Wealthfront Corporation

09/14/2026 | Press release | Distributed by Public on 09/14/2026 14:21

Quarterly Report for Quarter Ending July 31, 2026 (Form 10-Q)

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 unaudited condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Form 10-K filed for the year ended January 31, 2026. 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" included elsewhere in this Form 10-Q, and "Risk Factors" included in the Form 10-K filed for the year ended January 31, 2026 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 July 31, 2026, our platform served 1.5 million funded clients and had $99.0 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.1 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 net interest margin, proxy distribution revenue earned through a partnership with a third-party investor communications company, mortgage origination fees and the gain on sale of loans, net, which reflects net proceeds and fair value adjustments.
1 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:
Three Months Ended July 31,
2026 2025
$ Change
% Change
Platform assets ($ millions) $ 98,990 $ 88,175 $ 10,815 12 %
Cash management 44,857 46,579 (1,722) (4) %
Investment advisory 54,133 41,596 12,537 30 %
Net deposits ($ millions) $ 1,053 $ 3,662 $ (2,608) (71) %
Cash management (26) 2,806 (2,831) (101) %
Investment advisory 1,079 856 223 26 %
Funded clients (thousands) 1,507 1,318 189 14 %
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 $99.0 billion as of July 31, 2026, an increase of $10.8 billion, or 12%, compared to July 31, 2025. The increase in platform assets is due to a 30% year-over-year increase in investment advisory assets, partially offset by a 4% year-over-year decrease in cash management assets.
Net deposits: We define "net deposits" as the total value of assets placed into our platform products by our clients, net of withdrawals, plus promotional deposit matches paid by us, 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 $1.1 billion during the three months ended July 31, 2026, a decrease of $2.6 billion, or 71%, compared to the same period in the prior year. The decline was primarily due to the continued lower absolute level of interest rates following the Federal Reserve interest rate cuts that took effect towards the end of fiscal year 2026. This led to lower cash management net deposits, partially offset by higher investment advisory net deposits. 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. Investment advisory net deposits increased 26% compared to the same period in the prior year due to successful cross-product adoption and increased interest in investment advisory products as interest rates decline.
Funded clients: We define "funded clients" as clients with balances greater than zero or that have been greater than zero on at least one occasion during the 45 consecutive calendar days ending as of the measurement date. Funded clients include clients with a zero balance across all accounts as of the measurement date if they had greater than zero balances in at least one account within 45 calendar days prior to the measurement date. Individuals who share 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 1.5 million as of July 31, 2026, an increase of 0.2 million, or 14%, compared to July 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 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, excluding: (i) interest expense, (ii) provision for (benefit from) income taxes, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) change in fair value of 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 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-Q because it is a key measurement 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 and net income margin, the most directly comparable GAAP measures, to Adjusted EBITDA and Adjusted EBITDA margin, respectively:
Three Months Ended July 31, Six Months Ended July 31,
(in thousands, except percentages) 2026 2025 2026 2025
Net income $ 17,751 $ 34,741 $ 30,585 $ 60,688
Add:
Interest expense 255 99 507 166
Provision for (benefit from) income tax 2,644 5,130 7,240 13,294
Depreciation and amortization of property, software, and equipment, net 1,237 1,859 2,671 3,706
EBITDA (non-GAAP) 21,887 41,829 41,003 77,854
Stock-based compensation expense 16,433 1,571 33,485 3,450
Change in fair value of warrant liabilities and SAFEs (255) 1,359 157 1,359
IPO-related service provider expense - - 929 -
Adjusted EBITDA $ 38,065 $ 44,759 $ 75,574 $ 82,663
Total revenue 91,874 91,123 182,358 175,637
Net income margin 19 % 38 % 17 % 35 %
Adjusted EBITDA Margin 41 % 49 % 41 % 47 %
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 cost within our condensed 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. We also offer a promotional benefit to new clients that sign up and to clients who enable direct deposits into their Cash Accounts. These benefits are also accounted for as a reduction to Cash Account fees. 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 certain new account promotions or 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 new or 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 condensed consolidated statements of operations.
Other Revenue
Other revenue primarily consists of net interest margin revenue, proxy distribution revenue, mortgage origination fees and the gain on sale of loans, net, which reflects net proceeds and fair value adjustments.
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. Recently, our cost of revenue as a percentage of revenue has increased due in part to our investment into Wealthfront Home Lending. We expect cost of revenue as a percentage of revenue to decline over the long term as we benefit from the scalability of our platform. However, this percentage may increase in the near-term as we scale Wealthfront Home Lending.
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, personnel-related costs, including stock-based compensation, and allocated overhead. As part of our promotional interest referral incentive program, we offer existing clients the opportunity to earn a higher APY for referring new clients to the platform, which causes the total amount of consideration to vary based on the referring clients' Cash Account balance. We also pay consideration to referring clients in connection with other referral incentive programs, the amount of which varies based on the applicable program; for example, we pay consideration to referring clients for certain investing account referrals in the form of a partial deposit match on deposits placed in the referring client's own investing account within a specified period of time, and from time to time we have also paid consideration to referring clients for certain account referrals in the form of a fixed amount flat fee cash bonus. Consideration paid to clients for referring a new client, other than consideration paid in the form of a fee waiver, is accounted for as a marketing expense.
We intend to keep 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 six months ended July 31, 2026 and July 31, 2025 primarily consists of commitment fees recognized as interest expense in connection with the Company's credit agreements with a third party, as described in Note 7.- Financing Activities.
Other Expense (Income), Net
Other expense (income), net primarily consists of dividend income on corporate cash balances and fair value changes arising from remeasurements of warrant liabilities and SAFEs.
Provision for (Benefit From) Income Taxes
The provision for (benefit from) income taxes primarily consists of federal, state, and local 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, certain one-time items, and changes in tax contingencies.
Results of Operations
The following table sets forth our condensed consolidated statements of operations data for the periods indicated:
Three Months Ended July 31, Six Months Ended July 31,
(in thousands) 2026 2025 2026 2025
Revenue:
Cash management $ 61,758 $ 68,873 $ 125,139 $ 133,139
Investment advisory 28,804 22,040 55,048 41,914
Other revenue 1,312 210 2,171 584
Total revenue 91,874 91,123 182,358 175,637
Costs and operating expenses:
Cost of revenue 10,764 9,587 20,728 18,255
Product development 34,009 21,227 67,724 41,459
General and administrative 15,685 8,873 32,606 18,740
Marketing 10,715 9,093 21,935 19,281
Operations and support 3,914 3,063 8,030 5,988
Total costs and operating expenses 75,087 51,843 151,023 103,723
Interest expense 255 99 507 166
Other expense, net (3,863) (690) (6,997) (2,234)
Income before income taxes 20,395 39,871 37,825 73,982
Provision for income taxes 2,644 5,130 7,240 13,294
Net income $ 17,751 $ 34,741 $ 30,585 $ 60,688
The following table sets forth stock-based compensation for the periods indicated below:
Three Months Ended July 31,
Six Months Ended July 31,
(in thousands) 2026 2025 2026 2025
Product development $ 9,698 $ 1,046 $ 19,818 $ 2,297
General and administrative 5,590 291 11,309 640
Marketing 378 77 619 168
Operations and support 767 157 1,739 345
Total stock-based compensation expense 16,433 1,571 33,485 3,450
Capitalized stock-based compensation expense - - - -
Total stock-based compensation expense, net of amounts capitalized $ 16,433 $ 1,571 $ 33,485 $ 3,450
During the three and six months ended July 31, 2026, share-based compensation reflected the ongoing, service-based vesting of outstanding equity awards including dual-trigger RSUs issued prior to the IPO. Upon completion of the IPO, the performance-based qualifying event was satisfied, and the remaining dual-trigger awards are now subject only to the service-based vesting condition and expensed upon satisfaction of this condition. During the three and six months ended July 31, 2025, share-based compensation for dual-trigger RSUs was not yet recognized because the performance-based qualifying event, such as an IPO, had not occurred and therefore could not be considered probable. See Note 12. - Stock-Based Compensation of our condensed consolidated financial statements included elsewhere in this Form 10-Q for more information.
The following table sets forth the components of our condensed consolidated statements of operations data, for each of the periods presented, as a percent of revenue:
Three Months Ended July 31 Six Months Ended July 31,
(as a percentage of revenue)(1)
2026 2025 2026 2025
Revenue:
Cash management 68 % 76 % 69 % 76 %
Investment advisory 31 % 24 % 30 % 24 %
Other revenue 1 % - % 1 % - %
Total revenue 100 % 100 % 100 % 100 %
Costs and operating expenses:
Cost of revenue 12 % 11 % 11 % 10 %
Product development 37 % 23 % 38 % 23 %
General and administrative 17 % 10 % 18 % 11 %
Marketing 12 % 10 % 12 % 11 %
Operations and support 4 % 3 % 4 % 3 %
Total costs and operating expenses 82 % 57 % 83 % 58 %
Interest expense - % - % - % - %
Other expense (income), net (4) % (1) % (4) % (1) %
Income before income taxes 22 % 44 % 21 % 43 %
Provision for income taxes 3 % 6 % 4 % 8 %
Net income 19 % 38 % 17 % 35 %
_______________
(1)Totals may not foot due to rounding.
Comparison of the Three and Six Months Ended July 31, 2026 and July 31, 2025
Total Revenue
Three Months Ended July 31, Six Months Ended July 31,
(in thousands, except percentages) 2026 2025 $ Change % Change 2026 2025 $ Change % Change
Cash management $ 61,758 $ 68,873 $ (7,115) (10) % $ 125,139 $ 133,139 $ (8,000) (6) %
Investment advisory 28,804 22,040 6,764 31 % 55,048 41,914 13,134 31 %
Other revenue 1,312 210 1,102 525 % 2,171 584 1,587 272 %
Total revenue $ 91,874 $ 91,123 $ 751 1 % $ 182,358 $ 175,637 $ 6,721 4 %
Total revenue increased by $0.8 million, or 1%, and $6.7 million, or 4%, for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year, primarily driven by an increase in investment advisory assets.
Cash Management2
Three Months Ended July 31, Six Months Ended July 31,
(in millions, except annualized rate and percentages) 2026 2025 Change % Change 2026 2025 Change % Change
Cash management assets (off-balance sheet), beginning of the period $ 44,883 $ 43,774 $ 1,109 3 % $ 45,360 $ 42,411 $ 2,949 7 %
Cash management assets (off-balance sheet), end of the period 44,857 46,579 (1,722) (4) % 44,857 46,579 (1,722) (4) %
Average (1)
44,870 45,176 (306) (1) % 45,109 44,495 614 1 %
Cash management revenue 61.8 68.9 (7.1) (10) % 125.1 133.1 (8.0) (6) %
Annualized cash management fee rate (2)
0.55 % 0.60 % (0.06) % (10) % 0.56 % 0.60 % (0.04) % (7) %
_______________
(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 decreased by $7.1 million, or 10%, and $8.0 million, or 6%, for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. The decline in cash management revenue was primarily attributable to a 10% and 7% decrease in the annualized cash management fee rate for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. The decline in the annualized cash management fee rate was primarily due to APY boosts from client incentives and the inherent mathematical impact of converting annual percentage rates (APR) to annual percentage yields (APY) in a declining rate environment.
2 Wealthfront accrues and/or recognizes cash management revenue on a daily basis. The chart shows resulting averages for the periods presented.
Investment Advisory3
Three Months Ended July 31, Six Months Ended July 31,
(in millions, except annualized rate and percentages) 2026 2025 Change % Change 2026 2025 Change % Change
Investment advisory assets (off-balance sheet), beginning of the period $51,718 $37,085 $14,633 39 % $ 48,745 $ 37,764 $10,981 29 %
Investment advisory assets (off-balance sheet), end of the period 54,133 41,596 12,537 30 % 54,133 41,596 12,537 30 %
Average(1)
52,925 39,340 13,585 35 % 51,439 39,680 11,759 30 %
Investment advisory revenue 28.8 22.0 6.8 31 % 55.0 41.9 13.1 31 %
Annualized investment advisory fee rate (2)
0.22 % 0.22 % (0.01) % (3) % 0.22 % 0.21 % - % 1 %
_______________
(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 $6.8 million, or 31%, and $13.1 million, or 31%, for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. The increase in investment advisory revenue was primarily driven by a 35% and 30% increase in the average balance of investment advisory assets for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. The annualized investment advisory fee rate declined 3% for the three months ended July 31, 2026, compared to the same period in the prior year, primarily driven by the impact of one-time client incentives tied to the launch of custodial accounts. The annualized investment advisory fee rate increased by 1% for the six months ended July 31, 2026, compared to the same period in the prior year. The annualized investment advisory fee rate for the six months ended July 31, 2026 was consistent with the prior year period when using the daily average balance instead of the simple average. Utilizing daily average balances neutralizes the impacts of significant investment advisory asset appreciation (depreciation) and net deposits that occur throughout the comparison periods that are not always captured using the simple average of beginning and ending quarter balances.
Other Revenue
Other revenue increased by approximately $1.1 million, or 525%, and $1.6 million, or 272%, for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. The increase in other revenue was primarily due to increased portfolio line of credit net interest margin revenue.
Total Costs and Operating Expenses
Three Months Ended July 31, Six Months Ended July 31,
(in thousands, except percentages) 2026 2025 $ Change % Change 2026 2025 $ Change % Change
Cost of revenue $ 10,764 $ 9,587 $ 1,177 12 % $ 20,728 $ 18,255 $ 2,473 14 %
Product development 34,009 21,227 12,782 60 % 67,724 41,459 26,265 63 %
General and administrative 15,685 8,873 6,812 77 % 32,606 18,740 13,866 74 %
Marketing 10,715 9,093 1,622 18 % 21,935 19,281 2,654 14 %
Operations and support 3,914 3,063 851 28 % 8,030 5,988 2,042 34 %
Total costs and operating expenses $ 75,087 $ 51,843 $ 23,244 45 % $ 151,023 $ 103,723 $ 47,300 46 %
3 Wealthfront accrues and/or recognizes investment advisory revenue on a daily basis. The chart shows resulting averages for the periods presented.
Cost of Revenue
Cost of revenue increased by $1.2 million, or 12%, and $2.5 million, or 14% for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. The increase was primarily due to:
•an increase of $0.6 million and $1.0 million in cash management costs for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. The increase in cash management costs was primarily due to increased sweep program expenses from increased money movement volumes;
•a decrease of $0.2 million and an increase of $0.1 million in brokerage platform fees for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. These changes were primarily driven by fluctuations in vendor contract pricing and increases in money movement volumes, clients and accounts during the respective periods; and
•an increase of $0.8 million and $1.4 million in other cost of revenue for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year due primarily to increased data fees and other costs.
See the section titled "Components of Operations-Costs and Operating Expenses" for additional information.
Product Development
Product development expenses increased by $12.8 million, or 60%, and $26.3 million, or 63%, for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. The increase was primarily due to an increase of $12.3 million and $25.3 million in personnel-related costs due to increased headcount, including from the launch of Wealthfront Home Lending. The increase in personnel-related costs included an increase of $8.7 million and $17.5 million in stock-based compensation and $3.6 million and $7.8 million in salary and allocated overhead costs for the three and six months ended July 31, 2026, respectively. Cloud computing costs increased $0.5 million and $1.0 million for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year.
General and Administrative
General and administrative expenses increased by $6.8 million, or 77%, and $13.9 million, or 74%, for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. The increase was primarily due to an increase of $6.1 million and $12.4 million in personnel-related costs due to increased headcount, including an increase of $5.3 million and $10.7 million in stock-based compensation, and $0.8 million and $1.7 million in salary and allocated overhead costs for the three and six months ended July 31, 2026, respectively. Professional fees increased $0.5 million and $1.3 million for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year.
Marketing
Three Months Ended July 31, Six Months Ended July 31,
(in thousands, except percentages) 2026 2025 $ Change % Change 2026 2025 $ Change % Change
Performance and brand advertising 6,372 5,139 $ 1,233 24 % 12,841 11,904 $ 937 8 %
Client referral costs 1,274 2,193 (919) (42) % 3,570 4,159 (589) (14) %
Personnel-related costs 2,307 1,227 1,080 88 % 4,203 2,412 1,791 74 %
Other marketing 426 355 71 20 % 707 473 234 49 %
Allocated overhead 336 179 157 88 % 614 333 281 84 %
Total $ 10,715 $ 9,093 $ 1,622 18 % $ 21,935 $ 19,281 $ 2,654 14 %
Marketing expenses increased by $1.6 million, or 18%, and $2.7 million, or 14%, for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. The increase was primarily due to an increase of $1.2 million and $0.9 million in performance and brand advertising expenses for the three and six months ended July 31, 2026, respectively, due to higher spend into efficient client acquisition opportunities. Personnel-related costs increased by $1.1 million and $1.8 million due to increased headcount, including an increase of $0.3 million and $0.5 million in stock-based compensation and an increase of $0.8 million and $1.3 million in salary expense for the three and six months ended July 31, 2026, respectively.
Operations and Support
Operations and support expenses increased by $0.9 million, or 28%, and $2.0 million, or 34% for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. Personnel-related costs increased by $0.8 million and $2.0 million due to increased headcount, including an increase of $0.6 million and $1.4 million in stock-based compensation and an increase of $0.2 million and $0.6 million in salary and allocated overhead costs for the three and six months ended July 31, 2026, respectively.
Interest Expense
Three Months Ended July 31, Six Months Ended July 31,
(in thousands, except percentages) 2026 2025 $ Change % Change 2026 2025 $ Change % Change
Interest expense $ 255 $ 99 $ 156 158 % $ 507 $ 166 $ 341 205 %
Interest expense increased by $0.2 million, or 158%, and $0.3 million, or 205%, for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. The increase was primarily due to increased unused commitment fees following the increase to our revolving credit facility in October 2025 from $50.0 million to $250.0 million.
Other Expense (Income), Net
Three Months Ended July 31, Six Months Ended July 31,
(in thousands, except percentages) 2026 2025 $ Change % Change 2026 2025 $ Change % Change
Other expense (income), net $ (3,863) $ (690) $ (3,173) 460 % $ (6,997) $ (2,234) $ (4,763) 213 %
Other expense (income), net increased by $3.2 million, or 460%, and $4.8 million, or 213% for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. The increase in other expense (income) was primarily due to a net increase of $1.6 million and $3.6
million in dividend income from corporate cash swept into a money market fund and an increase of $1.6 million and $1.2 million in fair value change in the warrant liabilities for the three and six months ended July 31, 2026, respectively.
Provision for (Benefit From) Income Taxes
Three Months Ended July 31, Six Months Ended July 31,
(in thousands, except percentages) 2026 2025 $ Change % Change 2026 2025 $ Change % Change
Provision for (benefit from) income taxes $ 2,644 $ 5,130 $ (2,486) (48) % $ 7,240 $ 13,294 $ (6,054) (46) %
Effective income tax rate 13.0 % 12.9 % 19.1 % 18.0 %
Provision for (benefit from) income taxes decreased by $2.5 million and $6.1 million for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year. These decreases were primarily driven by lower pre-tax income compared to the prior year comparative periods, partially offset by higher effective tax rates measured during the periods. The effective tax rate was 13.0% and 19.1% for the three and six months ended July 31, 2026, respectively, compared to 12.9% and 18.0% for the three and six months ended July 31, 2025, respectively. The increase in the effective tax rate for both current year periods was primarily driven by non-deductible executive compensation under IRC Section 162(m) following the Company becoming a publicly traded entity, partially offset by net excess tax benefits recognized from share-based compensation and research and development tax credits. Non-deductible executive compensation under IRC Section 162(m) did not impact the effective tax rate in prior-year comparative periods since the Company was not yet a publicly traded entity. For additional information, refer to Note 13. - Income Taxes to our condensed consolidated financial statements included in this Form 10-Q.
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 July 31, 2026, our primary sources of liquidity were our unrestricted cash and cash equivalents of $453.3 million.
As of July 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. On October 14, 2025, the Company entered into an amended and restated credit agreement with the same third-party financial institution acting as administrative agent to provide a revolving line of up to $250.0 million (the "Amended Revolver"). The Amended Revolver was not drawn on during the six months ended July 31, 2026, and no amounts were outstanding under the Amended Revolver as of July 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.
No amounts were outstanding under the Amended Revolver as of July 31, 2026.
Warehouse Line of Credit
In July 2025, we, through our subsidiary Wealthfront Home Lending, LLC, entered into a master terms agreement for a mortgage loan warehouse facility (the "Warehouse Line") with a third-party financial institution to provide a warehouse line of up to $10.0 million. The Warehouse Line is utilized exclusively to fund the origination of residential mortgage loans held for sale. Borrowings under the facility are structured as repurchase transactions secured by the underlying pledged mortgage loans and related assets, and are repaid through proceeds received from sales of the loans to third-party investors.
Interest on outstanding draws accrues at the underlying promissory note rate, subject to a minimum rate of 6.00% per annum, plus a transaction funding fee of $100 per loan purchased. Outstanding borrowings under the Warehouse Line were $5.1 million and $0.2 million as of July 31, 2026 and January 31, 2026, respectively.
Cash Flows
The following table presents summarized condensed consolidated cash flow information for the periods presented (in thousands):
Six Months Ended July 31,
(in thousands, except percentages) 2026 2025
Net cash provided by operating activities $ 69,992 $ 77,405
Net cash used in investing activities (1,253) (632)
Net cash provided by (used in) financing activities (54,411) 4,883
Operating Activities
Cash provided by operating activities was $70.0 million for the six months ended July 31, 2026, primarily due to the net income of $30.6 million, non-cash adjustments of $43.8 million, and changes in operating assets and liabilities of $4.3 million. Non-cash adjustments of $43.8 million primarily reflect stock-based compensation, deferred income taxes, depreciation and amortization, non-cash lease expense, and fair value changes.
Cash provided by operating activities was $77.4 million for the six months ended July 31, 2025, primarily due to the net income of $60.7 million and $20.6 million non-cash adjustments, partially offset by changes in operating assets and liabilities of $3.8 million. Non-cash adjustments of $20.6 million primarily reflect stock-based compensation, deferred income taxes, depreciation and amortization, and non-cash lease expense.
Investing Activities
Cash used in investing activities was $1.3 million and $0.6 million, respectively, for the six months ended July 31, 2026 and July 31, 2025, primarily due to purchase of property, software, and equipment in the six months ended July 31, 2026 and July 31, 2025, respectively.
Financing Activities
Cash used in financing activities was $54.4 million for the six months ended July 31, 2026, primarily due to $60.1 million in repurchases of common stock and $10.4 million in taxes paid related to the net settlement of RSUs, slightly offset by $11.1 million in proceeds from the exercise of stock options and common stock warrants, as well as proceeds from the issuance of common stock under the ESPP.
Cash provided by financing activities was $4.9 million for the six months ended July 31, 2025, primarily due to $5.1 million in the exercise of stock options, slightly offset by the repurchase of common stock of $0.2 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 are 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 fund repurchases with existing cash and cash equivalents and cash from operations. For the six months ended July 31, 2026, we repurchased 6.4 million shares as part of the share repurchase program at an average price of $8.93 per share for a total of $57.6 million.
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 July 31, 2026, Wealthfront Brokerage LLC's net capital was $214.8 million, which exceeded the alternative method minimum net capital requirement by $207.3 million.
Contractual Obligations
Leases
Our principal contractual obligations as of July 31, 2026 include payments on minimum lease payments for operating leases. See Note 6. - Leases to the unaudited condensed consolidated financial statements for the three months ended July 31, 2026 and 2025 included in this Form 10-Q. As of July 31, 2026, the total future minimum lease payments for operating leases was $8.9 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 unaudited condensed consolidated financial statements for the three months ended July 31, 2026 and 2025 included in this Form 10-Q. As of July 31, 2026, our non-cancelable purchase commitments primarily relate to our cloud computing services consisting of total future minimum service payments of $11.3 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 condensed consolidated financial statements included in this Form 10-Q for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this Form 10-Q.
Critical Accounting Estimates
Management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements and the related notes thereto, which have been prepared in accordance with GAAP. In preparing the condensed 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 condensed 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.
There have been no material changes to our critical accounting policies and estimates as compared to those described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth in our Form 10-K as of January 31, 2026.
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