Wealthfront (WLTH) Q4 2026 Earnings Transcript

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Date

Wednesday, March 11, 2026 at 5 p.m. ET

Call participants

• Chief Executive Officer — David Fortunato
• Chief Financial Officer — Alan Imberman
• Chief Operating Officer — Matthew Moon

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Takeaways

• Total platform assets -- $94.1 billion at fiscal year-end (January 31, 2026), a 17% increase, with investment advisory assets rising 29% to $48.7 billion and cash management assets increasing 7% to $45.4 billion.
• Funded clients and accounts -- Funded clients reached approximately 1,420,000, up 17%, and funded accounts totaled roughly 1,840,000, up 16%, indicating 1.3 funded accounts per client.
• Annual net deposits -- $6.7 billion in net deposits for the year; the fourth quarter experienced $400 million in net outflows driven by clients shifting cash into investments.
• Investment advisory cross-product flows -- The company recorded its second-best quarter for cross-product flows into investment advisory, and a second consecutive record for net cross-account transfers from cash to investment.
• Organic investment advisory growth -- Annualized organic investment advisory growth reached 11% for the quarter, with January’s growth running at an annualized 15%.
• Cash management outflows -- Cash management net outflows improved to $145 million in February from $840 million in January, with cumulative net deposits turning positive after February 16.
• Home lending rollout -- Early access to home lending launched in Colorado, Texas, and California; plans for general availability in these states and further geographic expansion are set for later in the year.
• New product features -- Launched Wealthfront Treasury Money Market Fund (WLTX X) with $85 million in AUM pre-general availability, introduced automated dividend sweeps, and a $1,000,000 daily withdrawal limit for qualified clients.
• Cash management APY and incentives -- Increased base APY by five basis points to 3.3% in January and introduced a 25 basis point APY incentive for direct depositors with investment accounts in early March.
• Revenue growth -- Annual revenue totaled $365 million, up 18%; fiscal Q4 revenue was $96.1 million, up 16%.
• Cash management revenue -- $69.7 million in fiscal Q4, up 12%, driven by higher average balances and an annualized fee rate of 60 basis points.
• Cash management fee rate guidance -- Projected to decline to 57%-58% in fiscal Q1 due to higher APY and direct deposit incentive uptake.
• Investment advisory revenue -- Fiscal Q4 investment advisory revenue was $25.8 million, up 31%, with the annualized fee rate stable at 22 basis points.
• Gross profit and margins -- Fiscal Q4 gross profit reached $86.6 million (up 17%) with a 90% gross margin; adjusted EBITDA margin for fiscal Q4 was 46% (up two percentage points).
• Operating expenses and stock-based compensation -- GAAP expenses were $310.7 million in fiscal Q4, including a $239 million dual-trigger equity award for the IPO; adjusted operating expenses, excluding IPO-related items, were $57.1 million (up 15%).
• GAAP net income -- GAAP diluted net loss of $134.8 million and diluted EPS of negative $1.31, including the IPO equity award expense.
• Free cash flow -- Generated $33 million in fiscal Q4 (75% conversion of adjusted EBITDA); for the year, free cash flow was $151.1 million (88% conversion rate).
• Balance sheet -- Ended the period with $440.8 million in cash and cash equivalents and remains debt-free.
• Share repurchases -- Authorized a $100 million share repurchase program in March; management expressed “the shares are extremely attractive at the current price.”
• Rule of 40 -- Achieved a metric of 62 for fiscal Q4, marking the fourteenth consecutive quarter above this threshold.
• Seasonal trends -- Anticipating significant cash management outflows in March and April due to tax season, with April outflows expected to surpass last year’s $537 million given higher balances.
• Asset-weighted cross-product adoption -- The percentage of platform assets held by clients with both cash management and investment advisory accounts increased to approximately 61.5% at February’s end.
• Investment account returns -- Automated investment account returns grew 2.8% in January and 1.7% in February (month over month), due in part to international equities’ outperformance.
• Tax-loss harvesting -- February tax-loss harvesting was at its highest dollar level since prior market volatility around “Liberation Day.”

Summary

Wealthfront (NASDAQ:WLTH) set new records for total platform assets, revenue, and investment advisory asset growth, highlighting accelerating cross-product flows and deepening client relationships. The rollout of proprietary products such as the Wealthfront Treasury Money Market Fund and the expansion of home lending into new states are positioning the company to increase client engagement and diversify revenue sources. Management initiated a $100 million share repurchase authorization, citing confidence in future cash generation and current share valuation, and emphasized that product incentives and APY increases are intended to strengthen platform stickiness amid evolving client needs.

• The sequential decline in cash management fee rates reflects current competitive dynamics and the company’s willingness to sacrifice near-term margin for multi-product client adoption, with CFO Alan Imberman stating, “as more people adopt it, we do expect to see potentially further degradation in the fee rate, but that would also signal that we have more clients building deeper relationships across the platform.”
• The impact of stock-based compensation and IPO-related equity awards created a substantial, one-off GAAP net loss that does not reflect underlying cash profitability.
• Home lending’s measured expansion strategy prioritizes client experience refinement and operational efficiency over rapid scale, with management emphasizing that automation is core to scaling without unsustainable headcount growth.
• Product development spending will remain focused on home lending, cross-product incentives, and further enhancements to automation and user experience, with the roadmap described as expanding based on “deeper understanding of our clients' financial situations.”
• Recent months’ investment account growth and robust tax-loss harvesting activity suggest that client engagement is acute during periods of market volatility, reinforcing the company’s automated, diversified investment approach.

Industry glossary

• Annualized organic growth: Proprietary calculation multiplying period net deposits by an annualization factor and dividing by prior period ending assets to express client asset growth on an annual run-rate basis.
• Rule of 40: A SaaS industry benchmark where the sum of year-over-year revenue growth rate and EBITDA margin exceeds 40%, reflecting a strong balance between growth and profitability.
• Dual-trigger equity award: Stock-based compensation that is contingent on two conditions (such as time-based vesting and a liquidity event like an IPO) before recognition in financial statements.
• WLTX X: Wealthfront Treasury Money Market Fund, positioned as an after-tax-yield-advantaged vehicle targeting clients in high-income-tax states due to the state tax exemption on U.S. Treasury income.

Full Conference Call Transcript

David Fortunato: Thank you, and good afternoon, everyone. Fiscal 2026 was another successful year in which Wealthfront Corporation continued to deliver on its long-term objective of becoming the leading tech-driven platform for digital natives to turn their savings into wealth. We believe we make the best practices of personal finance accessible at low fees through technology and intuitive and convenient through user-friendly design and automation. At scale, this drives high margins, allowing us to share savings with clients, creating and engendering trust, driving asset retention and low-cost word-of-mouth growth, which once again drives high margins.

This flywheel enables us to offer feature enhancements such as our recent ongoing cash APY increases that I will describe in more detail later on, and more broadly, helps our clients save more on every paycheck, earn higher returns on their savings, and borrow at lower rates. We remain grounded in our belief that the best way to build deep, long-term client relationships is to continue to delight clients by offering them more value than anyone else and focusing on their long-term financial outcomes. This informs our product development strategy and keeps us focused on our roadmap regardless of short-term market conditions.

At fiscal year-end, total platform assets grew 17% year over year to a record $94.1 billion, with investment advisory assets of $48.7 billion, up 29% year over year, and cash management assets of $45.4 billion, up 7% year over year. Funded clients ended the year at roughly 1,420,000, up 17% year over year, and funded accounts of roughly 1,840,000, up 16% year over year, reflecting 1.3 funded accounts per funded client. Total net deposits in the year ended January 31, 2026 were $6.7 billion, including $400 million in net outflows in the fourth quarter.

Fourth quarter figures reflected a cash-to-invest transition environment that resulted in the second-best quarter of total investment advisory cross-product flows, including a second consecutive record quarter of net cross-account transfers from cash to invest. This helped drive annualized organic investment advisory growth to 11% in the quarter, the highest since the market enthusiasm post U.S. election in the quarter ended January 2025, with monthly annualized organic growth accelerating throughout the quarter, ending at 15% in January. Recall, annualized organic growth is calculated as total net deposits in a given period multiplied by an annualization factor based on actual day counts in that period, divided by prior period ending assets.

As we will discuss further, cash management net flows began to normalize in mid-January, roughly four weeks after reducing the client rate on December 19 and prior to the five basis point increase to the client APY on January 30. Net outflows from cash management were $145 million in February, a significant improvement from the $840 million in net outflows in January. Since February 16, cumulative cash management net deposits have been positive. However, we expect withdrawals due to tax time seasonality to begin later this month and continue up until the April 15 federal tax deadline. On the product development side, we continue to accelerate our product velocity.

For example, in the fourth quarter, we bolstered both our cash management and investment advisory offerings, enhanced interoperability between both, and began to offer early access to Wealthfront home lending. For cash management, we introduced automated dividend sweeps from investment advisory accounts to cash management accounts and increased daily withdrawal limits up to $1,000,000 for qualified clients. In December, we began a measured rollout of our proprietary Wealthfront Treasury Money Market Fund, or WLTX X. It offers an attractive after-tax yield alternative for clients and their cash, particularly for clients living in states with high income taxes, given the state tax exemption on U.S. Treasury interest income.

As of February, prior to general availability, the money market fund had just over $85 million in AUM. For investment advisory, we expanded availability of fractional shares into automated investing accounts and automated bond portfolios, helping to reduce cash drag and tracking error relative to our target portfolios. We also introduced dividend reinvestment plans as well as a broader list of stocks and ETFs that can be traded in the stock investing account. We continue to see strong uptake, particularly among younger clients, in this investment account.

In November, we launched early access to home lending starting in Colorado, and have since expanded to Texas and California, with a full rollout to these states as well as early access in additional states expected to come later this year. We believe we can use technology to deliver a better digital experience and a lower rate, and we are deliberately scaling at a measured pace in order to maximize learnings to optimize our long-term outcomes. We aim to provide our clients home mortgage rates at least 50 basis points better than the national average. While we are in early days, we are proud to have delivered on this objective on average in the states in which we operate today.

Beyond new product initiatives, we have increased the base APY on all cash management accounts by five basis points to 3.3% on January 30. Over the course of the past several months, the effective federal funds rate gradually stabilized higher within its target range, allowing us to pass more savings along to our clients. We could have simply taken this benefit for ourselves, but consistent with our business model, we are constantly looking for ways to give back to our clients, deliver better financial outcomes, and build trust. Our focus for Wealthfront Cash is to offer the best cash account experience for young professional savers.

In this vein, we launched an incentive in early March in which clients that direct deposit at least $1,000 per month who also have a funded investment account will receive an ongoing 25 basis point boost to their cash APY. We expect this incentive to deepen existing client relationships as well as drive cross-product adoption for those clients using one of the cash management or investment advisory accounts today. We also anticipate new clients to diversify into both of these account types more quickly. Closing with current trends, today we published February metrics. As discussed earlier, when looking at intramonth trends, cash management net outflows peaked in mid-January prior to our five basis point increase to the client base APY.

Cash management net outflows significantly improved to only $145 million in February versus $840 million in January. Investment advisory net deposits were $416 million, implying an annualized organic growth rate of 11%. Total net deposits were therefore $271 million in February and, along with market appreciation, led us to another month-end record of total platform assets of $95.2 billion. In turbulent times like these, the time-tested performance of a low-cost diversified index portfolio with the added benefit of automated tax-loss harvesting becomes more apparent. Aggregate investment account returns, most notably our automated investment account, benefited in January and February from the relative outperformance of international equities, contributing to a 2.8% month-over-month growth in January, and 1.7% month-over-month growth in February.

Crucially, this performance stands in stark contrast to the returns of speculative asset classes that often falter when market conditions tighten. While others chase fads, our automated investing account is engineered to mitigate volatility and maximize after-tax outcomes. We believe the value of this product is even greater when you consider the strong year-to-date tax losses we have harvested for our clients. February tax-loss harvesting dollars were the highest since the widespread market volatility realized immediately before, during, and after Liberation Day last year. With that, I will now turn the call over to Alan Imberman to go over the financials.

Alan Imberman: Thanks, David. Starting with the income statement and a high-level overview for the year. Revenue for fiscal 2026 reached a record $365 million, up 18% year over year. Adjusted EBITDA for fiscal 2026 also hit a new record of $170.7 million, up 20% year over year, reflecting an adjusted EBITDA margin of 47%, up one percentage point year over year. Moving now to the fourth quarter, revenue came in at a quarterly record of $96.1 million, up 16% year over year. Cash management revenue was $69.7 million, up 12% year over year due to both higher average cash management balances measured as the average of beginning and end of quarter figures and a higher annualized fee rate.

The average cash management balance in the fourth quarter was $46.2 billion, up 10% year over year, and the annualized cash management fee rate was 60 basis points, up one basis point year over year. When the Fed reduces the Fed funds target rate, we typically wait until the Friday of the following week to reduce the APY we offer our clients. This creates temporary fee compression because the interest rate we receive from banks reprices lower immediately while the interest rate we pay to clients remains constant for a one-week grace period.

Additionally, in a declining rate environment, the fee rate is negatively impacted by the inherent mathematical impact of converting annual percentage rates (APR) to annual percentage yields (APY). The inverse of this is true in an increasing rate environment. As David noted, we launched a new incentive in early March in which clients who direct deposit at least $1,000 per month and also have a funded investment account will receive an ongoing cash yield increase of 25 basis points.

As a result of both the direct deposit incentive and the five basis points passed along to clients at the end of January, we now expect our first quarter annualized cash management fee rate to be in the range of 57 to 58 basis points. Because April is tax season and our clients are net cash taxpayers, we anticipate significant seasonal cash management net outflows to begin in March and continue up until the April 15 federal tax filing deadline. For context, net cash management outflows in April 2025 were $537 million, and we would expect this figure to be larger this year given the increase in total cash management assets.

It may seem counterintuitive, but we are delighted to see tax-related outflows because it reflects the highly attractive financial profile of our clients and also means our clients are comfortable using the cash account to meet near-term liquidity needs, indicating use of the account as a primary operating account that generally gets replenished over time and are typically stickier over the long run. Investment advisory revenue was $25.8 million, up 31% year over year, and surpassed $100 million in annualized revenue for the first time, due primarily to a 30% year over year increase in average investment advisory balances to $47.3 billion.

Our annualized investment advisory fee rate was roughly flat at 22 basis points versus the same period last year. Asset growth was driven by both strong markets and net deposits over the trailing twelve months, with organic net deposit growth accelerating throughout the quarter, ending at 15% annualized growth in January. Net cross-account transfer from cash to invest in the quarter set a new record for the second consecutive quarter, reflecting the compelling combination of a broad suite of investment products, overarching platform incentives, and targeted lifecycle marketing campaigns currently in place. Gross profit came in at a quarterly record of $86.6 million, up 17% year over year, reflecting a gross profit margin of 90%.

Total GAAP expenses of $310.7 million included $248.3 million in stock-based compensation expense, of which $239 million reflected dual-trigger equity award expense recognized in connection with our IPO. GAAP expenses also included $5.3 million in employer taxes related to these dual-trigger equity awards. Adjusted operating expenses, that is, expenses excluding share-based compensation and employer taxes due to IPO-related equity awards, were $57.1 million, up 15% year over year due primarily to higher product development and general and administrative expense, partially offset by lower marketing expense. Adjusted EBITDA of $44.2 million was up 22% year over year and reflected an adjusted EBITDA margin of 46%, up two percentage points year over year.

As we continue to invest in incentives and scale home lending, we expect adjusted EBITDA margins to decline sequentially but remain above 40% for the first fiscal quarter 2027. We continue to demonstrate significant operational and financial discipline, delivering a Rule of 40 metric of 62 for the fourth quarter. This is our fourteenth consecutive quarter, or more than three years, exceeding the Rule of 40 and underscores a business model that has successfully and consistently balanced robust top-line growth with the structural efficiencies of our automated platform.

GAAP diluted net income was negative $134.8 million and GAAP diluted earnings per share was negative $1.31, both of which include the one-time impact of dual-trigger equity awards in connection with our IPO of $239 million. We believe that our adjusted EBITDA is a strong proxy for cash flow. For the fourth quarter, net cash provided by operating activities was $33.3 million and free cash flow was $33 million. This results in a free cash flow conversion ratio, that is free cash flow as a percentage of adjusted EBITDA, of 75%. January, however, is a seasonally lower free cash flow period as we pay out the majority of our accrued annual cash bonuses to our employees in that period.

For the fiscal year, net cash provided by operating activities was $152.2 million and free cash flow was $151.1 million. This resulted in an annual free cash flow conversion ratio of 88%. Note, both quarterly and annual free cash flow figures are not adjusted for IPO-related expenses; therefore, conversion ratios are lower than they otherwise would have been had the IPO not occurred. Driven primarily by this robust free cash flow generation over the course of the year and over $130 million in net cash proceeds raised in our IPO in December, we continued to strengthen our debt-free balance sheet, ending the period with cash and cash equivalents of $440.8 million.

At quarter end, we had roughly 186.5 million diluted shares outstanding. In March, we received board authorization to implement $100 million in share repurchases. We believe repurchasing our stock is attractive at current levels given our robust free cash flow generation, our debt-free capital structure, as well as the multi-decade opportunity to compound wealth with new and existing clients. Over the long term, our excess capital priorities are: invest in organic growth, including infrastructure and automation while also comfortably exceeding minimum capital requirements; evaluate opportunities to repurchase shares; and assess M&A with a preference to build versus buy. Any remaining capital would be added to our surplus reserves in order to bolster resilience and durability.

Regarding February metrics, total platform assets ended at another month-end record of $95.2 billion, consisting of $50.0 billion in investment advisory assets, and $45.2 billion in cash management assets. Total net deposits were $271 million, and recall, February only has 28 days in the month. Investment advisory net deposits were $416 million, reflecting organic growth of 11% annualized. We continue to successfully drive cash-to-invest flows, bringing asset-weighted cross-product adoption, that is, assets held by clients with both cash management and investment advisory accounts, to roughly 61.5% at February, up over one percentage point since December.

Cash management net flows began to normalize in mid-January, four weeks after reducing the client rate on December 19, and prior to the five basis point increase to the client APY on January 30. Net outflows from cash management were $145 million in February, a significant improvement from the $840 million in net outflows in January. Since February 16, cumulative cash management net deposits have been positive. However, we expect withdrawals due to tax time seasonality to begin later this month and to continue up until the April 15 federal tax deadline. In closing, our business is designed to be aligned with the interest of our clients. Simply put, we succeed only when they do.

We believe that as long as we continue to deliver products that truly delight our clients, they will engage more broadly with us, entrust us with more of their wealth, and recommend our platform to their friends, family, and coworkers. We are deeply committed to this long-term journey alongside them. With that, we will now open for questions.

Operator: Thank you. To ask a question, you will need to press *11 on your telephone. To remove yourself from the queue, you may press *11 again. You will be limited to one question and one follow-up to allow everyone the opportunity to participate. Our first question comes from the line of Ken Worthington of JPMorgan. Your question please, Ken.

Ken Worthington: Hi. Good afternoon, and thanks for taking my question. I want to dig further into the rollout of mortgages and see how that is going. So what kind of reception are you getting from your customers in Colorado, where that offering is more seasoned? And can you see, based on the transfer of assets to title companies, how your penetration of eligible customers is looking thus far?

David Fortunato: Hey, Ken. How is it going? Yeah. So we are progressing, I think, well. The thing that we are optimizing for—we talked a little bit in the prepared remarks—is less about directly trying to capture all of the volume that we reasonably can in Colorado and really maximizing the learning that we have both with our infrastructure and with the client experience. So as we have launched first in Colorado with the early access period and then in Texas and California, we are really focused on making sure that the experience that we are delivering to clients is good. There are things that we have to improve and we are working on.

We have already rolled out a bunch of improvements with more to come. On the rate basis, we feel very good about underpromising and overdelivering on the quality of rate we are giving folks. We are still seeing significant home volume across the country. I think the stat that I saw was more than $400 million of wires to escrow and title companies in our Q4 went off the platform, which obviously is a significant chunk of the outflows that we saw. We have a bunch of things that we need to improve on the digital experience. We are making quick progress, but it is a huge area of focus for us.

As we continue to expand the early access period, the real constraint that we have is that the experience that we are offering to clients is one that we feel good about, and we feel the clients will feel good about for the long term. We are not trying to build a transactional mortgage experience. We are trying to build a long-term relationship with clients, of which mortgages is just one step.

Ken Worthington: Perfect. And then maybe to follow up, same topic. How do you see the ramp and the rollout to other states and the further penetration in existing states? How does that look as you move through the rest of the year? Is this really kind of an experimental year where you would not expect things to really ramp; it is just sort of getting the infrastructure? Or do you expect things to really ramp as we move throughout the year and as you get more comfortable with the offering?

David Fortunato: So we certainly expect to go general availability in Colorado first. That will happen sometime this year. I would expect that we go general availability in Texas and California at some point this year. And I would expect that we launch early access periods in additional states. Exactly what percentage of our client base will be covered by general availability, I am less sure of.

Our ability to roll out automation features and balance scaling headcount versus scaling through technology is the kind of core dance that we are doing, where we are trying to really scale with technology and limit headcount growth where needed, except where we are very confident in the volumes that we are seeing, and that is a credible strategy to be able to build sustainable volume over time.

Alan Imberman: Thank you.

Operator: Our next question comes from the line of Ryan Tomasello of KBW. Your question, please, Ryan.

Ryan Tomasello: Hi, everyone. Thanks for taking the questions. Regarding the cash management fee rate guide for 1Q, I believe you said 57 to 58 bps. Is that a reasonable baseline for the remainder of the year, or how should we think about the potential for additional compression there to the extent these incentives you are offering continue to see strong uptake?

David Fortunato: Hey, Ryan. Thanks. Yeah. The one thing I would say is the competitive environment has certainly evolved a bit over the last six months. And what we have seen is after the five basis point change and the direct deposit incentive, I think we feel much better about where we are in the competitive environment, and we are seeing that with the transition in cash net flows. As for how we think about the fee rate going forward, I will let Alan take that.

Alan Imberman: Yeah, Ryan. So I would say the 57 to 58 is just the first quarter guide. It will really depend on the uptake as to how the rest of the year goes. The thing we like about incentives such as the direct deposit incentive is that we will only have to pay the extra rate when people give us more money or take on this additional incentive by performing the action of direct deposit and funding an investment account. And so as more people adopt it, we do expect to see potentially further degradation in the fee rate, but that would also signal that we have more clients building deeper relationships across the platform with us.

And so that is the balance we are looking for there.

Ryan Tomasello: Okay. Appreciate that. And then on the account growth, is it possible to isolate the specific trends within the investment advisory side of the business? Obviously, the trends on net deposit organic growth have been quite positive, but I would assume that there are also underlying positive trends on just the actual account growth side within investment advisory. Any color you can provide there?

David Fortunato: Yeah. I mean, the investment account growth, as cash-only clients add investment accounts, is a key focus for us in any transition environment. And it has been probably the most significant focus inside of the company over the past three or four months. We focus on the flows because that is what ultimately leads to asset growth and, therefore, revenue growth because of our monetization strategy. But the way that we achieve that flow growth is both growing with clients over the long term and getting more clients to adopt investment products. It is too early to know exactly what the impact will be from the direct deposit incentive that we are trying.

I think we are looking forward to being able to talk more about that as we get additional data in, but we have been pleased with the early response. Obviously, direct deposit takes some time to come through. There is a little bit of a lag. So we have not had a direct deposit cycle since that incentive launched. But the past incentives that we have run around investment account adoption, along with the macro environment in January and February being more conducive to investment, have helped our focus on investment cross-product adoption and new client investment growth as well.

Operator: Our next question comes from the line of Devin Ryan of Citizens Bank. Please go ahead, Devin.

Devin Ryan: Thank you. Hi, David. Hi, Alan. How are you?

David Fortunato: Doing well. Thank you.

Devin Ryan: Good. Question, another one just kind of cash account. And just some of the outflows kind of late last year, early this year, do you have a sense of whether that money was going toward other online banks paying higher rates, or was it going to brokerages or maybe just, you know, bill pay without kind of gross flows? I would love to get a sense of that. And then do you have a sense of the remaining balances that are maybe more pure rate chasers? And how much of that is remaining?

I appreciate that is probably difficult to quantify, but would love to just get some thoughts on that and some of the behavior that you did see kind of late last year into early this year.

David Fortunato: Sure. I am happy to give a high-level answer, and then if Alan has anything he wants to add, he can chime in. So what we saw, I think, is broadly consistent with what we had discussed previously, and that is that as rate cuts occur, the larger number of rate cuts that occur in consecutive succession leads to more folks evaluating what they are doing with their cash. So we had three cuts in a row. It takes several weeks for cash net flow activity to normalize post Fed rate cut, which I think we had talked about before. We normally have a really good idea sort of four to six weeks after a rate cut has gone through.

One of the interesting things that we saw in January was both: January is a seasonal high period for investing, which I think amplified some of our desire to drive additional cash-to-invest adoption, because January is a great period for folks to reevaluate their finances and think about opening investment accounts. And so we did lean into that in January, and I think some of what you see in the January numbers is that.

The other thing I would point out is that the gross versus net distinction in cash flows, especially because of the liquidity features that we offer—free wires, free instant transfers, the ability to send money to escrow and title companies to buy a home—we do a lot of gross flows for cash management. We did a calculation where we look at the recapture rate of those gross flows by client in the quarter, and we are recapturing a majority of the gross withdrawals.

That is consistent with what we have seen in prior periods, that we saw from clients in our Q4, and we think it shows the value of the cash management account really sustaining even as clients reach goals. Maybe they are purchasing a house or putting a down payment down. Maybe they are buying a car. They come back to the account, and we do recapture a significant chunk of those assets. I think the sort of high-level question that you asked about what are folks doing with their money is: there are folks that are doing some of all of the things that you described with their money.

It is our job to be the best place for our clients to invest for the long term, the best place to save for the long term. We want to deliver the best mortgage experience that they can get anywhere as well. It will take us time to do some of those things, especially the mortgage, but that is really what the focus of the business is—leading with product and delivering the best product and the best value to our clients across their broad financial needs.

Devin Ryan: Okay. Great detail. Thank you so much. I guess a follow-up here on the repurchase authorization, $100 million buyback. Can you talk a little bit about expectations, pacing, and intent there? I think it is a strong signal. Obviously, the company has a lot of liquidity here, so in theory, even potentially more behind that. So just love to get a sense of how much is signal versus intent to actually step in and buy shares here down from the IPO price?

Alan Imberman: Yeah. Hey, Devin. It is Alan. What I would say is that we think the shares are extremely attractive at the current price. We are in a position, as you mentioned, to have a very strong balance sheet and free cash flow generation such that we can make this investment, and we will compare our ability and our willingness to repurchase against, obviously, other opportunities that we have to invest in. But we do think that we will be purchasers of our shares, especially at the current levels.

Operator: Thank you. Our next question comes from the line of Daniel Perlin of RBC Capital Markets. Your question please, Dan.

Daniel Perlin: Thanks. Good evening, everyone. I guess I just wanted to kind of circle back a little bit on the home lending side. And I guess the broader context is, I heard everything you said in your prepared remarks, but how do you think that rollout, product reception, and expectations as you think about the ensuing year are going relative to when you kind of addressed investors around the IPO? I mean, it sounds pretty consistent, but it also sounds like there are some nuanced differences maybe. So I just want to make sure I understand that. Thank you.

David Fortunato: Sure. So I think we know a lot more about the areas that we need to improve to deliver the best digital experience that we can to clients. And we are putting in focused work on those areas and gradually expanding as we go. We understand a lot more about the operational challenges and where we need to invest to drive operational efficiency so that we can do so as efficiently as possible with as digital a back-end experience as we can.

The result of those things is we want to build, like we have with cash and like we have with investments, a sustained low-cost advantage in being able to deliver the products so that we are able to share the savings with clients and get them the best financial outcome. So there is a lot more that we understand with the volume of loans that we have done so far. We will continue to learn and prioritize both the operational efficiency and digital experience wins as we move along, continuing to let people off the early access list and go general availability in Colorado first.

I think our understanding and our learnings are generally consistent with what we have communicated in the past. We obviously have a lot more detail now from operating in the space, operating in more states, and doing more loans than we have in the past.

Daniel Perlin: Yep. That is great. Just a quick follow-up. So it was really good to see the net deposits turned positive in February. And this pivot, as you guys had telegraphed from cash management to investment advisory, was kind of taking place. I think the question that I have is, you have this weird dynamic right now where the environment may or may not produce lower rates in the near term. It might be sustained for longer. I am just wondering how you guys think about positioning yourselves maybe more in the near term in an environment where that might be the case.

It might be an unfair question because it is impossible to answer, but it does feel like there is a lot more volatility around expectations for rates. So just how you are posturing maybe as we go through the next, I guess, couple of quarters. Thank you so much.

David Fortunato: Yep. So I think we feel good about our competitive positioning after the five basis point change and the 25 basis point direct deposit incentive. Obviously, we do not know what the market is going to do in the future. We do not know what rates are going to do in the future. We do think that we are well positioned from the investment side because of our focus on global diversification. That has put us in a good position over the last few months, and what we have really seen resonating with clients is in uncertain environments, investing with global diversification is a real selling point.

We sort of do not think about positioning ourselves based on what is going to happen over the next few months, but we feel good about our position because of the investments we have made over the last few years in cash, investment, and home lending also, that if rates come down, we feel like we are in a good position to help clients continue to invest or invest more.

We feel like we are in a good position to be able to help them buy homes that have become more affordable at lower interest rates while also helping them continue to save for the long term and get access to liquidity as needed using tax-advantaged tools like the Wealthfront money market fund. As we have continued to build out our offering, our goal is really to help clients across the broadest range of financial situations be able to put their savings and investments to work. And that has been the focus, and we feel good about the position because of the diversity.

We cannot predict the future, but we can prepare for it, and that is what we have done.

Operator: Thank you. Our next question comes from the line of James Jarrow of Goldman Sachs. Your question please, James.

James Jarrow: Good afternoon, and thanks for taking the question. Could you just update us on the success of the match programs in the invest business so far? How much has this been driving the flows in that side of the business? And perhaps if you could just also comment on the ROIs there and how you structure that to ensure strong ROIs.

David Fortunato: Hey, James. So I would say we are constantly experimenting with incentives. The most successful incentives that we have done for cash-to-invest adoption have actually not been the deposit matches. It has been other types of incentives that we have run to encourage cash-to-invest adoption. We are happy with the initial response to the direct deposit incentive having driven a fair amount of investment account opening. It is still early, and so we will have to see how that evolves over time. We will have to see how that evolves with new clients and if the cross-product adoption rate early in the client tenure improves as we expect it to.

I think, generally, our incentives have been successful with the second-best quarter in our history at cross-product flows of cash to invest and a second record quarter of net cross-account transfers from cash to invest. But I do not think that we have overly focused on match as the driver of those. We have looked at a variety of incentives and are pursuing the ones that we feel deliver the best overall outcome to the company and to our clients.

James Jarrow: Okay. Thank you so much. That is super helpful. I just wanted to ask a bigger-picture one. So let us say we get to a terminal Fed funds of roughly 3%, which obviously there is uncertainty as to whether we will get there. But how would you think about the right way to model the mix of your client assets across cash versus investment advisory? In other words, what percentage of client assets would you expect to be cash versus investment advisory?

Alan Imberman: Hey, James. It is Alan here. Yeah. I think it is a difficult question in the sense that there is more going on than just the level of rates. Clients are accumulating more wealth, and as we have shown in our prospectus, as clients obtain a certain level of cash, they start putting incremental dollars to work and investing, and so you start to see the investment account, which grows faster as well, really continue to grow. And that is what we have seen over the past few quarters. And did not discuss this last time, but investment advisory assets have now overtaken cash assets pretty clearly.

And so when we are modeling it, I think it depends on, as well as younger clients coming in who start with cash because they are early in the journey in savings. So I think you have to have more variables than just the level of rates. I think you have to have variables around clients that are coming in and then our existing clients and their behavior. And, again, we have control over that in some of the incentives that we offer. And so that is probably how I would think about it.

James Jarrow: Okay. Thanks a lot.

Alan Imberman: Thank you.

Operator: Our next question comes from the line of Alexander Markgraff of KBW, KBCM. Your question, Alex.

Alexander Markgraff: Thanks. Hey, David, Alan, Matt. Thanks for the question. A couple here. I guess just first, David, from a product standpoint, if I look at the releases in 2025, pretty busy. Just sort of curious how you think about calendar 2026 or fiscal 2027 using the sort of digestion year versus carry-forward of velocity framework? And then, Alan, just as a follow-on to that, maybe just some comments on spend priorities in the context of David's comments would be helpful. Thank you.

David Fortunato: Hey, Alex. I guess our focus as a product development and technical organization is to be able to build automated products so that we can continue to focus most of our technical talent on delivering new products to clients and improving our existing products. We have a lot left to build. I would say that one of the things that we have seen over the past couple of years is that our roadmap only ever gets longer of things that we want to focus on and we want to get out to our clients.

As we continue to build a deeper understanding of our clients' financial situations through both the qualitative and quantitative research that we do into their financial lives, we continue to have new ideas and be excited about those ideas. And so the focus that we have really is on prioritizing and focusing on the things that we think will make the biggest impact to our clients' financial outcomes and have the biggest impact on our business, but we really want to continue to accelerate product velocity, if anything, to continue to get products out to clients and improve the existing product experience so that Wealthfront Corporation is delivering the best value of any provider in the space.

Alan Imberman: Yeah. What I would say to add to that in terms of the spend, as I mentioned in the prepared remarks, the investment in home lending as well as our incentives are really where we are putting a lot of resources. We continue to work on incentives and really strengthening the core as well while we invest in home lending. And so that has not changed. We continually look at our business model flywheel and kind of prioritize around that. And so we are continually trying to figure out ways to automate to generate savings, share those savings with clients to help their financial outcomes, build that trust, get them to refer us, and grow with word-of-mouth.

And some of that is used through incentives. And so we will continue to use that as our framework for how we invest.

Alexander Markgraff: Awesome. I appreciate that. And then, Alan, maybe just a quick follow-up, more sort of model mechanics question on the money market fund. Understanding there are a lot of factors that determine the ramp of that, but just as we see that sort of mix into the model, just a reminder on how that sort of affects the revenue lines would be helpful.

Alan Imberman: Yeah. So it will be inside of cash management. We are in a fee waiver period right now. I think starting March 1, the fee is a quarter of a percent on the management fee. And then in terms of, as David mentioned, it offers a really good after-tax yield for folks in states with high income tax. And so we will have to see in terms of the growth once we roll it out to general availability. But that is where it will fit, and that is the monetization on the product.

Alexander Markgraff: Awesome. Thank you both. Appreciate it.

Operator: Please press *11 on your telephone to ask a question. And as there are no further questions in queue, I would now like to turn the conference back to David Fortunato for closing remarks. Sir?

David Fortunato: Thank you. I want to thank everyone for joining the call and for your continued interest in Wealthfront Corporation. We look forward to staying in touch and updating you on our progress in the months ahead. Thanks all.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Matthew Moon: Everyone else has left the call.

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