Wealthfront (WLTH) investor relations material

Executive summary

• Total platform assets reached $99.0 billion at quarter-end, up 12% year-over-year, surpassing $100 billion in August, with 1.51 million funded clients, a 14% increase.

• Investment Advisory assets grew 30% year-over-year to $54.1 billion, while Cash Management assets declined 4% to $44.9 billion.

• Funded accounts rose 15% year-over-year to 1.97 million.

• Product-led growth enabled continued investment in new offerings, including Home Lending and Custodial Accounts.

• Continued focus on cross-product adoption and incentives, especially for recent client cohorts.

Financial highlights

• Quarterly revenue was $91.9 million, up 1% year-over-year, with gross profit of $81.1 million and a gross margin of 88%.

• Investment Advisory revenue rose 31% year-over-year to $28.8 million, while Cash Management revenue declined 10% to $61.8 million.

• Adjusted EBITDA was $38.1 million, down 15% year-over-year, with a margin of 41%.

• GAAP diluted net income was $17.6 million, with diluted EPS of $0.10, both down year-over-year due to higher stock-based compensation and product development expenses.

• Net cash provided by operating activities was $47.3 million; adjusted free cash flow was $28.3 million, with a 74% conversion ratio.

Outlook and guidance

• Management expects continued growth in Investment Advisory assets as clients shift from cash management in a lower interest rate environment.

• Long-term adjusted EBITDA margin target remains above 40%, with near-term headwinds from Home Lending investments and higher expenses.

• Continued measured rollout of Home Lending to additional states and ongoing investment in automation and AI.

• The company believes available cash and cash from operations will be adequate to meet liquidity needs for at least the next 12 months.