Wealthfront (WLTH) Q1 2027 earnings summary

Executive summary

• Achieved record total platform assets of $96.6B, up 19% year-over-year, with investment advisory assets up 39% and cash management assets up 3%.

• Funded clients grew 15% year-over-year to 1.46M, with 1.90M funded accounts.

• Launched cross-product adoption incentives, expanded home lending to new states, and introduced new features in cash management and investment accounts.

• Continued investment in automation, AI, and product innovation, including enhancements in cash management, investment accounts, and home lending.

• Net income was $12.8M, down from $25.9M in the prior year quarter, reflecting higher operating expenses, especially in product development and general and administrative costs.

Financial highlights

• Revenue reached $90.5M, up 7% year-over-year, with gross profit of $80.5M and a gross margin of 89%.

• Investment advisory revenue rose 32% year-over-year to $26.2M, driven by higher balances.

• Cash management revenue was $63.4M, down 1% year-over-year due to lower fee rates, partially offset by higher balances.

• Adjusted EBITDA was $37.5M, down 1% year-over-year, with a margin of 41%.

• Adjusted free cash flow was $42.7M, with a conversion ratio of 114%.

Outlook and guidance

• Margins expected to remain near 40% in the near term as investments in home lending and incentives continue; longer-term margins to be lower than pre-home lending levels.

• Expect lower adjusted free cash flow conversion ratio in fiscal Q2 due to annual cash bonus payouts.

• Management expects continued investment in platform enhancements, new product development, and marketing, with operating expenses anticipated to rise in absolute terms but decline as a percentage of revenue over the long term.

• Business model designed for resilience across market cycles, with continued focus on organic product-led growth.

• Liquidity is strong, with $428M in unrestricted cash and a significant undrawn revolving credit facility.