Wealthfront Corporation Q1 FY2027 earnings call

• **Overall Platform Growth and Client Metrics** - Total platform assets grew 19% year over year to a record $96.6 billion as of quarter-end, and increased further to a new record of $99 billion at May end. - Funded clients totaled 1.46 million, up 15% year over year, and funded accounts totaled 1.9 million, also up 15% year over year. - Total net deposits in 1Q27 were $554 million; May 2026 net deposits hit $447 million, with $342 million in investment advisory net deposits and $140 million in cash management net deposits.

• **Product Development and New Initiatives** - Launched a cross-product adoption incentive in early March 2026 that gives clients with at least $1,000 in monthly direct deposit and a funded investment account a 25 basis point increase to cash APY. The incentive drove over 4,000 new account openings, pushed asset-weighted cross-product adoption to 63% (up 1.5 percentage points) by end of May, and new incentive adopters have brought larger average net deposits than comparable non-adopting clients. - Added new features to core products: cash category goals and automated recurring transfers for cash management, one-tap trading for individual stock and ETF brokerage accounts. - Expanded Wealthfront Home Lending, adding a second takeout investor and launching general availability in Colorado (April 2026) and Texas (May 2026). Rate lock volume grew 25% month over month in May 2026 despite rising overall mortgage rates, and the business currently offers average rates at least 50 basis points below the national average, with more than half of users interacting with the application via mobile. The rollout is proceeding at a deliberate pace to optimize product design and client experience, with current focus on automating the pre-qualification and approval process. - Completed a transition to a new bank provider for client cash accounts, enabling the rollout of client-specific withdrawal limits up to $1 million per account to support large one-time withdrawals like annual tax payments. The transition also allows Wealthfront to fund early direct deposit payments for clients before receiving issuer reimbursement.

• **AI Strategy** - Management views AI as a tool to advance its long-term goal of delivering automated holistic financial advice comparable to or better than traditional human advisors. The company is currently in the experimental and testing phase, prioritizing solutions that build client trust first, and plans to roll out incremental AI-powered features over time, with long-term aspirations for natural language interface-driven holistic financial planning covering tax, estate, and other planning needs.

• **Capital Allocation** - Executed $27 million in share repurchases (3.1 million shares at an average price of $8.66 per share) in the quarter under the authorized $100 million repurchase program. Ended the quarter with $428 million in cash and cash equivalents, with a debt-free balance sheet. - Long-term capital priorities are: 1) invest in organic product-led growth and platform automation, 2) opportunistic share repurchases, 3) evaluate M&A with a preference for building in-house vs. acquiring, 4) retain surplus reserves for business resilience.

Wealthfront reports two core operating product segments, plus an early-stage home lending segment: 1. **Cash Management**: Revenue for the quarter was $63.4 million, down 1% year over year, accounting for 70% of total company revenue. The annualized cash management fee rate was 58 basis points, within the previously guided 57-58 basis point range, and average cash management balances increased 5% year over year to $45.1 billion. As of quarter-end, total cash management platform assets were $44.9 billion, up 3% year over year. The run-rate annualized fee rate at May end was 54 basis points (56 basis points on an effective Fed funds rate neutral basis). 2. **Investment Advisory**: Revenue for the quarter was $26.2 million, up 32% year over year, accounting for 29% of total company revenue. Average investment advisory balances increased 34% year over year to $50.2 billion, while the annualized advisory fee rate held steady at 21 basis points year over year. As of quarter-end, total investment advisory platform assets were $51.7 billion, up 39% year over year. 3. **Wealthfront Home Lending**: This segment is in early-stage rollout, with no material revenue contribution reported in the quarter. Startup expenses for the segment contributed to a modest reduction in overall company gross margin, with ongoing investment expected to continue pressuring near-term margins as the business scales.

- Management maintained previous margin guidance, reaffirming that adjusted EBITDA margins will hold near 40% in the near term as the company invests in the cross-product adoption incentive and the Wealthfront Home Lending rollout, down from the 45-47% margin range seen prior to ramping up home lending investment. Over the long term, once home lending reaches steady state, margins are expected to remain modestly lower than pre-investment levels, a tradeoff management is willing to accept for faster long-term growth and a larger total addressable market. - The cross-product incentive's 25 basis point APY boost is currently permanent for eligible clients, and management has no near-term plans to modify or end the incentive given its strong early performance. - Management expects adjusted free cash flow conversion will be lower in fiscal second quarter 2027 than in 1Q27 due to the annual timing of employee bonus payouts, where 35% of accrued annual bonuses are paid each July.

- Mortgage business scaling and timing are heavily dependent on macroeconomic mortgage rate conditions. Higher-than-expected rates may slow volume growth, even with a broader geographic rollout, and the scaling timeline is currently uncertain relative to initial expectations that embedded projected rate cuts. - Future diluted GAAP weighted average share count can fluctuate meaningfully period over period due to changes in average share price, new stock grants, and forfeitures of outstanding equity awards. - The company operates in a dynamic macroeconomic environment, and shifts in investor sentiment or changes to market deposit pricing competition could impact future net deposit flows and asset retention.

Q: Devin Ryan (Citizens Bank) asks for an update on the cross-product incentive's performance, marketing traction, and the size of additional deposits brought by adopting clients, plus more detail on Wealthfront's AI product strategy for the coming quarters. / A: The incentive is a strong top-of-funnel driver of new client acquisition, and adopting clients bring an average of several thousand dollars more in net deposits than similar non-adopting clients, with monthly cohorts of new cash clients adopting investment accounts at improving rates. Organic traffic is also up due to mentions of Wealthfront from large language models. For AI, Wealthfront's top priority is building and maintaining client trust, so it will roll out incremental features that align with this goal rather than launching untested tools. Long-term, AI will enable natural language-powered holistic financial planning covering tax, estate, and trust planning, and the company will advance toward this goal incrementally.

Q: Ryan Tomasello (KBW) asks how the Wealthfront Home Lending rollout is tracking relative to initial expectations, if there have been unexpected operational bottlenecks, and what key learnings have emerged so far. / A: The rollout is proceeding at a deliberate, measured pace per the original plan, but higher prevailing mortgage rates have shifted strategy slightly: there is less refinance volume, so the company expanded geographic reach earlier than planned to maintain enough volume for product testing and learning. Rate lock volume grew 25% month over month in May 2026, which management sees as a positive early result. A key operational learning is that automated RSU income verification is a higher priority for Wealthfront's client base than the average mortgage borrower, so the company is prioritizing development of this feature. The overall scaling timeline is now uncertain relative to initial expectations that included projected rate cuts, but management is pleased with progress to date.

Q: James Yarrow (Goldman Sachs) asks how deposit pricing competition has evolved this year, and how cash outflow trends will evolve now that 2026 rate cuts are no longer priced into markets. / A: Deposit pricing competition has softened in recent months, with more fintech and high-yield savings providers pulling back on rates. Wealthfront's transparent pricing (only changing rates when the Fed adjusts policy) is a competitive advantage relative to competitors that make frequent ad-hoc rate changes, supporting client retention. With rates now holding at elevated levels and no expected near-term cuts, management expects favorable cash balance trends, noting that cash management net deposits were positive in May 2026. The cross-product incentive is encouraging intentional conversion of cash balances to investment accounts, which aligns with the company's long-term growth goals.

Q: Alex Markgrass (KeyBank) asks about Wealthfront's positioning to capture clients from upcoming private company liquidity events, and if the cross-product direct deposit incentive has an off-ramp or planned end date. / A: Wealthfront's strategy is to acquire clients early in their financial journey and grow with them over time, so the company already has many existing clients employed at firms expected to have upcoming liquidity events, and is well positioned to grow alongside them as they gain wealth. The tech-first, automated offering is particularly aligned with the preferences of these employees relative to traditional wealth managers. Management is pleased with the incentive's performance to date, has no plans to change or end the incentive in the near term, and retains the ability to adjust it later if needed.