Wealthfront (NASDAQ:WLTH) executives used the company’s fourth quarter and fiscal year 2026 earnings call to highlight record assets, revenue, and adjusted EBITDA, while outlining how product updates and new incentives are intended to deepen client relationships and encourage cross-product adoption.
Platform growth and client activity
CEO David Fortunato said fiscal 2026 was “another successful year” for the firm’s long-term objective of becoming “the leading tech-driven platform for digital natives to turn their savings into wealth.” He pointed to a “flywheel” in which technology and automation support high margins, allowing the company to share savings with clients and, in turn, build trust and retention.
- $48.7 billion in investment advisory assets, up 29% year-over-year
- $45.4 billion in cash management assets, up 7% year-over-year
Funded clients ended the year at roughly 1.42 million (up 17%), and funded accounts totaled roughly 1.84 million (up 16%). Total net deposits for the fiscal year were $6.7 billion, including $0.4 billion of net outflows in the fourth quarter.
Fortunato described the fourth quarter as a “cash-to-invest transition environment,” resulting in the company’s “second-best quarter” of total investment advisory cross-product flows and a second consecutive record quarter of net cross-account transfers from cash to invest. He said annualized organic investment advisory growth was 11% in the quarter, with monthly annualized organic growth accelerating through the quarter and ending at 15% in January.
Cash management normalization, APY changes, and incentives
Management spent significant time discussing the recent cadence of cash management flows around rate changes. Fortunato said cash management net flows began to normalize in mid-January, roughly four weeks after Wealthfront reduced the client rate on Dec. 19 and before it increased the client APY by five basis points on Jan. 30.
February metrics shared on the call showed cash management net outflows improved to $145 million in February from $840 million in January. Fortunato added that since Feb. 16, cumulative cash management net deposits have been positive, though he and CFO Alan Imberman both warned that withdrawals tied to tax seasonality are expected to begin later in March and run up to the April 15 federal deadline.
In addition to lifting the base APY by five basis points to 3.3% on Jan. 30, Fortunato announced an incentive launched in early March: clients who direct deposit at least $1,000 per month and also have a funded investment account receive an ongoing 25 basis point boost to their cash APY. He said the company expects the incentive to deepen relationships, drive cross-product adoption, and encourage new clients to diversify into both cash and investment accounts more quickly.
Product updates: money market fund, investing features, and home lending
Fortunato said Wealthfront is accelerating “product velocity” and highlighted several fourth-quarter initiatives across cash management, investing, and home lending.
For cash management, the company introduced automated dividend sweeps from investment advisory accounts to cash management accounts and increased daily withdrawal limits up to $1 million for qualified clients. In December, Wealthfront began a measured rollout of its proprietary Wealthfront Treasury Money Market Fund (WLTXX), positioned as an after-tax yield alternative, particularly for clients in high-tax states given the state tax exemption on U.S. Treasury interest income. As of the end of February—prior to general availability—the fund had just over $85 million in AUM. Imberman later noted the fund is included within cash management revenue, is currently in a fee waiver period, and that starting March 1 the management fee is 0.25%.
On the investing side, Fortunato said Wealthfront expanded fractional shares into Automated Investing Accounts and Automated Bond Portfolios to reduce cash drag and tracking error relative to target portfolios. The company also introduced dividend reinvestment plans and expanded the list of stocks and ETFs available in its Stock Investing Account, with Fortunato noting strong uptake among younger clients.
Wealthfront also provided updates on its Home Lending initiative. Fortunato said early access launched in Colorado in November and has since expanded to Texas and California with a full rollout in those states, with early access in additional states expected later this year. He reiterated the company’s aim to provide mortgage rates at least 50 basis points better than the national average and said it has delivered on that objective on average in the states where it operates so far. In Q&A, management emphasized a measured rollout, focused on improving both the digital client experience and operational efficiency.
Fortunato also cited an indicator of home-related cash movement during the quarter, referencing a statistic of more than $400 million of wires to escrow and title companies in the fourth quarter that went off the platform, which he said represented a significant chunk of the outflows seen.
Financial results: records for revenue and adjusted EBITDA
Imberman reported record revenue for fiscal 2026 of $365 million, up 18% year-over-year, and record adjusted EBITDA of $170.7 million, up 20%, for an adjusted EBITDA margin of 47%.
For the fourth quarter, revenue was a quarterly record of $96.1 million, up 16% year-over-year. Cash management revenue was $69.7 million, up 12%, driven by higher average cash balances and a higher annualized fee rate. The average cash management balance was $46.2 billion (up 10%), and the annualized cash management fee rate was 60 basis points (up 1 basis point). Imberman explained that the company’s practice of waiting until the Friday of the following week to reduce client APY after a Fed rate cut can create temporary fee compression, since bank rates reprice immediately while client rates remain unchanged for a one-week grace period.
Investment advisory revenue was $25.8 million, up 31% year-over-year, and surpassed $100 million in annualized revenue for the first time, reflecting a 30% year-over-year increase in average investment advisory balances to $47.3 billion. The annualized investment advisory fee rate was roughly flat at 22 basis points.
Gross profit was a quarterly record $86.6 million, up 17%, for a gross margin of 90%. Imberman said total GAAP expenses were $310.7 million, including $248.3 million of stock-based compensation, primarily tied to $239 million of double-trigger equity award expense recognized in connection with the company’s IPO, plus $5.3 million in employer taxes related to those awards. GAAP diluted net income was -$134.8 million and GAAP diluted EPS was -$1.31, which Imberman said included the one-time double-trigger equity impact.
Adjusted operating expenses were $57.1 million, up 15%, primarily due to higher product development and general administrative expense, partially offset by lower marketing expense. Adjusted EBITDA was $44.2 million, up 22%, for a margin of 46%. Looking ahead, Imberman said the company expects adjusted EBITDA margins to decline sequentially as it invests in incentives and scales home lending, but to remain above 40% for the first quarter of fiscal 2027.
Cash flow, balance sheet, and share repurchase authorization
Wealthfront reported fourth-quarter net cash provided by operating activities of $33.3 million and free cash flow of $33 million, with free cash flow conversion of 75% of adjusted EBITDA. For the full year, net cash from operations was $152.2 million and free cash flow was $151.1 million, representing an 88% conversion ratio. Imberman noted that free cash flow figures were not adjusted for IPO-related expenses.
The company ended the period with $440.8 million in cash and cash equivalents and said it raised over $130 million in net cash proceeds in its December IPO. Diluted shares outstanding were roughly 186.5 million at quarter-end.
In March, Wealthfront received board authorization for $100 million in share repurchases. Imberman said the company views repurchases as attractive at current levels given free cash flow generation, a debt-free capital structure, and what he described as a multi-decade opportunity. He added that capital priorities include investing in organic growth, evaluating repurchases, and assessing M&A, with a preference to build versus buy.
In its February update, Wealthfront reported month-end total platform assets of $95.2 billion, including $50.0 billion in investment advisory assets and $45.2 billion in cash management assets. Total net deposits were $271 million in February, with investment advisory net deposits of $416 million (11% annualized organic growth). The company also said asset-weighted cross-product adoption rose to roughly 61.5% at the end of February, up over one percentage point since the end of December.
About Wealthfront (NASDAQ:WLTH)
Wealthfront (NASDAQ:WLTH) is a technology-driven wealth management firm that provides automated investment services to individual investors. Operating as a robo-advisor, the company uses algorithms and software to construct and manage diversified portfolios largely composed of low-cost exchange-traded funds (ETFs). Its platform is geared toward long-term, goal-based investing with an emphasis on passive strategies, automated rebalancing and straightforward user experience delivered through web and mobile applications.
The company’s product suite includes automated portfolio management, tax-loss harvesting and goal-planning tools that help clients set and track financial objectives.
