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- Stock-based Compensation Surge (new) — SBC expense rose 10x YoY due to IPO-related vesting, driving a 49% drop in net income despite revenue growth.
- Profitability Uncertainty (new) — Company discloses a $42.1M net loss in fiscal 2026 and accumulated deficit of $111.4M, with no guarantee of future profitability.
- Rsu Tax Withholding Obligations (new) — Company used $140.9M to satisfy tax withholding on RSU settlements and may face further cash outlays or sell-to-cover transactions.
revenue $91.9M, net income $17.8M. Wealthfront Q2 revenue up 1% but net income halves on IPO stock-comp surge
Filed September 14, 2026 · Period ending July 31, 2026 · ~1 min read
Key Changes
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high
Net income fell to $17.8M in Q2 and 50% to $30.6M for H1 as stock-based compensation jumped from $1.6M to $16.4M in the quarter.
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high
Investment advisory revenue grew YoY, but cash management revenue fell 10% in Q2, leaving total revenue up only 1%.
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high
Risk factors disclose a $42.1M net loss in fiscal 2026 and $111.4M accumulated deficit, despite recent quarterly profits.
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medium
Liquidity remains strong with $453.3M unrestricted cash and an undrawn $250M revolver.
Summary
Wealthfront's first 10-Q as a public company shows a tale of two businesses: investment advisory revenue surged 31% on a 35% jump in average assets, but cash management revenue fell 10% as interest rates declined. Total revenue inched up just 1% to $91.9 million, while net income plunged 49% to $17.8 million.
The culprit was a tenfold increase in stock-based compensation to $16.4 million, triggered by the IPO satisfying performance conditions on dual-trigger RSUs. Operating expenses overall rose 45%, outpacing revenue growth. For retail investors, the key concern is whether this expense spike is a one-time event or a recurring drag.
The company also disclosed a $42.1 million net loss in fiscal 2026 and an accumulated deficit of $111.4 million, underscoring that profitability is recent and fragile. Watch next quarter whether stock-based compensation normalizes and whether investment advisory growth can offset continued cash management declines. The company's ability to maintain profitability while investing in growth will be critical.
Section-by-Section Diff
Legal Proceedings
Company discloses no material legal proceedings, with standard litigation risk language and a cross-reference to Note 8.
Added in current filing · verify on EDGAR →
We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition.
The company states it is not currently involved in any material legal proceedings. This is a standard disclosure confirming no significant litigation exposure at this time.
Show 2 minor / wording changes
Added in current filing · verify on EDGAR →
Defending legal proceedings is costly and can impose a significant burden on management and employees. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
The company includes standard cautionary language about the potential costs and burdens of litigation. This is typical boilerplate and does not indicate any specific pending matter.
Added in current filing · verify on EDGAR →
For more information, see Item 1 of Part I, “Financial Statements (Unaudited) - Note 8. — Commitments and Contingencies” in this Form 10-Q.
The company directs readers to Note 8 for additional details on commitments and contingencies. This cross-reference is standard and does not itself disclose any new legal matters.
MD&A
Wealthfront's Q2 FY26 MD&A shows revenue up 1% YoY, net income down 49%, and heavy stock-based compensation from post-IPO vesting.
Added in current filing · verify on EDGAR →
Total revenue increased by $0.8 million, or 1%, and $6.7 million, or 4%, for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year, primarily driven by an increase in investment advisory assets.
Revenue grew modestly year-over-year, driven by investment advisory assets, while net income fell sharply due to higher operating expenses and stock-based compensation.
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During the three and six months ended July 31, 2026, share-based compensation reflected the ongoing, service-based vesting of outstanding equity awards including dual-trigger RSUs issued prior to the IPO. Upon completion of the IPO, the performance-based qualifying event was satisfied, and the remaining dual-trigger awards are now subject only to the service-based vesting condition and expensed upon satisfaction of this condition.
Stock-based compensation expense jumped from $1.6 million to $16.4 million in the quarter and from $3.5 million to $33.5 million for the six months, as IPO-related performance conditions were met and awards began vesting.
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In March 2026, our board of directors approved a share repurchase program with authorization to purchase up to $100.0 million of our outstanding common stock.
The company initiated a $100 million buyback program and repurchased 6.4 million shares for $57.6 million during the six months ended July 31, 2026.
Added in current filing · verify on EDGAR →
As of July 31, 2026, our primary sources of liquidity were our unrestricted cash and cash equivalents of $453.3 million.
The company holds $453.3 million in unrestricted cash and has an undrawn $250 million revolving credit facility, providing ample liquidity.
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Cash management revenue decreased by $7.1 million, or 10%, and $8.0 million, or 6%, for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year.
Cash management revenue declined due to lower interest rates and reduced fee rates, partially offset by growth in investment advisory revenue.
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Investment advisory revenue increased by $6.8 million, or 31%, and $13.1 million, or 31%, for the three and six months ended July 31, 2026, respectively, compared to the same periods in the prior year.
Investment advisory revenue grew 31% year-over-year, driven by a 35% increase in average investment advisory assets.
Added in current filing · verify on EDGAR →
Total costs and operating expenses $ 75,087 $ 51,843 $ 23,244 45 % $ 151,023 $ 103,723 $ 47,300 46 %
Total operating expenses rose 45-46% year-over-year, driven by higher product development, general and administrative, and marketing costs, largely from increased headcount and stock-based compensation.
Added in current filing · verify on EDGAR →
Net income $ 17,751 $ 34,741 $ 30,585 $ 60,688
Net income fell 49% in the quarter and 50% for the six months, as expense growth outpaced modest revenue gains.
Risk Factors
First 10-Q risk factors for newly public WLTH: growth, profitability, platform assets, tariffs, competition, and buyback risks.
Added in current filing · verify on EDGAR →
We have experienced historical growth and we expect to continue to invest broadly across our organization to support our growth. Our revenue was $91.9 million and $91.1 million for the three months ended July 31, 2026 and 2025, respectively.
The company discloses recent revenue and headcount growth but cautions that historical growth may not continue and that revenue growth rate is expected to decline as the business matures. This is a standard risk for a newly public company with a limited operating history.
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While we recently achieved profitability, we incurred a net loss in the most recent fiscal year and have a history of net losses, and there can be no guarantee that we will achieve or maintain profitability in the future.
The company discloses a net loss of $42.1 million in fiscal 2026 and an accumulated deficit of $111.4 million as of July 31, 2026, despite recent quarterly profits. This highlights ongoing profitability uncertainty.
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The value and amount of our platform assets is subject to significant fluctuations. Fluctuations in the value and amount of our platform assets may be attributable in part to market conditions outside of our control that have had, and in the future could have, an adverse impact on our business, operating results, and financial condition.
Revenue depends heavily on platform assets, which fluctuate with market conditions. A decline in asset values or client withdrawals would directly reduce advisory fees and cash account fees.
Added in current filing · verify on EDGAR →
The imposition of new tariffs, border taxes, or other barriers to trade may directly or indirectly impact our business, operating results, and financial condition and our stock price. For example, in 2025, the United States announced tariffs on imported goods from most countries.
The company flags U.S. tariffs and potential retaliatory measures as a risk to client demand and platform assets, noting that tariff announcements caused temporary market volatility and a brief decline in platform assets that later recovered.
Added in current filing · verify on EDGAR →
We face intense competition, and we may be unable to compete effectively in our efforts to attract new clients and retain existing clients, which would adversely affect our business, operating results, and financial condition.
The company competes with robo-advisers, traditional brokers, banks, and fintech companies, many with greater resources. It also cites competition from cryptocurrency, sports betting, and high-risk products like zero-day options for client attention.
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In March 2026, our board of directors authorized the share repurchase program, under which we may repurchase up to $100.0 million of shares of our outstanding common stock, and as of July 31, 2026, $42.4 million of the original authorized amount remained.
The company discloses a $100 million buyback authorization with $42.4 million remaining as of July 31, 2026. It cautions that repurchases may not be fully consummated and could reduce cash available for other purposes.
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We have incurred, and expect to further incur, substantial federal and state tax withholding and remittance obligations in connection with the settlement of RSUs. The manner in which we fund these tax liabilities may have an adverse effect on our financial condition.
The company used approximately $140.9 million to satisfy tax withholding on RSU settlements and may face further cash outlays or sell-to-cover transactions that could pressure the stock price.
Added in current filing · verify on EDGAR →
Our Amended Revolver contains restrictive and financial covenants that may limit our operational flexibility. If we fail to meet our obligations under the Amended Revolver, our operations may be interrupted and our business, operating results, and financial condition could be adversely affected.
The company entered into an Amended Revolver in October 2025 and borrowed approximately $200 million in December 2025, later repaid with IPO proceeds. The facility imposes covenants including minimum tangible net worth, liquidity, and fixed charge coverage ratios.
Financial Statements
Primary statements as printed on the EDGAR filing (iXBRL face). Companyfacts is used only when a statement is not on the HTML face. Not generated by the model.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except shares and per share data)
| Description | Three months ended July 31, 2026 | Three months ended July 31, 2025 | Six months ended July 31, 2026 | Six months ended July 31, 2025 |
|---|---|---|---|---|
| Revenue: | ||||
| Cash management | 61,758 | 68,873 | 125,139 | 133,139 |
| Investment advisory | 28,804 | 22,040 | 55,048 | 41,914 |
| Other revenue | 1,312 | 210 | 2,171 | 584 |
| Total revenue | 91,874 | 91,123 | 182,358 | 175,637 |
| Costs and operating expenses: | ||||
| Cost of revenue | 10,764 | 9,587 | 20,728 | 18,255 |
| Product development | 34,009 | 21,227 | 67,724 | 41,459 |
| General and administrative | 15,685 | 8,873 | 32,606 | 18,740 |
| Marketing | 10,715 | 9,093 | 21,935 | 19,281 |
| Operations and support | 3,914 | 3,063 | 8,030 | 5,988 |
| Total costs and operating expenses | 75,087 | 51,843 | 151,023 | 103,723 |
| Interest expense | 255 | 99 | 507 | 166 |
| Other expense (income), net | (3,863) | (690) | (6,997) | (2,234) |
| Income before income taxes | 20,395 | 39,871 | 37,825 | 73,982 |
| Provision for income taxes | 2,644 | 5,130 | 7,240 | 13,294 |
| Net income | 17,751 | 34,741 | 30,585 | 60,688 |
| Earnings per share: | ||||
| Basic | 0.12 | 0.86 | 0.20 | 1.50 |
| Diluted | 0.10 | 0.24 | 0.18 | 0.43 |
| Weighted-average shares outstanding used in computing earnings per share: | ||||
| Basic | 150,094,381 | 40,497,003 | 150,260,391 | 40,386,351 |
| Diluted | 174,051,608 | 141,996,997 | 174,050,331 | 142,121,531 |
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except shares and per share data)
| Description | July 31, 2026 | January 31, 2026 |
|---|---|---|
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | 453,308 | 440,805 |
| Cash segregated and on deposit for regulatory purposes | 12,200 | 10,375 |
| Due from clients | 302,562 | 227,413 |
| Accounts receivable | 30,923 | 33,127 |
| Client-held fractional shares | 816,880 | 514,877 |
| Other current assets | 36,005 | 49,187 |
| Total current assets | 1,651,878 | 1,275,784 |
| Deferred tax assets, net | 113,921 | 119,749 |
| Operating lease right-of-use asset | 7,081 | 8,696 |
| Property, software, and equipment, net | 6,337 | 7,755 |
| Other noncurrent assets | 3,555 | 3,745 |
| Total assets | 1,782,772 | 1,415,729 |
| Liabilities and stockholders’ equity | ||
| Current liabilities: | ||
| Accounts payable | 6,526 | 7,299 |
| Accrued liabilities | 10,479 | 8,649 |
| Short-term financing | 5,116 | 181 |
| Due to clients | 10,998 | 30,209 |
| Payable to clearing broker | 302,658 | 227,439 |
| Current portion of operating lease liabilities | 4,336 | 4,101 |
| Fractional shares repurchase obligation | 816,880 | 514,877 |
| Total current liabilities | 1,156,993 | 792,755 |
| Operating lease liabilities, net of current portion | 4,151 | 6,292 |
| Other noncurrent liabilities | 1,766 | 1,993 |
| Total liabilities | 1,162,910 | 801,040 |
| Commitments and contingencies (Note 8) | ||
| Stockholders’ equity: | ||
| Common stock, $0.0001 par value per share; 214,611,134 shares authorized as of July 31, 2026 and January 31, 2026; 158,756,966 and 151,782,411 shares issued as of July 31, 2026 and January 31, 2026, respectively; 150,748,902 and 150,305,463 shares outstanding as of July 31, 2026 and January 31, 2026, respectively | 12 | 12 |
| Treasury stock, at cost; 8,008,064 and 1,476,948 shares held as of July 31, 2026 and January 31, 2026, respectively | (73,151) | (13,052) |
| Additional paid-in capital | 804,417 | 769,730 |
| Accumulated deficit | (111,416) | (142,001) |
| Total stockholders’ equity | 619,862 | 614,689 |
| Total liabilities and stockholders’ equity | 1,782,772 | 1,415,729 |
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
| Description | Six months ended July 31, 2026 | Six months ended July 31, 2025 |
|---|---|---|
| Operating activities | ||
| Net income | 30,585 | 60,688 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization of property, software, and equipment, net | 2,671 | 3,706 |
| Non-cash lease expense | 1,615 | 1,608 |
| Deferred income taxes | 5,828 | 9,727 |
| Stock-based compensation expense | 33,485 | 3,450 |
| Impairment of internally developed software | — | 709 |
| Change in fair value of warrant liabilities | 157 | 414 |
| Change in fair value of simple agreement for future equity | — | 945 |
| Changes in operating assets and liabilities: | ||
| Due from clients | (75,149) | (39,261) |
| Accounts receivable | 2,204 | (1,818) |
| Other current and noncurrent assets | 18,421 | (11,082) |
| Originations of mortgages held for sale | (55,529) | — |
| Proceeds from sale of mortgages held for sale | 50,479 | — |
| Accounts payable | (773) | (35) |
| Accrued liabilities | 1,831 | 9,033 |
| Due to clients | (19,211) | 1,463 |
| Payable to clearing broker | 75,219 | 39,659 |
| Lease liabilities | (1,906) | (1,801) |
| Other noncurrent liabilities | 64 | — |
| Net cash provided by operating activities | 69,992 | 77,405 |
| Investing activities | ||
| Purchases of property, software, and equipment | (1,253) | (632) |
| Net cash used in investing activities | (1,253) | (632) |
| Financing activities | ||
| Taxes paid related to net share settlement of RSUs | (10,353) | — |
| Net borrowings (payments) on short-term funding facilities | 4,935 | — |
| Proceeds from exercise of stock options, including early exercises | 6,970 | 5,121 |
| Proceeds from exercise of common stock warrants | 960 | — |
| Proceeds from issuance of common stock under ESPP | 3,176 | — |
| Repurchase of common stock | (60,099) | (238) |
| Net cash (used in) provided by financing activities | (54,411) | 4,883 |
| Net (decrease) increase in cash and cash equivalents, cash segregated and on deposit for regulatory purposes, and restricted cash and cash equivalents | 14,328 | 81,656 |
| Cash and cash equivalents, cash segregated and on deposit for regulatory purposes, and restricted cash and cash equivalents at the beginning of the period | 453,790 | 154,553 |
| Cash and cash equivalents, cash segregated and on deposit for regulatory purposes, and restricted cash and cash equivalents at the end of the period | 468,118 | 236,209 |
| Supplemental disclosures of cash flow information | ||
| Cash (refunded) paid for income taxes | 296 | 2,828 |
| Cash paid for interest | 6,102 | 3,659 |
| Non-cash investing activities | ||
| Non-cash recognition of new lease | — | 603 |
| Non-cash financing activities | ||
| Issuance of common stock upon cashless exercise of warrants | 449 | — |
| The following presents cash and cash equivalents, cash segregated and on deposit for regulatory purposes, and restricted cash and cash equivalents | ||
| Cash and cash equivalents | 453,308 | 222,749 |
| Cash segregated and on deposit for regulatory purposes | 12,200 | 10,850 |
| Restricted cash and cash equivalents in other noncurrent assets | 2,610 | 2,610 |
| Total cash and cash equivalents, cash segregated and on deposit for regulatory purposes, and restricted cash and cash equivalents | 468,118 | 236,209 |
Amounts as printed on the EDGAR/iXBRL face — (in thousands, except shares and per share data); (in thousands). Labels, columns, and figures are the filing face, not a GAAP stencil. Interactive statements & notes on EDGAR ↗
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Figures/quotes linked to EDGAR · Narrative written by AI · Sep 14, 2026 · How we verify