Good day, ladies and gentlemen, and welcome to Wealthfronts' Fiscal Third Quarter Earnings Conference Call. [Operator Instructions]. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Matthew Moon, Vice President, Investor Relations. You may begin.

Good afternoon, everyone, and thank you for joining us today to discuss Wealthfronts' Third Quarter 2026 financial results, which reflect the quarter ended October 31, 2025. On the line with me are David Fortunato, our Chief Executive Officer and President, and Alan Imberman, our Chief Financial Officer and Treasurer. After prepared remarks, we will open the line for Q&A. During the course of today's call, we may make forward-looking statements as defined under applicable securities laws. Forward-looking statements are subject to risks and uncertainties, and the company can give no assurance that they will proved to be correct. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Wealthfront files with the Securities and Exchange Commission, including the final prospectus filed in connection with our IPO. Our discussion today will include certain non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute or in isolation from GAAP measures. Reconciliations of non-GAAP measures, financial measures to comparable GAAP measures can be found in our press release accompanying this call, which is posted to our Investor Relations website at ir.wealthfront.com. With that, I will now turn over the call to David.

Thanks, Matt. Last month, we took the company public in what was a significant milestone in the 17 years since we were founded in 2008. Though we are now a public company, what drives us forward every day remains the same, serving our clients who have entrusted us with their wealth. Throughout the IPO process, we had the opportunity to take a number of stakeholders through our long-term strategy and vision in detail. Since many of you on the call today are new to that story, we wanted to begin with a refresh of Wealthfront and the long-term vision and strategy that we are pursuing. Wealthfront began with the insight that advancements in technology could make intelligent investing, effortless. We strive to deliver on this insight by prioritizing technology in everything that we do. We've built fully automated services that enable a better client experience, drive faster product and feature velocity and have generated high gross margins at or around 90% in recent years. This allows us to pass along savings to our clients, delivering better financial outcomes, which in combination with a digital-first user experience, establishes, maintains and grows trust. This trust leads to strong retention, deeper client relationships and low-cost client growth via word of mouth. This combination has driven adjusted EBITDA margins to over 40% for the last 10 quarters, which has allowed us to reinvest in the business to continue this flywheel. The average age of our clients is 38 years old and over 3/4 of our funded clients are born after 1980, a group that we define as digital natives. As of the end of calendar 2024, U.S. digital natives represented $16 trillion in U.S. household net worth or roughly 10% of the total U.S. household net worth. Contrary to popular belief, digital natives have…

Thanks, David. Starting with the income statement. Revenue came in at a quarterly record of $93.2 million, up 16% year-over-year. Cash Management revenue was $68.8 million, up 14% year-over-year, primarily due to higher average Cash Management balances measured as the simple average of beginning and end of quarter figures. The average Cash Management balance in the third quarter was $46.8 billion, up 18% year-over-year and the annualized Cash Management fee rate was 58 basis points, down 2 basis points or 3% year-over-year. On the fee rate, when the Fed reduces the Fed funds target rate, we typically wait until the Friday of the following week to reduce the APY we offer our clients. This creates temporary fee compression because the interest rate we receive from banks, reprices lower immediately, while the interest rate we pay to clients remains constant for a 1-week grace period. Additionally, in a declining rate environment, the fee rate is negatively impacted by the inherent mathematical impact of converting annual percentage rates, or APR to annual percentage yields or APY. The inverse of this is true in an increasing rate environment. Investment Advisory revenue was $24.2 million, up 26% year-over-year, primarily due to average Investment Advisory balances of $43.7 billion, up 28% year-over-year, while the annualized Investment Advisory fee rate of 22 basis points was flat versus the same period last year. Asset growth was driven by both strong markets and net deposits over the trailing 12-month timeframe, including our best quarter of net cross account transfers from cash to invest in the company's history. Gross profit came in at a quarterly record of $83 million, up 15% year-over-year, reflecting a gross profit margin of 89%. Total GAAP expenses of $61.8 million were up 22% year-over-year, while adjusted operating expenses, that is expenses excluding share-based compensation,…

[Operator Instructions] First question comes from the line of Devin Ryan with Citizens Bank.

Good to talk David, congrats on the first earnings call here. I guess we want to start on the mortgage offering. And just love to get a sense of any of the early learnings as you guys are just starting to roll this out, kind of what you're hearing from customers? Is it as you expected kind of prior to rolling it out? And then if you can just remind everybody here kind of where you feel like on the product differentiation itself, like what the experience benefits are of Wealthfront versus whatever else is in the market right now?

Yes. So thanks, Devin. The fundamental offering really is a great digital experience and a great rate that will be better than they'd find elsewhere. We've made good progress. We originated our first home mortgage in the third quarter and started letting clients off the wait list in November. We initially started in Colorado. We've expanded and are letting clients off the wait list now in Texas and California. It's still early days, and there's still a lot left to learn. We've continued to work to expand our license coverage and now support a majority of our clients. We still have a long way to go. The opportunity size is relatively large. We've sent just from Wealthfront Cash Management accounts, $2.5 billion in wires to title and escrow companies in calendar year '25. You can make some assumptions on the typical down payment to get to an opportunity size, which we believe is both large, and we have the ability to take advantage of. As we exit the holiday period, we're still in a relatively low seasonal period for Home Lending, but early results are promising, and we're continuing to stay focused on building for the long term. This is not a journey that's going to take us a few months to be at sort of our peak. We think it's going to be the course of multiple years, give us the opportunity to build an amazing experience for our clients and for prospective clients in the future.

That's great. And then as a follow-up, just on the monthly you're providing, obviously, would be very helpful to have this. So I appreciate that. In terms of the December month, can you share anything around just the customer trends? I know the market is a bit more volatile, but a bit of outflow. So any sense of kind of the dynamics there? And then just kind of momentum in deposit gathering here kind of early in the new year and expectations there would be helpful.

Yes. Thanks. So we saw three consecutive Fed rate cuts continue to grow total assets on back-to-back month ends for November and December month-ends. When interest rates decline, we expect to see a slowdown in Cash Management Assets and an increase in Investment Advisory Asset growth. Ultimately, our focus is on continuing to grow Total Platform Assets. The internal focus over the last few months and generally during any transition period is on incentivizing cross-product adoption of investment accounts and retaining client assets on the platform as clients with both accounts are the ones that are most likely to bring more assets to the platform over time. The build-out that we've done over the last few years of investment offerings, we think, has put us in a great position to be able to help folks adopt investment products in their journey. And I think we've executed cross-product adoption quite well during the recent Fed cutting cycle. Alan mentioned that asset-weighted cross-product adoption is up above 60% at December-end. It's up 2% year-over-year from December 2024, but the total assets that are covered by clients with both Cash and Investment Management accounts has grown by more than $10 billion in that period because we have grown assets while growing asset-weighted cross-product adoption as well. So we feel pretty good about the results that we've gotten from driving cross-product adoption. We think that sets us up well for growth going forward in the future. And it gives us a good opportunity to continue to expand with Home Lending as we build broader and deeper relationships with these clients.

Our next question comes from the line of Ryan Tomasello with KBW.

I wanted to drill down into the customer acquisition strategy in mortgage, specifically, how you think Wealthfront is positioned to meet customers before they engage with agents? Who, as I'm sure you know, like tend to control a lot of that referral process on the mortgage side. And if you could also just remind us the structure of the mortgage business, including the partnership with United Wholesale and just the ownership structure? That would be helpful.

Yes. Thanks, Ryan. The first thing I would say is folks join Wealthfront really to save and invest, and they often have goals in mind. Our financial planning interface gives clients the ability to plan for retirement, plan for sending kids to college. It also helps them plan for buying a home. And that's one of the goals that clients engage with most frequently. So we have reasonable visibility into what clients are looking to do with their savings on the platform, and that gives us pretty early visibility that they might be focused on buying a home and engagement with that goal, changing the number of bedrooms they're looking for or in what markets they're looking to buy a home is a great early indicator that they are more actively engaging in the home buying process. That gives us the opportunity to really present the ease of the experience that we offer, if we can support those clients in their home states, get them prequalification letters, which generally clients will pull even before they significantly engage with a realtor. So they start to understand what they can afford and the realtor will often ask for that prequalification letter early in the process. We think that gives us a great opportunity to be able to engage with clients very early in their home buying process, even kind of before the home buying process would normally be considered to have started. And as we're able to build that, we also have the ability to add incentives for the home lending process. We have nothing that we've rolled out yet, but it is something that we're actively looking at to provide incentives to help clients save for a down payment on the platform and then actively engage with our home buying experiences as well. Ultimately, we think if we deliver a great experience to clients, that will lead to word-of-mouth growth for the home lending product like it does for our Cash Management and our Investing product as well. And then on the ownership structure, we are working to revisit the -- or revise the ownership structure to have Home Lending -- the Home Lending subsidiary fall under the Wealthfront Corporation umbrella. The ownership structure that we have was formed intentionally to limit exposure of personal financial information of the LPs and GPs of the equity owners of Wealthfront as a private company. That disclosure was required by various state laws. The primary issuance via the IPO helped ameliorate these ownership thresholds. And once fully remediated, we do plan to restructure ownership of the Home Lending subsidiary. All that said and discussed in the S-1, it's important to note that the relevant management and financing agreements that Wealthfront Corporation has today gives Wealthfront Corporation the ability to direct the activities of Wealthfront Home Lending and absorb and fund all benefits and losses of Wealthfront Home Lending.

Great. Appreciate all that detail. And then in terms of the product development pipeline, as you think about ways to bolster asset retention, curious if the company would consider offering a more traditional self-directed investing product, basically to add another funnel on the Investment Advisory side of the business to recapture potential outflows on the cash side in a less favorable rate environment.

Yes. So our Stock Investing product is the closest product that we have today to a kind of standard self-directed account. It's been the second most popular product for account openings over the last few months behind our automated investment account in terms of number of clients getting started there. It is an area of very active focus for us to continue to improve that product experience and give clients who do want to engage with the Stock Investing product, a great experience at being able to self-direct their investment choices. We also see it as an aggregation opportunity to help consolidate existing client assets on the platform so that they can see everything and manage everything in one place. So if you think about sort of our focus areas for investment, we're obviously continuing to do a lot of work on our automated investment account and see opportunities to drive additional value with the product offering there. And I would say our other focus on investing is really in the self-directed Stock Investing account.

Our next question comes from the line of Dan Perlin with RBC Capital Markets.

And again, let me offer my congratulations on your inaugural quarter here post the IPO. The question I have to start with is you've had historically just a very high referral rate, very organic in nature to drive a lot of new clients and obviously asset gathering. But now that you've done the IPO, you've got a brand out there clearly that's going to be more obvious to people. I'm wondering what that go-to-market motion might look like? Would you be willing to kind of step up investments there? Especially at a time when investors are potentially coming out of the cash accounts and moving into the advisory space?

Yes. I mean the first thing that I would say is the business does follow some seasonal patterns and trends. So as we enter Q1, Q1 is historically -- or calendar Q1 is a solid time for sign-ups, sort of around the same period that people are focused on going to the gym, they're also focused in making improvements to their finances. Over 50% of our new clients in the last 2 years have been through referrals, and we continue to see referrals be a primary way to bring folks onto the platform. We did make some incentive changes recently, which give us a little bit of flexibility in the way that we do some of our paid marketing. So we added a benefit for new clients joining the platform that are not referred, and then we increased the benefit to the referral product from 50 basis points to 75 basis points, which continues to reserve the best incentive that we offer to existing clients that are referring their friends, family and coworkers, but at the same time, provides an incentive to folks that are either visiting the website organically or the app organically or are engaging through our paid channels. So I think you can sort of see from that, we are both trying to drive incentives, which optimize our ability to convert clients coming in through organic and paid channels, while still trying to make sure that the referral channel is the most valuable channel to come in both for clients and it obviously is the most valuable channel for us because folks tend to come in with higher asset levels and adopt more products more quickly if they come in through the referral channel.

Yes. Super efficient, and you guys have been very successful in doing that. The other quick question I have, maybe for Alan is just as we think about the gross margin implications to the extent there is any as you move kind of from the Cash Management account into Advisory, anything to kind of flag for investors as we move forward in that potential rate cycle?

Thanks, Dan. On a margin basis, actually, the Investment account is just as profitable, if not more incrementally profitable than Cash Management, and that's primarily due to the fact that the Cash Management account has really the only true variable cost associated with it. Obviously, on an absolute dollars basis, the Cash Management account because of the higher fee rate will generate a higher gross profit margin dollars. But on a pure relative margin basis, investment accounts are just as profitable. And so the gross profit margin shouldn't be as impacted.

[Operator Instructions] Our next question is from Alex Markgraff with KBCM.

Congrats on the transaction. David, maybe one, just to better understand some of the asset retention story. Could you just give us a sense of the client experience from a life cycle marketing standpoint? You mentioned some incentives just as to sort of what the client sees and feels as they're making those decisions on asset allocation at this point in time?

Yes. I mean one of the things that I think that we think is important in understanding both our clients and clients of other platforms is the jobs to be done framework. And so the jobs that our clients hire us to do is to turn their savings into wealth and build wealth over the long term. We think that puts us in a position where the life cycle marketing, sort of the ongoing messages that we provide to clients, both in-app and over e-mail and through our content marketing is focused on growing clients' wealth overtime. And so when there are Fed rate cuts, we want to orient clients to other opportunities that exist in product. And the diversity of products that we have gives us the ability to offer products like the automated bond ladder account for folks that might not be ready to sort of put more of their money into equity markets. The automated bond portfolio, which is a little bit higher yielding and a little bit higher risk than the bond ladder product, up to our automated investment account, which we think is the best way to build wealth over the long term, along with some more self-directed style offerings, which we would include the Direct Indexing products and the Stock Investing Account. The incentives that we've used has been some experimentation around accelerating that adoption. We've had good early results in December with incentives to drive additional cross-product adoption. I think we've seen both asset flows and account opening accelerate as a result of that. I think we're quite happy with the incentives. We think it puts us in a much better position. And ultimately, we've achieved record assets as of the beginning of this weekend. So I think we crossed $94 billion at the beginning of the weekend because of the cross-product adoption that we've been able to drive and the continued engagement with the platform more broadly.

Understood. I appreciate the color there. Maybe just one on -- I know there was an earlier question on client growth, but maybe just to come back to that. I think as you all have shared in filings and in the deck here, obviously, a very large opportunity ahead of the company. Maybe just curious, stepping back, how you think about -- or Alan, any comments on how you think about deploying acquisition dollars in the near term? Understanding there's some seasonality in the very near term, but maybe stepping back a little further, just talk about how you think about client growth and the opportunity at hand given it is so large?

Yes. What I would say is we're still in a transition environment mostly focused on cross-product adoption. So from cash to invest, we've grown clients quite strong over the past few years in the high rate cycle intentionally. And now during a transition environment, the most important thing is incentivizing and executing on cash to invest. And even outside of that, as David mentioned before, our most important client acquisition strategy and obviously most efficient and effective is the referral channel. Some of that comes with incentives, and so we can use capital to put to work there as well. But that's where you're going to see kind of our focus. We've been that way really since inception is on the referral. So we'll continue to look out for opportunities around paid and do some of our normal paid spend. But during this environment, it's cash to invest and still we're always looking at the referral channel.

We have a question coming from the line of Rob Ryan with Wells Fargo.

Other than the automated investing program, all of your products on the investment side are fairly new, either brand new or maybe less than 3 years old. So what has been the product uptake for the new investment products? Has this changed over time? And where did these new products stand in terms of contribution to total October 31 investing platform assets? And because of the differences in the fee rates, in a way, wouldn't it kind of be good if we saw a bit of a downtick in your average management fee rate?

Yes. Thanks for the question, Rob. I would start by saying our goal is to grow total platform assets. And so if clients want to engage with some of the direct indexing products, that's great. If they want to engage with the automated investing account, that's great. We think that we can offer all of these products profitably over the long term. That said, most new clients and most new assets on the investment side of the business join us for the automated investing account. The other products help us in different macro environments and different transition environments, and they help drive cross-product adoption of cash first clients to investment accounts over time. Each of the categories, so the Automated Bond Ladder, the Automated Bond Portfolio, the Direct Indexing Accounts and the Stock Investing Accounts are over $1 billion in assets, each. So we have seen good relative growth of all of those products. But the fastest absolute growth that we've seen continues to be in our automated investment account, which provides a globally diversified tax-efficient investment option that takes care of all of the difficult choices that a client might have to make in their asset allocation without them having to think about it.

And I'm not showing any further questions. I would now like to turn the call back to David Fortunato for any further remarks.

I want to thank everyone for joining the call and for your continued interest in Wealthfront. We look forward to staying in touch and updating you on our progress in the months ahead. Thank you all.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may now disconnect. Everyone, have a great day.