Company: WLTH
Filing Date: 2025-09-29
Form Type: S-1
Source: 0001628280-25-043113
Chunk: 144

Company: WEALTHFRONT CORP
Filing Date: 2025-09-29
Form: S-1
Chunk 144
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erm Investment Strategy through Volatile Macroeconomic Conditions

Equity markets and interest rates often move inversely, providing a natural hedge that enables our business to be durable, and grow steadily and profitably across most economic conditions. The potential for macroeconomic shifts emphasizes the importance of not only having a comprehensive suite of uncorrelated financial products, but also the versatility of employing client acquisition strategies to quickly adapt to the environment. For example, in stronger macroeconomic environments with low interest rates, our investment advisory products become more popular. In weaker macroeconomic environments with higher interest rates, our cash management products become more popular. When a client initially funds either a cash management or investment advisory account and subsequently funds the other type of account, we define this as cross product adoption. As of July 31, 2025, our cross product adoption rate was 59% on an asset basis and 27% on a client basis. We also benefit from our clients’ commitment to passive investing, which reduces withdrawals during market downturns, further stabilizing our growth.

Software-Driven, Automated Services Lead to High Margins for Us and More Value for Our Clients

Our focus on automation streamlines service delivery, requiring far fewer employees than traditional approaches. Nearly half of our employees as of July 31, 2025 were software engineers, and we operate without salespeople or financial advisors, which our clients prefer. Consequently, our software-driven service model generates a better user experience and higher operating margins that can be shared with clients and reinvested into product improvement and platform development.

In fiscal 2024 and fiscal 2025, our revenue growth was 153% and 43%, our net income margin was 36% and 63%, and our Adjusted EBITDA margin was 48% and 46%, respectively. For the six months ended July 31, 2024 and 2025, our revenue growth was 56% and 20%, our net income margin was 91% and 35%, and our Adjusted EBITDA margin was 49% and 47%, respectively. Net income for fiscal 2025 included a total tax benefit for the year of $55.2 million due to the one-time deferred tax benefit of $80.2 million, resulting primarily from the release of the full valuation allowance on our historical net deferred tax assets. This combination of growth and profitability demonstrates our ability to grow efficiently with high margins in any economic environment.

#### Our Revenue Model
We generate revenue primarily from our cash management and