HealthEquity — Second Quarter Ended July 31, 2026 Earnings Summary

Financial Performance

• Revenue increased 8% year-over-year to $350.7 million for the quarter ended July 31, 2026, compared to $325.8 million in the prior year period.
• Net income rose 10% to $65.6 million, or $0.78 per diluted share, compared to $59.9 million, or $0.68 per diluted share, in the prior year.
• Net income margin increased to 19% from 18% year-over-year.
• Adjusted EBITDA increased 11% to $167.0 million, with the margin expanding to 48% from 46% in the prior year.
• Non-GAAP net income increased 15% to $103.8 million, or $1.24 per diluted share, compared to $94.6 million, or $1.08 per diluted share, in the prior year.
• Revenue composition included service revenue of $124.4 million, custodial revenue of $175.9 million, and interchange revenue of $50.4 million.
• Total HSA Assets grew 14% year-over-year to $37.9 billion as of July 31, 2026.

Guidance and Future Outlook

• Management raised fiscal 2027 guidance, expecting full-year revenues between $1.411 billion and $1.421 billion.
• Full-year net income guidance is set between $242 million and $248 million, translating to $2.88 to $2.96 per diluted share.
• Full-year non-GAAP net income guidance is between $392 million and $398 million, or $4.66 to $4.73 per diluted share.
• Full-year Adjusted EBITDA guidance is between $628 million and $636 million.
• The outlook assumes an estimated 84 million diluted weighted-average shares outstanding.

Business Segments and Product Lines

• New HSAs from sales increased 24% year-over-year to 202,000 in the second quarter.
• Total HSA accounts reached a record 10.7 million as of July 31, 2026, an 8% increase year-over-year.
• HSAs with investments grew 20% year-over-year to 0.9 million.
• Total accounts (HSAs and CDBs) reached 17.8 million, including 7.0 million complementary CDBs.
• Client-held funds, used to generate custodial revenue, were $0.9 billion as of July 31, 2026.
• HSA investments comprised $20.6 billion of total HSA assets, while HSA cash comprised $17.4 billion.

Market and Competitive Landscape

• HealthEquity is identified as the largest independent HSA custodian by account volume.
• The company reports record Adjusted EBITDA margin of 48% and record HSA assets of nearly $38 billion.
• Management cites growth driven by deepening member relationships and technology-enabled efficiency improvements.

Risks and Challenges

• Potential risks include the ability to place and safeguard custodial assets, dependence on tax-advantaged HSA benefits, and competition from entities with greater resources.
• Risks also encompass cybersecurity breaches, reliance on third-party vendors, and changes in healthcare regulations or expenditures.
• The company notes that actual results may differ from forward-looking statements due to various known and unknown risks.

Management Commentary and Tone

• Scott Cutler, President and CEO, described the quarter as "record-setting" and expressed confidence in the business model's durability.
• Management stated that momentum from strong execution across the business supports raising fiscal 2027 guidance.
• The tone indicates a focus on scaling efficiently and creating long-term value in the second half of the fiscal year.

Other Key Points

• The company returned $108.1 million to shareholders through stock repurchases in the second quarter, buying 1.2 million shares.
• As of July 31, 2026, $948.4 million remained authorized for repurchase under the stock repurchase program.
• A conference call to discuss results was scheduled for August 27, 2026, at 8:30 a.m. Eastern Time.
• The company utilizes a normalized non-GAAP tax rate of 25% for its non-GAAP financial measures.