Wealthfront (WLTH) Stock Falls 6% After Q4 Earnings Show Cash Outflow Reversal
TLDR
- Wealthfront stock dropped as much as 13% Thursday before closing down 6.2%
- Q4 net loss of $135 million driven by one-time IPO-related stock compensation charges of $239 million
- Revenue beat expectations at $96.1 million vs the $92.5 million analyst estimate
- Net outflows of $360 million for the quarter, vs net inflows of $2.7 billion a year earlier
- Total platform assets hit a record $94.1 billion; funded clients grew to 1.4 million
Wealthfront (WLTH) stock tumbled as much as 13% on Thursday morning before recovering to close down 6.2%. The drop came one day after the fintech company posted mixed fourth-quarter earnings results.
The company reported a GAAP net loss of $134.8 million, or $1.31 per share. That compares to a profit of $32 million in the same quarter a year ago.
Wealthfront Corporation, WLTH
The headline loss looks worse than it is. The loss was driven almost entirely by $239 million in dual-trigger equity award expenses tied to Wealthfront’s recent IPO, part of $248.3 million in total stock-based compensation recorded in the quarter.
Revenue came in at $96.1 million for the quarter, a 16% increase year over year. That beat analyst expectations of $92.5 million, according to FactSet estimates.
Adjusted EBITDA grew 22% to $44.2 million with a 46% margin. Gross profit hit $86.6 million, representing a 90% gross margin.
The broader market didn’t help. The S&P 500 fell 1.5% and the Nasdaq dropped 1.8% on Thursday, pressured by concerns over the Iran conflict, elevated oil prices, stubborn inflation, and trouble in private credit.
Cash Management Outflows Weigh on Sentiment
The bigger concern for investors was what happened with cash flows. Wealthfront reported net outflows of $360 million for the quarter ending January 31. That’s a stark reversal from net inflows of $2.7 billion in the same period a year earlier.
The cash management business is sensitive to interest rate movements. More than two-thirds of Wealthfront’s revenue in the quarter came from its high-yield cash management offering.
When rates were high, that product was a major draw. Rate cuts last year made it less attractive. The company also saw a sharp $840 million outflow in January alone, tied to customer behavior following rate changes and early tax-season withdrawals.
Management noted that cash deposits turned positive again in mid-February, with outflows moderating to $145 million. But the company warned that tax-related withdrawals are likely to spike again through April.
J.P. Morgan analyst Kenneth Worthington kept his Overweight rating but cut his December 2026 price target to $10 from $16. He pointed to the cash segment’s ongoing sensitivity to rates as a near-term pressure. Keefe, Bruyette & Woods analyst Ryan Tomasello downgraded the stock to Market Perform from Outperform.
Record Platform Assets and Expanding Products
Despite the outflow noise, the overall platform numbers were strong. Total platform assets grew to a record $94.1 billion, up from $80.2 billion a year earlier. By February, that figure had climbed further to $95.2 billion.
The investment advisory business posted a 29% year-over-year increase in assets to $48.7 billion. Advisory revenue rose 31% in Q4 to $25.8 million.
Funded clients increased to roughly 1.42 million from 1.2 million, with funded accounts growing 16% to approximately 1.84 million.
For the full fiscal year, revenue hit a record $365 million, up 18% from the prior year. Full-year adjusted EBITDA reached $170.7 million, a 20% increase, with margin widening to 47%.
The company also reported $152.2 million in operating cash flow for the year and ended the period debt-free with $440.8 million in cash. A $100 million share repurchase program was authorized.
Wealthfront raised its base cash APY by 5 basis points to 3.3% in January and introduced a direct-deposit incentive offering an additional 25 basis point APY boost for qualifying clients.
The company’s home lending program, currently in early access in Colorado, Texas, and California, is being expanded. CEO David Fortunato said Wealthfront aims to offer mortgage rates at least 50 basis points below the national average.
Management guided to a Q1 cash management fee rate of 57–58 basis points and expects EBITDA margins to remain above 40% in the first fiscal quarter of 2027.
The post Wealthfront (WLTH) Stock Falls 6% After Q4 Earnings Show Cash Outflow Reversal appeared first on CoinCentral.
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