HealthEquity, Inc.

Second-quarter revenue increased 8% year over year. Service revenue was a record $124.4 million, up 6%; custodial revenue was a record $175.9 million, up 10%; and interchange revenue was $50.4 million, up 5%. Gross profit was a record $258 million, or approximately 74% of revenue, versus 71% in the second quarter last year. GAAP net income was a record $65.6 million, or $0.78 per diluted share; non-GAAP net income was $103.8 million, or $1.24 per diluted share; and adjusted EBITDA was a record $167 million, up 11% year over year, with adjusted EBITDA margin at 48% versus 46% last year. For the first six months, revenue was $705.4 million, up 7%; GAAP net income was $135.1 million, or $1.60 per diluted share; non-GAAP net income was $208.9 million, or $2.47 per diluted share; and adjusted EBITDA was $331.5 million, up 14%, with 47% margin. HSA assets were up 14% year over year, total HSAs grew 8%, new HSAs from sales grew 24%, and HSA accounts reached a record 10.7 million. The company ended the quarter with $256 million in cash, generated $136 million of operating cash flow, had about $931 million of debt net of issuance costs, and repurchased about $108 million of shares at an average price below $90. Full-year fiscal 2027 guidance was raised to revenue of $1.411 billion to $1.421 billion, GAAP net income of $242 million to $248 million, non-GAAP net income of $392 million to $398 million, and adjusted EBITDA of $628 million to $636 million. The company now expects average HSA cash yield to be between 3.85% and 3.9% for fiscal 2027.

Scott Cutler framed the quarter as proof that the model is not only scaling but becoming more durable, citing stronger operating cash flow, disciplined capital allocation, and record profitability. He emphasized three growth drivers: account and asset growth, deeper member engagement through the app/Marketplace/investing, and technology- and AI-enabled efficiency that lowers service costs. His tone was confident and expansionary, with repeated comments that the company is still early in Marketplace, app integration, and AI-driven workflow automation.

James Lucania focused on the financial acceleration and margin build: revenue up 8%, gross profit at 74% of revenue, adjusted EBITDA margin at 48%, and record GAAP/non-GAAP earnings. He noted that service costs continued to fall on a per-account basis while total accounts grew 4%, and said there was no unusual item in the service cost line beyond a $3.3 million one-time disposal expense related to unused internally developed software. He also highlighted balance sheet flexibility, with $256 million of cash, $136 million of operating cash flow, about $931 million of debt, about $948 million remaining under the repurchase authorization, and guidance that includes continued buybacks, possible revolver paydown, and funding growth initiatives.

Analysts focused on Marketplace traction, interchange revenue, margin sustainability, HSA cash yield, and whether stronger demand was being driven by affordability concerns in healthcare. Management said Marketplace traffic, subscriber growth, and conversion are improving, with Health Savings Days producing the highest traffic and largest sales week in Marketplace history and 500,000 unique visitors in one week; they also said Marketplace is not yet material to company revenue but is an important engagement signal. On margins, management said the improvement is being driven by AI, automation, and lower service costs, and that there is still more room to improve as AI expands into client and back-office workflows. On cash yield and custodial revenue, management said the yield outlook is tight because much of the cash is already hedged, and that higher five-year Treasury rates help over time but do not immediately flow through due to the hedge structure. On healthcare affordability, management said it is a major tailwind as employers seek ways to lower annual cost growth, and they cited more adoption of HDHP/HSA structures, ICHRA interest, and broader individual-market opportunities.