HealthEquity, Inc.

First-quarter revenue increased 7% year over year. Service revenue was a record $122.9 million, up 3% year over year; custodial revenue was a record $174.3 million, up 11%; and interchange revenue was $57.4 million, up 5%. Gross profit was a record $256.3 million, or 72% of revenue, versus 68% in the first quarter last year. Net income was $69.4 million, or $0.82 per diluted share on a GAAP basis; non-GAAP net income was $105.1 million, or $1.24 per diluted share; and adjusted EBITDA was $164.5 million, up 17% year over year, or 46% of revenue versus 42% last year. The company ended the quarter with $265 million in cash, generated $98 million of operating cash flow, and had approximately $943 million of debt outstanding net of issuance costs. For fiscal 2027, management now expects revenue of $1.41 billion to $1.42 billion, GAAP net income of $242 million to $248 million ($2.88 to $2.95 per share), non-GAAP net income of $392 million to $398 million ($4.66 to $4.73 per share), adjusted EBITDA of $625 million to $633 million, and an average yield on HSA cash of approximately 3.85%.

Scott Cutler said the quarter showed disciplined execution, accelerating growth and better profitability, with HealthEquity using AI and digital engagement to lower cost to serve and deepen member engagement. He framed the company as a healthcare financial operating system rather than a basic administrator, emphasizing account growth, asset growth, investing, and marketplace as a flywheel that should expand lifetime value. His tone was confident and constructive, especially around the raised outlook, strong selling season momentum, and the decision to expand buybacks.

James Lucania highlighted the key financial drivers: revenue up 7%, gross margin at 72%, adjusted EBITDA up 17% to $164.5 million, and strong cash generation of $98 million of operating cash flow. He also walked through the HSA cash yield dynamics, noting an annualized yield of 3.84% in the quarter, or 3.78% excluding a one-time breakage fee, and said fiscal 2027 average yield is expected to be about 3.85%. On capital allocation, he pointed to $265 million of cash, about $943 million of debt net of issuance costs, $123 million of share repurchases in the quarter, and the newly expanded $1 billion repurchase authorization, while saying the company still wants flexibility for debt paydown and M&A.

Analysts focused on marketplace monetization, AI-driven service efficiencies, balance sheet/cash needs, Bronze account growth, and the impact of softer healthcare utilization. Management said marketplace is being built through member engagement rather than paid acquisition, is already reflected in the outlook, and that the most active early program has been metabolic health; they also said market-wide low utilization likely helps interchange only modestly today and may support balances and investment revenue if spending remains muted. On AI, management said the biggest savings are showing up in service operations already, but some costs are shifting into tech and development spend, with broader enterprise rollout still early.