What changed in this filing

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Item 1. Financial Statements

2025-12-03 compared with 2025-09-02 · 79 added, 68 removed, 427 unchanged (26% of the section changed)

3 unchanged sentences

Condensed consolidated balance sheets

(in thousands, except par value) July 31, 2025 January 31, 2025

(in thousands, except par value) October 31, 2025 January 31, 2025

Current assets

Cash and cash equivalents $ 309,259 $ 295,948

Accounts receivable, net of allowance for doubtful accounts of $ 920 and $ 2,070 as of July 31, 2025 and January 31, 2025, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 918 and $ 2,070 as of October 31, 2025 and January 31, 2025, respectively

111,243 118,006

23 unchanged sentences

Stockholders’ equity

Preferred stock, $ 0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of July 31, 2025 and January 31, 2025, respectively

Common stock, $ 0.0001 par value, 900,000 shares authorized, 86,421 and 86,536 shares issued and outstanding as of July 31, 2025 and January 31, 2025, respectively

Preferred stock, $ 0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of October 31, 2025 and January 31, 2025, respectively

Common stock, $ 0.0001 par value, 900,000 shares authorized, 85,615 and 86,536 shares issued and outstanding as of October 31, 2025 and January 31, 2025, respectively

Additional paid-in capital 1,917,244 1,905,628

7 unchanged sentences

Condensed consolidated statements of operations (unaudited)

Three months ended July 31, Six months ended July 31,

Three months ended October 31, Nine months ended October 31,

(in thousands, except per share data) 2025 2024 2025 2024

34 unchanged sentences

Condensed consolidated statements of comprehensive income (unaudited)

Three months ended July 31, Six months ended July 31,

Three months ended October 31, Nine months ended October 31,

(in thousands, except per share data) 2025 2024 2025 2024

2 unchanged sentences

Cash flow hedges

Net unrealized gains, net of income tax expense of $ 70 for each of the three and six months ended July 31, 2025

Net unrealized gains, net of income tax expense of $ 2,935 and $ 3,005 for the three and nine months ended October 31, 2025, respectively

8,634 — 8,837 —

Total other comprehensive income 8,634 — 8,837 —

4 unchanged sentences

Condensed consolidated statements of stockholders’ equity (unaudited)

Three months ended July 31, Six months ended July 31,

Three months ended October 31, Nine months ended October 31,

(in thousands) 2025 2024 2025 2024

24 unchanged sentences

Condensed consolidated statements of cash flows (unaudited)

Six months ended July 31,

Nine months ended October 31,

(in thousands) 2025 2024

5 unchanged sentences

Amortization of debt discount and issuance costs

Loss on extinguishment of debt — 1,576

Deferred taxes 42,734 ( 10,065 )

17 unchanged sentences

Proceeds from long-term debt — 736,875

Payment of debt issuance costs — ( 3,748 )

Settlement of client-held funds obligation, net 621 3,188

8 unchanged sentences

Condensed consolidated statements of cash flows (unaudited) (continued)

Six months ended July 31,

Nine months ended October 31,

(in thousands) 2025 2024

6 unchanged sentences

Repurchases of common stock included in accrued liabilities 2,478 1,500

Exercise of common stock options receivable 5,390 7

Non-cash purchase consideration related to acquisitions of HSA portfolios — 20,325

17 unchanged sentences

Basis of presentation

The accompanying condensed consolidated financial statements as of July 31, 2025 and for the three and six months ended July 31, 2025 and 2024 are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting.

The accompanying condensed consolidated financial statements as of October 31, 2025 and for the three and nine months ended October 31, 2025 and 2024 are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting.

In the opinion of management, the interim data includes all adjustments necessary for a fair presentation of the results for the interim periods.

26 unchanged sentences

We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software , which removes all references to project stages and establishes new criteria for the capitalization of internal-use software costs.

The guidance will be effective for annual periods beginning after December 15, 2027, including interim periods within those annual periods.

Early adoption is permitted.

Upon adoption, the guidance may be applied prospectively, retrospectively, or on a modified retrospective basis, including for in-process projects.

We are currently evaluating the ASU to determine its impact on our consolidated financial statements.

Net income per share

The following table sets forth the computation of basic and diluted net income per share:

Three months ended July 31, Six months ended July 31,

Three months ended October 31, Nine months ended October 31,

(in thousands, except per share data) 2025 2024 2025 2024

10 unchanged sentences

Diluted $ 0.59 $ 0.06 $ 1.88 $ 0.79

For the three months ended July 31, 2025 and 2024, 0.2 million and 0.1 million shares, respectively, attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted net income per share as their inclusion would have been anti-dilutive.

For each of the six months ended July 31, 2025 and 2024, 0.1 million shares attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted net income per share as their inclusion would have been anti-dilutive.

For the three months ended October 31, 2025 and 2024, 0.2 million and 0.1 million shares, respectively, attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted net income per share as their inclusion would have been anti-dilutive.

For each of the nine months ended October 31, 2025 and 2024, 0.1 million shares attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted net income per share as their inclusion would have been anti-dilutive.

Supplemental financial statement information

2 unchanged sentences

Property and equipment consisted of the following:

(in thousands) July 31, 2025 January 31, 2025

(in thousands) October 31, 2025 January 31, 2025

Leasehold improvements $ 14,048 $ 13,966

4 unchanged sentences

Property and equipment, net $ 3,390 $ 3,239

Depreciation expense was $ 0.5 million and $ 1.1 million for the three and six months ended July 31, 2025, respectively, and $ 1.3 million and $ 2.7 million for the three and six months ended July 31, 2024, respectively.

Depreciation expense was $ 0.4 million and $ 1.5 million for the three and nine months ended October 31, 2025, respectively, and $ 1.0 million and $ 3.7 million for the three and nine months ended October 31, 2024, respectively.

Contract balances

2 unchanged sentences

Alternatively, when payment precedes the related services, the Company records a contract liability, or deferred revenue, until its performance obligations are satisfied.

As of July 31, 2025 and January 31, 2025, the balance of deferred revenue was $ 11.5 million and $ 17.1 million, respectively.

As of October 31, 2025 and January 31, 2025, the balance of deferred revenue was $ 8.6 million and $ 17.1 million, respectively.

The balances are related to cash received in advance for custodial and interchange revenue arrangements, other up-front fees and other commuter deferred revenue.

1 unchanged sentence

Amounts expected to be recognized as revenue within a period of 12 months or less are classified as accrued liabilities in the Company's condensed consolidated balance sheets, with the remainder included within other long-term liabilities.

Revenue recognized during the three and six months ended July 31, 2025 that was included in the balance of deferred revenue as of January 31, 2025 was $ 3.3 million and $ 6.4 million, respectively.

Revenue recognized during the three and nine months ended October 31, 2025 that was included in the balance of deferred revenue as of January 31, 2025 was $ 3.1 million and $ 9.5 million, respectively.

The Company expects to satisfy its remaining obligations for these arrangements.

The components of operating lease costs were as follows:

Three months ended July 31, Six months ended July 31,

Three months ended October 31, Nine months ended October 31,

(in thousands)

5 unchanged sentences

Other income, net, consisted of the following:

Three months ended July 31, Six months ended July 31,

Three months ended October 31, Nine months ended October 31,

(in thousands) 2025 2024 2025 2024

Interest income $ 2,864 $ 3,897 $ 8,961 $ 10,881

Other income (expense), net 27 11 27 ( 466 )

Other income, net 22 851 49 385

Total other income, net $ 2,886 $ 4,748 $ 9,010 $ 11,266

1 unchanged sentence

Supplemental cash flow information related to the Company's operating leases was as follows:

Six months ended July 31,

Nine months ended October 31,

(in thousands) 2025 2024

5 unchanged sentences

The gross carrying amount and associated accumulated amortization of intangible assets were as follows:

July 31, 2025

October 31, 2025

(in thousands) Gross carrying amount Accumulated amortization Net carrying amount

15 unchanged sentences

Total amortizable intangible assets $ 1,954,752 $ ( 750,094 ) $ 1,204,658

Amortization expense was $ 38.0 million and $ 76.1 million for the three and six months ended July 31, 2025, respectively, and $ 42.3 million and $ 79.9 million for the three and six months ended July 31, 2024, respectively.

There were no changes to the carrying value of goodwill during the six months ended July 31, 2025.

Amortization expense was $ 38.4 million and $ 114.4 million for the three and nine months ended October 31, 2025, respectively, and $ 39.7 million and $ 119.5 million for the three and nine months ended October 31, 2024, respectively.

There were no changes to the carrying value of goodwill during the nine months ended October 31, 2025.

Commitments and contingencies

The Company’s principal commitments consist of long-term debt, operating lease obligations, and other purchase obligations and contractual commitments.

There were no material changes during the six months ended July 31, 2025, outside of the ordinary course of business, in the Company's commitments from those disclosed in its Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

There were no material changes during the nine months ended October 31, 2025, outside of the ordinary course of business, in the Company's commitments from those disclosed in its Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

Contingencies

18 unchanged sentences

Long-term debt consisted of the following:

(in thousands) July 31, 2025 January 31, 2025

(in thousands) October 31, 2025 January 31, 2025

4.50 % Senior Notes due 2029

6 unchanged sentences

Long-term debt, net $ 982,105 $ 1,056,301

(1) In addition to the $ 5.0 million and $ 5.6 million of unamortized discount and issuance costs related to long-term debt as of July 31, 2025 and January 31, 2025, respectively, $ 6.8 million and $ 7.7 million of unamortized issuance costs related to the Company's Revolving Credit Facility are included within other assets in the condensed consolidated balance sheets as of July 31, 2025 and January 31, 2025, respectively.

(1) In addition to the $ 4.8 million and $ 5.6 million of unamortized discount and issuance costs related to long-term debt as of October 31, 2025 and January 31, 2025, respectively, $ 6.4 million and $ 7.7 million of unamortized issuance costs related to the Company's Revolving Credit Facility are included within other assets in the condensed consolidated balance sheets as of October 31, 2025 and January 31, 2025, respectively.

4.50 % Senior Notes due 2029

5 unchanged sentences

of each year.

Accrued interest on the Notes was $ 9.0 million at each of July 31, 2025 and January 31, 2025, which is included within accrued liabilities on the Company's condensed consolidated balance sheets.

Accrued interest on the Notes was $ 2.3 million and $ 9.0 million as of October 31, 2025 and January 31, 2025, respectively, which is included within accrued liabilities on the Company's condensed consolidated balance sheets.

The effective interest rate on the Notes is 4.72 %.

The Notes are unsecured senior obligations of the Company and rank equally in right of payment to all of its existing and future senior unsecured debt and senior in right of payment to all of its future subordinated debt.

The Notes are redeemable at the Company’s option, in whole or in part, at any time on or after October 1, 2024, at a redemption price if redeemed during the 12 months beginning (i) October 1, 2024 of 102.250 %, (ii) October 1, 2025 of 101.125 %, and (iii) October 1, 2026 and thereafter of 100.000 %, in each case of the principal amount of the Notes being redeemed, and together with accrued and unpaid interest, if any, to, but excluding, the date of redemption.

The Notes are redeemable at the Company’s option, in whole or in part, at a redemption price if redeemed during the 12 months beginning (i) October 1, 2025 of 101.125 %, and (ii) October 1, 2026 and thereafter of 100.000 %, in each case of the principal amount of the Notes being redeemed, and together with accrued and unpaid interest, if any, to, but excluding, the date of redemption.

The Company may be required to make an offer to purchase the Notes upon the sale of certain assets or upon specific kinds of changes of control.

5 unchanged sentences

The Revolving Credit Facility may be used in the future for working capital and general corporate purposes, including the financing of acquisitions and other investments.

As of July 31, 2025, the outstanding balance under the Revolving Credit Facility was $ 411.9 million, which is included within long-term debt, net of issuance costs, in the condensed consolidated balance sheet.

As of October 31, 2025, the outstanding balance under the Revolving Credit Facility was $ 386.9 million, which is included within long-term debt, net of issuance costs, in the condensed consolidated balance sheet.

The maturity date of the Revolving Credit Facility is August 23, 2029.

2 unchanged sentences

The Company is also required to pay certain fees to the Lenders, including, among others, a quarterly commitment fee on the average unused amount of the Revolving Credit Facility at a rate ranging from 0.25 % to 0.50 %, with the applicable rate also determined by reference to a leverage-based pricing grid set forth in the Credit Agreement.

As of July 31, 2025, the interest rate on the Revolving Credit Facility was 5.96 %.

As of October 31, 2025, the interest rate on the Revolving Credit Facility was 5.32 %.

The loans under the Revolving Credit Facility may be prepaid, and the commitments thereunder may be reduced by the Company without penalty or premium, subject to the reimbursement of customary “breakage costs.”

The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit, among other things, the ability of the Company and its subsidiaries to incur additional indebtedness, create liens, merge or dissolve, make investments, dispose of assets, engage in sale and leaseback transactions, make distributions and dividends and prepayments of junior indebtedness, engage in transactions with affiliates, enter into restrictive agreements, amend documentation governing junior indebtedness, modify its fiscal year and modify its organizational documents, in each case, subject to customary exceptions, thresholds, qualifications and “baskets.” In addition, the Credit Agreement contains financial performance covenants, which require the Company to maintain (i) a maximum total net leverage ratio, measured as of the last day of each fiscal quarter, of no greater than 5.00 to 1.00 beginning with the fiscal quarter ended January 31, 2025, and (ii) a minimum consolidated interest coverage ratio, measured as of the last day of each fiscal quarter, of no less than 3.00 to 1.00 beginning with the fiscal quarter ended January 31, 2025.

The Company was in compliance with all covenants under the Credit Agreement as of July 31, 2025 and for the period then ended.

The repayment obligation under the Credit Agreement may be accelerated upon the occurrence of an event of default thereunder, including, among other things, failure to pay principal, interest or fees on a timely basis, material inaccuracy of any representation or warranty, failure to comply with covenants, cross-default to other material debt, material judgments, change of control and certain insolvency or bankruptcy-related events, in each case, subject to any certain grace and/or cure periods.

The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit, among other things, the ability of the Company and its subsidiaries to incur additional indebtedness, create liens, merge or dissolve, make investments, dispose of assets, engage in sale and leaseback transactions, make distributions and dividends and prepayments of junior indebtedness, engage in transactions with affiliates, enter into restrictive agreements, amend documentation governing junior indebtedness, modify its fiscal year and modify its organizational documents, in each case, subject to customary exceptions, thresholds, qualifications and “baskets.” In addition, the Credit Agreement contains financial performance covenants, which require the Company to maintain (i) a maximum total net leverage ratio, measured as of the last day of each fiscal quarter, of no greater than 5.00 to 1.00 and (ii) a minimum consolidated interest coverage ratio, measured as of the last day of each fiscal quarter, of no less than 3.00 to 1.00.

The Company was in compliance with all covenants under the Credit Agreement as of October 31, 2025 and for the period then ended.

inaccuracy of any representation or warranty, failure to comply with covenants, cross-default to other material debt, material judgments, change of control and certain insolvency or bankruptcy-related events, in each case, subject to any certain grace and/or cure periods.

The Company’s obligations under the Credit Agreement are required to be unconditionally guaranteed by each of its existing or subsequently acquired or organized direct and indirect domestic subsidiaries and are secured by security interests in substantially all assets of the Company and the guarantors, in each case, subject to certain customary exceptions.

1 unchanged sentence

Accordingly, management estimated the effective annual tax rate and applied this rate to pre-tax income through the end of the latest fiscal quarter to determine the interim income tax provision.

For the three and six months ended July 31, 2025, the Company recorded an income tax provision of $ 18.2 million and $ 35.2 million, respectively.

This resulted in an effective income tax rate of 23.3 % and 23.6 % for the three and six months ended July 31, 2025, respectively, compared with an effective income tax rate of 23.2 % and 19.1 % for the three and six months ended July 31, 2024, respectively.

For the three and six months ended July 31, 2025, discrete tax items impacting the effective tax rate were primarily due to differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense and changes to net state deferred tax liabilities due to state apportionment changes.

For the three and six months ended July 31, 2024, discrete tax items impacting the effective tax rate were primarily due to differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense.

As of July 31, 2025 and January 31, 2025, the Company’s total gross unrecognized tax benefit was $ 26.1 million and $ 24.1 million, respectively.

If recognized, $ 22.7 million of the total gross unrecognized tax benefits would affect the Company's effective tax rate as of July 31, 2025.

For the three and nine months ended October 31, 2025, the Company recorded an income tax provision of $ 15.8 million and $ 51.1 million, respectively.

This resulted in an effective income tax rate of 23.5 % and 23.6 % for the three and nine months ended October 31, 2025, respectively, compared with an effective income tax rate of 8.3 % and 18.3 % for the three and nine months ended October 31, 2024, respectively.

For the three and nine months ended October 31, 2025, discrete tax items impacting the effective tax rate were primarily due to differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense and changes to net state deferred tax liabilities due to state apportionment changes.

For the three and nine months ended October 31, 2024, discrete tax items impacting the effective tax rate were primarily due to differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense , adjustments to research and development tax credits, and an increase in unrecognized tax benefits.

As of October 31, 2025 and January 31, 2025, the Company’s total gross unrecognized tax benefit was $ 26.8 million and $ 24.1 million, respectively.

If recognized, $ 23.4 million of the total gross unrecognized tax benefits would affect the Company's effective tax rate as of October 31, 2025.

The Company files income tax returns with U.S.

federal and state taxing jurisdictions and is currently under examination by the states of California, New York, and Texas.

federal and state taxing jurisdictions and is currently under examination by the states of California and New York.

Such examinations may lead to ordinary course adjustments or proposed adjustments to the Company's taxes, net operating losses, and/or tax credit carryforwards.

The Company concluded an examination by the state of Texas during the period ended October 31, 2025, and all necessary adjustments were immaterial.

As a result of the Company's net operating loss carryforwards and tax credit carryforwards, the Company remains subject to examination by one or more jurisdictions for tax years after 2006.

7 unchanged sentences

The following table shows a summary of stock-based compensation in the Company's condensed consolidated statements of operations during the periods presented:

Three months ended July 31, Six months ended July 31,

Three months ended October 31, Nine months ended October 31,

(in thousands) 2025 2024 2025 2024

8 unchanged sentences

2024 Equity Incentive Plan (the "Incentive Plan") provides for the issuance of stock awards to team members, consultants, and directors of the Company.

Subject to adjustment as provided in the Incentive Plan, as of July 31, 2025, the aggregate number of shares of the Company’s common stock reserved and available for issuance pursuant to awards granted under the Incentive Plan was 3.0 million.

Subject to adjustment as provided in the Incentive Plan, as of October 31, 2025, the aggregate number of shares of the Company’s common stock reserved and available for issuance pursuant to awards granted under the Incentive Plan was 3.0 million.

Stock options

9 unchanged sentences

Exercised ( 221 ) $ 21.27 - 73.61

Outstanding as of July 31, 2025 165 $ 21.27 - 73.61

Outstanding as of October 31, 2025 148 $ 24.36 - 73.61

$ 46.67 1.8 $ 7,097

Vested and expected to vest as of July 31, 2025 165 $ 44.25 1.9 $ 8,709

Exercisable as of July 31, 2025 165 $ 44.25 1.9 $ 8,709

Vested and expected to vest as of October 31, 2025 148 $ 46.67 1.8 $ 7,097

Exercisable as of October 31, 2025 148 $ 46.67 1.8 $ 7,097

Restricted stock units

6 unchanged sentences

Forfeited ( 422 ) 76.97

Outstanding as of July 31, 2025 2,603 $ 80.19

Outstanding as of October 31, 2025 2,436 $ 81.66

Performance restricted stock units.

During the six months ended July 31, 2025, the Company awarded 139,451 PRSUs subject to a market condition based on the Company’s total shareholder return relative to the Russell 3000 index as measured on January 31, 2028.

During the nine months ended October 31, 2025, the Company awarded 139,451 PRSUs subject to a market condition based on the Company’s total shareholder return relative to the Russell 3000 index as measured on January 31, 2028.

The Company used a Monte Carlo simulation to determine that the grant date fair value of the awards was $ 17.7 million.

2 unchanged sentences

The PRSUs cliff vest upon approval by the Talent, Compensation and Culture Committee of the board of directors.

In addition, during the six months ended July 31, 2025, the Company awarded 46,485 PRSUs subject to the achievement of certain financial criteria measured on January 31, 2028.

In addition, during the nine months ended October 31, 2025, the Company awarded 46,485 PRSUs subject to the achievement of certain financial criteria measured on January 31, 2028.

The PRSUs cliff vest and are issued upon approval by the Talent, Compensation and Culture Committee.

2 unchanged sentences

The vesting of the PRSUs will ultimately range from 0 % to 200 % of the number of shares underlying the PRSU grant based on the level of achievement of the performance goals.

Each of the PRSUs granted during the six months ended July 31, 2025 contains a provision such that upon the award holder's eligible retirement, the PRSUs would remain outstanding and eligible to vest based on achievement of their respective market or performance conditions without regard to the award holder’s continued employment on the vesting date.

Each of the PRSUs granted during the nine months ended October 31, 2025 contains a provision such that upon the award holder's eligible retirement, the PRSUs would remain outstanding and eligible to vest based on achievement of their respective market or performance conditions without regard to the award holder’s continued employment on the vesting date.

Based on the application of ASC 718, Compensation - Stock Compensation , expense is recognized over the requisite service period, which ends on the earlier of (1) the date of approval by the Talent, Compensation and Culture Committee or (2) the date the award holder becomes eligible for retirement (defined as at least 55 years old with at least 10 years of service at the Company).

4 unchanged sentences

Under the 2025 Stock Repurchase Program, the Company may purchase up to an additional $ 300 million of its common stock, as market conditions warrant.

The 2025 Stock Repurchase Program will allow the Company to continue to opportunistically repurchase shares after the 2024 Stock Repurchase Program has been exhausted.

The common stock may be repurchased at prices that the Company deems appropriate and subject to market conditions, applicable law, and other factors deemed relevant in the Company's sole discretion.

1 unchanged sentence

The stock repurchase programs do not obligate the Company to repurchase any dollar amount or number of shares of common stock, and the programs may be suspended or discontinued at any time.

The following table sets forth the common stock repurchased and subsequently retired during the three and six months ended July 31, 2025:

Three months ended July 31, 2025 Six months ended July 31, 2025

The following table sets forth the common stock repurchased and subsequently retired during the three and nine months ended October 31, 2025:

Three months ended October 31, 2025 Nine months ended October 31, 2025

(in thousands)

1 unchanged sentence

Common stock repurchases (1) 1,009 $ 93,656 2,376 $ 219,958

(1) Shares repurchased include unsettled repurchases as of July 31, 2025.

(1) Shares repurchased include unsettled repurchases as of October 31, 2025.

Transaction fees and excise tax were recorded as part of the repurchase price.

1 unchanged sentence

The excess of repurchase price over par value was allocated between additional paid-in capital and retained earnings.

As of July 31, 2025, $ 351.8 million of common stock remained authorized for repurchase under the Company's common stock repurchase programs.

As of October 31, 2025, $ 258.8 million of common stock remained authorized for repurchase under the Company's common stock repurchase program.

Accumulated other comprehensive income

As of July 31, 2025, AOCI consisted of unrealized gains on cash flow hedges, net.

As of October 31, 2025, AOCI consisted of unrealized gains on cash flow hedges, net.

Derivative financial instruments and hedging activities

Yields paid by the Company's depository partners and insurance company partners are impacted by the prevailing interest rate environment at the time HSA cash is placed with those partners.

The Company uses Treasury bond forwards to hedge a portion of the benchmark interest rate risk of expected future transitions of HSA cash currently held by its depository partners into group annuity contracts or similar arrangements with its insurance company partners.

These derivatives involve the Company and its counterparty agreeing to fix the price of a specified Treasury bond on a future date, ranging from January 2026 to January 2027, resulting in cash settlement for the difference between the fixed price and the market price on that date.

The Company uses Treasury bond forwards to hedge a portion of the benchmark interest rate risk of expected future placements of HSA cash.

These derivatives involve the Company and its counterparty agreeing to fix the price of a specified Treasury bond on a future date, ranging from January 2026 to August 2027, resulting in cash settlement for the difference between the fixed price and the market price on that date.

The parties may elect net settlement of multiple transactions under certain conditions;

however, the Company presents its derivative assets and liabilities on a gross basis on its condensed consolidated balance sheets.

The gain or loss on the derivative is recorded in AOCI and subsequently reclassified into custodial revenue in the same periods during which the hedged transaction affects custodial revenue earned from the Company's insurance company partners.

As of July 31, 2025, each of the Company's derivatives was designated as a cash flow hedge.

As of October 31, 2025, each of the Company's derivatives was designated as a cash flow hedge.

The Company did not use derivatives prior to fiscal 2026.

As of the July 31, 2025, the weighted average interest rate indicated by the Company's Treasury bond forwards was 4.05 %.

As of the October 31, 2025, the weighted average interest rate indicated by the Company's Treasury bond forwards was 3.94 %.

Notional amount of derivative contracts

1 unchanged sentence

(in thousands, except

number of instruments) July 31, 2025 January 31, 2025

number of instruments) October 31, 2025 January 31, 2025

Number of instruments Notional Number of instruments Notional

2 unchanged sentences

The table below presents the fair value of the Company’s derivatives as well as their classification in the condensed consolidated balance sheet.

July 31, 2025

October 31, 2025

Derivative assets Derivative liabilities

3 unchanged sentences

The pre-tax gains on the Company's cash flow hedges recognized in AOCI were as follows:

Three months ended July 31, Six months ended July 31,

Three months ended October 31, Nine months ended October 31,

(in thousands) 2025 2024 2025 2024

Treasury bond forwards $ 11,569 $ — $ 11,842 $ —

No reclassification from AOCI to earnings was recorded with respect to the Company's derivatives during the six months ended July 31, 2025 or 2024.

The estimated net amount of existing gains reported in AOCI as of July 31, 2025 that is expected to be reclassified into earnings within the next 12 months is immaterial.

No reclassification from AOCI to earnings was recorded with respect to the Company's derivatives during the nine months ended October 31, 2025 or 2024.

The estimated net amount of existing gains reported in AOCI as of October 31, 2025 that is expected to be reclassified into earnings within the next 12 months is $ 1.0 million.

Fair value measurements are made at a specific point in time based on relevant market information.

9 unchanged sentences

The Notes are valued based upon quoted market prices and are considered Level 2 instruments because the markets in which the Notes trade are not considered active markets.

As of July 31, 2025, the fair value of the Notes was $ 578.9 million.

As of October 31, 2025, the fair value of the Notes was $ 584.3 million.

The Revolving Credit Facility is considered a Level 2 instrument, and the amounts outstanding thereunder are recorded at book value in the Company's condensed consolidated financial statements.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements