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Item 7. Management’s Discussion and Analysis

2026-03-17 compared with 2025-03-18 · 165 added, 167 removed, 294 unchanged (53% of the section changed)

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See “Special note regarding forward-looking statements” on page 1 of this Annual Report.

We are a leader and an innovator in providing technology-enabled services that empower consumers to make healthcare saving and spending decisions.

We are a leader and an innovator in providing technology-enabled services that empower consumers to make healthcare saving, spending, and investing decisions.

We use our innovative technology to manage consumers' tax-advantaged HSAs and other CDBs offered by employers, including FSAs and HRAs, and to administer COBRA, commuter and other benefits.

As part of our services, we provide consumers with payment processing services, personalized benefit information, the ability to earn wellness incentives, and investment advice to grow their tax-advantaged healthcare savings.

The core of our offerings is the HSA, a financial account through which consumers spend and save long-term for healthcare expenses on a tax-advantaged basis.

As part of our services, we provide consumers with payment processing services, personalized benefit information, access to healthcare solutions through our marketplace, and investment advice to grow their tax-advantaged healthcare savings.

The core of our offerings is the HSA, a financial account through which consumers save, spend, and invest their healthcare dollars on a tax-advantaged basis.

As of January 31, 2026, we administered 10.6 million HSAs, with balances totaling $36.5 billion, which we call HSA Assets, as well as 7.2 million complementary CDBs.

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We reach consumers primarily through relationships with their employers, which we call Clients.

We reach Clients primarily through relationships with benefits brokers and advisors, integrated partnerships with a network of health plans, benefits administrators, benefits brokers and consultants, and retirement plan recordkeepers, which we call Network Partners, and a sales force that calls on Clients directly.

We reach Clients primarily through relationships with benefits brokers and advisors, integrated partnerships with a network of health plans, benefits administrators, and retirement plan recordkeepers, which we call Network Partners, and a sales force that calls on Clients directly.

As of January 31, 2026, our platforms were integrated with more than 200 Network Partners.

We have increased our share of the growing HSA market from 4% in December 2010 to 20% as of June 2025, measured by HSA Assets.

According to the 2024 Midyear Devenir HSA Research Report, as of June 2024, we were the largest HSA provider by both accounts and HSA Assets.

According to the 2025 Midyear Devenir HSA Research Report, as of June 2025, we were the largest HSA provider by number of accounts and the second largest HSA provider by HSA Assets.

In addition, we believe we are the largest provider of other CDBs.

We seek to differentiate ourselves through our service-driven culture, product breadth, ecosystem connectivity, and proprietary technology.

We seek to differentiate ourselves through our service-driven culture, product breadth, ecosystem connectivity, and proprietary technology, which enables our members to better save, spend, and invest their healthcare dollars.

Our proprietary technology allows us to help consumers optimize the value of their HSAs and other CDBs and gain confidence and skills in managing their healthcare costs as part of their financial security.

Our ability to assist consumers is enhanced by our capacity to securely share data in both directions with others in the health, benefits, and retirement ecosystems.

Our commuter benefits offering also leverages connectivity to an ecosystem of mass transit, ride hailing, and parking providers.

We earn revenue primarily from three sources:

service, custodial, and interchange.

We earn service revenue mainly from fees paid by our Network Partners, Clients, and members for the administration services we provide in connection with the HSAs and other CDBs we offer.

We earn custodial revenue primarily from HSA cash held by our federally insured bank and credit union partners, which we collectively call our Depository Partners, HSA cash held by our insurance company partners, and Client-held funds deposited with our Depository Partners.

We earn service revenue mainly from fees paid by our Clients, Network Partners, and members for the administration services we provide in connection with the HSAs and other CDBs we offer.

Service revenue also includes revenues earned from invested HSA Assets and our marketplace.

We earn custodial revenue primarily from HSA cash held by our insurance company partners, HSA cash held by our federally insured bank and credit union partners, which we collectively call our Depository Partners, and Client-held funds deposited with our Depository Partners.

We earn interchange revenue mainly from fees paid by merchants on payments that our members make using our physical payment cards and on our virtual payment system.

See “Key components of our results of operations” for additional information on our sources of revenue.

Recent acquisitions

HealthSavings HSA portfolio acquisition.

In March 2022, we acquired the HealthSavings HSA portfolio, which consisted of $1.3 billion of HSA Assets held in approximately 87,000 HSAs in exchange for a purchase price of $60 million in cash.

BenefitWallet HSA portfolio acquisition.

In fiscal 2025, we acquired the BenefitWallet HSA portfolio, comprised of approximately 616,000 HSAs plus other accounts and $2.7 billion of HSA Assets, from Conduent for a purchase price of $425.0 million.

In fiscal 2025, we acquired the BenefitWallet HSA portfolio, comprised of approximately 616,000 HSAs plus other accounts, which collectively totaled $2.7 billion of HSA Assets, from Conduent Business Services, LLC for a purchase price of $425.0 million.

We paid the purchase price using $225.0 million of borrowings under our Revolving Credit Facility, with the remainder paid using cash on hand.

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See also the section entitled “Risk factors” included in Part 1, Item 1A of this Annual Report on Form 10-K and our other reports filed with the SEC.

Our acquisition and integration strategy

We have historically acquired HSA portfolios and businesses that strengthen our service offerings.

We plan to continue this growth strategy and are regularly engaged in evaluating different opportunities.

We have developed an internal capability to source, evaluate, and integrate acquired HSA portfolios.

Our selective acquisition strategy

We have historically acquired HSA portfolios and businesses that we believe strengthen our service offerings.

We expect to continue this growth strategy and are regularly engaged in evaluating different opportunities.

We have developed an internal capability to source, evaluate, and integrate acquisitions.

We believe the nature of our competitive landscape provides significant acquisition opportunities.

Many of our competitors view their HSA businesses as non-core functions.

We believe they may look to divest these assets and, in certain cases, be limited from making acquisitions due to depository capital requirements.

Our success depends in part on our ability to successfully integrate acquired businesses and HSA portfolios with our business in an efficient and effective manner.

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We derive revenue primarily from healthcare-related saving and spending by consumers in the U.S., which are driven by changes in the broader healthcare industry, including the structure of health insurance.

The average family premium for employer-sponsored health insurance has risen by 24% since 2019 and 52% since 2014, resulting in increased participation in HSA-qualified health plans and HSAs and increased consumer cost-sharing in health insurance more generally.

We believe that continued growth in healthcare costs and related factors will spur continued growth in HSA-qualified health plans and HSAs and may encourage policy changes making HSAs or similar vehicles available to new populations such as individuals in Medicare.

According to the 2025 KFF Employer Health Benefits Survey, the average family premium for health insurance has risen by 26% since 2020 and 53% since 2015, resulting in increased participation in HSA-qualified health plans and HSAs and increased consumer cost-sharing in health insurance more generally.

In July 2025, the “One Big Beautiful Bill Act” was signed into law, which expanded HSA availability to individuals with Bronze and Catastrophic health plans and expanded HSA eligibility to include a broader range of healthcare services.

We believe that continued growth in healthcare costs and related factors will spur continued growth in HSA-qualified health plans and HSAs and may encourage additional policy changes making HSAs or similar vehicles available to new populations such as individuals in Medicare.

However, the timing and impact of these and other developments in U.S.

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Our sales force calls on enterprise and regional employers in industries across the U.S., as well as potential Network Partners from among health plans, benefits administrators, and retirement plan record keepers.

Our Network Partners are a key channel through which we gain access to Clients and members.

Our integrations with Network Partners provide a key channel through which we gain access to Clients and members.

Our Network Partners collectively employ thousands of sales representatives and account managers who promote both the Network Partners' products and our products and services.

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Product breadth

We are the largest custodian and administrator of HSAs, as well as a market-share leader in each of the major categories of complementary CDBs, including FSAs and HRAs, COBRA and commuter benefits administration.

Our Clients and their benefits advisors increasingly seek HSA providers that can deliver an integrated offering of HSAs and complementary CDBs.

We are a leader in administering HSAs and each of the major categories of complementary CDBs, including FSAs and HRAs, COBRA and commuter benefits.

Our Clients and their benefits advisors increasingly seek HSA providers that can deliver a bundled offering of HSAs and complementary CDBs.

With our CDB capabilities, we can provide employers with a single partner for both HSAs and complementary CDBs, which is preferred by the vast majority of employers, according to research conducted for us by Aite Group.

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Interest rates

As a non-bank custodian, our members’ custodial HSA cash assets are held by either our federally insured Depository Partners (our "Basic Rates" offering), pursuant to contractual arrangements we have with these Depository Partners, or by our insurance company partners through group annuity contracts or other similar arrangements (our "Enhanced Rates" offering).

For the reasons described below, we have encouraged our members to place more of their HSA cash in our Enhanced Rates offering.

As our Basic Rates contracts expire, the HSA cash held in those Basic Rates contracts will transition to Enhanced Rates contracts, subject to our members retaining the right to keep their HSA cash in Basic Rates.

As a non-bank custodian, our members’ custodial HSA cash assets are held by either our insurance company partners through group annuity contracts or other similar arrangements (our "Enhanced Rates" offering) or by our federally insured Depository Partners (our "Basic Rates" offering), pursuant to contractual arrangements we have with these Depository Partners.

As our Basic Rates contracts continue to expire, the HSA cash held in those Basic Rates contracts will transition to Enhanced Rates contracts, subject to our members retaining the right to keep their HSA cash in Basic Rates.

HSA members who allocate HSA cash to our Enhanced Rates offering retain a higher yield compared to our Basic Rates offering.

An increase in the percentage of HSA cash held in our Enhanced Rates offering also positively impacts our custodial revenue, as we generally earn a higher yield on HSA cash held by our insurance company partners compared to cash held by our Depository Partners.

The yields paid by our insurance company partners are impacted by the prevailing interest rate environment, which in turn is driven by macroeconomic factors and government policies over which we have no control.

Such factors, and the responses of our competitors to them, also determine the amount of interest retained by our members.

The lengths of our agreements with Depository Partners typically range from three to five years and may have fixed or variable interest rate terms.

The terms of new and renewing agreements with our Depository Partners are impacted by the then-prevailing interest rate environment, which in turn is driven by macroeconomic factors and government policies over which we have no control.

Such factors, and the response of our competitors to them, also determine the amount of interest retained by our members.

HSA members who place their HSA cash into our Enhanced Rates offering retain a higher yield compared to our Basic Rates offering.

An increase in the percentage of HSA cash held in our Enhanced Rates offering also positively impacts our custodial revenue, as we generally receive a higher yield on HSA cash held by our insurance company partners compared to cash held by our Depository Partners.

As with our Depository Partners, yields paid by our insurance company partners are impacted by the prevailing interest rate environment, which in turn is driven by macroeconomic factors and government policies over which we have no control.

Such factors, and the response of our competitors to them, also determine the amount of interest retained by our members.

We believe that increased participation in our Enhanced Rates offering, diversification of Depository Partners and insurance company partners, varied contract terms, and other factors reduce our exposure to short-term fluctuations in prevailing interest rates and mitigate the short-term impact of sustained increases or declines in prevailing interest rates on our custodial revenue.

As with our insurance company partners, the terms of new and renewing agreements with our Depository Partners are impacted by the then-prevailing interest rate environment, which in turn is driven by macroeconomic factors and government policies over which we have no control.

Such factors, and the responses of our competitors to them, also determine the amount of interest retained by our members.

We believe that increased participation in our Enhanced Rates offering, diversification of insurance company partners and Depository Partners, varied contract terms, and other factors reduce our exposure to short-term fluctuations in prevailing interest rates and mitigate the short-term impact of sustained increases or declines in prevailing interest rates on our custodial revenue.

In addition, as further described in Note 11—Derivative financial instruments and hedging activities, the Company uses Treasury bond forwards to hedge a portion of the benchmark interest rate risk of expected future placements of HSA cash.

Over longer periods, sustained shifts in prevailing interest rates affect the amount of custodial revenue we can realize on custodial assets and the interest retained by our members.

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We are currently investing in a modernization of our proprietary technology platforms to support new opportunities and enhance security, privacy and platform infrastructure, while maintaining existing applications, features, and services.

For example, we are making investments in the architecture and infrastructure of the technology that we use to provide our services to improve our transaction processing capabilities and support continued account and transaction growth, as well as in data-driven personalized engagement to help our members spend less, save more, and build wealth for retirement.

In addition, we are investing in technology solutions to meet the evolving needs of our members, Clients and Network Partners.

Our current innovation efforts include, among others, increasing member and client self-service capabilities, developing APIs, driving electronic communication rather than paper, increasing straight-through processing, improving overall process times utilizing both traditional robotic process automation, and increasingly through AI tools including the Expedited Claims tool, leveraging chip-enabled stacked cards, and mobile wallet.

For example, we are continuing to make investments in the architecture and infrastructure of the technology that we use to provide our services to improve our transaction processing capabilities and support continued account and transaction growth, as well as in data-driven personalized engagement to help our members spend less, save more, and build wealth for retirement.

We are investing in technology solutions to meet the evolving needs of our members, Clients and Network Partners.

We also increasingly use AI tools and technologies to improve customer service, lower costs, and increase efficiencies.

Our current innovation efforts include, among others, increasing member and Client self-service capabilities, developing APIs, driving electronic communication rather than paper, increasing straight-through processing, improving overall process times utilizing traditional robotic process automation, providing our members access to healthcare solutions through our marketplace, and AI tools including the Expedited Claims and HSAnswers tools, leveraging chip-enabled stacked cards, and mobile wallet.

Our Purple culture

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Many of these are state or federally chartered banks and other financial institutions for which we believe benefits administration services are not a core business.

devote more resources to the development, sale, and support of their products and services than we have at our disposal.

Some of our direct competitors (including well-known retail investment companies, such as Fidelity Investments, and healthcare service companies such as UnitedHealth Group's Optum and Webster Bank ) are in a position to devote more resources to the development, sale and support of their products and services than we have at our disposal.

Our other CDB administration competitors include health insurance carriers, human resources consultants and outsourcers, payroll providers, national CDB specialists, regional third-party administrators, and commercial banks.

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Our Network Partners and ecosystem partners may also choose to offer competitive services directly, as some health plans have done.

The products, programs, and services made available through our marketplace are part of highly competitive markets and introduce new and sophisticated competitors to us.

Our success depends on our ability to predict and react quickly to these and other industry and competitive dynamics.

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Our ability to predict and react quickly to relevant legal and regulatory trends and to correctly interpret their market and competitive implications is important to our success.

Key financial and operating metrics

Key operating metrics

We regularly review a number of key operating and financial metrics to evaluate our business, determine the allocation of our resources, make decisions regarding corporate strategies, and evaluate forward-looking projections and trends affecting our business.

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The number of our HSAs and CDBs are key metrics because our revenue is driven by the amount we earn from them.

The number of our HSAs increased by 1.2 million, or 14%, from January 31, 2024 to January 31, 2025, driven by new HSAs from sales and new HSAs added through the BenefitWallet HSA portfolio acquisition.

The number of our CDBs increased by 0.1 million, or 2%, from January 31, 2024 to January 31, 2025, primarily driven by an increase in HRA accounts.

The number of our HSAs increased by 0.7 million, or 7%, from January 31, 2025 to January 31, 2026, driven by new HSAs from sales.

The number of our CDBs increased by 0.1 million, or 1%, from January 31, 2025 to January 31, 2026, driven by an increase in FSA and HRA accounts.

The following table sets forth HSA Assets as of and for the periods indicated:

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Average daily HSA cash - Year-to-date $ 17,082 $ 16,206 5 %

HSA Assets includes our HSA members’ custodial assets, which consists of the following components:

(i) HSA cash, which includes member cash held by our Depository Partners and our insurance company partners, and (ii) HSA investments, which includes member investments held by our custodial investment partner.

HSA Assets include our HSA members’ custodial assets, which consist of the following components:

(i) HSA cash, which includes member cash held by our insurance company partners and Depository Partners, and (ii) HSA investments, which includes member investments held by our custodial investment partner.

Measuring HSA Assets is important because our custodial revenue is directly affected by average daily custodial balances for HSA Assets that are revenue generating.

HSA cash increased by $2.4 billion, or 16%, from January 31, 2024 to January 31, 2025, due to HSA cash added through the BenefitWallet HSA portfolio acquisition and net HSA contributions from new and existing HSA members, partially offset by transfers to HSA investments.

HSA investments increased by $4.5 billion, or 44%, from January 31, 2024 to January 31, 2025, due to the increased market value of invested balances, transfers from HSA cash, and HSA investments added through the BenefitWallet HSA portfolio acquisition.

Total HSA Assets increased by $6.9 billion, or 27%, from January 31, 2024 to January 31, 2025, primarily due to the increased market value of invested balances, HSA Assets added through the BenefitWallet HSA portfolio acquisition, and net HSA contributions from new and existing HSA members.

The following table summarizes the amount of HSA cash held by our Depository Partners and insurance company partners that is expected to reprice by fiscal year and the respective average annualized yield currently earned on that HSA cash as of January 31, 2025:

HSA cash increased by $0.5 billion, or 3%, from January 31, 2025 to January 31, 2026, due to net HSA contributions from new and existing HSA members, partially offset by transfers to HSA investments.

HSA investments increased by $3.8 billion, or 26%, from January 31, 2025 to January 31, 2026, due to the increased market value of invested balances and transfers from HSA cash.

Total HSA Assets increased by $4.4 billion, or 14%, from January 31, 2025 to January 31, 2026, primarily due to the increased market value of invested balances and net HSA contributions from new and existing HSA members.

HSA cash maturity schedule

The following table summarizes the amount of HSA cash held by our insurance company partners and Depository Partners that is expected to reprice by fiscal year and the respective average annualized yield currently earned on that HSA cash as of January 31, 2026:

Year ending January 31, (in billions, except percentages) HSA cash expected to reprice Average annualized yield

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Client-held funds fluctuate depending on the timing of funding and spending of CDB balances and the number of CDBs we administer.

Adjusted EBITDA

We define Adjusted EBITDA, which is a non-GAAP financial metric, as earnings before interest, taxes, depreciation and amortization, amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, amortization of incremental costs to obtain a contract, costs associated with unused office space, and certain other non-operating items.

We believe that

Adjusted EBITDA provides useful information to investors and analysts in understanding and evaluating our operating results in the same manner as our management and our board of directors because it reflects operating profitability before consideration of non-operating expenses and non-cash expenses and serves as a basis for comparison against other companies in our industry.

The following table presents a reconciliation of net income, the most comparable GAAP financial measure, to Adjusted EBITDA for the periods indicated:

Year ended January 31,

(in thousands) 2025 2024

Net income $ 96,703 $ 55,712

Interest income (13,914) (12,138)

Interest expense 60,634 55,455

Income tax provision 19,331 19,328

Depreciation and amortization 50,573 60,315

Amortization of acquired intangible assets 111,878 92,763

Stock-based compensation expense 96,425 77,151

Merger integration expenses 40,535 10,435

Amortization of incremental costs to obtain a contract 6,745 5,435

Costs associated with unused office space 3,244 4,179

Other (403) 538

Adjusted EBITDA $ 471,751 $ 369,173

The following table sets forth our net income as a percentage of revenue:

Year ended January 31,

(in thousands, except percentages) 2025 2024 $ Change % Change

Net income $ 96,703 $ 55,712 $ 40,991 74%

As a percentage of revenue 8 % 6 %

The $41.0 million, or 74%, increase in net income from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to an increase in total revenue, partially offset by an increase in operating expenses, including the settlement of a lawsuit related to a lease termination (the "Lease Settlement"), as described in Note 6—Commitments and contingencies to our financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, and an increase in cost of revenue, including increased costs incurred to reimburse and protect members from outside fraud activity.

For additional information, refer to the section entitled "Results of operations."

The following table sets forth our Adjusted EBITDA as a percentage of revenue:

Year ended January 31,

(in thousands, except percentages) 2025 2024 $ Change % Change

Adjusted EBITDA $ 471,751 $ 369,173 $ 102,578 28 %

As a percentage of revenue 39 % 37 %

The $102.6 million, or 28%, increase in Adjusted EBITDA from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to an increase in total revenue, partially offset by increases in personnel-related costs, professional fees, and costs incurred to reimburse and protect members from outside fraud activity.

Our use of Adjusted EBITDA, including as a percentage of revenue, has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

Non-GAAP net income

Non-GAAP net income is calculated by adding back to GAAP net income before income taxes the following items:

amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, costs associated with unused office space, and losses on extinguishment of debt, and subtracting a non-GAAP tax provision using a normalized non-GAAP tax rate.

believe that non-GAAP net income and non-GAAP net income per diluted share provide useful information to investors and analysts in understanding and evaluating our operating results in the same manner as our management and our board of directors because these non-GAAP metrics reflect operating profitability before consideration of certain non-operating expenses and non-cash expenses and serve as a basis for comparison against other companies in our industry.

The following table presents a reconciliation of net income, the most comparable GAAP financial measure, to non-GAAP net income for the periods indicated:

Year ended January 31,

(in thousands, except per share data) 2025 2024

Net income $ 96,703 $ 55,712

Income tax provision 19,331 19,328

Income before income taxes - GAAP 116,034 75,040

Non-GAAP adjustments:

Amortization of acquired intangible assets 111,878 92,763

Stock-based compensation expense 96,425 77,151

Merger integration expenses 40,535 10,435

Costs associated with unused office space 3,244 4,179

Loss on extinguishment of debt 1,576 1,157

Total adjustments to income before income taxes - GAAP 253,658 185,685

Income before income taxes - Non-GAAP 369,692 260,725

Income tax provision - Non-GAAP (1) 92,423 65,180

Non-GAAP net income 277,269 195,545

Diluted weighted-average shares 88,828 86,957

GAAP net income per diluted share $ 1.09 $ 0.64

Non-GAAP net income per diluted share $ 3.12 $ 2.25

(1) The Company utilizes a normalized non-GAAP tax rate to provide better consistency across the interim reporting periods within a given fiscal year by eliminating the effects of non-recurring and period-specific items, which can vary in size and frequency, and which are not necessarily reflective of the Company’s longer-term operations.

The normalized non-GAAP tax rate applied to each period presented was 25%.

The Company may adjust its non-GAAP tax rate as additional information becomes available and in conjunction with any other significant events occurring that may materially affect this rate, such as merger and acquisition activity, changes in business outlook, or other changes in expectations regarding tax regulations.

The $81.7 million, or 42%, increase in non-GAAP net income from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to an increase in total revenue, partially offset by increases in personnel-related costs, professional fees, and costs incurred to reimburse and protect members from outside fraud activity.

Our use of non-GAAP net income has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

Key components of our results of operations

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Service revenue.

We earn service revenue from the fees we charge our Network Partners, Clients, and members for the administration services we provide in connection with the HSAs and other CDBs we offer.

With respect to our Network Partners and Clients, our fees are generally based on a fixed tiered structure for the duration of the relevant service agreement and are paid to us on a monthly basis.

In addition, once a member’s HSA cash balance reaches a certain threshold, the member is able to invest his or her HSA Assets through our investment partner from which we earn recordkeeping and advisory fees, calculated as a percentage of the member's HSA investments.

We earn service revenue primarily from the fees we charge our Clients, Network Partners, and members for the administration services we provide in connection with the HSAs and other CDBs we offer.

Service revenue also includes revenues earned from invested HSA Assets and our marketplace.

With respect to our Clients and Network Partners, our fees are generally based on a fixed tiered structure for the duration of the relevant service agreement and are paid to us on a monthly basis.

In addition, once a member’s HSA cash balance reaches a certain threshold, the member is able to invest their HSA Assets through our investment partner from which we earn recordkeeping, advisory, and other fees, calculated as a percentage of the member's HSA investments.

We recognize revenue on a monthly basis as services are rendered to our members and Clients.

Custodial revenue.

We earn custodial revenue primarily from HSA cash held by our Depository Partners or our insurance company partners and Client-held funds held by our Depository Partners.

HSA cash is held by our

Depository Partners pursuant to contracts that (i) typically have terms ranging from three to five years, (ii) provide for a fixed or variable interest rate payable on the average daily cash balances held by the relevant Depository Partner, and (iii) have minimum and maximum required balances.

We earn custodial revenue primarily from HSA cash held by our insurance company partners or our Depository Partners and Client-held funds held by our Depository Partners.

HSA cash held by our insurance company partners is held in group annuity contracts or similar arrangements.

HSA cash is held by our Depository Partners pursuant to contracts that (i) typically have terms ranging from three to five years, (ii) provide for a fixed or variable interest rate payable on the average daily cash balances held by the relevant Depository Partner, and (iii) have minimum and maximum required balances.

Client-held funds held by our Depository Partners are held in interest-bearing demand deposit accounts that have a floating interest rate and no set term or duration.

We earn custodial revenue on HSA cash and Client-held funds that is based on the interest rates offered to us by these Depository Partners and insurance company partners.

We earn custodial revenue on HSA cash and Client-held funds that is based on the interest rates offered to us by these insurance company partners and Depository Partners.

Interchange revenue.

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Service costs.

Service costs are comprised of costs related to servicing accounts, managing Client and Network Partner relationships and processing reimbursement claims.

Service costs are primarily comprised of costs related to servicing accounts, managing Client and Network Partner relationships, and processing reimbursement claims.

Expenditures include personnel-related costs, depreciation, amortization, stock-based compensation, common expense allocations (such as office rent, supplies, and other overhead expenses), costs to reimburse members from outside fraud activity, new member and participant supplies, and other operating costs related to servicing our members.

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Interchange costs are comprised of costs we incur in connection with processing payment transactions initiated by our members.

Due to the substantiation requirement on FSA/HRA-linked payment card transactions, payment card costs are higher for FSA and HRA transactions than for HSA transactions.

Due to the substantiation requirement on FSA- and HRA-linked payment card transactions, payment card costs are higher for FSA and HRA transactions than for HSA transactions.

In addition to fixed per card fees, we are assessed additional transaction costs determined by the amount of the transaction.

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Our gross profit is our total revenue minus our total cost of revenue, and our gross margin is our gross profit expressed as a percentage of our total revenue.

Our gross margin has been and will continue to be affected by a number of factors, including interest rates, the amount we charge our Network Partners, Clients, and members, the mix of our sources of revenue, how many services we deliver per account, and payment processing costs per account.

Our gross margin has been and will continue to be affected by a number of factors, including interest rates, the amount we charge our Clients, Network Partners, and members, the mix of our sources of revenue, how many services we deliver per account, and payment processing costs per account.

Operating expenses

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Valuation allowances are established when necessary to reduce net deferred tax assets to the amount expected to be realized.

As of January 31, 2025, we have not recorded a valuation allowance on federal deferred tax assets, but we have recorded a valuation allowance on certain state deferred tax assets.

As of January 31, 2026, we had not recorded a valuation allowance on federal deferred tax assets but recorded a valuation allowance on certain state deferred tax assets.

We maintain an overall net federal and state deferred tax liability on our consolidated balance sheet.

We evaluate our tax positions in accordance with Accounting Standards Codification (“ASC”) 740-10-25, Accounting for Uncertainty in Income Taxes , which prescribes a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return.

We evaluate our tax positions in accordance with Accounting Standards Codification 740-10-25, Accounting for Uncertainty in Income Taxes , which prescribes a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return.

Results of operations

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Service revenue.

The $22.6 million, or 5%, increase in service revenue from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to the increases in the number of HSAs and the amount of HSA investments, partially offset by lower average service fees per account.

We expect service revenue to continue to increase, primarily due to an increase in Total Accounts, partially offset by lower average service fees per account.

The $6.7 million, or 1%, increase in service revenue from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026 was primarily due to the increases in the number of Total Accounts and the amount of HSA investments, largely offset by lower average service fees per account.

We expect service revenue to continue to increase, primarily due to increases in Total Accounts and HSA investments, partially offset by lower average service fees per account.

Custodial revenue.

The $158.8 million, or 41%, increase in custodial revenue from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to an increase in average annualized yield on HSA cash from 2.49% for the fiscal year ended January 31, 2024 to 3.11% for the fiscal year ended January 31, 2025 (due to both higher market interest rates and an increase in participation in our Enhanced Rates offering from 32% of HSA cash as of January 31, 2024 to 49% as of January 31, 2025), the $2.1 billion, or 15%,

increase in the average daily balance of HSA cash, as described above, and an increase in interest rates on the portion of our Client-held funds held by our Depository Partners in interest-bearing demand deposit accounts that have a floating interest rate.

Assuming the current interest rate environment continues, we expect our average annualized yield on HSA cash to further increase as our existing agreements with our Depository Partners are renewed or replaced with agreements with higher rates, resulting in higher custodial revenue.

The $91.4 million, or 17%, increase in custodial revenue from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026 was primarily due to an increase in average annualized yield on HSA cash from 3.11% for the fiscal year ended January 31, 2025 to 3.53% for the fiscal year ended January 31, 2026 (due to both increased participation in our Enhanced Rates offering from 49% of HSA cash as of January 31, 2025 to 58% as of January 31, 2026 and HSA cash placed with Depository Partners at higher yields), the $0.9 billion, or 5% increase in average daily HSA cash, as described above, partially offset by a decrease in interest rates on the portion of our Client-held funds held by our Depository Partners in interest-bearing demand deposit accounts that have a floating interest rate.

Assuming the current interest rate environment continues, we expect our average annualized yield on HSA cash to further increase as our remaining existing agreements with our Depository Partners are renewed or replaced with agreements with higher rates, resulting in higher custodial revenue.

In addition, we expect an increase in the percentage of HSA cash held in our Enhanced Rates offering to continue to positively impact our average annualized yield and thus our custodial revenue.

As Basic Rates contracts mature, we intend to transfer the associated HSA cash into Enhanced Rates contracts unless the HSA member affirmatively opts to remain in the Basic Rates offering.

Refer to the HSA cash maturity schedule in the section entitled “Key financial and operating metrics.”

Interchange revenue.

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Total revenue.

Total revenue increased by $200.2 million, or 20%, from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025, due to the increases in custodial, service, and interchange revenues, described above.

Total revenue increased by $113.7 million, or 9%, from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026, due to the increases in custodial, interchange, and service revenues, described above.

Cost of revenue

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Service costs.

The $34.2 million, or 11%, increase in service costs from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to a $19.1 million increase in costs incurred to reimburse members impacted by outside fraud activity and increases in costs to support the increase in Total Accounts and member interactions, partially offset by efficiencies resulting from our technology investments.

For the fiscal year ending January 31, 2026, we expect service costs to decrease as a result of our technology investments in security and further operational efficiencies, partially offset by costs resulting from an increase in Total Accounts.

The $23.1 million, or 7%, decrease in service costs from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026 was primarily due to efficiencies resulting from our technology investments and a decrease in costs incurred to reimburse members impacted by outside fraud activity, partially offset by increases in costs to support the increase in Total Accounts and member interactions.

For the fiscal year ending January 31, 2027, we expect service costs to remain relatively steady as further operational efficiencies are expected to largely offset higher costs resulting from an increase in Total Accounts.

Custodial costs.

The $7.2 million, or 22%, increase in custodial costs from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to the $2.1 billion, or 15% increase in the average daily balance of HSA cash, as described above, an increase in fees charged by our Depository Partners, and an increase in the average annualized rate of interest retained by HSA members on HSA cash, from 0.22% during the fiscal year ended January 31, 2024 to 0.23% during the fiscal year ended January 31, 2025.

On an annual basis, we expect custodial costs to increase due to an increase in the year-over-year average daily balance of HSA cash, an increase in fees charged by our Depository Partners, and an increase in the average annualized rate of interest retained by HSA members on HSA cash.

The $4.1 million, or 10%, increase in custodial costs from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026 was primarily due to the $0.9 billion, or 5% increase in average daily HSA cash, as described above, and an increase in the average annualized rate of interest retained by HSA members on HSA cash, from 0.23% during the fiscal year ended January 31, 2025 to 0.24% during the fiscal year ended January 31, 2026.

On an annual basis, we expect custodial costs to increase due to an increase in average daily HSA cash and an increase in the average annualized rate of interest retained by HSA members on HSA cash.

Interchange costs.

The $4.2 million, or 15%, increase in interchange costs from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to an increase in Total Accounts and certain costs associated with our transition to a single card processor during the fiscal year ended January 31, 2025, partially offset by efficiencies resulting from the transition.

The $3.3 million, or 10%, decrease in interchange costs from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026 was primarily due to efficiencies resulting from the transition to a single card processor, partially offset by higher costs due to an increase in Total Accounts and an increase in spend per account using our payment cards.

We expect interchange costs to continue to increase, primarily due to an increase in Total Accounts.

Total cost of revenue.

For the fiscal year ending January 31, 2026, we expect that our cost of revenue will decrease in dollar amount, primarily due to a decrease in service costs.

We expect our cost of revenue to decrease as a percentage of our total revenue, primarily due to an increase in custodial revenue and a decrease in service costs, partially offset by costs resulting from an increase in Total Accounts.

Cost of revenue as a percentage of total revenue decreased to 35% for the fiscal year ended January 31, 2025 compared to 38% for the fiscal year ended January 31, 2024, due to total revenue increasing at a significantly higher rate (20%) than total cost of revenue (12%).

Cost of revenue as a percentage of total revenue decreased to 30% for the fiscal year ended January 31, 2026 compared to 35% for the fiscal year ended January 31, 2025, due to the 9% increase in total revenue and the 5% decrease in total cost of revenue.

For the fiscal year ending January 31, 2027, we expect our cost of revenue to decrease as a percentage of our total revenue, primarily due to an increase in custodial revenue, partially offset by costs resulting from an increase in Total Accounts.

Cost of revenue will continue to be affected by a number of different factors, including our ability to scale our service delivery, Network Partner implementation, and account management functions.

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Sales and marketing.

The $11.5 million, or 14%, increase in sales and marketing expenses from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to an increase in personnel-related expenses.

We expect our sales and marketing expenses to increase as we continue to focus on our cross-selling and member engagement programs.

The $4.5 million, or 5%, increase in sales and marketing expenses from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026 was primarily due to increases in advertising expenses.

We expect our sales and marketing expenses to increase as we continue to focus on brand awareness and Client and member engagement programs, including campaigns to reach individuals who are newly eligible for HSAs under recent legislative expansion.

On an annual basis, we expect our sales and marketing expenses to remain relatively steady as a percentage of our total revenue.

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Technology and development.

The $20.7 million, or 9%, increase in technology and development expenses from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to increases in personnel-related expenses and software costs.

The $23.0 million, or 10%, increase in technology and development expenses from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026 was primarily due to increases in software costs and personnel-related expenses.

We expect our technology and development expenses to increase as we continue to invest in the development and security of our proprietary technology, including our ongoing modernization project described earlier.

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General and administrative.

The $28.6 million, or 28%, increase in general and administrative expenses from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to accelerated stock-based compensation expense recognized with respect to certain performance restricted stock units granted during the current fiscal year, as described in Note 9—Stock-based compensation to our financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, and increases in professional services expense.

For the fiscal year ending January 31, 2026, we expect our general and administrative expenses to decrease, primarily due to a decrease in stock-based compensation expense, partially offset by additional demands on our legal, compliance, and finance functions as we continue to grow our business.

We expect our general and administrative expenses to decrease as a percentage of our total revenue.

The $12.3 million, or 9%, decrease in general and administrative expenses from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026 was primarily due to a decrease in stock-based compensation expense resulting from the retirement of our former chief executive officer and a decrease in professional services expenses, partially offset by increases in personnel-related expenses.

However, on an annual basis, we expect our general and administrative expenses to increase, primarily due to the normalization of our stock-based compensation expense and additional demands on our legal, compliance, and finance functions as we continue to grow our business.

We expect our general and administrative expenses to increase as a percentage of our total revenue.

However, our general and administrative expenses may fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and the timing and extent of our general and administrative expenses.

Amortization of acquired intangible assets.

The $19.1 million, or 21%, increase in amortization of acquired intangible assets from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to the new intangible assets added through the BenefitWallet HSA portfolio acquisition.

The $3.9 million, or 4%, decrease in amortization of acquired intangible assets from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026 was primarily due to a smaller carrying amount of intangible assets that have not been fully amortized, partially offset by amortization of intangible assets added through the BenefitWallet HSA portfolio acquisition during the fiscal year ended January 31, 2025

On an annual basis, we expect amortization of acquired intangible assets to decrease, primarily due to a smaller carrying amount of intangible assets that have not been fully amortized.

Merger integration.

The $30.1 million, or 288%, increase in merger integration expense from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to the Lease Settlement, as described in Note 6—Commitments and contingencies to our financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Other merger integration expenses during the fiscal year ended January 31, 2025 consisted of professional fees, including expenses incurred in conjunction with the migration of accounts, technology-related expenses directly related to the Further acquisition and certain ongoing merger integration expenses related to the acquisition of WageWorks, Inc.

("WageWorks").

On an annual basis, we expect merger integration expense to decrease as we complete the remaining merger integration activities.

The $35.5 million, or 88%, decrease in merger integration expenses from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026 was primarily due to a non-recurring $30.0 million settlement of a lawsuit related to a lease termination (the "Lease Settlement"), as described in Note 6—Commitments and contingencies to our financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2025, and a decrease in professional fees.

Merger integration expenses during the fiscal year ended January 31, 2026 consisted primarily of professional fees, including expenses incurred in conjunction with the migration of accounts and technology-related expenses directly related to the Further acquisition.

On an annual basis, we expect merger integration expense to remain relatively steady as we complete the remaining merger integration activities.

Interest expense

The $5.2 million, or 9%, increase in interest expense from the fiscal year ended January 31, 2024 to the fiscal year ended January 31, 2025 was primarily due to a higher average principal balance and a $0.4 million increase in losses on extinguishment of debt.

The increase was partially offset by a lower average interest rate on borrowings with variable interest rate terms.

On August 23, 2024, we entered into the Credit Agreement pursuant to which the Company established a new five-year senior secured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of up to $1.0 billion, a portion of which was used to repay all outstanding obligations under our prior credit agreement (the "Prior Credit Agreement").

As of January 31, 2025, borrowings under our Revolving Credit Facility were $461.9 million and had a stated interest rate of 5.91%.

As of January 31, 2024, borrowings under our Prior Credit Agreement were $286.9 million and had a stated interest rate of 6.69%.

The increase in principal was due to $225.0 million of borrowings to pay a portion of the BenefitWallet HSA portfolio acquisition purchase price, partially offset by prepayments of $50.0 million during the fiscal year ended January 31, 2025.

The $3.5 million, or 6%, decrease in interest expense from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026 was primarily due to a lower average interest rate on borrowings with variable interest rate terms and a lower average principal balance.

The interest rate on our Revolving Credit Facility is variable and, accordingly, we may incur additional expense if interest rates increase in future periods.

Other income, net

The $1.5 million increase in other income, net, was due to an increase in interest income on corporate cash, partially offset by a decrease in other miscellaneous income, net.

The $2.2 million decrease in other income, net, was primarily due to a decrease in interest income on corporate cash.

Income tax provision

We recorded an income tax provision of $19.3 million in each of the fiscal years ended January 31, 2025 and 2024.

Relative to the year ended January 31, 2024, we had an increase in pre-tax book income, an increase in nondeductible executive compensation, and increased expense from deferred tax rate adjustments due to state apportionment changes, which were offset by an increase in tax deductible stock-based compensation compared to GAAP stock-based compensation expense and a decrease in expense from unrecognized tax benefits.

The $42.9 million increase in income tax provision from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026 was primarily the result of an increase in pre-tax book income, a reduction in tax benefit from stock-based compensation expense, and a decrease in research and development tax credits net of unrecognized tax benefits, partially offset by tax benefit from deferred tax rate adjustments due to state apportionment changes and a decrease in excessive employee remuneration.

The $118.5 million, or 123%, increase in net income from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026 was primarily due to an increase in gross profit and a decrease in operating expenses, as more fully described above.

The decrease in operating expenses was primarily due to the non-recurring $30.0 million expense related to the Lease Settlement during the fiscal year ended January 31, 2025.

These changes were partially offset by the increase in income tax provision.

Seasonal concentration of our growth combined with our recurring revenue model create seasonal variation in our results of operations.

Revenue results are seasonally impacted due to ancillary service fees, timing of HSA contributions, and timing of card spend.

Revenue results are seasonally impacted due to ancillary service fees, timing of HSA

contributions, and timing of card spend.

Cost of revenue is seasonally impacted as a significant number of new and existing Network Partners bring us new HSAs and CDBs beginning in January of each year concurrent with the start of many employers’ benefit plan years.

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These expenses begin to ramp up during our third fiscal quarter, with the majority of seasonal expenses incurred in our fourth fiscal quarter.

Non-GAAP financial information

Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results.

We believe that these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to the Company's financial condition and results of operations.

We caution investors that non-GAAP financial information, by its nature, departs from GAAP;

accordingly, its use can make it difficult to compare current results with results from other reporting periods and with the results of other companies.

In addition, while amortization of acquired intangible assets is being excluded from non-GAAP financial measures, the revenue generated from those acquired intangible assets is not excluded.

Whenever we use these non-GAAP financial measures, we provide a reconciliation of the applicable non-GAAP financial measure to the most closely applicable GAAP financial measure.

Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed in the tables below.

Adjusted EBITDA

We believe that Adjusted EBITDA provides useful information to investors and analysts in understanding and evaluating our operating results in the same manner as our management and our board of directors because it reflects operating profitability before consideration of non-operating expenses and non-cash expenses and serves as a basis for comparison against other companies in our industry.

The following table presents a reconciliation of net income, the most comparable GAAP financial measure, to Adjusted EBITDA for the periods indicated:

Year ended January 31,

(in thousands) 2026 2025

Net income $ 215,201 $ 96,703

Interest income (11,729) (13,914)

Interest expense 57,131 60,634

Income tax provision 62,231 19,331

Depreciation and amortization 46,703 50,573

Amortization of acquired intangible assets 107,953 111,878

Stock-based compensation expense 73,063 96,425

Merger integration expenses 5,024 40,535

Amortization of incremental costs to obtain a contract 7,840 6,745

Costs associated with unused office space 2,945 3,244

Other (378) (403)

Adjusted EBITDA $ 565,984 $ 471,751

The following table sets forth our net income and Adjusted EBITDA as a percentage of revenue:

Year ended January 31,

(in thousands, except percentages) 2026 2025 $ Change % Change

Net income $ 215,201 $ 96,703 $ 118,498 123%

As a percentage of revenue 16 % 8 %

Adjusted EBITDA $ 565,984 $ 471,751 $ 94,233 20 %

As a percentage of revenue 43 % 39 %

Our Adjusted EBITDA increased by $94.2 million, or 20%, from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026, primarily due to an increase in total revenue, efficiencies resulting from our technology investments, a decrease in costs incurred to reimburse members impacted by outside fraud activity, and a decrease in professional services expenses, partially offset by increases in software costs and costs to support the increase in Total Accounts and member interactions.

Non-GAAP net income

Non-GAAP net income is calculated by adding back to GAAP net income before income taxes the following items:

We believe that non-GAAP net income and non-GAAP net income per diluted share provide useful information to investors and analysts in understanding and evaluating our operating results in the same manner as our management and our board of directors because these non-GAAP metrics reflect operating profitability before consideration of certain non-operating expenses and non-cash expenses and serve as a basis for comparison against other companies in our industry.

The following table presents a reconciliation of net income, the most comparable GAAP financial measure, to non-GAAP net income for the periods indicated:

Year ended January 31,

(in thousands, except per share data) 2026 2025

Net income $ 215,201 $ 96,703

Income tax provision 62,231 19,331

Income before income taxes - GAAP 277,432 116,034

Non-GAAP adjustments:

Amortization of acquired intangible assets 107,953 111,878

Stock-based compensation expense 73,063 96,425

Merger integration expenses 5,024 40,535

Costs associated with unused office space 2,945 3,244

Loss on extinguishment of debt — 1,576

Total adjustments to income before income taxes - GAAP 188,985 253,658

Income before income taxes - Non-GAAP 466,417 369,692

Income tax provision - Non-GAAP (1) 116,604 92,423

Non-GAAP net income 349,813 277,269

Diluted weighted-average shares 87,473 88,828

GAAP net income per diluted share $ 2.46 $ 1.09

Non-GAAP net income per diluted share $ 4.00 $ 3.12

The normalized non-GAAP tax rate applied to each period presented was 25%.

Our non-GAAP net income increased by $72.5 million, or 26%, from the fiscal year ended January 31, 2025 to the fiscal year ended January 31, 2026, primarily due to an increase in total revenue, efficiencies resulting from our technology investments, a decrease in costs incurred to reimburse members impacted by outside fraud activity, and a decrease in professional services expenses, partially offset by increases in software costs and costs to support the increase in Total Accounts and member interactions.

Liquidity and capital resources

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In addition, we may conduct concurrent or other financings at any time.

On August 23, 2024, we entered into the Credit Agreement, which includes a five-year senior secured Revolving Credit Facility in an aggregate principal amount of up to $1.0 billion, a portion of which was used to refinance our Prior Credit Agreement.

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.

Our Credit Agreement includes a senior secured Revolving Credit Facility in an aggregate principal amount of up to $1.0 billion, which matures on August 23, 2029 and may be used in the future for working capital and general corporate purposes, including the financing of acquisitions and other investments.

For a description of the terms of the Credit Agreement , refer to Note 7—Indebtedness to our financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

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We were in compliance with all covenants under the Credit Agreement as of January 31, 2026, and for the period then ended.

During the fiscal year ended January 31, 2025, we used $452.2 million of cash, which includes $225.0 million borrowed under our prior revolving credit facility, to pay for the BenefitWallet HSA portfolio acquisition.

In August 2024, in connection with our entry into the Credit Agreement, we repaid all outstanding obligations in the amount of $511.9 million under the Prior Credit Agreement and terminated all commitments thereunder.

During the fiscal year ended January 31, 2025, we prepaid $50.0 million under the Credit Agreement.

We continue to be in compliance with all covenants under the Credit Agreement through the filing date of this Annual Report on Form 10-K.

During the fiscal year ended January 31, 2026, we used $299.3 million of cash for common stock repurchases.

See Note 10—Stockholders' equity to our financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to our stock repurchase program.

During the fiscal year ended January 31, 2026, we prepaid $100.0 million under our Credit Agreement .

Capital expenditures for the fiscal years ended January 31, 2026 and 2025 were $48.5 million and $53.2 million, respectively.

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Cash flows from operating activities.

Net cash provided by operating activities increased by $97.0 million, primarily due to increased cash receipts with respect to our custodial, service, and interchange revenues and a decrease in income tax payments, partially offset by an increase in cash payments with respect to operating expenses, cost of revenue, and interest on our long-term debt.

Net cash provided by operating activities increased by $117.2 million, primarily due to increased cash receipts with respect to our custodial, interchange, and service revenues, partially offset by the timing of cash payments for personnel-related costs.

Cash flows from investing activities.

Net cash used in investing activities increased by $459.4 million, primarily due to a $449.0 million increase in cash used to acquire HSA portfolios and a $10.0 million increase in cash used for purchases of software and capitalized software development costs.

Net cash used in investing activities decreased by $458.3 million, primarily due to a $451.9 million decrease in cash used to acquire HSA portfolios and a $4.6 million decrease in cash used for purchases of software and capitalized software development costs.

Cash flows from financing activities.

Net cash provided by financing activities was $57.6 million during the fiscal year ended January 31, 2025, compared to $47.0 million of net cash used in financing activities during the fiscal year ended January 31, 2024.

The change was due to a $736.9 million increase in proceeds from long-term debt and a $3.0 million increase in proceeds from the exercise of common stock options, partially offset by a $511.2 million increase in cash used for principal payments and debt issuance costs associated with our long-term debt, a $121.5 million increase in cash used for repurchases of common stock, and a $2.5 million increase in net cash used in the settlement of client-held funds obligations.

Net cash used in financing activities was $387.0 million during the fiscal year ended January 31, 2026, compared to $57.6 million of net cash provided by financing activities during the fiscal year ended January 31, 2025.

The change was primarily due to a $736.9 million decrease in proceeds from long-term debt and a $177.8 million increase in cash used for repurchases of common stock, partially offset by a $465.6 million decrease in cash used for principal payments and debt issuance costs associated with our long-term debt.

Contractual obligations

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Costs incurred during operation and post-implementation stages are charged to expense.

Costs incurred that are directly attributable to developing or obtaining software for internal use incurred in the application development stage are capitalized.

Costs incurred that are directly attributable to developing or

obtaining software for internal use incurred in the application development stage are capitalized.

Management’s judgment is required in determining the point when various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs and in determining the estimated useful lives over which the costs are amortized.

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The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

Recoverability of these assets is measured by a comparison of the carrying

amounts to the future undiscounted cash flows the assets are expected to generate from the use and eventual disposition.

Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from the use and eventual disposition.

If such review indicates that the carrying amount of property and equipment and intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value.

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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-K

Item 7. Management’s Discussion and Analysis