What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-28 compared with 2025-12-03 · 179 added, 201 removed, 258 unchanged (60% of the section changed)

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Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such events.

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 health savings accounts ("HSAs") and other consumer-directed benefits ("CDBs") offered by employers, including flexible spending accounts and health reimbursement arrangements (“FSAs” and “HRAs”), and to administer Consolidated Omnibus Budget Reconciliation Act (“COBRA”), commuter and other benefits.

As part of our services, we provide consumers with payment processing services, personalized benefit information, access to healthcare solutions through our marketplace platform, 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 of October 31, 2025, we administered 10.1 million HSAs, with balances totaling $34.4 billion, which we call HSA Assets, as well as 7.2 million complementary CDBs.

We refer to the aggregate number of HSAs and other CDBs that we administer as Total Accounts, of which we had 17.3 million as of October 31, 2025.

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 April 30, 2026, we administered 10.6 million HSAs, with balances totaling $37.1 billion, which we call HSA Assets, as well as 7.2 million complementary CDBs.

We refer to the aggregate number of HSAs and other CDBs that we administer as Total Accounts, of which we had 17.8 million as of April 30, 2026.

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 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 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.

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.

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

According to the 2025 Year-End Devenir HSA Research Report, as of December 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.

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.

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

BenefitWallet HSA portfolio acquisition

In fiscal 2025, we acquired the BenefitWallet HSA portfolio, comprised of approximately 616,000 HSAs plus other accounts with $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.

Key factors affecting our performance

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See also the section entitled “Risk factors” included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 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, may 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.

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

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.

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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 a market-share leader in the administration of 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 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 HSA 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 10—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.

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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, providing our members access to healthcare solutions through our marketplace platform, and increasingly through AI tools including the Expedited Claims and HSAnswers tools, leveraging chip-enabled stacked cards, and mobile wallet.

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, facilitate member personalization, 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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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 following table sets forth our HSAs, CDBs, and Total Accounts as of and for the periods indicated:

(in thousands, except percentages) October 31, 2025 October 31, 2024 % Change January 31, 2025

(in thousands, except percentages) April 30, 2026 April 30, 2025 % Change January 31, 2026

HSAs 10,635 9,886 8 % 10,570

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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 0.6 million, or 6%, from October 31, 2024 to October 31, 2025, driven by new HSAs from sales.

The number of our CDBs increased by 0.2 million, or 3%, from October 31, 2024 to October 31, 2025, primarily driven by an increase in HRA and FSA accounts, partially offset by a decrease in other CDBs.

The number of our HSAs increased by 0.7 million, or 8%, from April 30, 2025 to April 30, 2026, driven by new HSAs from sales.

The number of our CDBs decreased by 24 thousand, or less than 1%, from April 30, 2025 to April 30, 2026.

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

(in millions, except percentages) October 31, 2025 October 31, 2024 % Change January 31, 2025

(in millions, except percentages) April 30, 2026 April 30, 2025 % Change January 31, 2026

HSA cash $ 17,494 $ 17,066 3 % $ 17,982

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HSA Assets include our HSA members’ custodial assets, which consist 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.

(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 $0.5 billion, or 3%, from October 31, 2024 to October 31, 2025, due to net HSA contributions from new and existing HSA members, partially offset by transfers to HSA investments.

HSA investments increased by $3.9 billion, or 29%, from October 31, 2024 to October 31, 2025, due to the increased market value of invested balances and transfers from HSA cash.

Total HSA Assets increased by $4.5 billion, or 15%, from October 31, 2024 to October 31, 2025, primarily due to the increased market value of invested balances and net HSA contributions from new and existing HSA members.

HSA cash increased by $0.4 billion, or 3%, from April 30, 2025 to April 30, 2026, due to net HSA contributions from new and existing HSA members, partially offset by transfers to HSA investments.

HSA investments increased by $5.4 billion, or 38%, from April 30, 2025 to April 30, 2026, due to the increased market value of invested balances and transfers from HSA cash.

Total HSA Assets increased by $5.8 billion, or 19%, from April 30, 2025 to April 30, 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 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 October 31, 2025:

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 April 30, 2026:

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

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Total (1) $ 16.5 3.6 %

(1) Excludes $0.5 billion of HSA cash held in floating-rate contracts as of October 31, 2025.

(1) Excludes $1.0 billion of HSA cash held in floating-rate contracts as of April 30, 2026.

Client-held funds

(in millions, except percentages) October 31, 2025 October 31, 2024 % Change January 31, 2025

(in millions, except percentages) April 30, 2026 April 30, 2025 % Change January 31, 2026

Client-held funds $ 1,013 $ 925 10 % $ 1,090

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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:

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

(in thousands) 2025 2024 2025 2024

Net income $ 51,692 $ 5,703 $ 165,461 $ 70,338

Interest income (2,864) (3,897) (8,961) (10,881)

Interest expense 14,049 18,155 43,862 45,377

Income tax provision 15,840 515 51,072 15,735

Depreciation and amortization 11,778 12,371 34,970 38,393

Amortization of acquired intangible assets 27,002 28,350 81,005 84,876

Stock-based compensation expense 20,542 21,123 53,946 74,717

Merger integration expenses 1,159 34,437 3,700 38,357

Amortization of incremental costs to obtain a contract 1,982 1,702 5,859 5,015

Costs associated with unused office space 654 812 2,229 2,408

Other (22) (1,026) (49) (368)

Adjusted EBITDA $ 141,812 $ 118,245 $ 433,094 $ 363,967

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

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

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

Net income $ 51,692 $ 5,703 $ 45,989 806 % $ 165,461 $ 70,338 $ 95,123 135 %

As a percentage of revenue 16 % 2 % 17 % 8 %

Our net income increased by $46.0 million, or 806%, from the three months ended October 31, 2024 to the three months ended October 31, 2025, primarily due to an increase in gross profit and a decrease in operating expenses.

The decrease in operating expenses was primarily due to a non-recurring $30.0 million expense during the three months ended October 31, 2024 to settle a lawsuit related to a lease termination (the "Lease Settlement"), as described in Note 6 to our consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

These changes were partially offset by an increase in income tax provision and are described more fully in the section entitled "Comparison of the three and nine months ended October 31, 2025 and 2024."

Our net income increased by $95.1 million, or 135%, from the nine months ended October 31, 2024 to the nine months ended October 31, 2025, primarily due to an increase in gross profit and a decrease in operating expenses.

The decrease in operating expenses was primarily due to the non-recurring Lease Settlement during the nine months ended October 31, 2024.

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

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

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

Adjusted EBITDA $ 141,812 $ 118,245 $ 23,567 20 % $ 433,094 $ 363,967 $ 69,127 19 %

As a percentage of revenue 44 % 39 % 44 % 41 %

Our Adjusted EBITDA increased by $23.6 million, or 20%, from the three months ended October 31, 2024 to the three months ended October 31, 2025, primarily due to an increase in total revenue, a decrease in costs incurred to reimburse members impacted by outside fraud activity, efficiencies resulting from our technology investments, 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.

Our Adjusted EBITDA increased by $69.1 million, or 19%, from the nine months ended October 31, 2024 to the nine months ended October 31, 2025, primarily due to an increase in total revenue, efficiencies resulting from our technology investments, a decrease in professional services expenses, and a decrease in costs incurred to reimburse members impacted by outside fraud activity, partially offset by increases in software costs and costs to support the increase in Total Accounts and member interactions.

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.

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:

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

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

Net income $ 51,692 $ 5,703 $ 165,461 $ 70,338

Income tax provision 15,840 515 51,072 15,735

Income before income taxes - GAAP 67,532 6,218 216,533 86,073

Non-GAAP adjustments:

Amortization of acquired intangible assets 27,002 28,350 81,005 84,876

Stock-based compensation expense 20,542 21,123 53,946 74,717

Merger integration expenses 1,159 34,437 3,700 38,357

Costs associated with unused office space 654 812 2,229 2,408

Loss on extinguishment of debt — 1,576 — 1,576

Total adjustments to income before income taxes - GAAP 49,357 86,298 140,880 201,934

Income before income taxes - Non-GAAP 116,889 92,516 357,413 288,007

Income tax provision - Non-GAAP (1) 29,223 23,129 89,353 72,002

Non-GAAP net income 87,666 69,387 268,060 216,005

Diluted weighted-average shares 86,970 88,634 87,799 88,699

GAAP net income per diluted share $ 0.59 $ 0.06 $ 1.88 $ 0.79

Non-GAAP net income per diluted share $ 1.01 $ 0.78 $ 3.05 $ 2.44

(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.

Our non-GAAP net income increased by $18.3 million, or 26%, from the three months ended October 31, 2024 to the three months ended October 31, 2025, primarily due to an increase in total revenue, a decrease in costs incurred to reimburse members impacted by outside fraud activity, efficiencies resulting from our technology investments, 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.

Our non-GAAP net income increased by $52.1 million, or 24%, from the nine months ended October 31, 2024 to the nine months ended October 31, 2025, primarily due to an increase in total revenue, efficiencies resulting from our technology investments, a decrease in professional services expenses, and a decrease in costs incurred to reimburse members impacted by outside fraud activity, partially offset by increases in software costs and costs to support the increase in Total Accounts and member interactions.

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 primarily 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.

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 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.

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.

Custodial costs.

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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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Technology and development.

Technology and development expenses include personnel and related expenses for software development and delivery, licensed software, information technology, data management, product, and

Technology and development expenses include personnel and related expenses for software development and delivery, licensed software, information technology, data management, product, and security.

Technology and development expenses also include software engineering services, the costs of operating our technology infrastructure, depreciation, amortization of capitalized software development costs, stock-based compensation, and common expense allocations.

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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 October 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.

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

Comparison of the three and nine months ended October 31, 2025 and 2024

As of April 30, 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 condensed consolidated balance sheet.

Comparison of the three months ended April 30, 2026 and 2025

The following table sets forth our revenue for the periods indicated:

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

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

Three months ended April 30,

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

Service revenue $ 122,932 $ 119,784 $ 3,148 3 %

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Service revenue.

The $1.1 million, or 1%, increase in service revenue from the three months ended October 31, 2024 to the three months ended October 31, 2025 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.

The $3.8 million, or 1%, increase in service revenue from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 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.

The $3.1 million, or 3%, increase in service revenue from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily due to increases in marketplace revenue, the amount of HSA investments, and the number of Total Accounts, partially offset by lower average service fees per account.

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

Custodial revenue.

The $18.1 million, or 13%, increase in custodial revenue from the three months ended October 31, 2024 to the three months ended October 31, 2025 was primarily due to an increase in average annualized yield on HSA cash from 3.17% for the three months ended October 31, 2024 to 3.53% for the three months ended October 31, 2025 (due to both HSA cash placed with Depository Partners at higher yields and increased participation in our Enhanced Rates offering) and the $0.5 billion, or 3%, 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.

The $74.1 million, or 18%, increase in custodial revenue from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 was primarily due to an increase in average annualized yield on HSA cash from 3.07% for the nine months ended October 31, 2024 to 3.51% for the nine months ended October 31, 2025 (due to both HSA cash placed with Depository Partners at higher yields and increased participation in our Enhanced Rates offering) and the $1.0 billion, or 6%, 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.

On an annual basis, 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 $17.9 million, or 11%, increase in custodial revenue from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily due to an increase in average annualized yield on HSA cash from 3.50% for the three months ended April 30, 2025 to 3.84% for the three months ended April 30, 2026 (due to increased participation in our Enhanced Rates offering, HSA cash placed with Depository Partners at higher yields, and a $2.4 million one-time benefit resulting from the early termination of a contract with a Depository Partner) and the $0.4 billion, or 2%, 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.

On an annual basis, 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.”

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

Interchange revenue.

The $2.5 million, or 6%, increase in interchange revenue from the three months ended October 31, 2024 to the three months ended October 31, 2025 was primarily due to an increase in Total Accounts.

The $12.9 million, or 10%, increase in interchange revenue from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 was primarily due to an increase in Total Accounts and an increase in spend per account using our payment cards.

On an annual basis, relative to the fiscal year ended January 31, 2025, we expect interchange revenue to continue to increase, primarily due to an increase in Total Accounts.

The $2.8 million, or 5%, increase in interchange revenue from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily due to an increase in Total Accounts and an increase in spend per account using our payment cards, partially offset by a lower average rate earned on payment card transactions.

On an annual basis, relative to the fiscal year ended January 31, 2026, we expect interchange revenue to continue to increase, primarily due to an increase in Total Accounts, partially offset by a lower average rate earned on payment card transactions.

Total revenue.

Total revenue increased $21.7 million, or 7%, from the three months ended October 31, 2024 to the three months ended October 31, 2025 due to the increases in custodial, interchange, and service revenues, described above.

Total revenue increased $90.9 million, or 10%, from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 due to the increases in custodial, interchange, and service revenues, described above.

Total revenue increased $23.8 million, or 7%, from the three months ended April 30, 2025 to the three months ended April 30, 2026 due to the increases in custodial, service, and interchange revenues, described above.

Cost of revenue

The following table sets forth our cost of revenue for the periods indicated:

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

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

Three months ended April 30,

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

Service costs $ 78,326 $ 88,005 $ (9,679) (11) %

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Service costs.

The $10.0 million, or 11%, decrease in service costs from the three months ended October 31, 2024 to the three months ended October 31, 2025 was primarily due to a decrease in costs incurred to reimburse

members impacted by outside fraud activity and efficiencies resulting from our technology investments, partially offset by increases in costs to support the increase in Total Accounts and member interactions.

The $6.1 million, or 2%, decrease in service costs from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 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.

On an annual basis, relative to the fiscal year ended January 31, 2025, we expect service costs to decrease as a result of our technology investments in security and further operational efficiencies, partially offset by higher costs resulting from an increase in Total Accounts.

The $9.7 million, or 11%, decrease in service costs from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily due to efficiencies resulting from our technology investments and decreases in costs incurred to reimburse members impacted by outside fraud activity, non-recurring consulting expenses, and self-insured medical claims expenses.

These decreases were partially offset by increases in costs to support the increase in Total Accounts and member interactions.

On an annual basis, relative to the fiscal year ended January 31, 2026, we expect service costs to decrease as further operational efficiencies are expected to largely offset higher costs resulting from an increase in Total Accounts.

Custodial costs.

The $0.6 million, or 6%, increase in custodial costs from the three months ended October 31, 2024 to the three months ended October 31, 2025 was primarily due to the $0.5 billion, or 3%, increase in average daily HSA cash, as described above, as well as an increase in the average annualized rate of interest retained by HSA members on HSA cash from 0.23% during the three months ended October 31, 2024 to 0.24% during the three months ended October 31, 2025.

The $3.4 million, or 11%, increase in custodial costs from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 was primarily due to the $1.0 billion, or 6%, increase in average daily HSA cash, as described above, as well as an increase in the average annualized rate of interest retained by HSA members on HSA cash from 0.23% during the nine months ended October 31, 2024 to 0.24% during the nine months ended October 31, 2025.

The $0.9 million, or 8%, increase in custodial costs from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily due to the $0.4 billion, or 2%, 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 three months ended April 30, 2025 to 0.25% during the three months ended April 30, 2026.

On an annual basis, relative to the fiscal year ended January 31, 2026, 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 $28 thousand, or less than 1%, increase in interchange costs from the three months ended October 31, 2024 to the three months ended October 31, 2025 was primarily due to an increase in Total Accounts, offset by efficiencies resulting from the transition to a single card processor.

The $3.2 million, or 13%, decrease in interchange costs from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 was primarily due to efficiencies resulting from the transition to a single card processor, partially offset by an increase in Total Accounts and an increase in spend per account using our payment cards.

The $0.6 million, or 7%, increase in interchange costs from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily due to an increase in Total Accounts, an increase in spend per account using our payment cards, and an increase in costs related to the prevention of outside fraud activity.

We expect interchange costs to continue to increase, primarily due to an increase in Total Accounts and an increase in costs related to the prevention of outside fraud activity.

Total cost of revenue.

Cost of revenue as a percentage of total revenue decreased to 30.0% for the nine months ended October 31, 2025 compared to 33.8% for the nine months ended October 31, 2024, due to total revenue increasing at a significantly higher rate (10%) than total cost of revenue (2%).

On an annual basis, relative to the fiscal year ended January 31, 2025, 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 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.

Cost of revenue as a percentage of total revenue decreased to 27.7% for the three months ended April 30, 2026 compared to 32.2% for the three months ended April 30, 2025, due to the 7% increase in total revenue and the 8% decrease in total cost of revenue.

On an annual basis, relative to the fiscal year ended January 31, 2026, 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 will continue to be affected by a number of different factors, including our ability to efficiently scale our service delivery, Network Partner implementation, and account management functions.

Operating expenses

The following table sets forth our operating expenses for the periods indicated:

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

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

Three months ended April 30,

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

Sales and marketing $ 26,833 $ 25,984 $ 849 3 %

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Sales and marketing.

The $1.8 million, or 8%, increase in sales and marketing expenses from the three months ended October 31, 2024 to the three months ended October 31, 2025 was primarily due to increases in advertising expenses, partially offset by decreases in personnel-related expenses.

The $2.7 million, or 4%, increase in sales and marketing expenses from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 was primarily due to increases in advertising expenses, partially offset by decreases in personnel-related expenses.

The $0.8 million, or 3%, increase in sales and marketing expenses from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily due to increases in advertising expenses, largely offset by a decrease in personnel-related 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.

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Technology and development.

The $5.7 million, or 10%, increase in technology and development expenses from the three months ended October 31, 2024 to the three months ended October 31, 2025 was primarily due to increases in software costs and personnel-related expenses.

The $17.3 million, or 10%, increase in technology and development expenses from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 was primarily due to increases in software costs and personnel-related expenses.

The $6.3 million, or 10%, increase in technology and development expenses from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily due to an increase in software costs.

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 $0.9 million, or 3%, decrease in general and administrative expenses from the three months ended October 31, 2024 to the three months ended October 31, 2025 was primarily due to a decrease in professional services expenses, partially offset by increases in personnel-related expenses.

The $15.9 million, or 16%, decrease in general and administrative expenses from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 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.

On an annual basis, relative to the fiscal year ended January 31, 2025, 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 $5.6 million, or 22%, increase in general and administrative expenses from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily due to an increase in stock-based compensation expense resulting from non-recurring award forfeitures during fiscal 2026 related to the retirement of our former chief executive officer, partially offset by a decrease in professional services expenses.

On an annual basis, relative to the fiscal year ended January 31, 2026, 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 $1.3 million, or 5%, decrease in amortization of acquired intangible assets from the three months ended October 31, 2024 to the three months ended October 31, 2025 was due to a smaller carrying amount of intangible assets that have not been fully amortized.

The $3.9 million, or 5%, decrease in amortization of acquired intangible assets from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 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 nine months ended October 31, 2024.

The $0.5 million, or 2%, decrease in amortization of acquired intangible assets from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily due to a smaller carrying amount of intangible assets that have not been fully amortized.

On an annual basis, relative to the fiscal year ended January 31, 2026, 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.

Merger integration expenses decreased by $33.3 million, or 97%, from the three months ended October 31, 2024 to the three months ended October 31, 2025, primarily due to the non-recurring Lease Settlement during three months ended October 31, 2024.

Merger integration expenses during the three months ended October 31, 2025 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.

Merger integration expenses decreased by $34.7 million, or 90%, from the nine months ended October 31, 2024 to the nine months ended October 31, 2025, primarily due to the non-recurring Lease Settlement during nine months ended October 31, 2024.

Merger integration expenses during the nine months ended October 31, 2025 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 continue to decrease as we complete the remaining merger integration activities.

Merger integration expenses decreased by $0.2 million, or 13%, from the three months ended April 30, 2025 to the three months ended April 30, 2026.

Merger integration expenses during the three months ended April 30, 2026 consisted primarily of expenses incurred in conjunction with the migration of accounts and technology-related expenses directly related to the Further acquisition.

On an annual basis, relative to the fiscal year ended January 31, 2026, we expect merger integration expense to remain relatively steady as we complete the remaining merger integration activities.

Interest expense

The $4.1 million, or 23%, decrease in interest expense from the three months ended October 31, 2024 to the three months ended October 31, 2025 was primarily due a lower average interest rate on borrowings with variable interest rate terms and a lower average principal balance.

The $1.5 million, or 3%, decrease in interest expense from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 was primarily due a lower average interest rate on borrowings with variable interest rate terms and a lower average principal balance.

As of October 31, 2025, borrowings under our revolving credit facility were $386.9 million and had a stated interest rate of 5.32%.

As of October 31, 2024, borrowings under our prior credit agreement were $511.9 million and had a stated interest rate of 6.34%.

The decrease in principal was due to prepayments of $100.0 million during the twelve months ended October 31, 2025.

The $2.3 million, or 15%, decrease in interest expense from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily due to a lower average principal balance and a lower average interest rate on borrowings with variable interest rate terms.

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 $1.9 million decrease in other income, net, from the three months ended October 31, 2024 to the three months ended October 31, 2025 was due to decreases in interest income on corporate cash and other miscellaneous income, net.

The $2.3 million decrease in other income, net, from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 was due to decreases in interest income on corporate cash and other miscellaneous income, net.

The $0.7 million decrease in other income, net, from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily due to a decrease in interest income on corporate cash.

Income tax provision

The $15.3 million increase in income tax provision from the three months ended October 31, 2024 to the three months ended October 31, 2025 was primarily the result of an increase in pre-tax book income and a decrease in research and development tax credits, partially offset by a decrease in nondeductible executive compensation.

The $35.3 million increase in income tax provision from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 was primarily the result of an increase in pre-tax book income, a decrease in tax deductible stock-based compensation compared to GAAP stock-based compensation expense, and a decrease in research and development tax credits, partially offset by a decrease in nondeductible executive compensation.

The $6.0 million increase in income tax provision from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily the result of an increase in pre-tax book income and a reduction in tax benefit from stock-based compensation expense.

The $15.5 million, or 29%, increase in net income from the three months ended April 30, 2025 to the three months ended April 30, 2026 was primarily due to an increase in gross profit, partially offset by increases in operating expenses and income tax provision, as more fully described above.

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

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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

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

Three months ended April 30,

(in thousands) 2026 2025

Net income $ 69,418 $ 53,915

Interest income (1,887) (2,733)

Interest expense 12,588 14,858

Income tax provision 22,995 17,038

Depreciation and amortization 11,699 11,739

Amortization of acquired intangible assets 26,515 27,002

Stock-based compensation expense 19,406 14,336

Merger integration expenses 1,113 1,275

Amortization of incremental costs to obtain a contract 2,116 1,926

Costs associated with unused office space 686 852

Other (161) —

Adjusted EBITDA $ 164,488 $ 140,208

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

Three months ended April 30,

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

Net income $ 69,418 $ 53,915 $ 15,503 29 %

As a percentage of revenue 20 % 16 %

Adjusted EBITDA $ 164,488 $ 140,208 $ 24,280 17 %

As a percentage of revenue 46 % 42 %

Our Adjusted EBITDA increased by $24.3 million, or 17%, from the three months ended April 30, 2025 to the three months ended April 30, 2026, primarily due to an increase in total revenue and lower service costs due to efficiencies resulting from our technology investments, partially offset by increases in software costs.

Non-GAAP net income

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

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

Three months ended April 30,

(in thousands, except per share data) 2026 2025

Net income $ 69,418 $ 53,915

Income tax provision 22,995 17,038

Income before income taxes - GAAP 92,413 70,953

Non-GAAP adjustments:

Amortization of acquired intangible assets 26,515 27,002

Stock-based compensation expense 19,406 14,336

Merger integration expenses 1,113 1,275

Costs associated with unused office space 686 852

Total adjustments to income before income taxes - GAAP 47,720 43,465

Income before income taxes - Non-GAAP 140,133 114,418

Income tax provision - Non-GAAP (1) 35,034 28,604

Non-GAAP net income 105,099 85,814

Diluted weighted-average shares 85,006 88,415

GAAP net income per diluted share $ 0.82 $ 0.61

Non-GAAP net income per diluted share $ 1.24 $ 0.97

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

Our non-GAAP net income increased by $19.3 million, or 22%, from the three months ended April 30, 2025 to the three months ended April 30, 2026, primarily due to an increase in total revenue and lower service costs due to efficiencies resulting from our technology investments, partially offset by increases in software costs.

Liquidity and capital resources

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We rely on cash provided by operating activities to meet our short-term liquidity requirements, which primarily relate to the payment of corporate payroll and other operating costs, interest payments on our long-term debt, and capital expenditures.

As of October 31, 2025 and January 31, 2025, cash and cash equivalents were $309.3 million and $295.9 million, respectively.

As of April 30, 2026 and January 31, 2026, cash and cash equivalents were $265.4 million and $318.9 million, respectively.

Capital resources

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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 6—Indebtedness.

As of October 31, 2025, the outstanding balance under the revolving credit facility was $386.9 million.

We were in compliance with all covenants under the credit agreement as of October 31, 2025, and for the period then ended.

For a description of the terms of

the credit agreement, refer to Note 6—Indebtedness.

As of April 30, 2026, the outstanding balance under the revolving credit facility was $346.9 million.

We were in compliance with all covenants under the credit agreement as of April 30, 2026, and for the period then ended.

We continue to be in compliance with all covenants under the credit agreement through the filing date of this Quarterly Report on Form 10-Q.

During the nine months ended October 31, 2025, we used $218.2 million for common stock repurchases.

During the three months ended April 30, 2026, we used $123.3 million of cash for common stock repurchases.

See Note 9—Stockholders' equity for additional information related to our stock repurchase program.

During the nine months ended October 31, 2025, we prepaid $75.0 million under our credit agreement.

Capital expenditures for the nine months ended October 31, 2025 and 2024 were $38.4 million and $39.7 million, respectively.

During the three months ended April 30, 2026, we prepaid $15.0 million under our credit agreement.

Capital expenditures for the three months ended April 30, 2026 and 2025 were $16.3 million and $16.1 million, respectively.

We expect to continue our current level of capital expenditures for the remainder of the fiscal year ending January 31, 2027 as we continue to invest in improving the architecture and functionality of our proprietary systems.

Capital expenditures to improve the architecture of our proprietary systems include computer hardware, personnel and related costs for software engineering, and outsourced software engineering services.

As a result of accelerated tax deductions enabled under the “One Big Beautiful Bill Act,” which was signed into law on July 4, 2025, we expect that corporate income tax payments for the fiscal years ending January 31, 2026 and January 31, 2027 will be significantly reduced.

We believe our existing cash, cash equivalents, and revolving credit facility will be sufficient to meet our operating and capital expenditure requirements for at least the next 12 months.

To the extent these current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may need to

raise additional funds through public or private equity or debt financing.

To the extent these current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may need to raise additional funds through public or private equity or debt financing.

In the event that additional financing is required, we may not be able to raise it on favorable terms, if at all.

The following table shows our cash flows from operating activities, investing activities, and financing activities for the stated periods:

Nine months ended October 31,

Three months ended April 30,

(in thousands) 2026 2025

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Net cash used in investing activities (13,904) (16,143)

Net cash provided by (used in) financing activities (287,164) 145,973

Increase (decrease) in cash and cash equivalents 13,311 (81,816)

Net cash used in financing activities (137,180) (56,649)

Decrease in cash and cash equivalents (53,558) (8,054)

Beginning cash and cash equivalents 318,927 295,948

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Cash flows from operating activities.

Net cash provided by operating activities increased by $75.1 million from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 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 and accrued liabilities.

Net cash provided by operating activities increased by $32.8 million from the three months ended April 30, 2025 to the three months ended April 30, 2026, primarily due to increased cash receipts with respect to our custodial, service, and interchange revenues and a decrease in cash payments for service costs.

Cash flows from investing activities.

Net cash used in investing activities decreased by $453.2 million from the nine months ended October 31, 2024 to the nine months ended October 31, 2025 due to a $451.9 million decrease in cash used to acquire HSA portfolios, a $1.1 million decrease in cash used for purchases of software and capitalized software development costs, and a $0.1 million decrease in cash used for purchases of property and equipment.

Net cash used in investing activities decreased by $2.2 million from the three months ended April 30, 2025 to the three months ended April 30, 2026, primarily due to net cash received from the settlement of derivatives.

Cash flows from financing activities.

Net cash used in financing activities was $287.2 million during the nine months ended October 31, 2025, compared to $146.0 million of net cash provided by financing activities during the nine months ended October 31, 2024.

The change was due to a $736.9 million decrease in proceeds from long-term debt, a $159.7 million increase in cash used for repurchases of common stock, and a $2.6 million decrease in net cash received in the settlement of client-held funds obligations, partially offset by a $461.9 million decrease in principal payments on our long-term debt, a $3.7 million decrease in debt issuance costs associated with long-term debt, and a $0.4 million increase in proceeds from the exercise of common stock options.

Net cash used in financing activities increased by $80.5 million from the three months ended April 30, 2025 to the three months ended April 30, 2026, primarily due to a $64.2 million increase in cash used for repurchases of common stock and a $15.0 million increase in principal payments on our long-term debt.

Contractual obligations

1 unchanged sentence

Off-balance sheet arrangements

As of October 31, 2025, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources.

As of April 30, 2026, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources.

Critical accounting policies and significant management estimates

4 unchanged sentences

Our significant accounting policies are more fully described in Note 1 of the accompanying unaudited condensed consolidated financial statements and in Note 1 to our audited consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

There have been no significant or material changes in our critical accounting policies during the nine months ended October 31, 2025, as compared to those disclosed in “Management’s discussion and analysis of financial condition and results of operations – Critical accounting policies and significant management estimates” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

There have been no significant or material changes in our critical accounting policies during the three months ended April 30, 2026, as compared to those disclosed in “Management’s discussion and analysis of financial condition and results of operations – Critical accounting policies and significant management estimates” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

Recent accounting pronouncements

1 unchanged sentence

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 2. Management’s Discussion and Analysis