What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-27 compared with 2026-05-28 · 91 added, 69 removed, 368 unchanged (30% of the section changed)

12 unchanged sentences

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, and investment advice to grow their tax-advantaged healthcare savings.

As part of our services, we provide consumers with payment processing services, personalized benefit information, access to certain healthcare products, programs, and services, made available in our marketplace through partnerships with third‑party providers, and investment advice to grow their tax-advantaged healthcare savings.

We are increasingly using AI in our business, both to improve customer service and engagement and to increase efficiencies.

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.

As of July 31, 2026, we administered 10.7 million HSAs, with balances totaling $37.9 billion, which we call HSA Assets, as well as 7.0 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 July 31, 2026.

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

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

The agreements with our insurance company partners have an indefinite term, with approximately 10% of the assets held in such agreements repricing per year.

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

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Our full suite of CDB offerings complements our HSA solution and enhances our leadership position within the HSA sector.

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 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 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 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.

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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) April 30, 2026 April 30, 2025 % Change January 31, 2026

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

HSAs 10,739 9,989 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 0.7 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 number of our HSAs increased by 0.8 million, or 8%, from July 31, 2025 to July 31, 2026, driven by new HSAs from sales.

The number of our CDBs decreased by 137 thousand, or 2%, from July 31, 2025 to July 31, 2026.

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

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

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

HSA cash $ 17,369 $ 17,035 2 % $ 17,982

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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 $0.4 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 increased by $0.3 billion, or 2%, from July 31, 2025 to July 31, 2026, due to net HSA contributions from new and existing HSA members, partially offset by transfers to HSA investments.

HSA investments increased by $4.5 billion, or 28%, from July 31, 2025 to July 31, 2026, due to the increased market value of invested balances and transfers from HSA cash.

Total HSA Assets increased by $4.8 billion, or 14%, from July 31, 2025 to July 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 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) $ 16.7 3.9 %

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

(1) Excludes $0.7 billion of HSA cash held in floating-rate contracts as of July 31, 2026.

Client-held funds

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

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

Client-held funds $ 931 $ 818 14 % $ 1,090

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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 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.

As of July 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 condensed consolidated balance sheet.

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

Comparison of the three and six months ended July 31, 2026 and 2025

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

Three months ended April 30,

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

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

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

Service revenue $ 124,444 $ 117,873 $ 6,571 6 % $ 247,376 $ 237,657 $ 9,719 4 %

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Service revenue.

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.

The $6.6 million, or 6%, increase in service revenue from the three months ended July 31, 2025 to the three months ended July 31, 2026 was primarily due to increases in marketplace revenue, Total Accounts, and HSA investments, partially offset by lower average service fees per account.

The $9.7 million, or 4%, increase in service revenue from the six months ended July 31, 2025 to the six months ended July 31, 2026 was primarily due to increases in marketplace revenue, Total Accounts, and HSA investments, partially offset by lower average service fees per account.

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

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.

The $16.1 million, or 10%, increase in custodial revenue from the three months ended July 31, 2025 to the three months ended July 31, 2026 was primarily due to an increase in average annualized yield on HSA cash from 3.51% for the three months ended July 31, 2025 to 3.83% for the three months ended July 31, 2026 (due to increased participation in our Enhanced Rates offering and HSA cash placed with Depository Partners at higher yields) 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.

The $33.9 million, or 11%, increase in custodial revenue from the six months ended July 31, 2025 to the six months ended July 31, 2026 was primarily due to an increase in average annualized yield on HSA cash from 3.51% for the six months ended July 31, 2025 to 3.83% for the six months ended July 31, 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, relative to the fiscal year ended January 31, 2026, assuming the current interest rate environment continues, we expect our average annualized yield on HSA cash to further increase as 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 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.

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

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

Interchange revenue.

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.

The $2.3 million, or 5%, increase in interchange revenue from the three months ended July 31, 2025 to the three months ended July 31, 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.

The $5.0 million, or 5%, increase in interchange revenue from the six months ended July 31, 2025 to the six months ended July 31, 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 $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.

Total revenue increased $24.9 million, or 8%, from the three months ended July 31, 2025 to the three months ended July 31, 2026 due to the increases in custodial, service, and interchange revenues, described above.

Total revenue increased $48.7 million, or 7%, from the six months ended July 31, 2025 to the six months ended July 31, 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 April 30,

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

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

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

Service costs $ 73,170 $ 75,156 $ (1,986) (3) % $ 151,496 $ 163,161 $ (11,665) (7) %

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Service costs.

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.

The $2.0 million, or 3%, decrease in service costs from the three months ended July 31, 2025 to the three months ended July 31, 2026 was primarily due to efficiencies resulting from our technology investments and a decrease in self-insured medical claims expenses.

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

The $11.7 million, or 7%, decrease in service costs from the six months ended July 31, 2025 to the six months ended July 31, 2026 was primarily due to efficiencies resulting from our technology investments and decreases in costs incurred to reimburse members impacted by outside fraud activity, self-insured medical claims expenses, and non-recurring consulting expenses.

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

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 $0.9 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.

The $0.9 million, or 8%, increase in custodial costs from the three months ended July 31, 2025 to the three months ended July 31, 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 0.24% during the three months ended July 31, 2025 to 0.26% during the three months ended July 31, 2026.

The $1.9 million, or 8%, increase in custodial costs from the six months ended July 31, 2025 to the six months ended July 31, 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 0.24% during the six months ended July 31, 2025 to 0.25% during the six months ended July 31, 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 $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.

The $0.6 million, or 8%, increase in interchange costs from the three months ended July 31, 2025 to the three months ended July 31, 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.

The $1.1 million, or 8%, increase in interchange costs from the six months ended July 31, 2025 to the six months ended July 31, 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 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.

Cost of revenue as a percentage of total revenue decreased to 27.1% for the six months ended July 31, 2026 compared to 30.4% for the six months ended July 31, 2025, due to the 7% increase in total revenue and the 4% 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.

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

Three months ended April 30,

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

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

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

Sales and marketing $ 23,215 $ 19,922 $ 3,293 17 % $ 50,048 $ 45,906 $ 4,142 9 %

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Sales and marketing.

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.

The $3.3 million, or 17%, increase in sales and marketing expenses from the three months ended July 31, 2025 to the three months ended July 31, 2026 was primarily due to increases in advertising expenses.

The $4.1 million, or 9%, increase in sales and marketing expenses from the six months ended July 31, 2025 to the six months ended July 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.

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Technology and development.

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.

The $9.1 million, or 14%, increase in technology and development expenses from the three months ended July 31, 2025 to the three months ended July 31, 2026 was primarily due to an increase in software and cloud infrastructure costs.

The $15.5 million, or 12%, increase in technology and development expenses from the six months ended July 31, 2025 to the six months ended July 31, 2026 was primarily due to an increase in software and cloud infrastructure 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 $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.

The $4.9 million, or 16%, increase in general and administrative expenses from the three months ended July 31, 2025 to the three months ended July 31, 2026 was primarily due to an increase in personnel-related expenses.

The $10.5 million, or 19%, increase in general and administrative expenses from the six months ended July 31, 2025 to the six months ended July 31, 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.

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.

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Amortization of acquired intangible assets.

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.

The $0.7 million, or 3%, decrease in amortization of acquired intangible assets from the three months ended July 31, 2025 to the three months ended July 31, 2026 was primarily due to a smaller carrying amount of intangible assets that have not been fully amortized.

The $1.2 million, or 2%, decrease in amortization of acquired intangible assets from the six months ended July 31, 2025 to the six months ended July 31, 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 $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.

Merger integration expenses decreased by $0.3 million, or 23%, from the three months ended July 31, 2025 to the three months ended July 31, 2026.

Merger integration expenses during the three months ended July 31, 2026 consisted primarily of expenses incurred in conjunction with the migration of accounts and technology-related expenses directly related to the Further acquisition.

Merger integration expenses decreased by $0.5 million, or 18%, from the six months ended July 31, 2025 to the six months ended July 31, 2026.

Merger integration expenses during the six months ended July 31, 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 $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 $2.4 million, or 16%, decrease in interest expense from the three months ended July 31, 2025 to the three months ended July 31, 2026 was primarily due to a lower average principal balance and a lower average interest rate on borrowings with variable interest rate terms.

The $4.6 million, or 15%, decrease in interest expense from the six months ended July 31, 2025 to the six months ended July 31, 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 $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.

The $1.6 million decrease in other income, net, from the three months ended July 31, 2025 to the three months ended July 31, 2026 was primarily due to a decrease in interest income on corporate cash.

The $2.3 million decrease in other income, net, from the six months ended July 31, 2025 to the six months ended July 31, 2026 was primarily due to a decrease in interest income on corporate cash.

Income tax provision

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.

The $4.0 million increase in income tax provision from the three months ended July 31, 2025 to the three months ended July 31, 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 $10.0 million increase in income tax provision from the six months ended July 31, 2025 to the six months ended July 31, 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 $5.8 million, or 10%, increase in net income from the three months ended July 31, 2025 to the three months ended July 31, 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.

The $21.3 million, or 19%, increase in net income from the six months ended July 31, 2025 to the six months ended July 31, 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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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,

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

(in thousands) 2026 2025 2026 2025

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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

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

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

Net income $ 65,644 $ 59,854 $ 5,790 10 % $ 135,062 $ 113,769 $ 21,293 19 %

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As a percentage of revenue 48 % 46 % 47 % 44 %

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.

Our Adjusted EBITDA increased by $15.9 million, or 11%, from the three months ended July 31, 2025 to the three months ended July 31, 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 and cloud infrastructure costs.

Our Adjusted EBITDA increased by $40.2 million, or 14%, from the six months ended July 31, 2025 to the six months ended July 31, 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 and cloud infrastructure costs.

Non-GAAP net income

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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,

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

(in thousands, except per share data) 2026 2025 2026 2025

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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 $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.

Our non-GAAP net income increased by $9.2 million, or 10%, from the three months ended July 31, 2025 to the three months ended July 31, 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 and cloud infrastructure costs.

Our non-GAAP net income increased by $28.5 million, or 16%, from the six months ended July 31, 2025 to the six months ended July 31, 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 and cloud infrastructure costs.

Liquidity and capital resources

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Our principal sources of liquidity are our current cash and cash equivalents balances, collections from our custodial, service, and interchange revenue activities, and availability under our revolving credit facility.

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

As of July 31, 2026 and January 31, 2026, cash and cash equivalents were $256.0 million and $318.9 million, respectively.

Capital resources

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A shelf registration statement, which includes a base prospectus, allows us at any time to offer any combination of securities described in the prospectus in one or more offerings.

Unless otherwise specified in a prospectus supplement accompanying the base prospectus, we would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes, including, but not limited to, working capital, sales and marketing activities, general and administrative matters, capital expenditures, and repayment of indebtedness, and if opportunities arise, for the acquisition of, or investment in, assets, technologies, solutions or businesses that complement our business.

complement our business.

Pending such uses, we may invest the net proceeds in interest-bearing securities.

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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 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.

For a description of the terms of the credit agreement, refer to Note 6—Indebtedness.

As of July 31, 2026, the outstanding balance under the revolving credit facility was $335.0 million.

We were in compliance with all covenants under the credit agreement as of July 31, 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 three months ended April 30, 2026, we used $123.3 million of cash for common stock repurchases.

During the six months ended July 31, 2026, we used $231.1 million of cash for common stock repurchases.

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

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.

During the six months ended July 31, 2026, we prepaid $26.9 million under our credit agreement.

Capital expenditures for the six months ended July 31, 2026 and 2025 were $32.1 million and $27.3 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.

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

Three months ended April 30,

Six months ended July 31,

(in thousands) 2026 2025

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Net cash used in financing activities (256,790) (164,768)

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

Increase (decrease) in cash and cash equivalents (62,924) 8,513

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 $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.

Net cash provided by operating activities increased by $33.1 million from the six months ended July 31, 2025 to the six months ended July 31, 2026, primarily due to increased cash receipts with respect to our custodial, service, and interchange revenues, partially offset by an increase in income tax payments.

Cash flows from investing activities.

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.

Net cash used in investing activities increased by $12.5 million from the six months ended July 31, 2025 to the six months ended July 31, 2026, due to a $7.8 million increase in cash paid to settle derivative financial instruments and a $4.7 million increase in capital expenditures.

Cash flows from financing activities.

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.

Net cash used in financing activities increased by $92.0 million from the six months ended July 31, 2025 to the six months ended July 31, 2026, primarily due to a $105.2 million increase in cash used for repurchases of common stock and a $9.8 million decrease in proceeds from the exercise of common stock options, partially offset by a $23.1 million decrease in principal payments on our long-term debt.

Contractual obligations

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Off-balance sheet arrangements

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.

As of July 31, 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

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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 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.

There have been no significant or material changes in our critical accounting policies during the six months ended July 31, 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

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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-Q

Item 2. Management’s Discussion and Analysis