UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~April~~July 3031, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-36568



HEALTHEQUITY, INC.

(Exact name of registrant as specified in its charter)

Delaware

52-2383166

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

15 West Scenic Pointe Drive

Suite 100

Draper, Utah 84020

(Address of principal executive offices) (Zip code)

(801) 727-1000

(Registrant's telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	HQY	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of ~~May~~August 2822, 2025, there were 86,~~475~~156,~~351~~334 shares of the registrant's common stock outstanding.

Table of Contents

HealthEquity, Inc. and subsidiaries

Form 10-Q quarterly report

Table of contents

		Page
Part I. FINANCIAL INFORMATION
Item 1.	Financial statements
	Condensed consolidated balance sheets as of April 30, 2025 (unaudited) and January 31, 2025	3
	Condensed consolidated balance sheets as of July 31, 2025 (unaudited) and January 31, 2025	3
	Condensed consolidated statements of operations and comprehensive income for the three months ended April 30, 2025 and 2024 (unaudited)	4
	Condensed consolidated statements of operations for the three and six months ended July 31, 2025 and 2024 (unaudited)	4
	Condensed consolidated statements of stockholders' equity for the three months ended April 30, 2025 and 2024 (unaudited)	5
	Condensed consolidated statements of comprehensive income for the three and six months ended July 31, 2025 and 2024 (unaudited)	5
	Condensed consolidated statements of cash flows for the three months ended April 30, 2025 and 2024 (unaudited)	6
	Condensed consolidated statements of stockholders' equity for the three and six months ended July 31, 2025 and 2024 (unaudited)	6
	Notes to condensed consolidated financial statements (unaudited)	8
	Condensed consolidated statements of cash flows for the six months ended July 31, 2025 and 2024 (unaudited)	7
Item 2.	Management's discussion and analysis of financial condition and results of operations	17
	Notes to condensed consolidated financial statements (unaudited)	9
Item 3.	Quantitative and qualitative disclosures about market risk	31
Item 2.	Management's discussion and analysis of financial condition and results of operations	19
Item 4.	Controls and procedures	32
Item 3.	Quantitative and qualitative disclosures about market risk	35
Item 4.	Controls and procedures	36
Part II. OTHER INFORMATION
Item 1.	Legal proceedings	3437
Item 1A.	Risk factors	3437
Item 5.	Other information	3438
Item 6.	Exhibits	3539
	Signatures	3640

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Part I. Financial information

Item 1. Financial statements

HealthEquity, Inc. and subsidiaries

Condensed consolidated balance sheets

(in thousands, except par value)	~~April~~July 3031, 2025		January 31, 2025
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	~~287~~304,~~894~~461	$	295,948
Accounts receivable, net of allowance for doubtful accounts of $1,041 and $2,070 as of April 30, 2025 and January 31, 2025, respectively	116,256		118,006
Accounts receivable, net of allowance for doubtful accounts of $920 and $2,070 as of July 31, 2025 and January 31, 2025, respectively	111,164		118,006
Prepaid expenses and other current assets	6877,~~646~~207		63,795
Total current assets	~~472~~492,~~796~~832		477,749
Property and equipment, net	3,~~173~~088		3,239
Operating lease right-of-use assets	4139,~~446~~756		43,185
Intangible assets, net	1,~~179~~152,~~430~~456		1,204,658
Goodwill	1,648,145		1,648,145
Other assets	7180,~~283~~401		71,574
Total assets	$	3,416,~~273~~678	$	3,448,550
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	139,~~496~~600	$	14,361
Accrued compensation	2432,~~433~~482		69,330
Accrued liabilities	6864,~~444~~543		62,631
Operating lease liabilities	9,~~969~~950		10,001
Total current liabilities	116,~~342~~575		156,323
Long-term liabilities
Long-term debt, net of issuance costs	1,~~056~~006,~~566~~834		1,056,301
Operating lease liabilities, non-current	4038,~~223~~240		42,219
Other long-term liabilities	2221,~~178~~993		22,962
Deferred tax liability	5786,~~158~~615		55,834
Total long-term liabilities	1,~~176~~153,~~125~~682		1,177,316
Total liabilities	1,~~292~~270,~~467~~257		1,333,639
Commitments and contingencies (see Note 5)
Stockholders’ equity
Preferred stock, $0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of April 30, 2025 and January 31, 2025, respectively	—		—
Preferred stock, $0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of July 31, 2025 and January 31, 2025, respectively	—		—
Common stock, $0.0001 par value, 900,000 shares authorized, 86,714 and 86,536 shares issued and outstanding as of April 30, 2025 and January 31, 2025, respectively	9		9
Common stock, $0.0001 par value, 900,000 shares authorized, 86,421 and 86,536 shares issued and outstanding as of July 31, 2025 and January 31, 2025, respectively	9		9
Additional paid-in capital	1,~~905~~919,~~444~~312		1,905,628
Accumulated earnings	218,353		209,274
Accumulated other comprehensive income	203		—
Total stockholders’ equity	2,123,806		2,114,911
Accumulated earnings	226,897		209,274
Total liabilities and stockholders’ equity	$	3,416,273	$	3,448,550
Total stockholders’ equity	2,146,421		2,114,911
Total liabilities and stockholders’ equity	$	3,416,678	$	3,448,550

See accompanying notes to condensed consolidated financial statements.

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HealthEquity, Inc. and subsidiaries

Condensed consolidated statements of operations (unaudited)

Condensed consolidated statements of operations and


	Three months ended July 31,				Six months ended July 31,
(in thousands, except per share data)	2025		2024		2025		2024
Revenue
Service revenue	$	117,873	$	116,720	$	237,657	$	234,934
Custodial revenue	159,876		138,684		316,331		260,328
Interchange revenue	48,086		44,524		102,691		92,263
Total revenue	325,835		299,928		656,679		587,525
Cost of revenue
Service costs	75,156		76,915		163,161		159,262
Custodial costs	11,137		10,108		21,884		19,165
Interchange costs	6,947		8,853		14,728		17,908
Total cost of revenue	93,240		95,876		199,773		196,335
Gross profit	232,595		204,052		456,906		391,190
Operating expenses
Sales and marketing	19,922		21,525		45,906		45,019
Technology and development	64,804		58,580		126,240		114,670
General and administrative	29,990		32,260		55,526		70,496
Amortization of acquired intangible assets	27,001		30,981		54,003		56,526
Merger integration	1,266		1,777		2,541		3,920
Total operating expenses	142,983		145,123		284,216		290,631
Income from operations	89,612		58,929		172,690		100,559
Other expense
Interest expense	(14,955)		(15,427)		(29,813)		(27,222)
Other income, net	3,391		3,114		6,124		6,518
Total other expense	(11,564)		(12,313)		(23,689)		(20,704)
Income before income taxes	78,048		46,616		149,001		79,855
Income tax provision	18,194		10,794		35,232		15,220
Net income	$	59,854	$	35,822	$	113,769	$	64,635
Net income per share:
Basic	$	0.69	$	0.41	$	1.31	$	0.74
Diluted	$	0.68	$	0.40	$	1.29	$	0.73
Weighted-average number of shares used in computing net income per share:
Basic	86,550		87,131		86,601		86,805
Diluted	87,746		88,646		88,153		88,606

	Three months ended April 30,
(in thousands, except per share data)	2025		2024
Revenue
Service revenue	$	119,784	$	118,214
Custodial revenue	156,455		121,644
Interchange revenue	54,605		47,739
Total revenue	330,844		287,597
Cost of revenue
Service costs	88,005		82,347
Custodial costs	10,747		9,057
Interchange costs	7,781		9,055
Total cost of revenue	106,533		100,459
Gross profit	224,311		187,138
Operating expenses
Sales and marketing	25,984		23,494
Technology and development	61,436		56,090
General and administrative	25,536		38,236
Amortization of acquired intangible assets	27,002		25,545
Merger integration	1,275		2,143
Total operating expenses	141,233		145,508
Income from operations	83,078		41,630
Other expense
Interest expense	(14,858)		(11,795)
Other income, net	2,733		3,404
Total other expense	(12,125)		(8,391)
Income before income taxes	70,953		33,239
Income tax provision	17,038		4,426
Net income and comprehensive income	$	53,915	$	28,813
Net income per share:
Basic	$	0.62	$	0.33
Diluted	$	0.61	$	0.33
Weighted-average number of shares used in computing net income per share:
Basic	86,655		86,472
Diluted	88,415		88,324

See accompanying notes to condensed consolidated financial statements.

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HealthEquity, Inc. and subsidiaries

	Three months ended April 30,
(in thousands)	2025		2024
Total stockholders' equity, beginning balance	$	2,114,911	$	2,035,021
Common stock:
Beginning balance	9		9
Issuance of common stock	—		—
Ending balance	9		9
Additional paid-in capital:
Beginning balance	1,905,628		1,829,384
Issuance of common stock	955		1,930
Stock-based compensation	14,336		32,020
Repurchases of common stock	(15,475)		—
Ending balance	1,905,444		1,863,334
Accumulated earnings
Beginning balance	209,274		205,628
Repurchases of common stock	(44,836)		—
Net income	53,915		28,813
Ending balance	218,353		234,441
Total stockholders' equity, ending balance	$	2,123,806	$	2,097,784

Condensed consolidated statements of comprehensive income (unaudited)


	Three months ended July 31,				Six months ended July 31,
(in thousands, except per share data)	2025		2024		2025		2024
Net income	$	59,854	$	35,822	$	113,769	$	64,635
Other comprehensive income
Cash flow hedges
Net unrealized gains, net of income tax expense of $70 for each of the three and six months ended July 31, 2025	203		—		203		—
Total other comprehensive income	203		—		203		—
Comprehensive income	$	60,057	$	35,822	$	113,972	$	64,635

See accompanying notes to condensed consolidated financial statements.

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HealthEquity, Inc. and subsidiaries

Condensed consolidated statements of stockholders’ equity (unaudited)

	Three months ended April 30,
	Three months ended July 31,				Six months ended July 31,
(in thousands)	2025		2024		2025		2024
Cash flows from operating activities:
Total stockholders' equity, beginning balance	$	2,123,806	$	2,097,784	$	2,114,911	$	2,035,021
Net income	$	53,915	$	28,813
Common stock:
Adjustments to reconcile net income to net cash provided by operating activities:
Beginning balance	9		9		9		9
Depreciation and amortization	38,741		38,938
Issuance of common stock	—		—		—		—
Stock-based compensation	14,336		32,020
Ending balance	9		9		9		9
Amortization of debt discount and issuance costs	265		703
Additional paid-in capital:
Deferred taxes	1,324		(5,388)
Beginning balance	1,905,444		1,863,334		1,905,628		1,829,384
Changes in operating assets and liabilities:
Issuance of common stock	9,481		1,857		10,436		3,787
Accounts receivable, net	1,750		(1,325)
Stock-based compensation	19,068		21,574		33,404		53,594
Other assets	(5,702)		(227)
Repurchases of common stock	(14,681)		—		(30,156)		—
Operating lease right-of-use assets	1,649		1,741
Ending balance	1,919,312		1,886,765		1,919,312		1,886,765
Accrued compensation	(42,210)		(25,757)
Accumulated other comprehensive income:
Accounts payable, accrued liabilities, and other current liabilities	3,422		(2,347)
Beginning balance	—		—		—		—
Operating lease liabilities, non-current	(1,968)		(1,745)
Other comprehensive income	203		—		203		—
Other long-term liabilities	(784)		3
Ending balance	203		—		203		—
Net cash provided by operating activities	64,738		65,429
Accumulated earnings:
Cash flows from investing activities:
Beginning balance	218,353		234,441		209,274		205,628
Purchases of software and capitalized software development costs	(16,057)		(13,106)
Repurchases of common stock	(51,310)		—		(96,146)		—
Purchases of property and equipment	(86)		(721)
Net income	59,854		35,822		113,769		64,635
Acquisitions of HSA portfolios	—		(256,123)
Ending balance	226,897		270,263		226,897		270,263
Net cash used in investing activities	(16,143)		(269,950)
Total stockholders' equity, ending balance	$	2,146,421	$	2,157,037	$	2,146,421	$	2,157,037
Cash flows from financing activities:
Repurchases of common stock	(59,065)		—
Proceeds from long-term debt	—		50,000
Settlement of client-held funds obligation, net	1,451		(546)
Proceeds from exercise of common stock options	965		2,317
Net cash provided by (used in) financing activities	(56,649)		51,771
Decrease in cash and cash equivalents	(8,054)		(152,750)
Beginning cash and cash equivalents	295,948		403,979
Ending cash and cash equivalents	$	287,894	$	251,229

See accompanying notes to condensed consolidated financial statements.

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HealthEquity, Inc. and subsidiaries

Condensed consolidated statements of cash flows (unaudited)

	Three months ended April 30,
	Six months ended July 31,
(in thousands)	2025		2024
Supplemental cash flow data:
Cash flows from operating activities:
Interest expense paid in cash	$	20,809	$	18,850
Net income	$	113,769	$	64,635
Income tax payments (refunds), net	(46)		277
Adjustments to reconcile net income to net cash provided by operating activities:
Supplemental disclosures of non-cash investing and financing activities:
Depreciation and amortization	77,195		82,548
Purchases of software and capitalized software development costs included in accounts payable, accrued liabilities, or accrued compensation	2,774		2,404
Stock-based compensation	33,404		53,594
Purchases of property and equipment included in accounts payable or accrued liabilities	546		32
Amortization of debt discount and issuance costs	533		1,428
Repurchases of common stock included in accrued liabilities	2,000		—
Deferred taxes	30,711		(5,204)
Exercise of common stock options receivable	—		42
Changes in operating assets and liabilities:
Accounts receivable, net	6,842		(3,561)
Prepaid expenses and other current and non-current assets	(20,650)		(9,345)
Operating lease right-of-use assets	3,339		3,365
Accrued compensation	(35,032)		(12,706)
Accounts payable, accrued liabilities, and other current liabilities	(3,785)		7,267
Operating lease liabilities, non-current	(3,951)		(3,840)
Other long-term liabilities	(1,771)		(4,623)
Net cash provided by operating activities	200,604		173,558
Cash flows from investing activities:
Purchases of software and capitalized software development costs	(26,464)		(25,329)
Purchases of property and equipment	(859)		(1,462)
Acquisitions of HSA portfolios	—		(452,241)
Net cash used in investing activities	(27,323)		(479,032)
Cash flows from financing activities:
Principal payments on long-term debt	(50,000)		—
Repurchases of common stock	(125,810)		—
Proceeds from long-term debt	—		225,000
Settlement of client-held funds obligation, net	596		(828)
Proceeds from exercise of common stock options	10,446		4,216
Net cash provided by (used in) financing activities	(164,768)		228,388
Increase (decrease) in cash and cash equivalents	8,513		(77,086)
Beginning cash and cash equivalents	295,948		403,979
Ending cash and cash equivalents	$	304,461	$	326,893

See accompanying notes to condensed consolidated financial statements.

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HealthEquity, Inc. and subsidiaries

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


	Six months ended July 31,
(in thousands)	2025		2024
Supplemental cash flow data:
Interest expense paid in cash	$	28,362	$	26,970
Income tax payments, net	6,507		13,471
Supplemental disclosures of non-cash investing and financing activities:
Purchases of software and capitalized software development costs included in accounts payable, accrued liabilities, or accrued compensation	3,380		3,370
Purchases of property and equipment included in accounts payable or accrued liabilities	155		70
Repurchases of common stock included in accrued liabilities	1,246		—
Non-cash purchase consideration related to acquisitions of HSA portfolios	—		20,325

See accompanying notes to condensed consolidated financial statements.

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HealthEquity, Inc. and subsidiaries

Notes to condensed consolidated financial statements (unaudited)

Note 1. Summary of business and significant accounting policies

Business

HealthEquity, Inc. ("HealthEquity" or the "Company") was incorporated in the state of Delaware on September 18, 2002. HealthEquity is a leader in administering health savings accounts (“HSAs”) and complementary consumer-directed benefits (“CDBs”), which empower consumers to access tax-advantaged healthcare savings while also providing corporate tax advantages for employers.

Principles of consolidation

The Company consolidates entities in which the Company has a controlling financial interest, which includes all of its wholly owned direct and indirect subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Segments

The Company is managed as a single operating segment that provides administration services in connection with HSAs and other CDBs, which reflects the way in which its chief operating decision maker (“CODM”), the Chief Executive Officer, reviews the Company's financial performance and makes decisions about resource allocation. The CODM assesses the performance of the Company, monitors actual financial results against budgets, and makes resource allocation decisions with a focus on the Company’s consolidated results as presented in the condensed consolidated statements of operations ~~and comprehensive income~~. The Company’s measure of profitability is net income. Single segment-level financial information, including total assets, significant non-cash transactions, and capital expenditures, is contained in the accompanying condensed consolidated financial statements and related notes.

The Company does not generate material international revenues. All long-lived assets are maintained in the United States of America.

Basis of presentation

The accompanying condensed consolidated financial statements as of ~~April~~July 3031, 2025 and for the three and six months ended ~~April~~July 3031, 2025 and 2024 are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. In the opinion of management, the interim data includes all adjustments necessary for a fair presentation of the results for the interim periods. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2025. The fiscal year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP.

Significant accounting policies

~~There~~Derivative ~~have~~Financial ~~been~~Instruments noand ~~material~~Hedging changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025.Activities

As required by Accounting Standards Codification ("ASC") 815, Derivatives and Hedging (ASC 815), the Company records derivative financial instruments at fair value as of each reporting date. Each of the Company's derivatives is designated as a cash flow hedge and presented on a gross basis within assets or liabilities in the Company's condensed consolidated balance sheets. The change in fair value of the derivatives is recorded to accumulated other comprehensive income ("AOCI") in the Company's condensed consolidated balance sheets and reclassified to custodial revenue in the period the hedged transactions affect earnings. Cash flows from hedging activities are classified as cash flows from investing activities in the condensed consolidated statements of cash flows. The Company assesses each derivative, both at inception and on an ongoing basis, to determine if the requirements for applying hedge accounting are met. The Company does not use derivative financial instruments for trading purposes. See Note 10—Derivative financial instruments and hedging activities for further information.

There have been no other material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

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Recently adopted accounting pronouncements

None.

Recently issued accounting pronouncements not yet adopted

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance is effective for annual periods beginning after December 15, 2024 and can be applied prospectively or retrospectively. We are currently evaluating the ASU to determine its impact on our income tax disclosures; however, the impact is not expected to be material.

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evaluating the ASU to determine its impact on our income tax disclosures; however, the impact is not expected to be material.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU requires disaggregated information about certain income statement expense line items on an annual and interim basis. This guidance will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The new standard permits early adoption and can be applied prospectively or retrospectively. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.

Note 2. Net income per share

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

	Three months ended April 30,
	Three months ended July 31,				Six months ended July 31,
(in thousands, except per share data)	2025		2024		2025		2024
Numerator (basic and diluted):
Net income	$	5359,~~915~~854	$	2835,~~813~~822	$	113,769	$	64,635
Denominator (basic):
Weighted-average common shares outstanding	86,~~655~~550		8687,~~472~~131		86,601		86,805
Denominator (diluted):
Weighted-average common shares outstanding	86,~~655~~550		8687,~~472~~131		86,601		86,805
Weighted-average dilutive effect of stock options and restricted stock units	1,~~760~~196		1,~~852~~515		1,552		1,801
Diluted weighted-average common shares outstanding	8887,~~415~~746		88,~~324~~646		88,153		88,606
Net income per share:
Basic	$	0.6269	$	0.3341	$	1.31	$	0.74
Diluted	$	0.6168	$	0.3340	$	1.29	$	0.73

For ~~each of~~ the three months ended ~~April~~July 3031, 2025 and 2024, 0.2 million and 0.1 million shares, respectively, attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted net income per share as their inclusion would have been anti-dilutive.

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

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Note 3. Supplemental financial statement information

Selected condensed consolidated balance sheet and condensed consolidated statement of operations ~~and comprehensive income~~ components consisted of the following:

Property and equipment

Property and equipment consisted of the following:

(in thousands)	~~April~~July 3031, 2025		January 31, 2025
Leasehold improvements	$	1314,~~966~~032	$	13,966
Furniture and fixtures	6,~~484~~478		6,708
Computer equipment	19,~~037~~131		19,218
Property and equipment, gross	39,~~487~~641		39,892
Accumulated depreciation	(36,~~314~~553)		(36,653)
Property and equipment, net	$	3,~~173~~088	$	3,239

Depreciation expense was $0.75 million and $1.41 million for the three and six months ended ~~April~~July 3031, 2025, respectively, and $1.3 million and $2.7 million for the three and six months ended July 31, 2024, respectively.

Contract balances

The Company does not recognize revenue until its right to consideration is unconditional and therefore has no related contract assets. The Company records a receivable when revenue is recognized prior to payment and the Company has unconditional right to payment. Alternatively, when payment precedes the related services, the Company records a contract liability, or deferred revenue, until its performance obligations are satisfied. As of July 31, 2025 and January 31, 2025, the balance of deferred revenue was $11.5 million and $17.1 million, respectively. The balances are related to cash received in advance for custodial and interchange revenue arrangements, other up-front fees and other commuter deferred revenue. The Company expects to recognize approximately 91% of its balance of deferred revenue as revenue over the next 12 months and the remainder thereafter. Amounts expected to be recognized as revenue within a period of 12 months or less are classified as accrued liabilities in the Company's condensed consolidated balance sheets, with the remainder included within other long-term liabilities. Revenue recognized during the three and six months ended July 31, 2025 that was included in the balance of deferred revenue as of January 31, 2025 was $3.3 million and $6.4 million, respectively. The Company expects to satisfy its remaining obligations for these arrangements.

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April 30, 2025 and January 31, 2025, the balance of deferred revenue was $14.4 million and $17.1 million, respectively. The balances are related to cash received in advance for custodial and interchange revenue arrangements, other up-front fees and other commuter deferred revenue. The Company expects to recognize approximately 81% of its balance of deferred revenue as revenue over the next 12 months and the remainder thereafter. Amounts expected to be recognized as revenue within a period of 12 months or less are classified as accrued liabilities in the Company's condensed consolidated balance sheets, with the remainder included within other long-term liabilities. Revenue recognized during the three months ended April 30, 2025 that was included in the balance of deferred revenue as of January 31, 2025 was $3.2 million. The Company expects to satisfy its remaining obligations for these arrangements.

Leases

The components of operating lease costs were as follows:

	Three months ended April 30,
	Three months ended July 31,				Six months ended July 31,
(in thousands)	2025		2024		2025		2024
Operating lease expense	$	2,~~240~~234	$	2,~~367~~257	$	4,474	$	4,624
Sublease income	(1,~~235~~338)		(~~972~~985)		(2,572)		(1,957)
Net operating lease expense	$	~~1,005~~896	$	1,~~395~~272	$	1,902	$	2,667

Other income, net

Other income, net, consisted of the following:

	Three months ended April 30,
	Three months ended July 31,				Six months ended July 31,
(in thousands)	2025		2024		2025		2024
Interest income	$	23,~~733~~364	$	3,~~881~~103	$	6,097	$	6,984
Other expense, net	—		(477)
Other income (expense), net	27		11		27		(466)
Total other income, net	$	23,~~733~~391	$	3,~~404~~114	$	6,124	$	6,518

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Supplemental cash flow information

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

	Three months ended April 30,
	Six months ended July 31,
(in thousands)	2025		2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	25,~~529~~075	$	24,~~257~~839
Right-of-use assets obtained in exchange for lease obligations	$	(90)	$	1,469

Note 4. Intangible assets and goodwill

Intangible assets

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

April 30, 2025

July 31, 2025

(in thousands)

Gross carrying amount

Accumulated amortization

Net carrying amount

Amortizable intangible assets:

Software and software development costs

~~325~~335,~~094~~767

(~~245~~255,~~188~~833)

79,~~906~~934

Acquired HSA portfolios

737,011

(~~136~~149,~~890~~174)

~~600~~587,~~121~~837

Acquired customer relationships

759,782

(~~269~~282,~~743~~666)

~~490~~477,~~039~~116

Acquired developed technology

132,825

(~~123~~125,~~461~~256)

97,~~364~~569

Acquired trade names

12,900

(12,900)

—

Total amortizable intangible assets

1,~~967~~978,~~612~~285

(~~788~~825,~~182~~829)

1,~~179~~152,~~430~~456

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	January 31, 2025
(in thousands)	Gross carrying amount		Accumulated amortization		Net carrying amount
Amortizable intangible assets:
Software and software development costs	$	312,234	$	(234,102)	$	78,132
Acquired HSA portfolios	737,011		(124,606)		612,405
Acquired customer relationships	759,782		(256,820)		502,962
Acquired developed technology	132,825		(121,666)		11,159
Acquired trade names	12,900		(12,900)		—
Total amortizable intangible assets	$	1,954,752	$	(750,094)	$	1,204,658

Amortization expense was $38.1 0 million and $3776.5 1 million for the three and six months ended ~~April~~July 3031, 2025, respectively, and $42.3 million and $79.9 million for the three and six months ended July 31, 2024, respectively.

Goodwill

There were no changes to the carrying value of goodwill during the ~~three~~six months ended ~~April~~July 3031, 2025.

Note 5. Commitments and contingencies

Commitments

The Company’s principal commitments consist of long-term debt, operating lease obligations, and other purchase obligations and contractual commitments. There were no material changes during the ~~three~~six months ended ~~April~~July 3031, 2025, outside of the ordinary course of business, in the Company's commitments from those disclosed in its Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

Contingencies

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future but have ~~not yet been made. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.~~

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not yet been made. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

Legal matters

As a result of a cybersecurity incident in fiscal 2025 in which a business partner's user account containing personally identifiable information was breached, the Company is subject to multiple legal actions, including a consolidated putative class action lawsuit in federal court in the District of Utah, ~~an individual lawsuit filed in Florida state court,~~ and a mass arbitration action. The plaintiffs in these legal actions allege that the Company failed to implement reasonable data security practices, which resulted in a breach and disclosure of plaintiffs' and others' personally identifiable information and protected health information. The plaintiffs are seeking, among other damages, unspecified monetary damages, equitable relief, costs, and attorneys' fees arising out of the incident. With respect to the consolidated putative class action lawsuit, on August 22, 2024, the court issued an order granting a motion to consolidate the class action lawsuits, on October 15, 2024, a consolidated class action amended complaint was filed, ~~and~~ on December 13, 2024, the Company filed a motion to dismiss the class action and a motion to compel arbitration, and on May 5, 2025, the court dismissed without prejudice the Company's motion to compel arbitration and the motion to dismiss, with the court noting that the Company could refile both motions after the conclusion of discovery. The Company intends to vigorously defend these remaining legal actions. In addition, the Company is subject to several regulatory inquiries related to the cybersecurity incident. The amount of the potential loss associated with these lawsuits and any potential regulatory action cannot be reasonably estimated based on currently available information.

The Company and its subsidiaries are involved in various other litigation, governmental proceedings, and claims, not described above, that arise in the normal course of business. It is not possible to determine the ultimate outcome or the duration of such litigation, governmental proceedings or claims, or the impact that such litigation, proceedings and claims will have on the Company’s financial position, results of operations, and cash flows.

As required under GAAP, the Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. No loss accrual relating to these matters was recorded because, based on currently available information, the Company does not believe that any contingent liabilities relating to these matters are probable or that the amount of any resulting loss is estimable. However, litigation is subject to inherent uncertainties and the Company’s view of these matters may change. Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact on the Company’s financial position, results of operations and cash flows for the period in which the unfavorable outcome occurs, and potentially in future periods.

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an unfavorable outcome to occur, there exists the possibility of a material adverse impact on the Company’s financial position, results of operations and cash flows for the period in which the unfavorable outcome occurs, and potentially in future periods.

Note 6. Indebtedness

Long-term debt consisted of the following:

(in thousands)	~~April~~July 3031, 2025		January 31, 2025
4.50% Senior Notes due 2029	$	600,000	$	600,000
Revolving Credit Facility	~~461~~411,875		461,875
Principal amount	1,~~061~~011,875		1,061,875
Less: unamortized discount and issuance costs (1)	5,~~309~~041		5,574
Total debt, net	1,~~056~~006,~~566~~834		1,056,301
Less: current portion of long-term debt	—		—
Long-term debt, net	$	1,~~056~~006,~~566~~834	$	1,056,301

(1)In addition to the $5.30 million and $5.6 million of unamortized discount and issuance costs related to long-term debt as of ~~April~~July 3031, 2025 and January 31, 2025, respectively, $76.28 million and $7.7 million of unamortized issuance costs related to the Company's Revolving Credit Facility are included within other assets onin the condensed consolidated balance sheets as of ~~April~~July 3031, 2025 and January 31, 2025, respectively.

4.50% Senior Notes due 2029

On October 8, 2021, the Company completed its offering of $600 million aggregate principal amount of its 4.50% Senior Notes due 2029 (the “Notes”). The Notes were issued under an indenture (the “Indenture”), dated October 8, 2021, among the Company, the guarantors party thereto, and Wells Fargo Bank, National Association, as trustee.

The Notes are guaranteed by each of the Company’s existing, wholly owned domestic subsidiaries that guarantees its obligations under the Credit Agreement (as defined below) and are required to be guaranteed by any of the Company’s future subsidiaries that guarantee its obligations under the Credit Agreement or certain of its other indebtedness. The Notes will mature on October 1, 2029. Interest on the Notes is payable on April 1 and October 1 of each year. As of April 30, 2025 and January 31, 2025, the balance of accrued interest on the Notes was $2.3 million and $9.0 million, respectively, which is included within accrued liabilities on the Company's condensed consolidated balance sheets. The effective interest rate on the Notes is 4.72%.

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of each year. Accrued interest on the Notes was $9.0 million at each of July 31, 2025 and January 31, 2025, which is included within accrued liabilities on the Company's condensed consolidated balance sheets. The effective interest rate on the Notes is 4.72%.

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

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

The Indenture contains covenants that impose significant operational and financial restrictions on the Company; however, these covenants generally align with the covenants contained in the Credit Agreement. See "Credit Agreement" below for a description of these covenants.

Credit Agreement

On August 23, 2024, the Company entered into a Credit Agreement (the “Credit Agreement”) among the Company, as borrower, each lender from time to time party thereto (the “Lenders”), JPMorgan Chase Bank, N.A., as administrative agent and the Swing Line Lender (as defined in the Credit Agreement), and each L/C Issuer (as defined therein) party thereto, pursuant to which the Company established a new five-year senior secured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of up to $1.0 billion (with a $25 million sub-limit for the issuance of letters of credit), a portion of which was used to refinance the Company's prior credit agreement. The Revolving Credit Facility may be used in the future for working capital and general corporate purposes, including the financing of acquisitions and other investments. As of ~~April~~July 3031, 2025, the outstanding balance under the Revolving Credit Facility was $~~461~~411.9 million, which is included within long-term debt, net of issuance costs, onin the condensed consolidated balance sheet. The maturity date of the Revolving Credit Facility is August 23, 2029.

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Subject to the terms and conditions set forth in the Credit Agreement (including obtaining additional commitments from one or more new or existing lenders), the Company may in the future incur additional loans or commitments under the Credit Agreement in an aggregate principal amount of up to $450 million, plus an additional amount so long as the Company’s pro forma first lien net leverage ratio would not exceed 3.85 to 1.00 as of the date such loans or commitments are incurred.

Borrowings under the Revolving Credit Facility bear interest at an annual rate equal to, at the Company’s option, either (i) the secured overnight financing rate published by the CME Group Benchmark Administration Limited (“Term SOFR”) (subject to a 0.10% “credit spread adjustment”) plus a margin ranging from 1.25% to 2.50% or (ii) an alternate base rate plus a margin ranging from 0.25% to 1.50%, with the applicable margin determined by reference to a leverage-based pricing grid set forth in the Credit Agreement. The Company is also required to pay certain fees to the Lenders, including, among others, a quarterly commitment fee on the average unused amount of the Revolving Credit Facility at a rate ranging from 0.25% to 0.50%, with the applicable rate also determined by reference to a leverage-based pricing grid set forth in the Credit Agreement. As of ~~April~~July 3031, 2025, the interest rate on the Revolving Credit Facility was 5.9296%.

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

The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit, among other things, the ability of the Company and its subsidiaries to incur additional indebtedness, create liens, merge or dissolve, make investments, dispose of assets, engage in sale and leaseback transactions, make distributions and dividends and prepayments of junior indebtedness, engage in transactions with affiliates, enter into restrictive agreements, amend documentation governing junior indebtedness, modify its fiscal year and modify its organizational documents, in each case, subject to customary exceptions, thresholds, qualifications and “baskets.” In addition, the Credit Agreement contains financial performance covenants, which require the Company to maintain (i) a maximum total net leverage ratio, measured as of the last day of each fiscal quarter, of no greater than 5.00 to 1.00 beginning with the fiscal quarter ended January 31, 2025, and (ii) a minimum consolidated interest coverage ratio, measured as of the last day of each fiscal quarter, of no less than 3.00 to 1.00 beginning with the fiscal quarter ended January 31, 2025. The Company was in compliance with all covenants under the Credit Agreement as of ~~April~~July 3031, 2025 and for the period then ended.

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

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

Note 7. Income taxes

The Company follows ASC 740-270, Income Taxes - Interim Reporting, for the computation and presentation of its interim period tax provision. Accordingly, management estimated the effective annual tax rate and applied this rate to pre-tax income through the end of the latest fiscal quarter to determine the interim income tax provision. For the three and six months ended ~~April~~July 3031, 2025 ~~and 2024~~, the Company recorded an income tax provision of $1718.02 million and $435.42 million, respectively. This resulted in an effective income tax rate of 2423.03% and 1323.36% for the three and six months ended ~~April~~July 3031, 2025, respectively, compared with an effective income tax rate of 23.2% and 19.1% for the three and six months ended July 31, 2024, respectively. For the three and six months ended ~~April~~July 3031, 2025, discrete tax items impacting the effective tax rate were primarily due to differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense and changes to net state deferred tax liabilities due to state apportionment changes. For the three and six months ended ~~April~~July 3031, 2024, discrete tax items impacting the effective tax rate were primarily due to differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense.

As of ~~April~~July 3031, 2025 and January 31, 2025, the Company’s total gross unrecognized tax benefit was $2526.51 million and $24.1 million, respectively. If recognized, $22.17 million of the total gross unrecognized tax benefits would affect the Company's effective tax rate as of ~~April~~July 3031, 2025.

~~-13-~~The Company files income tax returns with U.S. federal and state taxing jurisdictions and is currently under examination by the states of California, New York, and Texas. Such examinations may lead to ordinary course adjustments or proposed adjustments to the Company's taxes, net operating losses, and/or tax credit carryforwards. As a result of the Company's net operating loss carryforwards and tax credit carryforwards, the Company remains subject to examination by one or more jurisdictions for tax years after 2006.

~~Table~~On July 4, 2025, President Trump signed into law the “One Big Beautiful Bill Act” (“OBBBA”), which contains several corporate tax provisions. The most significant provision for the Company is the immediate expensing of ~~Contents~~domestic research and experimental expenditures. Other OBBBA changes include bonus depreciation allowance on qualified business asset purchases and modifications to the business interest expense limitation calculation. Each of these changes may result in accelerated tax deductions during the current and future tax years. Tax payments for the fiscal years ending January 31, 2026 and January 31, 2027 are expected to be significantly reduced as a result of the accelerated tax deductions. However, the Company's total income tax expense and effective tax rate are not expected to materially change as a result of the new legislation.

The Company files income tax returns with U.S. federal and state taxing jurisdictions and is currently under examination by the states of California and Texas. Such examinations may lead to ordinary course adjustments or proposed adjustments to the Company's taxes, net operating losses, and/or tax credit carryforwards. As a result of the Company's net operating loss carryforwards and tax credit carryforwards, the Company remains subject to examination by one or more jurisdictions for tax years after 2006.

Note 8. Stock-based compensation

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

	Three months ended April 30,
	Three months ended July 31,				Six months ended July 31,
(in thousands)	2025		2024		2025		2024
Cost of revenue	$	3,~~387~~114	$	42,~~525~~934	$	6,501	$	7,459
Sales and marketing	41,~~870~~529		43,~~323~~850		6,399		8,173
Technology and development	5,~~920~~732		56,~~940~~454		11,652		12,394
General and administrative	~~159~~8,693		178,~~232~~336		8,852		25,568
Total stock-based compensation expense	$	1419,~~336~~068	$	3221,~~020~~574	$	33,404	$	53,594

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Stock award plans

Incentive Plan. The HealthEquity, Inc. 2024 Equity Incentive Plan (the "Incentive Plan") provides for the issuance of stock awards to team members, consultants, and directors of the Company. Subject to adjustment as provided in the Incentive Plan, as of ~~April~~July 3031, 2025, the aggregate number of shares of the Company’s common stock reserved and available for issuance pursuant to awards granted under the Incentive Plan was 3.10 million.

Stock options

A summary of stock option activity is as follows:

	Outstanding stock options
(in thousands, except for exercise prices and term)	Number ofoptions	Range ofexerciseprices	Weighted-averageexerciseprice		Weighted-averagecontractualterm(in years)	Aggregateintrinsicvalue
Outstanding as of January 31, 2025	369	$21.27 - 73.61	$	48.13	2.5	$	22,957
Exercised	(33204)	$2524.0636 - 4473.5361	$	2951.6129
Outstanding as of April 30, 2025	336	$21.27 - 73.61	$	49.91	1.3	$	12,043
Outstanding as of July 31, 2025	165	$21.27 - 73.61	$	44.25	1.9	$	8,709
Vested and expected to vest as of April 30, 2025	336		$	49.91	1.3	$	12,043
Vested and expected to vest as of July 31, 2025	165		$	44.25	1.9	$	8,709
Exercisable as of April 30, 2025	336		$	49.91	1.3	$	12,043
Exercisable as of July 31, 2025	165		$	44.25	1.9	$	8,709

Restricted stock units

A summary of restricted stock unit ("RSU") and performance restricted stock unit ("PRSU") activity is as follows:

	RSUs and PRSUs
(in thousands, except weighted-average grant date fair value)	Shares	Weighted-average grant date fair value
Outstanding as of January 31, 2025	2,882	$	76.82
Granted	1,~~056~~139	9394.8227
Vested	(~~847~~1,048)	9187.3502
Forfeited	(~~183~~370)	8377.2193
Outstanding as of April 30, 2025	2,908	$	78.36
Outstanding as of July 31, 2025	2,603	$	80.19

Performance restricted stock units. During the ~~three~~six months ended ~~April~~July 3031, 2025, the Company awarded 139,451 PRSUs subject to a market condition based on the Company’s total shareholder return relative to the Russell 3000 index as measured on January 31, 2028. The Company used a Monte Carlo simulation to determine that the grant date fair value of the awards was $17.7 million. Compensation expense is recorded over the requisite service period if the service condition is met regardless of whether the market condition is satisfied. The market condition allows for a range of vesting from 0% to 200% based on the level of performance achieved. The PRSUs cliff vest upon approval by the Talent, Compensation and Culture Committee of the board of directors.

In addition, during the six months ended July 31, 2025, the Company awarded 46,485 PRSUs subject to the achievement of certain financial criteria measured on January 31, 2028. The PRSUs cliff vest and are issued upon approval by the Talent, Compensation and Culture Committee. The Company records stock-~~14-~~based compensation related to PRSUs over the requisite service period when it is considered probable that the performance conditions will be met. The Company believes it is probable that the PRSUs will vest at least in part. The vesting of the PRSUs will ultimately range from 0% to 200% of the number of shares underlying the PRSU grant based on the level of achievement of the performance goals.

Each of the PRSUs granted during the six months ended July 31, 2025 contains a provision such that upon the award holder's eligible retirement, the PRSUs would remain outstanding and eligible to vest based on achievement of their respective market or performance conditions without regard to the award holder’s continued employment on the vesting date. Based on the application of ASC 718, Compensation - Stock Compensation, expense is recognized over the requisite service period, which ends on the earlier of (1) the date of approval by the Talent, Compensation and Culture Committee or (2) the date the award holder becomes eligible for retirement (defined as at least 55 years old with at least 10 years of service at the Company). As a result, the expense associated with PRSUs granted to retirement-eligible individuals was recorded on the grant date.

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condition allows for a range of vesting from 0% to 200% based on the level of performance achieved. The PRSUs cliff vest upon approval by the Talent, Compensation and Culture Committee of the board of directors.

In addition, during the three months ended April 30, 2025, the Company awarded 46,485 PRSUs subject to the achievement of certain financial criteria measured on January 31, 2028. The PRSUs cliff vest and are issued upon approval by the Talent, Compensation and Culture Committee. The Company records stock-based compensation related to PRSUs over the requisite service period when it is considered probable that the performance conditions will be met. The Company believes it is probable that the PRSUs will vest at least in part. The vesting of the PRSUs will ultimately range from 0% to 200% of the number of shares underlying the PRSU grant based on the level of achievement of the performance goals.

Each of the PRSUs granted during the three months ended April 30, 2025 contains a provision such that upon the award holder's eligible retirement, the PRSUs would remain outstanding and eligible to vest based on achievement of their respective market or performance conditions without regard to the award holder’s continued employment on the vesting date. Based on the application of ASC 718, Compensation - Stock Compensation, expense is recognized over the requisite service period, which ends on the earlier of (1) the date of approval by the Talent, Compensation and Culture Committee or (2) the date the award holder becomes eligible for retirement (defined as at least 55 years old with least 10 years of service at the Company). As a result, the expense associated with PRSUs granted to retirement-eligible individuals was recorded on the grant date.

Note 9. Stockholders' equity

Stock repurchase ~~program~~programs

In ~~September~~June ~~2024~~2025, the Company announced that its ~~Board~~board of ~~Directors~~directors authorized a new common stock repurchase program. ~~Under~~ (the ~~program,~~“2025 ~~the~~Stock ~~Company~~Repurchase ~~may~~Program"), ~~purchase~~supplementing upthe to $300.0 million ~~of its~~ common stock, asrepurchase ~~market~~program ~~conditions~~approved ~~warrant.~~in ~~The~~August ~~common~~2024 ~~stock~~(the ~~may~~“2024 beStock ~~repurchased~~Repurchase atProgram"). ~~prices~~Under ~~that~~ the ~~Company~~2025 ~~deems~~Stock ~~appropriate~~Repurchase ~~and subject to market conditions~~Program, ~~applicable law, and other factors deemed relevant in~~ the Company's ~~sole discretion. Such repurchases~~ may bepurchase ~~effected~~up ~~through~~to ~~open~~an ~~market~~additional ~~purchases,~~$300 million ~~privately~~of ~~negotiated~~its ~~transactions~~common ~~or otherwise~~stock, ~~including~~as ~~repurchase~~market ~~plans that satisfy the~~ conditions ~~of Rule 10b5-1 under the Securities Exchange Act of 1934~~warrant. The ~~stock~~2025 ~~repurchase~~Stock ~~program~~Repurchase ~~does~~Program ~~not~~will ~~obligate~~allow the Company to ~~repurchase~~continue ~~any~~to ~~dollar~~opportunistically ~~amount~~repurchase ~~or number of~~ shares ofafter ~~common stock, and~~ the ~~program~~2024 ~~may~~Stock beRepurchase ~~suspended~~Program orhas ~~discontinued~~been ~~at any time~~exhausted.

The ~~following~~common ~~table~~stock ~~sets~~may ~~forth~~be repurchased at prices that the ~~common~~Company ~~stock~~deems ~~repurchased~~appropriate and ~~subsequently~~subject ~~retired~~to ~~during~~market conditions, applicable law, and other factors deemed relevant in the ~~three~~Company's ~~months~~sole ~~ended~~discretion. ~~April 30~~Such repurchases may be effected through open market purchases, ~~2025:~~privately negotiated transactions or otherwise, including repurchase plans that satisfy the conditions of Rule 10b5-1 under the Securities Exchange Act of 1934. The stock repurchase programs do not obligate the Company to repurchase any dollar amount or number of shares of common stock, and the programs may be suspended or discontinued at any time.

	Three months ended April 30, 2025
(in thousands)	Shares	Amount
Common stock repurchases (1)	702	$	60,311

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

(1)Shares repurchased include unsettled repurchases as of April 30, 2025.


	Three months ended July 31, 2025			Six months ended July 31, 2025
(in thousands)	Shares	Amount		Shares	Amount
Common stock repurchases (1)	665	$	65,991	1,367	$	126,302

~~All~~(1)Shares ~~repurchases~~repurchased ~~were~~include ~~made~~unsettled inrepurchases ~~open~~as ~~market transactions. The excess~~ of ~~repurchase price over par value was allocated between additional paid-in capital and retained earnings. As of April~~July 3031, 2025~~, $117~~.5 ~~million~~Transaction offees ~~common~~and ~~stock~~excise ~~remained~~tax ~~authorized~~were ~~for~~recorded ~~repurchase~~as ~~under~~part of the ~~Company's stock~~ repurchase ~~program~~price.

~~Note~~All 10repurchases were made in open market transactions. ~~Fair~~The excess of repurchase price over par value was allocated between additional paid-in capital and retained earnings. As of July 31, 2025, $351.8 million of common stock remained authorized for repurchase under the Company's common stock repurchase programs.

Accumulated other comprehensive income

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

Note 10. Derivative financial instruments and hedging activities

Yields paid by the Company's depository partners and insurance company partners are impacted by the prevailing interest rate environment at the time HSA cash is placed with those partners. The Company uses Treasury bond forwards to hedge a portion of the benchmark interest rate risk of expected future transitions of HSA cash currently held by its depository partners into group annuity contracts or similar arrangements with its insurance company partners. These derivatives involve the Company and its counterparty agreeing to fix the price of a specified Treasury bond on a future date, ranging from January 2026 to January 2027, resulting in cash settlement for the difference between the fixed price and the market price on that date. The parties may elect net settlement of multiple transactions under certain conditions; however, the Company presents its derivative assets and liabilities on a gross basis on its condensed consolidated balance sheets. The gain or loss on the derivative is recorded in AOCI and subsequently reclassified into custodial revenue in the same periods during which the hedged transaction affects custodial revenue earned from the Company's insurance company partners. As of July 31, 2025, each of the Company's derivatives was designated as a cash flow hedge. The Company did not use derivatives prior to fiscal 2026.

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

Notional amount of derivative contracts

The notional amount of the Company's derivative instruments was as follows:


(in thousands, except number of instruments)	July 31, 2025			January 31, 2025
	Number of instruments	Notional		Number of instruments	Notional
Treasury bond forwards	10	$	1,250,000	—	$	—

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Fair value of derivative contracts

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


	July 31, 2025
	Derivative assets				Derivative liabilities
(in thousands)	Other current assets		Other assets		Accrued liabilities		Other long-term liabilities
Treasury bond forwards	$	1,114	$	1,081	$	(1,120)	$	(802)

Effect of derivatives on the condensed consolidated financial statements

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


	Three months ended July 31,				Six months ended July 31,
(in thousands)	2025		2024		2025		2024
Treasury bond forwards	$	273	$	—	$	273	$	—

No reclassification from AOCI to earnings was recorded with respect to the Company's derivatives during the six months ended July 31, 2025 or 2024. The estimated net amount of existing gains reported in AOCI as of July 31, 2025 that is expected to be reclassified into earnings within the next 12 months is immaterial.

Note 11. Fair value

Fair value measurements are made at a specific point in time based on relevant market information. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards specify a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair value hierarchy:

•Level 1—quoted prices in active markets for identical assets or liabilities;

•Level 2—inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

•Level 3—unobservable inputs based on the Company’s own assumptions.

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Cash and cash equivalents are considered Level 1 instruments and are valued based on publicly available daily net asset values. The carrying values of cash and cash equivalents approximate fair values due to the short-term nature of these instruments.

The Notes are valued based upon quoted market prices and are considered Level 2 instruments because the markets in which the Notes trade are not considered active markets. As of ~~April~~July 3031, 2025, the fair value of the Notes was $~~568~~578.19 million.

The Revolving Credit Facility is considered a Level 2 instrument, and the amounts outstanding thereunder are recorded at book value in the Company's condensed consolidated financial statements. The Revolving Credit Facility reprices frequently due to variable interest rate terms and entails no significant changes in credit risk. As a result, the fair value of the Revolving Credit Facility approximates carrying value.

~~Note~~The 11Company classifies derivative instruments as Level 2 within the fair value hierarchy. ~~Subsequent~~These ~~events~~instruments are valued using industry standard valuation models that use observable inputs such as interest rate curves and implied volatilities.

In May 2025, the Company executed bond forward transactions with a combined notional value of $500 million and settlement dates between January 2026 and January 2027 to hedge a portion of the benchmark interest rate risk of expected future transitions of HSA cash currently held by our depository partners into group annuity contracts or similar arrangements with our insurance company partners. These derivatives are designated as cash flow hedges.-18-

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Item 2. Management’s discussion and analysis of financial condition and results of operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Statements that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. Such statements include, but are not limited to, statements concerning our ability to integrate acquired businesses, the anticipated synergies and other benefits of acquired businesses and any future acquisitions, health savings accounts and other tax-advantaged consumer-directed benefits, tax and other regulatory changes, market opportunity, our future financial and operating results, our investment and acquisition strategy, our sales and marketing strategy, management’s plans, beliefs and objectives for future operations, technology and development, economic and industry trends or trend analysis, expectations about seasonality, opportunity for portfolio purchases and other acquisitions, operating expenses, anticipated income tax rates, capital expenditures, cash flows and liquidity. These statements are based on the beliefs and assumptions of our management based on information currently available to us. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk factors” included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025 and our other reports filed with the SEC. Furthermore, such forward-looking statements speak only as of the date of this report. 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.

Overview

We are a leader and an innovator in providing technology-enabled services that empower consumers to make healthcare saving and spending 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, 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 ~~April~~July 3031, 2025, we administered 910.90 million HSAs, with balances totaling $3133.31 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 17.1 million as of ~~April~~July 3031, 2025.

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 21% as of December 2024, measured by HSA Assets. According to the 2024 Year-End Devenir HSA Research Report, as of December 2024, 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.

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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 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

We believe that our future performance will be driven by a number of factors, including those identified below. Each of these factors presents both significant opportunities and significant risks to our future performance. See also the section entitled “Risk factors” included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025 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 success depends in part on our ability to successfully integrate acquired businesses and HSA portfolios with our business in an efficient and effective manner.

Structural change in U.S. health insurance

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. We believe that continued growth in healthcare costs and related factors will spur continued growth in HSA-qualified health plans and HSAs and may encourage additional policy changes making HSAs or similar vehicles available to new populations such as individuals in Medicare. However, the timing and impact of these and other developments in U.S. healthcare are uncertain. Moreover, changes in healthcare policy, such as "Medicare for all" plans, could materially and adversely affect our business in ways that are difficult to predict.

Trends in U.S. tax law

Tax law has a profound impact on our business. Our offerings to members, Clients, and Network Partners consist primarily of services enabled, mandated, or advantaged by provisions of U.S. tax law and regulations. Changes in tax policy are speculative and may affect our business in ways that are difficult to predict.

Our client base

Our business model is based on a B2B2C distribution strategy, whereby we work with Network Partners and Clients to reach consumers to increase the number of our members with HSA accounts and complementary CDBs. We believe that there are significant opportunities to expand the scope of services that we provide to our current Clients.

~~Broad distribution footprint~~-20-

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~~channel~~Broad ~~through~~distribution 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. Our sales representatives and account management teams work with and train the sales representatives and account management teams of our Network Partners. footprint

We believe we have a diverse distribution footprint to attract new Clients and Network Partners. 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 Network Partners collectively employ thousands of sales representatives and account managers who promote both the Network Partners' products and our products and services. Our sales representatives and account management teams work with and train the sales representatives and account management teams of our Network Partners.

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. 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. We believe that the combination of HSA and complementary CDB offerings significantly strengthens our value proposition to employers, health benefits brokers and consultants, and Network Partners as a leading single-source provider.

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.

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. 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 transitions of HSA cash from our Basic Rates offering to our Enhanced Rates offering. Over longer periods, sustained shifts in prevailing interest rates affect the amount of custodial revenue we can realize on custodial assets and the interest retained by our members.

Interest on our revolving credit facility changes frequently due to variable interest rate terms, and as a result, our interest expense is expected to fluctuate based on changes in prevailing interest rates.

Our proprietary technology

We believe that innovations incorporated in our technology differentiate us from our competitors and help drive our growth by enabling us to better assist consumers to make healthcare saving and spending decisions and maximize the value of their tax-advantaged benefits. 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 ~~making~~continuing ~~investments in the architecture and infrastructure of the technology that we use~~ to provide our services to improve our transaction processing capabilities and support continued account and transaction growth, as well as in data-driven personalized engagement to help our members spend less, save more, and build wealth for retirement. In addition, we are investing in technology solutions to meet the evolving needs of our members, Clients and Network Partners. Our current innovation efforts include, among others, increasing member and client self-service capabilities, developing APIs, driving electronic communication rather than paper, increasing straight-through processing, improving overall process times utilizing both traditional robotic process automation, and increasingly through AI tools including the Expedited Claims tool, leveraging chip-enabled stacked cards, and mobile wallet.

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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. In addition, we are investing in technology solutions to meet the evolving needs of our members, Clients and Network Partners. Our current innovation efforts include, among others, increasing member and client self-service capabilities, developing APIs, driving electronic communication rather than paper, increasing straight-through processing, improving overall process times utilizing both traditional robotic process automation, and increasingly through AI tools including the Expedited Claims and HSAnswers tools, leveraging chip-enabled stacked cards, and mobile wallet.

Our Purple culture

A successful healthcare consumer needs education and guidance delivered by people as well as by technology. The education and customer service we provide is driven by our Purple culture, which we believe is a significant factor in our ability to attract and retain customers and to address opportunities in the rapidly changing healthcare sector. We invest in and intend to continue to invest in human capital through technology-enabled training, career development, and advancement opportunities.

Our competition and industry

Our direct competitors are HSA custodians and other CDB providers. Many of these are state or federally chartered banks and other financial institutions for which we believe benefits administration services are not a core business. Some of our direct competitors (including well-known retail investment companies, such as Fidelity Investments, and healthcare service companies such as UnitedHealth Group's Optum and Webster Bank) are in a position to devote more resources to the development, sale, and support of their products and services than we have at our disposal. Our other CDB administration competitors include health insurance carriers, human resources consultants and outsourcers, payroll providers, national CDB specialists, regional third-party administrators, and commercial banks. In addition, numerous indirect competitors, including benefits administration service providers, partner with banks and other HSA custodians to compete with us. Our Network Partners and ecosystem partners may also choose to offer competitive services directly, as some health plans have done. Our success depends on our ability to predict and react quickly to these and other industry and competitive dynamics.

Regulatory environment

Federal law and regulations, including the Affordable Care Act, the Internal Revenue Code, the Employee Retirement Income Security Act and Department of Labor regulations, and public health regulations that govern the provision of health insurance and provide the tax advantages associated with our services, play a pivotal role in determining our market opportunity. Privacy and data security-related laws such as the Health Insurance Portability and Accountability Act, or HIPAA, and the Gramm-Leach-Bliley Act, laws governing the provision of investment advice to consumers, such as the Investment Advisers Act of 1940, or the Advisers Act, the USA PATRIOT Act, anti-money laundering laws, and the Federal Deposit Insurance Act, all play a similar role in determining our competitive landscape. In addition, state-level regulations also have significant implications for our business in some cases. For example, our subsidiary HealthEquity Trust Company is regulated by the Wyoming Division of Banking, and several states are considering, or have already passed, new privacy regulations that can affect our business. Various states also have laws and regulations that impose additional restrictions on our collection, storage, and use of personally identifiable information. Privacy regulation in particular has become a priority issue in many states, including, for example, the California Privacy Rights Act. 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.

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Key financial and 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. We discuss certain of these key financial metrics, including revenue, below in the section entitled “Key components of our results of operations.” In addition, we utilize other key metrics as described below.

Total Accounts

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

(in thousands, except percentages)	~~April~~July 3031, 2025	~~April~~July 3031, 2024	% Change		January 31, 2025
HSAs	9,~~886~~989	9,~~097~~383	96	%	9,889
New HSAs from sales - Quarter-to-date	~~150~~163	~~194~~187	(2313)	%	471
New HSAs from sales - Year-to-date	~~150~~312	~~194~~382	(2318)	%	1,040
New HSAs from acquisitions - Year-to-date	—	~~400~~616	*		616
HSAs with investments	~~770~~782	~~665~~711	1610	%	753
CDBs	7,~~174~~153	6,~~913~~898	4	%	7,144
Total Accounts	17,~~060~~142	16,~~010~~281	75	%	17,033
Average Total Accounts - Quarter-to-date	17,~~122~~044	1516,~~919~~214	85	%	16,677
Average Total Accounts - Year-to-date	17,~~122~~083	1516,~~919~~066	86	%	16,302

*Not meaningful

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 0.86 million, or 96%, from ~~April~~July 3031, 2024 to ~~April~~July 3031, 2025, driven by new HSAs from sales ~~and new HSAs added through the BenefitWallet HSA portfolio acquisition~~. The number of our CDBs increased by 0.3 million, or 4%, from ~~April~~July 3031, 2024 to ~~April~~July 3031, 2025, primarily driven by an increase in HRA and FSA accounts, partially offset by a decrease in other CDBs.

HSA Assets

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

(in millions, except percentages)	~~April~~July 3031, 2025		~~April~~July 3031, 2024		% Change		January 31, 2025
HSA cash	$	17,~~066~~035	$	1516,~~850~~368	84	%	$	17,435
HSA investments	1416,~~205~~102		1113,~~427~~099		2423	%	14,676
Total HSA Assets	3133,~~271~~137		2729,~~277~~467		1512	%	32,111
Average daily HSA cash - Quarter-to-date	17,~~281~~017		1516,~~388~~363		124	%	16,634
Average daily HSA cash - Year-to-date	17,~~281~~149		15,~~388~~875		128	%	16,206

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. 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 $10.27 billion, or 84%, from ~~April~~July 3031, 2024 to ~~April~~July 3031, 2025, due to net HSA contributions from new and existing HSA members ~~and HSA cash added through the BenefitWallet HSA portfolio acquisition~~, partially offset by transfers to HSA investments.

HSA investments increased by $23.80 billion, or 2423%, from ~~April~~July 3031, 2024 to ~~April~~July 3031, 2025, due to the increased market value of invested balances, and transfers from HSA cash~~, and HSA investments added through the BenefitWallet HSA portfolio acquisition~~.

Total HSA Assets increased by $43.07 billion, or 1512%, from ~~April~~July 3031, 2024 to ~~April~~July 3031, 2025, primarily due to ~~net HSA contributions from new and existing HSA members,~~ the increased market value of invested balances, and net HSA ~~Assets~~contributions ~~added~~from ~~through~~new ~~the~~and ~~BenefitWallet~~existing HSA ~~portfolio acquisition~~members.

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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 ~~April~~July 3031, 2025:

Year ending January 31, (in billions, except percentages)	HSA cash expected to reprice		Average annualized yield
Remainder of 2026	$	1.73	21.47	%
2027	4.01		12.90	%
2028	2.2		4.01	%
2029	1.5		3.7	%
Thereafter	7.03		4.45	%
Total (1)	$	16.4	3.5	%

(1)Excludes $0.76 billion of HSA cash held in floating-rate contracts as of ~~April~~July 3031, 2025.

Client-held funds

(in millions, except percentages)	~~April~~July 3031, 2025		~~April~~July 3031, 2024		% Change		January 31, 2025
Client-held funds	$	~~925~~818	$	~~858~~817	80	%	$	896
Average daily Client-held funds - Quarter-to-date	~~902~~884		~~840~~860		73	%	798
Average daily Client-held funds - Year-to-date	~~902~~893		~~840~~850		75	%	817

Client-held funds are interest-earning deposits from which we generate custodial revenue. These deposits are amounts remitted by Clients and held by us on their behalf to pre-fund and facilitate administration of CDBs. We deposit the Client-held funds with our Depository Partners in interest-bearing, demand deposit accounts that have a floating interest rate and no set term or duration. 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 April 30,
	Three months ended July 31,				Six months ended July 31,
(in thousands)	2025		2024		2025		2024
Net income	$	5359,~~915~~854	$	2835,~~813~~822	$	113,769	$	64,635
Interest income	(23,~~733~~364)		(3,~~881~~103)		(6,097)		(6,984)
Interest expense	14,~~858~~955		1115,~~795~~427		29,813		27,222
Income tax provision	1718,~~038~~194		410,~~426~~794		35,232		15,220
Depreciation and amortization	11,~~739~~453		1312,~~393~~629		23,192		26,022
Amortization of acquired intangible assets	27,~~002~~001		2530,~~545~~981		54,003		56,526
Stock-based compensation expense	1419,~~336~~068		3221,~~020~~574		33,404		53,594
Merger integration expenses	1,~~275~~266		21,~~143~~777		2,541		3,920
Amortization of incremental costs to obtain a contract	1,~~926~~951		1,~~632~~681		3,877		3,313
Costs associated with unused office space	~~852~~723		~~790~~806		1,575		1,596
Other	—(27)		~~759~~(101)		(27)		658
Adjusted EBITDA	$	~~140~~151,~~208~~074	$	~~117~~128,~~435~~287	$	291,282	$	245,722

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

	Three months ended April 30,
	Three months ended July 31,										Six months ended July 31,
(in thousands, except percentages)	2025			2024			$ Change		% Change		2025			2024			$ Change		% Change
Net income	$	5359,~~915~~854		$	2835,~~813~~822		$	2524,~~102~~032	8767	%	$	113,769		$	64,635		$	49,134	76	%
As a percentage of revenue	1618		%	1012		%					17		%	11		%

Our net income increased by $2524.10 million, or 8767%, from the three months ended ~~April~~July 3031, 2024 to the three months ended ~~April~~July 3031, 2025, primarily due to an increase in gross profit and a decrease in operating expenses and other expense, partially offset by an increase in income tax provision ~~and interest expense~~, as described more fully in the section entitled "Comparison of the three and six months ended ~~April~~July 3031, 2025 and 2024."

Our net income increased by $49.1 million, or 76%, from the six months ended July 31, 2024 to the six months ended July 31, 2025, primarily due to an increase in gross profit and a decrease in operating expenses, partially offset by an increase in income tax provision and other expense, as described more fully in the section entitled "Comparison of the three and six months ended July 31, 2025 and 2024."

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

	Three months ended April 30,
	Three months ended July 31,										Six months ended July 31,
(in thousands, except percentages)	2025			2024			$ Change		% Change		2025			2024			$ Change		% Change
Adjusted EBITDA	$	~~140~~151,~~208~~074		$	~~117~~128,~~435~~287		$	22,~~773~~787	1918	%	$	291,282		$	245,722		$	45,560	19	%
As a percentage of revenue	4246		%	4143		%					44		%	42		%

Our Adjusted EBITDA increased by $22.8 million, or 1918%, from the three months ended ~~April~~July 3031, 2024 to the three months ended ~~April~~July 3031, 2025, primarily due to an increase in total revenue and efficiencies resulting from our technology investments, partially offset by increases in ~~personnel-related~~software costs and ~~professional~~costs ~~fees~~to support the increase in Total Accounts and member interactions.

Our Adjusted EBITDA increased by $45.6 million, or 19%, from the six months ended July 31, 2024 to the six months ended July 31, 2025, primarily due to an increase in total revenue and efficiencies resulting from our technology investments, 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.

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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 April 30,
	Three months ended July 31,				Six months ended July 31,
(in thousands, except per share data)	2025		2024		2025		2024
Net income	$	5359,~~915~~854	$	2835,~~813~~822	$	113,769	$	64,635
Income tax provision	1718,~~038~~194		410,~~426~~794		35,232		15,220
Income before income taxes - GAAP	7078,~~953~~048		3346,~~239~~616		149,001		79,855
Non-GAAP adjustments:
Amortization of acquired intangible assets	27,~~002~~001		2530,~~545~~981		54,003		56,526
Stock-based compensation expense	1419,~~336~~068		3221,~~020~~574		33,404		53,594
Merger integration expenses	1,~~275~~266		21,~~143~~777		2,541		3,920
Costs associated with unused office space	~~852~~723		~~790~~806		1,575		1,596
Loss on extinguishment of debt	—		—
Total adjustments to income before income taxes - GAAP	48,058		55,138		91,523		115,636
Total adjustments to income before income taxes - GAAP	43,465		60,498
Income before income taxes - Non-GAAP	126,106		101,754		240,524		195,491
Income before income taxes - Non-GAAP	114,418		93,737
Income tax provision - Non-GAAP (1)	31,526		25,439		60,130		48,873
Income tax provision - Non-GAAP (1)	28,604		23,434
Non-GAAP net income	94,580		76,315		180,394		146,618
Non-GAAP net income	85,814		70,303
Diluted weighted-average shares	87,746		88,646		88,153		88,606
Diluted weighted-average shares	88,415		88,324
GAAP net income per diluted share	$	0.68	$	0.40	$	1.29	$	0.73
GAAP net income per diluted share	$	0.61	$	0.33
Non-GAAP net income per diluted share	$	1.08	$	0.86	$	2.05	$	1.65
Non-GAAP net income per diluted share	$	0.97	$	0.80

(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 $1518.53 million, or 2224%, from the three months ended ~~April~~July 3031, 2024 to the three months ended ~~April~~July 3031, 2025, primarily due to an increase in total revenue and efficiencies resulting from our technology investments, partially offset by increases in ~~personnel-related~~software costs, ~~professional~~and ~~fees,~~costs to support the increase in Total Accounts and ~~interest~~member ~~expense~~interactions.

Our non-GAAP net income increased by $33.8 million, or 23%, from the six months ended July 31, 2024 to the six months ended July 31, 2025, primarily due to an increase in total revenue and efficiencies resulting from our technology investments, 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.

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Key components of our results of operations

Revenue

We generate revenue from three primary sources: service revenue, custodial revenue, and interchange revenue.

Service revenue. We earn service revenue from the fees we charge our Network Partners, Clients, and members for the administration services we provide in connection with the HSAs and other CDBs we offer. With respect to our Network Partners and Clients, our fees are generally based on a fixed tiered structure for the duration of the relevant service agreement and are paid to us on a monthly basis. In addition, once a member’s HSA cash balance reaches a certain threshold, the member is able to invest his or her HSA Assets through our investment partner from which we earn recordkeeping and advisory fees, calculated as a percentage of the member's HSA investments. We recognize revenue on a monthly basis as services are rendered to our members and Clients.

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which we earn recordkeeping and advisory 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. 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.

Interchange revenue. We earn interchange revenue each time one of our members uses one of our physical payment cards or virtual platforms to make a purchase. This revenue is collected each time a member “swipes” our payment card to pay expenses. We recognize interchange revenue monthly based on reports received from third parties, namely, the card-issuing banks and card processors.

Cost of revenue

Service costs. Service costs are 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.

Custodial costs. Custodial costs are comprised of interest retained by our HSA members on HSA cash and fees we pay to banking consultants whom we use to help secure agreements with our Depository Partners. Interest retained by HSA members is calculated on a tiered basis. The interest rates retained by HSA members can change based on a formula or upon required notice.

Interchange costs. Interchange costs are comprised of costs we incur in connection with processing payment transactions initiated by our members. Due to the substantiation requirement on FSA- and HRA-linked payment card transactions, payment card costs are higher for FSA and HRA transactions than for HSA transactions. In addition to fixed per card fees, we are assessed additional transaction costs determined by the amount of the transaction.

Gross profit and gross margin

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.

Operating expenses

Sales and marketing. Sales and marketing expenses consist primarily of personnel and related expenses for our sales and marketing staff, including sales commissions for our direct sales force, external agent/broker commission expenses, marketing expenses, depreciation, amortization, stock-based compensation, and common expense allocations.

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 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.

General and administrative. General and administrative expenses include personnel and related expenses of, and professional fees incurred by our executive, finance, legal, internal audit, corporate development, compliance, and people departments. They also include depreciation, amortization, stock-~~based compensation, and common expense allocations.~~27-

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~~relationships,~~security. ~~acquired~~Technology ~~developed~~and ~~technology,~~development ~~and~~expenses ~~acquired~~also ~~trade~~include ~~names~~software ~~and~~engineering ~~trademarks~~services, ~~which we amortize over~~ the ~~assets'~~costs ~~estimated~~of ~~useful~~operating ~~lives,~~our ~~estimated~~technology ~~to be 7-15 years~~infrastructure, ~~2-5 years~~depreciation, ~~and~~amortization 3of ~~years,~~capitalized ~~respectively.~~software Wedevelopment ~~also~~costs, ~~acquired intangible HSA portfolios from third~~stock-~~party~~based ~~custodians. We amortize these assets over the assets’ estimated useful life of 15 years. We evaluate our acquired intangible assets for impairment annually~~compensation, orand atcommon aexpense ~~triggering event~~allocations.

General and administrative. General and administrative expenses include personnel and related expenses of, and professional fees incurred by our executive, finance, legal, internal audit, corporate development, compliance, and people departments. They also include depreciation, amortization, stock-based compensation, and common expense allocations.

Amortization of acquired intangible assets. Amortization of acquired intangible assets results primarily from intangible assets acquired in connection with business combinations. The assets include acquired customer relationships, acquired developed technology, and acquired trade names and trademarks, which we amortize over the assets' estimated useful lives, estimated to be 7-15 years, 2-5 years, and 3 years, respectively. We also acquired intangible HSA portfolios from third-party custodians. We amortize these assets over the assets’ estimated useful life of 15 years. We evaluate our acquired intangible assets for impairment annually, or at a triggering event.

Merger integration. Merger integration expenses include personnel and related expenses, including severance, professional fees, legal expenses and settlements, and facilities and technology expenses directly related to integration activities to merge operations as a result of acquisitions.

Interest expense

Interest expense consists primarily of accrued interest expense and amortization of deferred financing costs associated with our long-term debt. Interest on our revolving credit facility changes frequently due to variable interest rate terms, and as a result, our interest expense is expected to fluctuate based on changes in prevailing interest rates.

Other income, net

Other income, net, consists of interest income earned on corporate cash and other miscellaneous income and expense.

Income tax provision

We are subject to federal and state income taxes in the United States based on a January 31 fiscal year end. We use the asset and liability method to account for income taxes, under which current tax liabilities and assets are recognized for the estimated taxes payable or refundable on the tax returns for the current fiscal year. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating loss carryforwards, and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. Valuation allowances are established when necessary to reduce net deferred tax assets to the amount expected to be realized. As of ~~April~~July 3031, 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 onin our condensed consolidated balance sheet.

Comparison of the three and six months ended ~~April~~July 3031, 2025 and 2024

Revenue

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

	Three months ended April 30,
	Three months ended July 31,								Six months ended July 31,
(in thousands, except percentages)	2025		2024		$ Change		% Change		2025		2024		$ Change		% Change
Service revenue	$	~~119~~117,~~784~~873	$	~~118~~116,~~214~~720	$	1,~~570~~153	1	%	$	237,657	$	234,934	$	2,723	1	%
Custodial revenue	~~156~~159,~~455~~876		~~121~~138,~~644~~684		3421,~~811~~192		2915	%	316,331		260,328		56,003		22	%
Interchange revenue	5448,~~605~~086		4744,~~739~~524		63,~~866~~562		148	%	102,691		92,263		10,428		11	%
Total revenue	$	~~330~~325,~~844~~835	$	~~287~~299,~~597~~928	$	4325,~~247~~907	159	%	$	656,679	$	587,525	$	69,154	12	%

Service revenue. The $1.62 million, or 1%, increase in service revenue from the three months ended ~~April~~July 3031, 2024 to the three months ended ~~April~~July 3031, 2025 was primarily due to the increases in the number of Total Accounts and the amount of HSA investments, ~~partially~~largely offset by lower average service fees per account.

~~We expect service revenue to continue to increase, primarily due to an increase in Total Accounts, partially offset by lower average service fees per account.~~-28-

Custodial revenue. The $34.8 million, or 29%, increase in custodial revenue from the three months ended April 30, 2024 to the three months ended April 30, 2025 was primarily due to an increase in average annualized yield on HSA cash from 2.93% for the three months ended April 30, 2024 to 3.50% for the three months ended April 30, 2025 (due to both higher market interest rates and increased participation in our Enhanced Rates offering) and the $1.9 billion, or 12%, increase in the average daily balance of 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.

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The $2.7 million, or 1%, increase in service revenue from the six months ended July 31, 2024 to the six months ended July 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 an increase in Total Accounts, partially offset by lower average service fees per account.

Custodial revenue. The $21.2 million, or 15%, increase in custodial revenue from the three months ended July 31, 2024 to the three months ended July 31, 2025 was primarily due to an increase in average annualized yield on HSA cash from 3.10% for the three months ended July 31, 2024 to 3.51% for the three months ended July 31, 2025 (due to both HSA cash placed with Depository Partners at higher yields and increased participation in our Enhanced Rates offering) and the $0.7 billion, or 4%, increase in the average daily balance of 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 $56.0 million, or 22%, increase in custodial revenue from the six months ended July 31, 2024 to the six months ended July 31, 2025 was primarily due to an increase in average annualized yield on HSA cash from 3.02% for the six months ended July 31, 2024 to 3.51% for the six months ended July 31, 2025 (due to both HSA cash placed with Depository Partners at higher yields and increased participation in our Enhanced Rates offering) and the $1.3 billion, or 8%, increase in the average daily balance of 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. 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.

Interchange revenue. The $63.96 million, or 148%, increase in interchange revenue from the three months ended ~~April~~July 3031, 2024 to the three months ended ~~April~~July 3031, 2025 was primarily due to an increase in Total Accounts and an increase in spend per account using our payment cards.

The $10.4 million, or 11%, increase in interchange revenue from the six months ended July 31, 2024 to the six months ended July 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.

Total revenue. Total revenue increased $4325.29 million, or 159%, from the three months ended ~~April~~July 3031, 2024 to the three months ended ~~April~~July 3031, 2025 due to the increases in custodial, interchange, and service revenues, described above.

Total revenue increased $69.2 million, or 12%, from the six months ended July 31, 2024 to the six months ended July 31, 2025 due to the increases in custodial, interchange, and service revenues, described above.

Cost of revenue

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

	Three months ended April 30,
	Three months ended July 31,								Six months ended July 31,
(in thousands, except percentages)	2025		2024		$ Change		% Change		2025		2024		$ Change		% Change
Service costs	$	8875,~~005~~156	$	8276,~~347~~915	$	5(1,~~658~~759)	7(2)	%	$	163,161	$	159,262	$	3,899	2	%
Custodial costs	1011,~~747~~137		910,~~057~~108		1,~~690~~029		1910	%	21,884		19,165		2,719		14	%
Interchange costs	76,~~781~~947		98,~~055~~853		(1,~~274~~906)		(1422)	%	14,728		17,908		(3,180)		(18)	%
Total cost of revenue	$	~~106~~93,~~533~~240	$	~~100~~95,~~459~~876	$	6(2,~~074~~636)	6(3)	%	$	199,773	$	196,335	$	3,438	2	%

Service costs. The $51.78 million, or 72%, ~~increase~~decrease in service costs from the three months ended ~~April~~July 3031, 2024 to the three months ended ~~April~~July 3031, 2025 was primarily due to ~~increases in costs to support the increase in Total Accounts and member interactions and an increase in costs incurred to reimburse members impacted by outside fraud activity, partially offset by~~ efficiencies resulting from our technology investments.

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 costs resulting from an increase in Total Accounts.-29-

Custodial costs. The $1.7 million, or 19%, increase in custodial costs from the three months ended April 30, 2024 to the three months ended April 30, 2025 was primarily due to the $1.9 billion, or 12%, increase in the year-over-year average daily balance of HSA cash, as described above and an increase in the average annualized rate of interest retained by HSA members on HSA cash from 0.22% during the three months ended April 30, 2024 to 0.23% during the three months ended April 30, 2025.

On an annual basis, relative to the fiscal year ended January 31, 2025, we expect custodial costs to increase due to an increase in the year-over-year average daily balance of HSA cash, an increase in the average annualized rate of interest retained by HSA members on HSA cash, and an increase in fees charged by our Depository Partners.

Interchange costs. The $1.3 million, or 14%, decrease in interchange costs from the three months ended April 30, 2024 to the three months ended April 30, 2025 was primarily due to efficiencies resulting from the transition to a single card processor, partially offset by an increase in Total Accounts.

Total cost of revenue. Cost of revenue as a percentage of total revenue decreased to 32.2% for the three months ended April 30, 2025 compared to 34.9% for the three months ended April 30, 2024, due to total revenue increasing at a significantly higher rate (15%) than total cost of revenue (6%). 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.

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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.

The $3.9 million, or 2%, increase in service costs from the six months ended July 31, 2024 to the six months ended July 31, 2025 was primarily due to increases in costs to support the increase in Total Accounts and member interactions, partially offset by efficiencies resulting from our technology investments.

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.

Custodial costs. The $1.0 million, or 10%, increase in custodial costs from the three months ended July 31, 2024 to the three months ended July 31, 2025 was primarily due to the $0.7 billion, or 4%, increase in the year-over-year average daily balance of 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 July 31, 2024 to 0.24% during the three months ended July 31, 2025.

The $2.7 million, or 14%, increase in custodial costs from the six months ended July 31, 2024 to the six months ended July 31, 2025 was primarily due to the $1.3 billion, or 8%, increase in the year-over-year average daily balance of 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 six months ended July 31, 2024 to 0.24% during the six months ended July 31, 2025.

On an annual basis, relative to the fiscal year ended January 31, 2025, we expect custodial costs to increase due to an increase in the year-over-year average daily balance of HSA cash and an increase in the average annualized rate of interest retained by HSA members on HSA cash.

Interchange costs. The $1.9 million, or 22%, decrease in interchange costs from the three months ended July 31, 2024 to the three months ended July 31, 2025 was primarily due to efficiencies resulting from the transition to a single card processor, partially offset by an increase in Total Accounts.

The $3.2 million, or 18%, decrease in interchange costs from the six months ended July 31, 2024 to the six months ended July 31, 2025 was primarily due to efficiencies resulting from the transition to a single card processor, partially offset by an increase in Total Accounts.

Total cost of revenue. Cost of revenue as a percentage of total revenue decreased to 30.4% for the six months ended July 31, 2025 compared to 33.4% for the six months ended July 31, 2024, due to total revenue increasing at a significantly higher rate (12%) 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.

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Operating expenses

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

	Three months ended April 30,
	Three months ended July 31,								Six months ended July 31,
(in thousands, except percentages)	2025		2024		$ Change		% Change		2025		2024		$ Change		% Change
Sales and marketing	$	2519,~~984~~922	$	2321,~~494~~525	$	2(1,~~490~~603)	11(7)	%	$	45,906	$	45,019	$	887	2	%
Technology and development	6164,~~436~~804		5658,~~090~~580		56,~~346~~224		1011	%	126,240		114,670		11,570		10	%
General and administrative	2529,~~536~~990		3832,~~236~~260		(122,~~700~~270)		(337)	%	55,526		70,496		(14,970)		(21)	%
Amortization of acquired intangible assets	27,~~002~~001		2530,~~545~~981		1(3,~~457~~980)		6(13)	%	54,003		56,526		(2,523)		(4)	%
Merger integration	1,~~275~~266		21,~~143~~777		(~~868~~511)		(4129)	%	2,541		3,920		(1,379)		(35)	%
Total operating expenses	$	~~141~~142,~~233~~983	$	145,~~508~~123	$	(42,~~275~~140)	(31)	%	$	284,216	$	290,631	$	(6,415)	(2)	%

Sales and marketing. The $21.56 million, or 117%, ~~increase~~decrease in sales and marketing expenses from the three months ended ~~April~~July 3031, 2024 to the three months ended ~~April~~July 3031, 2025 was primarily due to ~~increases~~decreases in personnel-related expenses ~~and professional services expenses~~.

WeThe ~~expect~~$0.9 ~~our~~million, ~~sales~~or ~~and~~2%, ~~marketing expenses to~~ increase asin wesales ~~continue to focus on our cross-selling~~ and ~~member~~marketing ~~engagement~~expenses ~~programs.~~from Onthe ansix ~~annual~~months ~~basis~~ended July 31, ~~relative~~2024 to the ~~fiscal~~six ~~year~~months ended ~~January~~July 31, 2025, wewas ~~expect~~primarily ~~our~~due ~~sales and marketing expenses~~ to ~~remain~~increases ~~relatively~~in ~~steady~~professional asservices ~~a percentage of our total revenue. However~~expenses, ~~our~~partially ~~sales~~offset ~~and~~by ~~marketing~~decreases ~~expenses~~in ~~may~~personnel-related ~~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 sales and marketing~~ expenses.

~~Technology~~We ~~and~~expect ~~development. The~~our ~~$5.3~~sales ~~million,~~and ormarketing ~~10%,~~expenses to increase inas ~~technology~~we continue to focus on our Client and ~~development~~member ~~expenses~~engagement ~~from~~programs, ~~the~~including ~~three~~campaigns ~~months~~to ~~ended~~reach ~~April 30~~individuals who are newly eligible for HSAs under recent legislative expansion. On an annual basis, ~~2024~~relative to the ~~three~~fiscal ~~months~~year ended ~~April~~January 3031, 2025, ~~was~~we ~~primarily~~expect ~~due~~our sales and marketing expenses to ~~increases~~remain inrelatively ~~personnel-related~~steady as a percentage of our total revenue. However, our sales and marketing expenses may fluctuate as a percentage of our total revenue from period to period due to the seasonality of our total revenue and ~~software~~the ~~costs~~timing and extent of our sales and marketing expenses.

Technology and development. The $6.2 million, or 11%, increase in technology and development expenses from the three months ended July 31, 2024 to the three months ended July 31, 2025 was primarily due to increases in software costs and personnel-related expenses.

The $11.6 million, or 10%, increase in technology and development expenses from the six months ended July 31, 2024 to the six months ended July 31, 2025 was primarily due to increases in software costs and personnel-related expenses.

We expect our technology and development expenses to increase as we continue to invest in the development and security of our proprietary technology, including our ongoing modernization project described earlier. On an annual basis, relative to the fiscal year ended January 31, 2025, we expect our technology and development expenses to remain relatively steady as a percentage of our total revenue. However, our technology and development 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 technology and development expenses.

General and administrative. The $122.73 million, or 337%, decrease in general and administrative expenses from the three months ended ~~April~~July 3031, 2024 to the three months ended ~~April~~July 3031, 2025 was primarily due to a decrease in ~~stock-based~~professional ~~compensation~~services ~~expense resulting from the retirement of our former chief executive officer~~expenses, partially offset by increases in personnel-related expenses.

The $15.0 million, or 21%, decrease in general and administrative expenses from the six months ended July 31, 2024 to the six months ended July 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. 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 $1.5 million, or 6%, increase in amortization of acquired intangible assets from the three months ended April 30, 2024 to the three months ended April 30, 2025 was primarily due to the new intangible assets added through the BenefitWallet HSA portfolio acquisition.-31-

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Amortization of acquired intangible assets. The $4.0 million, or 13%, decrease in amortization of acquired intangible assets from the three months ended July 31, 2024 to the three months ended July 31, 2025 was due to a smaller carrying amount of intangible assets that have not been fully amortized.

The $2.5 million, or 4%, decrease in amortization of acquired intangible assets from the six months ended July 31, 2024 to the six months ended July 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 six months ended July 31, 2024.

On an annual basis, relative to the fiscal year ended January 31, 2025, 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 $0.95 million, or 4129%, from the three months ended ~~April~~July 3031, 2024 to the three months ended ~~April~~July 3031, 2025. Merger integration expenses during the three months ended ~~April~~July 3031, 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 ~~and certain ongoing merger integration expenses related to the acquisition of WageWorks, Inc~~.

Merger integration expenses decreased by $1.4 million, or 35%, from the six months ended July 31, 2024 to the six months ended July 31, 2025. Merger integration expenses during the six months ended July 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.

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Interest expense

The $30.15 million, or 263%, ~~increase~~decrease in interest expense from the three months ended ~~April~~July 3031, 2024 to the three months ended ~~April~~July 3031, 2025 was primarily due to a ~~higher average principal balance, partially offset by a~~ lower average interest rate on borrowings with variable interest rate terms and a lower average principal balance.

AsThe ~~of April 30, 2025, borrowings under our revolving credit facility were~~ $~~461~~2.96 million, ~~and~~or ~~had~~10%, aincrease ~~stated~~in interest ~~rate~~expense offrom ~~5.92%.~~the Assix ofmonths ~~April~~ended July 3031, 2024, ~~borrowings~~to ~~under~~the ~~our~~six ~~prior~~months ~~credit~~ended ~~agreement~~July 31, ~~were~~2025 ~~$336.9 million and had a stated interest rate of 6.67%. The increase in principal~~ was primarily due to ~~$175.0 million of borrowings to pay~~ a ~~portion~~higher ofaverage ~~the~~principal ~~BenefitWallet HSA portfolio acquisition purchase price~~balance, partially offset by ~~prepayments~~a oflower ~~$50.0~~average ~~million~~interest ~~during~~rate ~~the~~on ~~twelve~~borrowings ~~months~~with ~~ended~~variable ~~April 30,~~interest ~~2025~~rate terms.

As of July 31, 2025, borrowings under our revolving credit facility were $411.9 million and had a stated interest rate of 5.96%. As of July 31, 2024, borrowings under our prior credit agreement were $511.9 million and had a stated interest rate of 6.70%. The decrease in principal was due to prepayments of $100.0 million during the twelve months ended July 31, 2025.

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 $0.73 million ~~decrease~~increase in other income, net, from the three months ended ~~April~~July 3031, 2024 to the three months ended ~~April~~July 3031, 2025 was primarily due to aan ~~decrease~~increase in interest income on corporate cash~~, partially offset by a decrease in other miscellaneous expense, net~~.

The $0.4 million decrease in other income, net, from the six months ended July 31, 2024 to the six months ended July 31, 2025 was due to a decrease in interest income on corporate cash, partially offset by a decrease in other miscellaneous expense, net.

Income tax provision

~~For~~The ~~the~~$7.4 ~~three~~million ~~months~~increase ~~ended~~in ~~April 30, 2025 and 2024, we recorded an~~ income tax provision offrom ~~$17.0~~the ~~million~~three ~~and~~months ~~$4.4~~ended ~~million~~July 31, ~~respectively.~~2024 ~~The~~to ~~increase~~the inthree ~~income~~months ~~tax~~ended ~~provision~~July 31, 2025 was primarily the result of an increase in pre-tax book income, ~~and~~partially offset by a decrease in nondeductible executive compensation and an increase in tax deductible stock-based compensation compared to GAAP stock-based compensation expense~~, partially offset by a decrease in nondeductible executive compensation~~.

The $20.0 million increase in income tax provision from the six months ended July 31, 2024 to the six months ended July 31, 2025 was primarily the result of an increase in pre-tax book income and a decrease in tax deductible stock-based compensation compared to GAAP stock-based compensation expense, partially offset by a decrease in nondeductible executive compensation.

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Seasonality

Seasonal concentration of our growth combined with our recurring revenue model create seasonal variation in our results of operations. Revenue results are seasonally impacted due to ancillary service fees, timing of HSA contributions, and timing of card spend. Cost of revenue is seasonally impacted as a significant number of new and existing Network Partners bring us new HSAs and CDBs beginning in January of each year concurrent with the start of many employers’ benefit plan years. Before we realize any revenue from these new accounts, we incur costs related to implementing and supporting our new Network Partners and new accounts. These costs of services relate to activating accounts and hiring additional staff, including seasonal help to support our member support center. These expenses begin to ramp up during our third fiscal quarter, with the majority of seasonal expenses incurred in our fourth fiscal quarter.

Liquidity and capital resources

Cash and cash equivalents overview

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~~July 3031, 2025 and January 31, 2025, cash and cash equivalents were $~~287~~304.95 million and $295.9 million, respectively.

Capital resources

We maintain a “shelf” registration statement on Form S-3 on file with the SEC. 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. Pending such uses, we may invest the net proceeds in interest-bearing securities. In addition, we may conduct concurrent or other financings at any time.

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 July 31, 2025, the outstanding balance under the revolving credit facility was $411.9 million. We were in compliance with all covenants under the credit agreement as of July 31, 2025, 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.

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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, 2025, the outstanding balance under the revolving credit facility was $461.9 million. We were in compliance with all covenants under the credit agreement as of April 30, 2025, 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.

Use of cash

During the ~~three~~six months ended ~~April~~July 3031, 2025, we used $59125.18 million for common stock repurchases. See Note 9—Stockholders' equity for additional information related to our stock repurchase ~~program~~programs.

~~Capital~~During ~~expenditures for~~ the ~~three~~six months ended ~~April~~July 3031, 2025, ~~and~~we ~~2024~~prepaid ~~were~~ $1650.10 million ~~and~~under ~~$13.8 million, respectively. We expect to continue~~ our ~~current~~credit ~~level of capital expenditures for the remainder of the fiscal year ending January 31, 2026 as we continue to invest in improving the architecture and functionality of our proprietary systems~~agreement. 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.

WeCapital ~~believe~~expenditures ~~our~~for ~~existing~~the ~~cash,~~six ~~cash~~months ~~equivalents~~ended July 31, 2025 and ~~revolving~~2024 ~~credit~~were ~~facility~~$27.3 ~~will~~million beand ~~sufficient~~$26.8 million, respectively. We expect to ~~meet~~continue our ~~operating~~current ~~and~~level of capital ~~expenditure~~expenditures ~~requirements~~ for ~~at least~~ the ~~next~~remainder 12of ~~months. To~~ the ~~extent~~fiscal ~~these~~year ~~current~~ending ~~and~~January 31, ~~anticipated~~2026 ~~future~~as ~~sources~~we ofcontinue ~~liquidity are insufficient~~ to ~~fund~~invest ~~our~~in ~~future~~improving ~~business~~the ~~activities~~architecture and ~~requirements,~~functionality weof ~~may~~our ~~need~~proprietary tosystems. ~~raise~~Capital ~~additional~~expenditures ~~funds~~to ~~through~~improve ~~public~~the orarchitecture ~~private~~of ~~equity~~our orproprietary ~~debt~~systems ~~financing.~~include Incomputer ~~the event that additional financing is required~~hardware, wepersonnel ~~may~~and ~~not~~related becosts ~~able~~for tosoftware ~~raise~~engineering, itand onoutsourced ~~favorable~~software ~~terms,~~engineering ~~if at all~~services.

	Three months ended April 30,
(in thousands)	2025		2024
Net cash provided by operating activities	$	64,738	$	65,429
Net cash used in investing activities	(16,143)		(269,950)
Net cash provided by (used in) financing activities	(56,649)		51,771
Decrease in cash and cash equivalents	(8,054)		(152,750)
Beginning cash and cash equivalents	295,948		403,979
Ending cash and cash equivalents	$	287,894	$	251,229

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.

~~Cash~~We ~~flows~~believe ~~from~~our ~~operating~~existing ~~activities. Net~~cash, cash ~~provided~~equivalents, byand ~~operating~~revolving ~~activities~~credit ~~decreased~~facility bywill ~~$0.7~~be ~~million~~sufficient ~~from the three months ended April 30, 2024~~ to ~~the~~meet ~~three~~our ~~months~~operating ~~ended~~and ~~April 30,~~capital ~~2025~~expenditure ~~primarily~~requirements ~~due~~for toat anleast ~~increase~~the innext ~~cash~~12 ~~payments~~months. ~~with~~To ~~respect~~the toextent ~~personnel-related~~these ~~costs~~current and ~~professional~~anticipated ~~fees,~~future ~~largely~~sources ~~offset~~of byliquidity ~~increased~~are ~~cash~~insufficient ~~receipts~~to ~~with~~fund ~~respect~~our tofuture ~~our~~business ~~custodial,~~activities ~~interchange~~and requirements, ~~and~~we ~~service~~may ~~revenues.~~need to

Cash flows from investing activities. Net cash used in investing activities decreased by $253.8 million from the three months ended April 30, 2024 to the three months ended April 30, 2025 due to a $256.1 million decrease in cash used to acquire HSA portfolios and a $0.6 million decrease in cash used for purchases of property and equipment, partially offset by a $3.0 million increase in cash used for purchases of software and capitalized software development costs.-33-

~~Cash~~Table ~~flows from financing activities. Net cash used in financing activities was $56.6 million during the three months ended April 30, 2025, compared to $51.8 million~~ of net cash provided by financing activities during the three months ended April 30, 2024. The change was due to a $59.1 million increase in cash used for repurchases of common stock, a $50.0 million decrease in proceeds from long-term debt, and a $1.4 million decrease in proceeds from the exercise of common stock options, partially offset by a $2.0 million increase in net cash received in the settlement of client-held funds obligations.Contents

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:


	Six months ended July 31,
(in thousands)	2025		2024
Net cash provided by operating activities	$	200,604	$	173,558
Net cash used in investing activities	(27,323)		(479,032)
Net cash provided by (used in) financing activities	(164,768)		228,388
Increase (decrease) in cash and cash equivalents	8,513		(77,086)
Beginning cash and cash equivalents	295,948		403,979
Ending cash and cash equivalents	$	304,461	$	326,893

Cash flows from operating activities. Net cash provided by operating activities increased by $27.0 million from the six months ended July 31, 2024 to the six months ended July 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.

Cash flows from investing activities. Net cash used in investing activities decreased by $451.7 million from the six months ended July 31, 2024 to the six months ended July 31, 2025 due to a $452.2 million decrease in cash used to acquire HSA portfolios and a $0.6 million decrease in cash used for purchases of property and equipment, partially offset by a $1.1 million increase in cash used for purchases of software and capitalized software development costs.

Cash flows from financing activities. Net cash used in financing activities was $164.8 million during the six months ended July 31, 2025, compared to $228.4 million of net cash provided by financing activities during the six months ended July 31, 2024. The change was due to a $225.0 million decrease in proceeds from long-term debt, a $125.8 million increase in cash used for repurchases of common stock, and a $50.0 million increase in principal payments on our long-term debt, partially offset by a $6.2 million increase in proceeds from the exercise of common stock options and a $1.4 million increase in net cash received in the settlement of client-held funds obligations.

Contractual obligations

See Note 5—Commitments and contingencies for information about our contractual obligations.

Off-balance sheet arrangements

As of ~~April~~July 3031, 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.

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Critical accounting policies and significant management estimates

Our management’s discussion and analysis of financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources, and we evaluate our critical accounting estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions and conditions.

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, 2025. There have been no significant or material changes in our critical accounting policies during the ~~three~~six months ended ~~April~~July 3031, 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.

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Recent accounting pronouncements

See Note 1—Summary of business and significant accounting policies within the interim financial statements included in this Form 10-Q for further discussion.

Item 3. Quantitative and qualitative disclosures about market risk

Market risk

Concentration of market risk. We derive a substantial portion of our revenue from providing services to tax-advantaged healthcare account holders. A significant downturn in this market or changes in state and/or federal laws impacting the preferential tax treatment of healthcare accounts such as HSAs could have a material adverse effect on our results of operations. During the ~~three~~six months ended ~~April~~July 3031, 2025 and 2024, no one customer accounted for greater than 10% of our total revenue. We monitor market and regulatory changes regularly and make adjustments to our business if necessary.

Inflation. Inflationary factors may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of expenses as a percentage of revenue if our revenue does not correspondingly increase with inflation.

Concentration of credit risk

Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents, accounts receivable, and derivatives. We maintain our cash and cash equivalents in bank and other depository accounts, which frequently exceed federally insured limits. Our cash and cash equivalents as of ~~April~~July 3031, 2025 and January 31, 2025 were $~~287~~304.95 million and $295.9 million, respectively, the vast majority of which was not covered by federal depository insurance. We have not experienced any material losses in such accounts. Our accounts receivable balance as of ~~April~~July 3031, 2025 and January 31, 2025 was $~~116~~111.32 million and $118.0 million, respectively. We have not experienced any significant write-offs to our accounts receivable and believe that we are not exposed to significant credit risk with respect to our accounts receivable. WeOur ~~continue~~derivative tocontracts ~~monitor~~are executed with a reputable financial institution, and we do not believe our derivative contracts expose us to significant credit risk. ~~and~~We ~~place~~continue ~~our~~to ~~cash~~monitor ~~and~~the ~~cash~~credit ~~equivalents~~risk associated with ~~reputable~~our financial ~~institutions~~instruments on an ongoing basis.

Interest rate risk

HSA Assets and Client-held funds. HSA Assets consist of custodial HSA funds we hold in custody on behalf of our members. As of ~~April~~July 3031, 2025 and January 31, 2025, we held in custody HSA Assets of $3133.31 billion and $32.1 billion, respectively. As a non-bank custodian, we contract with our Depository Partners and insurance company partners to hold HSA cash on behalf of our members, and we earn a significant portion of our total revenue from interest paid to us by these partners. HSA cash held by our insurance company partners is held in group annuity contracts or similar arrangements. The lengths of our agreements with Depository Partners typically range from three to five years and have either fixed or variable interest rates. As HSA Assets increase and existing contracts with Depository Partners expire, we seek to enter into new contracts with Depository Partners and insurance company partners, the terms of which are impacted by the then-prevailing interest rate environment. We believe that increased participation in our Enhanced Rates offering, diversification of Depository Partners and insurance company partners, and varied contract terms substantially reduces our exposure to short-term fluctuations in prevailing interest rates and mitigates the short-term impact of a sustained increase or decline in prevailing interest rates on our custodial revenue. A sustained decline in prevailing interest rates may negatively affect our business by reducing the size of the interest rate yield, or yield, available to us and thus the amount of the custodial revenue we can realize. Conversely, a sustained increase in prevailing interest rates can increase our yield. An increase in our yield would increase our custodial revenue as a percentage of total revenue. In addition, if our yield increases, we expect the spread to also increase between the interest offered to us by our Depository Partners and insurance company partners and the interest retained by our members, thus increasing our profitability. However, we may be required to increase the interest retained by our members in a rising prevailing interest rate environment. Changes in prevailing interest rates are driven by macroeconomic trends and government policies over which we have no control.

-During the six months ended July 31-, 2025, we have entered into derivative contracts to hedge a portion of the benchmark interest rate risk of expected future transitions of HSA cash currently held by our Depository Partners into group annuity contracts or similar arrangements with our insurance company partners; however, we continue to have exposure to such risks to the extent they are not hedged.

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~~that~~Client-held ~~increased~~funds ~~participation~~are ininterest ~~our~~earning ~~Enhanced~~deposits ~~Rates~~from ~~offering,~~which ~~diversification~~we generate custodial revenue. As of ~~Depository~~July 31, ~~Partners~~2025 and ~~insurance~~January 31, ~~company partners~~2025, ~~and~~we ~~varied~~held ~~contract~~Client-held ~~terms~~funds ~~substantially~~of ~~reduces~~$818 ~~our~~million ~~exposure~~and to$896 ~~short-term~~million, ~~fluctuations~~respectively. inThese ~~prevailing~~deposits ~~interest~~are ~~rates~~amounts ~~and~~remitted ~~mitigates~~by ~~the~~Clients ~~short-term~~and ~~impact~~held ofby aus ~~sustained~~on ~~increase~~their orbehalf ~~decline~~to inpre-fund ~~prevailing~~and ~~interest~~facilitate ~~rates~~administration onof our ~~custodial~~other ~~revenue~~CDBs. AThese ~~sustained~~deposits ~~decline~~are inheld ~~prevailing~~with ~~interest~~Depository ~~rates~~Partners. ~~may~~We ~~negatively~~deposit ~~affect~~the ~~our~~Client-held ~~business~~funds bywith ~~reducing~~our ~~the~~Depository ~~size~~Partners ofin ~~the~~ interest ~~rate yield~~-bearing, ordemand ~~yield,~~deposit ~~available~~accounts tothat ushave ~~and~~a ~~thus~~floating ~~the~~interest ~~amount~~rate ofand ~~the~~no ~~custodial~~set ~~revenue~~term weor ~~can realize~~duration. ~~Conversely,~~A a sustained ~~increase~~decline in prevailing interest rates ~~can~~may ~~increase~~negatively ~~our~~affect ~~yield. An increase in~~ our ~~yield~~business ~~would~~by ~~increase~~reducing ~~our~~the ~~custodial~~size ~~revenue as a percentage~~ of ~~total~~the ~~revenue. In addition, if our~~ yield ~~increases,~~available ~~we expect the spread~~ to ~~also increase between the interest offered to~~ us ~~by our Depository Partners~~ and ~~insurance~~thus ~~company~~the ~~partners~~amount ~~and~~of the ~~interest~~custodial ~~retained~~revenue bywe ~~our~~can ~~members,~~realize ~~thus~~from ~~increasing~~Client-held ~~our profitability~~funds. ~~However~~Conversely, wea ~~may~~sustained ~~be required to~~ increase ~~the interest retained by our members~~ in ~~a rising~~ prevailing interest ~~rate~~rates ~~environment~~may increase our yield. Changes in prevailing interest rates are driven by macroeconomic trends and government policies over which we have no control. In May 2025, we entered into derivative contracts to hedge a portion of the benchmark interest rate risk of expected future transitions of HSA cash currently held by our Depository Partners into group annuity contracts or similar arrangements with our insurance company partners; however, we continue to have exposure to such risks to the extent they are not hedged.

~~Client-held~~Cash ~~funds~~and ~~are~~cash ~~interest earning deposits from which we generate custodial revenue~~equivalents. We Asconsider ofall ~~April 30,~~highly ~~2025~~liquid ~~and~~investments ~~January 31,~~purchased ~~2025,~~with wean ~~held~~original ~~Client-held~~maturity ~~funds~~ of ~~$925~~three ~~million~~months ~~and~~or ~~$896~~less ~~million,~~to ~~respectively.~~be ~~These~~unrestricted ~~deposits~~cash ~~are~~equivalents. ~~amounts~~Our ~~remitted~~unrestricted bycash ~~Clients~~ and ~~held~~cash byequivalents ~~us on their behalf to pre-fund and facilitate administration of our other CDBs. These deposits~~ are held ~~with~~in ~~Depository~~institutions ~~Partners.~~in ~~We deposit~~ the ~~Client-held~~U.S. ~~funds~~and ~~with~~include ~~our~~deposits ~~Depository Partners~~ in ~~interest-bearing,~~a ~~demand~~money ~~deposit~~market ~~accounts~~account that ~~have~~is aunrestricted ~~floating~~as ~~interest~~to ~~rate~~withdrawal ~~and no set term~~ or ~~duration~~use. As Aof ~~sustained~~July 31, ~~decline~~2025 inand ~~prevailing~~January 31, ~~interest~~2025, ~~rates~~we ~~may~~had ~~negatively~~unrestricted ~~affect~~cash ~~our~~and ~~business~~cash byequivalents ~~reducing the size~~ of ~~the~~$304.5 ~~yield~~million ~~available to us~~ and ~~thus~~$295.9 ~~the~~million, ~~amount~~respectively. ofDue to the ~~custodial~~short-term ~~revenue~~nature weof ~~can~~these ~~realize from Client-held funds. Conversely~~instruments, awe ~~sustained~~believe ~~increase~~that inwe ~~prevailing~~do ~~interest~~not ~~rates~~have ~~may~~any ~~increase~~material ~~our~~exposure ~~yield.~~to ~~Changes~~changes in ~~prevailing~~the ~~interest~~fair ~~rates~~value ~~are~~of ~~driven~~our bycash ~~macroeconomic~~and ~~trends~~cash ~~and~~equivalents ~~government~~as ~~policies~~a ~~over~~result ~~which~~of wechanges ~~have~~in nointerest ~~control~~rates.

~~Cash~~Long-term ~~and cash equivalents~~debt. WeAs ~~consider~~of ~~all~~July 31, ~~highly~~2025 ~~liquid~~and ~~investments~~January 31, ~~purchased~~2025, ~~with~~we anhad ~~original~~$411.9 ~~maturity~~million ofand ~~three~~$461.9 ~~months~~million, orrespectively, ~~less~~outstanding tounder beour ~~unrestricted~~revolving ~~cash~~credit ~~equivalents~~facility. The ~~Our~~stated ~~unrestricted~~interest ~~cash~~rate ~~and~~on ~~cash~~our ~~equivalents~~revolving ~~are~~credit ~~held~~facility inis ~~institutions~~variable inand ~~the~~was U5.S96% as of July 31, 2025. ~~and~~Our ~~include~~overall ~~deposits~~interest inrate asensitivity ~~money~~under ~~market~~the ~~account~~revolving ~~that~~credit facility is ~~unrestricted~~primarily asinfluenced toby ~~withdrawal~~any oramounts ~~use. As~~borrowed ofand ~~April 30,~~prevailing ~~2025~~interest ~~and~~rates. ~~January 31,~~For ~~2025~~example, wea ~~had~~one ~~unrestricted~~percent ~~cash~~increase ~~and~~in ~~cash~~the ~~equivalents~~interest ofrate ~~$287.9~~on ~~million~~the ~~and~~amount ~~$295.9~~outstanding ~~million,~~under ~~respectively.~~our ~~Due~~revolving tocredit ~~the~~facility ~~short-term~~as ~~nature~~ of ~~these instruments~~July 31, we2025 ~~believe~~would ~~that~~result wein doapproximately ~~not~~$4.2 ~~have~~million ~~any~~of ~~material~~additional ~~exposure~~interest toexpense ~~changes~~over in the ~~fair~~next ~~value~~12 ofmonths. The interest rate on our ~~cash~~$600 ~~and~~million ~~cash~~of ~~equivalents~~unsecured asSenior aNotes ~~result~~due of2029 ~~changes~~is infixed ~~interest~~at ~~rates~~4.50%.

Long-term debt. As of both April 30, 2025 and January 31, 2025, we had $461.9 million outstanding under our revolving credit facility. The stated interest rate on our revolving credit facility is variable and was 5.92% as of April 30, 2025. Our overall interest rate sensitivity under the revolving credit facility is primarily influenced by any amounts borrowed and prevailing interest rates. For example, a one percent increase in the interest rate on the amount outstanding under our revolving credit facility as of April 30, 2025 would result in approximately $4.7 million of additional interest expense over the next 12 months. The interest rate on our $600 million of unsecured Senior Notes due 2029 is fixed at 4.50%.

Item 4. Controls and procedures

Evaluation of disclosure controls and procedures

Management, with the participation of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of the Company’s disclosure controls and procedures as of ~~April~~July 3031, 2025, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to provide reasonable assurance that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

~~-32-~~Based on such evaluation, our CEO and our CFO concluded that as of July 31, 2025, the Company's disclosure controls and procedures were effective at the reasonable assurance level.

Table of Contents

Based on such evaluation, our CEO and our CFO concluded that as of April 30, 2025, the Company's disclosure controls and procedures were effective at the reasonable assurance level.

Changes in internal control over financial reporting

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended ~~April~~July 3031, 2025 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II—Other information

Item 1. Legal proceedings

From time-to-time, we may be subject to various legal proceedings and claims that arise in the normal course of our business activities. Except as described in Note 5—Commitments and contingencies, as of the date of this Quarterly Report on Form 10-Q, we were not a party to any litigation whereby the outcome of such litigation, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our results of operations, cash flows or financial position. For a description of these legal proceedings, see Note 5—Commitments and contingencies of the notes to condensed consolidated financial statements.

Item 1A. Risk factors

The risks described in “Risk factors” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025 and subsequent periodic reports could materially and adversely affect our business, financial condition and results of operations. There have been no material changes in such risks. These risk factors do not identify all risks that we face, and our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations.

Item 2. Unregistered sales of equity securities and use of proceeds

Issuer purchases of equity securities

The following table presents information with respect to HealthEquity's repurchases of common stock during the three months ended ~~April~~July 3031, 2025 (in thousands, except average price paid per share).

Period	Total number of shares purchased (1)	Average price paid per share (2)		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs (3)
February 1 - 28	5	$	103.89	5	$	177,240
May 1 - 31	259	$	95.27	259	$	92,744
March 1 - 31	228	$	92.24	228	$	156,243
June 1 - 30	172	$	104.75	172	$	374,747
April 1 - 30	469	$	82.73	469	$	117,483
July 1 - 31	234	$	98.25	234	$	351,750
Total	~~702~~665			~~702~~665

(1)Repurchases may be effected through open market purchases, privately negotiated transactions or otherwise, including through Rule 10b5-1 plans. See Note 9—Stockholders' equity for additional information related to our stock repurchase ~~program~~programs.

(2)Average price paid per share includes ~~costs~~transaction fees but excludes excise tax associated with the repurchases.

(3)In June 2025, our board of directors approved a new stock repurchase program that authorized the repurchase of up to an additional $300 million of our common stock as market conditions warrant.

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Item 5. Other information

Rule 10b5-1 plan elections

~~None~~Except as described below, none of the Company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408(c) of Regulation S-K) during the fiscal quarter ended ~~April~~July 3031, 2025.

On June 9, 2025, Stephen Neeleman, our Founder and Vice Chairman, entered into a Rule 10b5-341 trading arrangement (the “Neeleman Arrangement”). The Neeleman Arrangement provides for the sale, between September 9, 2025 and September 11, 2026, of up to 54,356 aggregate shares of the Company’s common stock held directly and indirectly by Dr. Neeleman. The Neeleman Arrangement was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act.

On June 12, 2025, Delano Ladd, our Executive Vice President, General Counsel and Secretary, entered into a Rule 10b5-1 trading arrangement (the “Ladd Arrangement”). The Ladd Arrangement provides for the sale, between September 11, 2025 and June 6, 2026, of up to 18,000 aggregate shares of the Company’s common stock held directly by Mr. Ladd. The Ladd Arrangement was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act.

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Item 6. Exhibits

Incorporate by reference

Exhibitno.

Description

Form

File No.

Exhibit

Filing Date

31.1+

Certification of the Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2+

Certification of the Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*#

Certification of the Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*#

Certification of the Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

XBRL Instance document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy schema linkbase document

101.CAL

Inline XBRL Taxonomy calculation linkbase document

101.DEF

Inline XBRL Taxonomy definition linkbase document

101.LAB

Inline XBRL Taxonomy labels linkbase document

101.PRE

Inline XBRL Taxonomy presentation linkbase document

104

The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~April~~July 3031, 2025, formatted in Inline XBRL.


+						Filed herewith.
*						Furnished herewith.
#						These certifications are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference in any filing the registrant makes under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, irrespective of any general incorporation language in any filings.

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Table of Contents

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	HEALTHEQUITY, INC.
Date: June 3, 2025	By:	/s/ James Lucania
Date: September 2, 2025	By:	/s/ James Lucania
	Name:	James Lucania
	Title:	Executive Vice President and Chief Financial Officer

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Filing Compare · HEALTHEQUITY, INC.