Thank you so much for being here today. My name's Daniel Perlin, if I haven't seen you yet in the room. I head up the Fintech practice here at RBC, and I'm delighted to have the team from Wealthfront joining us today. From the company, we have David Fortunato, who's their CEO. Thank you so much for being here, sir. Alan Imberman, who's the company's Chief Financial Officer. Both friends to the conference and RBC, we very much appreciate your time and energy. Thanks for having us. Yeah, you bet. Look, for level setting purposes, you're still a relatively new company to the public markets. I thought it would be helpful if you just provided kind of an overview of what Wealthfront does and is today. Today, we're a technology-first digital advisory platform. We manage $99 billion for 1.45 million clients. We focus on the digital native generation, helping young folks save and invest for the long term. We started with investment management, low cost, diversified, and tax-efficient investment management. That's about 55% of our assets today. In 2019, we added cash management, which is about 45% of our assets today. We are in the process of rolling out Home Lending to help our clients who are younger and in the process of buying homes be able to digitally, on mobile devices, and at lower cost, be able to finance their home purchases. Which is an activity we see a lot among our client base. Really what we think about is just being there to support our clients on their wealth-building journey, and to offer the products and services that assist them in doing that. When we think about the overall addressable market opportunity, you talk about digital natives. You've got both the cash and the advisory side. How do we put all those together under kind of a framework of the addressable market, and then also help investors understand where you fit into the ecosystem of kind of wealth advice? Yeah. I'll start with the first one. I think the Fed defines millennials as anyone born after 1980, but it also includes Gen Z. The last kind of Federal Reserve distributional financial account survey had them at about $16 trillion in net worth. That is expected to grow to around $140 trillion over the next few decades, so about a compound annual growth rate of a little over 11%, and that's at the average. Our clients tend to be the higher earners within those generations. Our average account size is around $67,000 on the platform. Again, with kind of a median age of 35 years old, annual income around $150,000. These are the knowledge workers, the savers within those younger generations. That's kind of how we look at the total addressable market. That net worth includes the value of your home and includes market appreciation on your investment assets, your 401(k). Some things we don't offer yet today, but it is a good indication of the overall growth of that segment for which we serve. Yeah, I would say on where we fall. What we've seen is older investors and savers want a different experience than younger investors and savers want. The likelihood of working with a human financial advisor among folks that are in their 20s, 30s, and 40s is much lower than it was in prior generations. Our goal is really to build a digital first solution that meets their needs in the same way that they get their groceries delivered from a mobile app, they get rides from a mobile app. Our clients don't want to talk to someone. They want a mobile app and a website that work as well as any other digital solution to be able to help them manage their wealth, plan their finances moving forward. We do not see ourselves as competing with human financial advisors as much as we see tastes changing in generations about how they want to consume financial advice. Yeah. What do you say when people push back on that and say, "These clients will evolve over time as they accumulate more wealth. Do they spend more like their parents, or do they look more like their parents in that regard?" What does the data kind of suggest to you guys? The analysis that we've run has showed that as people get more assets on our platform, they actually have lower churn rates than clients with less assets on their platform. That might sound counterintuitive, but the sort of intuitive explanation is you do not reach $1 million, $10 million, $50 million, or $100 million on our platform by depositing $50 million and just o pening an account. You do it by getting started with $50,000 when you get your first bonus. You continually decide to deposit onto the platform, and each of those decisions is a buying decision about the way that we invest and the way that we help you save. Then you might have a liquidity event. You might have inheritance. Because you've been on the platform for five years, 10 years at that stage, you're a believer in low-cost diversified investing. That's when we tend to see significant assets come onto the platform. Yeah. What are some of the big thematics that we need to be mindful of as those kind of shifts and generational movements move in your direction? What should we be paying attention to? I think one of the numbers that we've disclosed publicly is that more than, I think it's 20,000 clients have significant assets, over $1 million on the platform. The thing that I always think is the big private banks that exist today, they have 20,000 clients, 80,000 clients, depending on the private bank. If you were to try to facilitate folks that are in their 20s, 30s, and 40s today, you'd start with our clients rather than starting with the clients of these large banks. Our approach has always been to get folks early in their lives and to grow with them. When we think about our priorities and our growth drivers, we think about as our clients age, being able to grow with them over the long haul. They're in a place where their finances are getting more complicated. They're buying homes, they're worried about tax and estate planning. Those are all things that we'll get into over time as their financial lives get more complicated. Really our job is to stay ahead of our clients' financial lives, as their financial situations get more complicated. One of the things that we've spent some time on recently is joint accounts and family account experiences. That folks are able to share with their spouse, with their kids. We've had a 529 account for a long time. We're adding to that as we continue to build. The core growth drivers really is just that we have the wealth creators in this generation, and we're building our products to serve their needs as they grow. Yep. Nope. You guys, I think you're very good at that, and we'll talk about one of them in a little bit. Before we do that, I want to talk about the interplay that is often discussed around your company as it pertains to cash management and the advisory business, and the role that interest rates might play in that interplay. Can we talk a little bit about that, how that works, how you are managing those opportunities and risks? Yeah. From a high level, I'll start and then I'll let you in. Sure. The thing that I would say is when rates are high, we tend to grow more with cash, and as rates come down, we tend to grow more with investment. In the transition periods, our focus is really on driving cross-product adoption so that folks who joined us for one product are adopting the other product. That diversity of our business, diversity of revenue generation, also diversifies our relationships with clients and allows us to keep growing throughout cycles. Yeah, we've built an all-weather model. If you look back, Wealthfront was started in 2011, so we've experienced five corrections, two bear markets, zero rates, high rates, zero rates, high rates again. Throughout that time, obviously, we've grown from zero assets to now $99 billion. It's very important to be able to grow in any environment. We've built products that work in any environment, and we do a very intentional growth strategy to lean on what's working in the environment you're in. So when interest rates are 5%, it's a lot harder to convince people to invest on an account that we do a lot of, most of our assets are in our passive indexing products that we say will give you between 6% and 10% annually. It's very difficult to get someone to invest when you can offer 5% FDIC insured. We know that, so we intentionally lean into let's grow through cash, very efficient acquisition, extremely low paybacks, fast growth. Then, as David mentioned, when there's a transitional environment, which will be rates coming down, that's the time when we can more effectively cross-product adopt our existing clients, which is what we've been doing very successfully over the last six to nine months, the most recent round of Fed rate cuts. That's an intentional business model and strategy that we've adopted. Home Lending, which I'm sure we'll touch on later, is another way to make the business even more all-weather. Now when rates go down, not only are our clients in that stage of buying for new homes, but there's also the refinance opportunity that comes about, which we actually saw a little bit of towards the end of last year and a little bit before the end of February when rates went up after the Iran escalation. Yeah. How do you think about the attach rates for clients who have both Cash Accounts and the advisory account? To the extent that you have seen those movements, what is the recapture rate and the cross-product adoption today? I think it's in the 60s. Yeah, the stat that we look at is asset-weighted cross-product adoption which is the percentage of assets on our platform that have both cash and investing. I think in November, December last year, we were at about 59%. We've pushed that up to 63% over the last few months through a combination of the macro environment changes, incentives, and promotions that we've run to our existing clients. There's a bunch of benefits that go along with that. When we have both account types and consistent flow of assets into the platform, we see faster growth in our clients' assets and wealth on the platform. That helps us, it helps our clients. As we've grown direct deposit and recurring deposit, the steady flow of money onto the platform, that's helped us be able to help clients automatically route money to the best opportunities, which is a service that we've had for the last five or six years, I think. We've really been able to help automate our clients' lives, that's been at the core of what we've done as a technology platform, is seeking to automate our clients' lives as money is routed onto the platform automatically as they earn it, be able to put that into the best assets for clients, then help those assets grow. Okay. What are the financial dynamics we need to be mindful of, Alan, in terms of w hen these mix shifts happen, fee structures are different, are margins different? Help us maybe map those changes. Yeah, that's an important point. The cash management account has a higher fee rate than the investment advisory account. We've started in 2011 charging a quarter of 1% for our investment advisory products, which offer diversification, the reinvestment of dividends, rebalancing, tax-loss harvesting, all for a quarter of 1%. The account has gotten exponentially better since then, we have never changed the price. Cash management accounts earn today, on the latest call we had last week, we gave people guidance at the end of May, we were earning 54 basis points on those accounts. There's about a 2x difference in what we earn. However, if you look at the growth of the accounts, and many of you will probably identify with this, is once you reach a certain level of cash in your savings account, you put incremental dollars towards investing. The investment accounts benefit from the incremental dollars as well as market appreciation over time. The growth rate of investments will more than make up for the fee differential. That's how we play. We take the long game. We don't actually care where clients put the money, as long as they keep it with us. Investment accounts tend to be thought of as stickier as well than a cash management account. Those are the economic kind of characteristics from a fee rate. On the profitability side, despite the fact that investment advisory is less than half the fee rate we make on in cash, they're both very similarly kind of incrementally 95% gross profit margin. Our total gross profit margin in the last quarter was 89%. We've been 90%-89% for as many quarters as I can think of, and sometimes higher. The incremental margins on our products are extremely high. I think it's an important point to stop really and just talk about the business model. Half the company is software engineers. David was the CTO for 10 years before becoming president and then CEO. We have about 400 people for $99 billion under management and one and a half million clients. We automate, and build our own software, our own brokerage, and RIA infrastructure, and now Home Lending also is being built from the ground up. In doing so, we get a lot of savings, as we can see through our gross margin. We share those savings with clients through a higher rate on their cash and a very low fee for the advisory service as well as to borrow. Our margin lending rate is 4.7%, which I think is extremely good, if you go and look around. As well as what we're doing on Home Lending, which is offering 50 basis points below the national average. By sharing savings with our clients, they trust us more, they have better financial outcomes. They tell their friends and refer them. We grow about half of our new growth comes from referrals, which allows us to be very EBITDA, profitable 40% and above EBITDA margins, which allows us to reinvest back in the business for automation, which for us is good because our clients actually prefer to have that experience, to not talk to someone, to have it automated, to work intuitively in an app. I think understanding all of that is really important when you think about our economics because we can be very profitable at rates well below from a fee perspective or above from an interest rate perspective than the incumbents and even some of the other fintechs. Yeah. Maybe speak to the May volumes, because I think a lot of the things you're describing is kind of proving out in how those trends have played out. Like cash was, I think, maybe flattish, but the investment piece was up quite a bit. The net deposits, like what the definition of that is and why that's important a s a KPI. I'll start. David can give some more of the color. We told the Street that obviously our quarter, we have a January 31 fiscal year. Our quarter ending April 30th, we guided would have negative cash deposits because our clients are very significant cash taxpayers. We estimate that both from our accounts and accounts we have visibility to through Plaid linking, that our clients paid $3 billion in taxes this year. Directly from our accounts that we can see going to the IRS was $500 million, which was a 40% increase year-over-year. We actually did better than we expected in terms of a lower withdrawal. We also did over $1 billion of investment deposits in the quarter. Some of that comes from folks who can seamlessly move cash to investing instantly on our platform. Those trends are, I think what we had seen was, and expected was after tax season, that cash would pick back up. We did see about $104 million of net deposits in May, the month of May, which we release monthly metrics intra-quarter. We saw a really strong continuation, I think, of about $342 million of investment deposits. These are what we call net deposits. This is excluding the market, how much money gross came in versus how much money went out and by account type. If it goes across account, it doesn't get the benefit of being double counted. If it goes from into cash, but out of cash into investing, it's a withdrawal out of cash and it's an inflow into investing. That's net deposits. Obviously, assets under management would include the benefits of market appreciation. In terms of the color on what we're seeing with sentiment and all of that, David can talk about that. We saw a pretty big shifts in our investor sentiment over the past few months. End of February, investor sentiment was pretty positive. We do our surveys monthly at the end of the month. End of March, we saw investor sentiment take a big hit. What we think happened was we actually did better than expected in April in terms of cash deposits because folks were holding off on investing some. We probably, even with the sort of tax time overhead, probably saw more money stay in cash accounts, through April, outperformed on a relative basis in April cash deposits, and then saw some money in May when investing sentiment sort of returned to February levels, flow into investment accounts. There always is this trade-off, I would say, that goes along with investing sentiment. We follow investing sentiment of our clients closely, because it does impact how they think about investing. A number of our clients do automated deposits and use us for either routing or decision-making associated with it. On the margin, there are still one-time flows that can drive those numbers, and you'll see cash or investing outperform on a relative basis, depending on how folks are feeling about the market. One of the things you mentioned on the last earnings call, which I thought could be very positive for you guys, is that the large language models are finding you, Wealthfront, more often, and you're starting to see more of those volumes coming from them. Why is that? You're an engineer, so you could probably speak to the technical nature of it, but that just seems like that could be a very, very significant positive for you guys, especially as they are seeking to optimize. It's kind of like the agentic wealth management angle there. If you go back 10 years ago, people were asking questions of Google and the PageRank system and then ultimately the various optimizations that they made. There was a big market, has been a big market, is still a big market in affiliate traffic. This is people trying to rank highly in Google and then selling that traffic to companies to be able to route them, and companies pay for leads with the affiliate traffic. With large language models, there's been a relatively significant shift. What was historically SEO has turned into AEO, or answer engine optimization. What we've seen is clients engage more deeply with large language models. They know more about their situation because of the memory that exists. The result is that large language models, which are trained on content that they find on the internet, we've been producing content marketing for more than 15 years. Our investment advice tends to align quite well with what academics and others think because we focus on low-cost, long-term, diversified investing. We get recommended at a higher rate. As the large language models have continued to grow in terms of traffic, I think more folks are asking the large language models the types of questions that they would have asked Google about what they should do for investing. What we've seen is we win a disproportionate share of those conversations. Our normal seasonality is people tend to reevaluate their finances and think about signing up for new providers of financial services in Q1. It tends to be the sort of high period. Then we normally see it trail off post-tax time. Into the summer, there's a lull in activity. In May, we actually saw an acceleration in sign-ups, so that's pretty significant off the seasonal trend. About roughly half was due to our efforts and the incentives that we're running to bring clients onto the platform and the marketing that we do, and roughly half of it was due to elevated traffic from the large language model providers, where we tend to get recommended at a disproportionate rate. That answered that other question that I had, which was, a lot of it some people thought was just the incentive fee, but then there's also this natural traffic that's coming your way. Staying on AI for the moment, let's talk about the opportunities and/or threats that you see. Is it product velocity? Is it managing risk for individuals? Do you worry about AI going back to do exactly what you just described from Google, which is maybe they're going to move into a different direction? I think it's unlikely that the large language model providers get really excited to be regulated by financial regulators and t ry to build out those solutions directly. I do think that there is possible partnerships that happen in the future. I do think that our positioning is such that we are probably the lowest cost producer of these financial products because we have the lowest cost to deliver them to clients. That doesn't always mean that we're the lowest cost provider of the services. Because of the automation and the focus that we've had, we have extremely low cost to deliver these services to clients, and I think that puts us at a structural advantage t o be able to capitalize in an environment where we're not charging 1% and seeing massive headwinds to large language models providing financial advice. Right. Understood. We're charging much less than clients, and we have extremely low costs to produce what we provide to clients on a marginal basis, as Alan was talking about our gross margins earlier. Puts us in a great position to be able to play offense in that world. The financial planning tooling that we've offered has mostly been visual interfaces that provide Monte Carlo simulations and other looks at your financial future that clients can use. Obviously, the large language models provide an opportunity to be able to put a natural language interface on top of that and use all of those underlying models as tool calls that will be able to run a simulation of the client's financial future and then return back in natural language the answer to that question. That's one of the things that we're sort of working on in the background. There's a headwind, I would say, that we have in terms of we want everything that we do to build trust with clients. Our goal is not to be first to market, it's to be first to product market fit with these things. As we think about the financial advice that we give clients, we are a fiduciary to our clients. We have a responsibility to give good advice. As we build out this solution over time, we expect to be able to pull pieces of it into the product earlier as we look towards the long-term future of providing really generalized financial advice through whatever interface a client most wants to consume it. Yep. In the spirit of the product roadmap, let's talk a little bit about Home Lending and where it stands today. I think you're in a couple of states, Colorado and Texas. What is the product? What are you solving for? What is the expectation as we think about the trajectory of that growth going forward over the next, call it, year or so? The short version is to give our clients who are buying homes very actively a great digital experience, and a great rate. We average 50 basis points better than the national average. The core driver of that is Home Lending post-financial crisis has kind of turned into a very transactional business. The firms that are originating home loans are paying thousands of dollars to be able to get a client to engage in that transactional activity with them. We have a large pool of clients that are actively buying homes that trust us a great deal, and it puts us in pole position to be able to win that business if we can deliver on what we deliver to our clients, a great rate and a great digital experience. Yep. That's awesome. How do you think about it, just for 10 seconds here? Alan, how do we think about the trajectory? The trajectory is going to be based really for us at this stage on accumulating learnings. We have, I think, 27 states where we're licensed in, which would cover 60% of our clients. If we wanted to just really go all out and try to just break the system in terms of opening in every state, we could do that. We're really, as David mentioned, in the business of trust at the end of the day when you manage people's money. Our goal right now is to slowly grow in these really key states, I mean, Texas, Colorado, and eventually California, where we already have people on the wait list, are very large proportional states of the U.S. population and our clients. Those give us a lot of learnings that we're continually doing to optimize so that when we do the broader rollout, we'll have a much more fine-tuned product. I think of it as kind of like slowly and then all at once. Once you've hit those three states and you feel like you have it dialed in, going into the incremental states, I think it's going to be, hopefully, just a lot easier at that point. Yep. Well, David and Alan, thank you so much for being here. It's a great discussion, and I'm looking forward to seeing where this goes in the future. Thank you very much. Thank you, Dan. Thanks, Dan. Thank you.