Wealthfront's Q2 earnings fell to $0.10 per share as aggressive scaling and higher personnel costs offset growth in investment advisory assets, leaving investors to weigh long-term potential against current margin compression.
Wealthfront's fiscal Q2 revenue grew only 1% and adjusted EBITDA margin fell to 41% with EPS dropping to $0.10, showing the cost of scaling assets is pressuring earnings.
Wealthfront Corporation reported a 1% revenue increase to $91.9 million for fiscal Q2, despite a 12% rise in platform assets to $99 billion. Adjusted EBITDA margins contracted to 41% from 49%, as rising operating expenses and a shift in asset mix toward lower-fee advisory services weighed on profitability.
Earnings were pressured by a 17% increase in operating expenses, a shift in asset mix toward lower-fee advisory products, and a significant rise in stock-based compensation costs.