HealthEquity (HQY) Q1 2025 earnings summary

Executive summary

• Revenue grew 18% year-over-year to $287.6 million, driven by increases in custodial, service, and interchange revenues and record HSA sales.

• Adjusted EBITDA increased 36% to $117.4 million, with margin improving to 41% of revenue.

• Net income rose to $28.8 million from $4.1 million, with non-GAAP net income up 64% to $70.3 million.

• BenefitWallet acquisition added up to 616,000 HSAs and $2.7 billion in assets, with all tranches completed by May 2024.

• Total accounts reached 16 million, with 9.1 million HSAs holding $27.3 billion in assets.

Financial highlights

• Service revenue was $118.2 million (+6%), custodial revenue $121.6 million (+37%), and interchange revenue $47.7 million (+6%).

• Gross profit increased to $187.1 million from $148.5 million, with margin rising to 65% from 61% year-over-year.

• GAAP net income was $28.8 million ($0.33 per share); non-GAAP net income was $73 million ($0.80 per share).

• Adjusted EBITDA margin improved to 41% from 35% year-over-year.

• Cash on hand at quarter end was $251.2 million; $65.4 million generated from operations.

Outlook and guidance

• Fiscal 2025 revenue guidance raised to $1.16–$1.18 billion.

• GAAP net income expected at $90–$105 million ($1.01–$1.18 per share); non-GAAP net income at $261–$276 million ($2.93–$3.10 per share).

• Adjusted EBITDA guidance increased to $454–$474 million.

• Average HSA cash yield guidance raised to 3.00–3.05% for fiscal 2025.

• Guidance includes full impact of BenefitWallet acquisition, higher net interest expense, and assumes a 25% tax rate.