Aug 27, 2026 earnings call — Record margins and raised guidance
HealthEquity raised fiscal 2027 revenue outlook to $1.411 billion to $1.421 billion.
Revenue $0.4B (est $0.3B) · EPS $1.24 (est $1.19) · Next-quarter revenue outlook $1.4B–$1.4B
Key quotes
"It was also a quarter of strong execution across the business with growing marketplace activity, continued technology-enabled efficiency, and lower service costs as HSA accounts reached a record 10.7 million."
"At the end of the quarter, Marketplace had more than 14,000 active members with continued month-over-month growth as we began more targeted member campaigns."
"In targeted workflows, AI helped resolve 85% of routine chat inquiries and contained 55% of card-related phone contacts."
Analyst Q&A 10
Marketplace growth and service revenue
Q (Allen Lutz · BofA): The analyst asked why service revenue rose this quarter and for early learnings from the Marketplace, including partner feedback and member behavior.
A: Management said the inflection in service revenue is driven by Marketplace and more investors, and that Marketplace shows strong subscriber and transaction growth. They reported a record traffic week and that non-metabolic programs now make up about a third of Marketplace revenue. They also noted most Marketplace transactions happen on mobile.
"Just last week alone, we drove 500,000 unique visitors to the site, which we're really excited about." — Scott Cutler (CEO)
Distribution and analytics monetization
Q (Alexei Gogolev · JPMorgan): The analyst asked how the firm balances partner distribution vs direct sales and whether analytics will be monetized as a standalone product or used to win and retain clients.
A: Management said they use a hybrid go-to-market: health plan partners, brokers, direct sales, and growth from existing clients via advisory work. They said analytics will be used mainly to drive adoption and strategic advisory services, not likely as a standalone product.
"So I don't think it's going to be necessarily a standalone product, but all of that information is leveraged to be able to drive greater adoption and better advisory services to our clients." — Scott Cutler (CEO)
Margins and AI efficiency
Q (Brian Tanquilut · Jefferies): The analyst asked how much further margins can improve and how AI and productivity tools will help.
A: Management said gross costs are falling while account growth continues, driven by better member service and automation, including a 25% call reduction and AI in chat. They said initial gains were in member services and they now plan to unlock efficiencies in client services and back office as well.
"What we're really transitioning to now is really what are the efficiencies that we can unlock on the client side and in back office." — Scott Cutler (CEO)
Intra-year HSA growth and CDB cross-sell
Q (Sean Dodge · BMO): The analyst asked what drove strong intra-year HSA additions and how to think about growth in other accounts like FSA or CDBs.
A: Management said intra-year growth comes from strategic advisory services, individual plans, and new sales, all working together, and noted 24% year-over-year new HSA sales growth. They explained CDB products are sold as bundles but clients are moving more toward HSAs, reducing FSA use over time.
"That's the largest contributor to that year-on-year growth, essentially the channel of individual plans and individual participants, as well as new sales." — Scott Cutler (CEO)
Service margin one-offs and affordability demand
Q (George Hill · Deutsche Bank): The analyst asked if service margin beat included one-time items and how the affordability crisis affects customer conversations and demand.
A: Management said there was nothing unusual in service cost this quarter and they continue to outperform fraud targets. They said employers are focused on affordability and the biggest lever is moving employees to high-deductible health plans, which can drive millions in savings for employers.
"And the single biggest lever that can actually amount to millions of dollars of savings for an employer and thousands of dollars of savings per employee is simply just driving greater adoption of high-deductible health plans." — Scott Cutler (CEO)
Marketplace marketing and margins
Q (Scott Schoenhaus · KeyBanc): The analyst asked what targeted marketing and personalization actions drove record Marketplace activity and how to think about Marketplace margins given marketing investments.
A: Management said Marketplace is early but growing and that marketing focused on top-of-funnel personalization, email campaigns, A/B testing, UX, and building brand partnerships. They said their Marketplace has very low cost of acquisition and low cost to serve, so it should deliver a high-margin profile distinct from other consumer marketplaces.
"Number one differentiator is cost of acquisition, which for us is very, very low." — Scott Cutler (CEO)
Marketplace conversion and funnel
Q (Mark Marcon · Baird): The analyst asked about conversion rates on Marketplace visits and confidence in future growth based on early engagement metrics.
A: Management said they are building the full funnel with a single app experience to drive engagement and conversion, and they improved conversion materially last quarter through A/B testing and personalization. They emphasized they are early in the journey but saw significant conversion improvements to build on.
"We made significant changes, improvements in conversion over the course of the last quarter." — Scott Cutler (CEO)
Custodial revenue and hedging
Q (Steven Valiquette · Mizuho): The analyst asked whether 10% custodial revenue growth is a reasonable back-half run rate and how hedging limits upside from higher yields.
A: Management said they cannot give specific forward numbers but that much cash is already hedged, giving them good certainty of near-term yields, and that new cash often arrives late in the year so it has limited impact on annual yield. They said they have started hedging enhanced-rate repricings and will continue adding hedges, which will raise locked yields over time.
"So that's why I said we have pretty good certainty plus or minus of what the yield is going to be for this year." — James Lucania (CFO)
New sales growth and capital use
Q (Ryan Halsted · RBC): The analyst asked about competitive win rates, RFP trends, and whether the company needs M&A or can keep taking share organically.
A: Management said their sales growth outpaces the industry and they differentiate via mission, product experience, and a large integrated partner network. They said retention and win rates are strong, they will keep investing in growth and technology, and will remain opportunistic on M&A while also paying down debt and allocating capital efficiently.
"The actual experience that we deliver is also becoming more and more differentiated relative to the competition." — Scott Cutler (CEO)
New app and labor market trends
Q (Jenny Shen · BTIG): The analyst asked whether the new app is an upgrade or entirely new, and about any hiring or labor market trends they are seeing.
A: Management said the next-generation app will upgrade all HealthEquity users and integrate the EZ Receipts app into a single experience combining claims, marketplace, investments, and education. They said their HSA growth is not tied to labor market strength and they continue to drive growth despite macro variance.
"And so all HealthEquity app users will effectively be upgraded as we roll that together." — Scott Cutler (CEO)