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Exclusive: Wealthfront puts off IPO plans

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Mar 19, 2024
Illustration of a robot with a dollar sign screen on its face

Illustration: Sarah Grillo/Axios

Robo-adviser Wealthfront posted $200 million in revenue last year and is profitable, CFO Alan Imberman tells Axios.

Why it matters: Having separated itself from its UBS relationship, those metrics put the company squarely on the IPO watchlist — though it has no plans to go public soon, Imberman says.

By the numbers: Launched in 2011 with a focus on millennial investors, Wealthfront, last valued at $1.4 billion, saw its revenue rise to $200 million from $81 million the year prior, says Imberman.

  • The company is cash flow positive and net income profitable, with net EBITDA margins of over 40% last year.
  • As with many businesses in the space, Wealthfront benefitted from higher interest rates.

What we're watching: The IPO markets are reopening, but many fintechs are only just peering in.

  • Last month Stripe launched a tender offer that pushed out considerations of a public offering.
  • A source with knowledge of the matter tells Axios that Wealthfront is weighing liquidity options — including a tender offer — for its employees.

Flashback: In 2022, UBS' deal to acquire Wealthfront for $1.4 billion fizzled in 2022, but the two maintained ties when UBS invested $69.7 million via a convertible note deal at around the same valuation.

Between the lines: A source with knowledge of the matter tells Axios that Wealthfront paid off the note this year — ahead of schedule — and UBS did not keep a stake in the business.

  • That also means Wealthfront paid less in interest than it would have otherwise.
  • Today, UBS faces scrutiny from investors and regulators after it stepped in to save Credit Suisse last year, CEO Ralph Hamers stepped down, and the U.S. wealth management business is under renewed pressure to grow.

The bottom line: The Wealthfront-UBS tie-up may go down in history as a deal better off not done for the robo-adviser.

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