2026 04 16 Earnings Schw Q1 Fy2026

Summary

Charles Schwab Q1 2026: revenue $6.5B +16% YoY, adjusted EPS $1.43 +~40% YoY. Core net new assets $158B (Q1 record, ex. one-time mutual fund clearing outflow), bringing total client assets to $11.8T. Record 9.9M daily average trades; managed investing net flows +46% (all-time record). Load-bearing chain: Schwab's "Through Clients' Eyes" strategy is converting volatile markets into a client-acquisition flywheel — 1.3M new accounts (+10% YoY), heightened engagement, and bank lending growth (+29% YoY). Acquisition of Forge provides pre-IPO access to retail clients (pipeline relevant to SpaceX IPO demand). AI and digital assets (crypto) flagged as near-term innovation areas. SCHW near 52-week low as of June 2026 despite fundamental recovery — directly relevant to the DB-to-DC passive flows resilience mechanism.

Transcript

Richard Wurster (President): Thank you, Jeff, and good morning. Thank you for joining us for our spring business update. I hope you walk away from the call this morning with three overarching messages. One, our Through Clients' Eyes strategy drove record client growth and financial results in the first quarter. Two, Schwab is delivering for clients and is uniquely capable of meeting client needs across investor types and investment environments. And three, we are innovating at a rapid pace with tangible progress in AI, digital assets and client capabilities and experiences.

Our Through Clients' Eyes strategy continues to drive results with strong growth across all fronts in the first quarter. Clients remain highly engaged, and they continue to turn to Schwab through volatile and uncertain markets. Clients opened 1.3 million brokerage accounts up 10% over last year. Excluding a one-time mutual fund clearing outflow, we attracted $158 billion in core net new assets, a first quarter record that brings total client assets to $11.8 trillion. March was our second highest month of NNA ever behind only December of 2021.

Clients continue to turn to us for more of their financial lives with strong engagement in our wealth and lending solutions. Managed investing net flows were up 46%, reaching an all-time record. Bank lending was up 29% year-over-year with bank product balances and pledged asset line balances reaching all-time records.

We supported a record 9.9 million daily average trades. This engagement led to record financial results with revenues up 16% to $6.5 billion and adjusted EPS of $1.43, up nearly 40% over last year. Behind those numbers are people of all life stages who are turning to Schwab to invest and trade through a period of heightened market volatility.

In the first quarter, we continued to execute across our key strategic focus areas and deliver innovations at a fast pace to help clients grow and protect their wealth. I'll highlight just a few, starting with growth. We're continuing to hire financial consultants and wealth advisers while expanding our branch footprint with about a dozen new branches planned for 2026.

When clients have a direct relationship with a financial consultant, their Client Promoter Scores increase 10 points and they trust Schwab with 2.4x more net new assets. We launched the Schwab Team Investor account, giving young people ages 13 to 17, an engaging way to get started on their lifelong investing journey. Our differentiated joint account structure allows parents to monitor and engage as needed as their teams trade and invest.

We believe it is important for teenagers to learn the benefits of saving and investing and the merits of compounding, rather than being exposed to more gambling-oriented messaging from some competitors. We completed the acquisition of Forge, which will allow us to provide clients with direct and indirect access to shares of pre-IPO companies through direct private share purchases, single company funds and multicompany funds.

We are building a healthy pipeline in our recently launched private issuer equity services, which offers capital management solutions and liquidity programs for pre-IPO companies and their shareholders. Given heightened interest from our clients in digital assets, we continue to build our capabilities to offer compliant access to spot crypto in 2026.

Michael Verdeschi (CFO): In the first quarter, we continued to execute on the financial recovery from our Bank portfolio restructuring and demonstrated the power of the Schwab business model. We generated net revenue of $6.5 billion. Total net revenue grew 16% year-over-year with net interest revenue up 10% and asset management and administration revenue up 20%. Trading revenue grew 25%, reflecting record daily average trades. Total revenue also benefited from strong growth in bank lending and other revenue.

Q&A — Michael Verdeschi on trading revenue:

Michael Verdeschi: When we think about what drove the trading revenue performance for the quarter — record 9.9 million daily average trades was clearly the key driver. Interestingly, while you saw more equities, you did see smaller trade size, less shares per trade, less option contracts per trade. And I think that is an indication of the environment that we were operating in — highly volatile, but also less conviction.

So we'll have to see how the macro backdrop evolves over the course of the year, but you see this dynamic where you see these spikes in daily average trades quite accretive, of course, to earnings, but having that pressure on that revenue per trade. If you perhaps see a more moderate set of volatility impacting the market, if you saw that reduction in volume of trades you could see a little bit of a lift in that revenue per trade. But again, it's really going to be dependent on how the environment evolves. Overall, we're very happy to support the client engagement. It's been a highly accretive activity.

Jeff Edwards (COO): I want to leave you where we started. First, our Through Clients' Eyes strategy continues to drive strong client growth and financial results. Second, we are continuing to deliver for clients and are uniquely positioned to meet client needs across investor types and market environments. And finally, we are innovating at speed, making tangible progress in helping our clients conduct more of their financial lives at Schwab so they can grow and protect their wealth over the long term.