Envestnet (NYSE:ENV), the leading provider of intelligent
systems for wealth management and financial wellness, today
announced that it will report its results for the fourth quarter
and year ended December 31, 2016, upon the finalization of its
financial statements.
Envestnet is currently finalizing certain accounting matters,
primarily related to potential state and local non-income tax
obligations. In addition, the Company may conclude that certain
control deficiencies exist in internal controls over financial
reporting and may represent a material weakness over financial
reporting as of December 31, 2016. The resolution of these matters
may impact the timing of the filing of Envestnet’s Form 10-K for
the year ended December 31, 2016.
Envestnet is working diligently to complete its financial
statements and anticipates releasing its fourth quarter results and
holding a conference call to discuss its fourth quarter 2016
results and 2017 outlook as soon as practicable.
The Company also updated its financial outlook for the fourth
quarter ended December 31, 2016 as summarized below:
In Millions Except Adjusted EPS
Previous Updated
GAAP:
AUM/A revenue $ 92.5 - 93.5 $ 93.4 - 93.5
Subscription and licensing revenue
55.0 - 56.0 55.7 - 55.8 Professional services and other revenue 5.5
- 6.0 6.0 - 6.1 Revenues $ 153.0 - 155.5 $ 155.1 - 155.5
Cost of revenues $ 48.5 - 49.5 $ 48.2 - 48.3 Net Income - -
Diluted shares outstanding 45.0 44.8 Net Income per Diluted Share -
-
Non-GAAP:
Adjusted Revenues(1) $ 153.0 - 155.5 $ 155.6 - 156.0 Adjusted
EBITDA(1) 29.0 - 30.0 30.1 - 30.5 Adjusted Net Income per Diluted
Share(1) $0.30 $0.32
Included in the Company’s adjusted revenues is approximately
$0.5 million in acquired deferred revenue not recognizable under
GAAP. The Company does not forecast net income and net income per
share due to the unpredictable nature of various items adjusted for
non-GAAP disclosure purposes, including the periodic GAAP income
tax provision.
Included at the end of this press release are various operating
metrics for the quarter and year ended December 31, 2016.
Neither the items included in the Company’s financial outlook
above nor the operating metrics included below will be
affected by any exposure to the potential state and local
non-income tax obligations referred to above.
About Envestnet
Envestnet, Inc. (NYSE: ENV) is the leading provider of
intelligent systems for wealth management and financial wellness.
Envestnet’s unified technology enhances advisor productivity and
strengthens the wealth management process. Envestnet empowers
enterprises and advisors to more fully understand their clients and
deliver better outcomes.
Envestnet enables financial advisors to better manage client
outcomes and strengthen their practices. Institutional-quality
research and advanced portfolio solutions are provided through
Envestnet | PMC, our Portfolio Management Consultants group.
Envestnet | Yodlee is a leading data aggregation and data analytics
platform powering dynamic, cloud-based innovation for digital
financial services. Envestnet | Tamarac provides leading
rebalancing, reporting, and practice management software for
advisors. Envestnet | Retirement Solutions provides retirement
advisors with an integrated platform that combines leading practice
management technology, research and due diligence, data
aggregation, compliance tools, fiduciary solutions and intelligent
managed account solutions.
More than 52,000 advisors and 2,500 companies including: 16 of
the 20 largest U.S. banks, 38 of the 50 largest wealth management
and brokerage firms, over 500 of the largest Registered Investment
Advisers, and hundreds of Internet services companies, leverage
Envestnet technology and services. Envestnet solutions enhance
knowledge of the client, accelerate client on-boarding, improve
client digital experiences, and help drive better outcomes for
enterprises, advisors, and their clients.
For more information on Envestnet, please visit
www.envestnet.com and follow @ENVintel.
(1) Non-GAAP Financial Measures
“Adjusted revenues” exclude the effect of purchase accounting on
the fair value of acquired deferred revenue. Under United States
generally accepted accounting principles (GAAP), we record at fair
value the acquired deferred revenue for contracts in effect at the
time the entities were acquired. Consequently, revenue related to
acquired entities for periods subsequent to the acquisition does
not reflect the full amount of revenue that would have been
recorded by these entities had they remained stand-alone
entities.
“Adjusted EBITDA” represents net income before deferred revenue
fair value adjustment, interest income, interest expense, accretion
on contingent consideration, income tax provision (benefit),
depreciation and amortization, non-cash compensation expense,
restructuring charges and transaction costs, severance, fair market
value adjustment on contingent consideration, litigation related
expense, foreign currency and related hedging activity, non-income
tax adjustment, other (income) expense, impairment of equity method
investment, loss allocation from equity method investment and loss
attributable to non-controlling interest.
“Adjusted net income” represents net income before deferred
revenue fair value adjustment, non-cash interest expense, non-cash
compensation expense, accretion on contingent consideration,
restructuring charges and transaction costs, severance, fair market
value adjustment on contingent consideration, amortization of
acquired intangibles, litigation related expense, foreign currency
and related hedging activity, non-income tax adjustment, other
(income) expense, impairment of equity method investment, loss
allocation from equity method investment and loss attributable to
non-controlling interest. Reconciling items are presented gross of
tax, and a normalized tax rate is applied to the total of all
reconciling items to arrive at adjusted net income. The reconciling
items, and resulting adjusted net income, are presented on a
different basis than historically shown to eliminate the impact of
quarterly volatility of the GAAP tax provision (benefit) on the
Company’s adjusted earnings figures.
“Adjusted net income per share” represents adjusted net income
divided by the diluted number of weighted-average shares
outstanding.
Reconciliations are not provided for guidance on adjusted
EBITDA, adjusted net income and adjusted net income per share, as
the Company is unable to predict the amounts to be adjusted, such
as the GAAP tax provision. The Company’s Non-GAAP Financial
Measures should not be viewed as a substitute for revenues, net
income or net income per share determined in accordance with
GAAP.
Cautionary Statement Regarding Forward-Looking
Statements
The forward-looking statements made in this press release
concerning, among other things, Envestnet, Inc.’s (the
“Company”) expected financial performance for the fourth quarter
and full year of 2016, are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These statements involve risks and uncertainties and the Company’s
actual results could differ materially from the results expressed
or implied by such forward-looking statements. Furthermore,
reported results should not be considered as an indication of
future performance. The potential risks, uncertainties and other
factors that could cause actual results to differ from those
expressed by the forward-looking statements in this press release
include, but are not limited to, potential exposure to state and
local non-income tax obligations; the impact of any inability to
timely complete the Company’s audit of its financial statements and
file its Form 10-K; the Company’s ability to remediate any material
weaknesses in internal controls over financial reporting which may
have contributed to any delay in completion of the Company’s
financial statements and filing of its Form 10-K; difficulty in
sustaining rapid revenue growth, which may place significant
demands on the Company’s administrative, operational and financial
resources, the concentration of nearly all of the Company’s
revenues from the delivery of investment solutions and services to
clients in the financial services industry, the impact of market
and economic conditions on revenues, the Company’s reliance on a
limited number of clients for a material portion of its revenue,
the renegotiation of fee percentages or termination of the
Company’s services by its clients, the Company’s ability to
identify potential acquisition candidates, complete acquisitions
and successfully integrate acquired companies, the impact of market
and economic conditions on revenue, the Company’s inability to
successfully execute the conversion of its clients’ assets from
their technology platform to the Company’s technology platform in a
timely and accurate manner, the Company’s ability to expand its
relationships with existing customers, grow the number of customers
and derive revenue from new offerings such as its data analytic
solutions and market research services and premium FinApps,
compliance failures, adverse judicial or regulatory proceedings
against the Company, liabilities associated with potential,
perceived or actual breaches of fiduciary duties and/or conflicts
of interest, changes in laws and regulations, general economic
conditions, political and regulatory conditions, the impact of
fluctuations in market conditions and interest rates on the demand
for the Company’s products and services and the value of assets
under management or administration, the impact of market conditions
on the Company’s ability to issue debt and equity, the impact of
fluctuations in interest rates on the Company’s cost of borrowing,
the Company’s financial performance, the results of the Company’s
investments in research and development, our data center and other
infrastructure, the Company’s ability to maintain the security and
integrity of its systems and facilities and to maintain the privacy
of personal information, failure of the Company’s systems to work
properly, the Company’s ability to realize operating efficiencies,
the advantages of the Company’s solutions as compared to those of
others, the failure to protect the Company’s intellectual property
rights, the Company’s ability to establish and maintain
intellectual property rights, the Company’s ability to retain and
hire necessary employees and appropriately staff its, and
management’s response to these factors. More information regarding
these and other risks, uncertainties and factors is contained in
the Company’s filings with the Securities and Exchange Commission
(“SEC”) which are available on the SEC’s website at www.sec.gov or
the Company’s Investor Relations website at
http://ir.envestnet.com/. You are cautioned not to unduly rely on
these forward-looking statements, which speak only as of the date
of this press release. All information in this press release is as
of February 22, 2017 and, unless required by law, the Company
undertakes no obligation to publicly revise any forward-looking
statement to reflect circumstances or events after the date of this
press release or to report the occurrence of unanticipated
events.
Envestnet, Inc. Historical Assets, Accounts and
Advisors (in millions, except accounts and advisors)
(unaudited) As
of
December 31,2015
March 31,2016
June 30,2016
September 30, 2016
December 31, 2016
Platform Assets Assets Under Management (AUM) $
92,559 $ 95,489 $ 96,700 $ 101,924 $ 105,178 Assets Under
Administration (AUA) 197,177 207,537
220,690 231,831 241,682 Subtotal
AUM/A 289,736 303,026 317,390 333,755 346,860 Licensing
561,699 576,988 685,952
721,690 748,125
Total Platform Assets $
851,435 $ 880,014 $ 1,003,342 $ 1,055,445
$ 1,094,985
Platform Accounts AUM 490,471
498,449 503,147 519,717 545,130 AUA 807,708
904,373 935,870 961,590
994,583 Subtotal AUM/A 1,298,179 1,402,822 1,439,017 1,481,307
1,539,713 Licensing 2,176,068 2,237,427
4,304,645 4,394,670 4,558,883
Total Platform Accounts 3,474,247
3,640,249 5,743,662 5,875,977
6,098,596
Advisors AUM/A 33,775 35,718 35,067
35,861 36,483 Licensing 13,553 13,675
16,081 16,191 17,852
Total
Advisors 47,328 49,393
51,148 52,052 54,335
The following tables summarize the changes in AUM and AUA for
the three months ended December 31, 2016:
In Millions
Except Accounts 9/30/2016
GrossSales
Redemp-tions
NetFlows
MarketImpact
12/31/2016 Assets under Management (AUM) $
101,924 $ 9,916 $ (6,635 ) $ 3,281 $ (27 ) $ 105,178
Assets
under Administration (AUA) 231,831 23,400
(15,890 ) 7,510 2,341
241,682
Total AUM/A $ 333,755 $
33,316 $ (22,525 )
$ 10,791 $ 2,314 $
346,860 Fee-Based Accounts 1,481,307 58,406 1,539,713
The above AUM/A gross sales figures include $5.3 billion in new
client conversions. The Company onboarded an additional $19.0
billion in licensing conversions during the fourth quarter,
bringing total conversions for the quarter to $24.3 billion.
The following tables summarize the changes in AUM and AUA for
the year ended December 31, 2016:
In Millions
Except Accounts 12/31/2015
GrossSales
Redemp-tions
Net Flows
MarketImpact
12/31/2016 Assets under Management (AUM) $
92,559 $ 34,504 $ (26,698 ) $ 7,806 $ 4,813 $ 105,178
Assets
under Administration (AUA) 197,177 84,253
(54,942 ) 29,311 15,194 241,682
Total AUM/A $ 289,736 $ 118,757
$ (81,640 ) $
37,117 $ 20,007 $ 346,860
Fee-Based Accounts 1,298,179 241,534 1,539,713
The above AUM/A gross sales figures include $17.1 billion in new
client conversions. The Company onboarded an additional $137.4
billion in licensing conversions during 2016, bringing total
conversions for the year to $154.5 billion.
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Envestnet, Inc.Investor
Relations312-827-3940investor.relations@envestnet.comorMedia
Relationsmediarelations@envestnet.com
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