Revenues, adjusted EBITDA and adjusted EPS
exceed guidance in Q2 2021, Raising 2021 Outlook
Envestnet (NYSE: ENV), a leading provider of intelligent systems
for wealth management and financial wellness, today reported
financial results for the three and six months ended June 30,
2021.
Three months ended
Six months ended
Key Financial Metrics
June 30,
%
June 30,
%
(in millions except per share
data)
2021
2020
Change
2021
2020
Change
GAAP:
Total revenues
$
288.7
$
235.3
23
%
$
563.8
$
481.9
17
%
Net income (loss)
$
(8.4
)
$
(5.5
)
53
%
$
6.6
$
(12.7
)
n/m
Net income (loss) per diluted share
attributable to Envestnet, Inc.
$
(0.15
)
$
(0.09
)
67
%
$
0.12
$
(0.23
)
n/m
Non-GAAP:
Adjusted revenues(1)
$
288.8
$
235.4
23
%
$
564.0
$
482.4
17
%
Adjusted EBITDA(1)
$
71.1
$
55.8
27
%
$
139.3
$
110.4
26
%
Adjusted net income(1)
$
43.5
$
31.8
37
%
$
85.4
$
63.0
36
%
Adjusted net income per diluted
share(1)
$
0.67
$
0.59
14
%
$
1.31
$
1.16
13
%
n/m - not meaningful
“During the second quarter and first half of 2021, Envestnet
again delivered strong financial results,” said Bill Crager, Chief
Executive Officer.
“We are executing our investment plan, which we expect to drive
consistent, accelerated growth. Additionally, we will continue to
utilize our operational expertise and leverage our competitive
advantage to create the ecosystem that powers the intelligent
financial life,” concluded Mr. Crager.
Financial Results for the Second Quarter of 2021
Asset-based recurring revenues increased 39% from the second
quarter of 2020, and represented 59% of total revenues for the
second quarter of 2021 compared to 52% for the second quarter of
2020. Subscription-based recurring revenues increased 7% from the
second quarter of 2020, and represented 39% of total revenues for
the second quarter of 2021, compared to 45% for the second quarter
of 2020. Professional services and other non-recurring revenues
decreased 24% from the prior year period. Total revenues increased
23% to $288.7 million for the second quarter of 2021 from $235.3
million for the second quarter of 2020.
Total operating expenses for the second quarter of 2021
increased 20% to $277.8 million from $231.3 million in the prior
year period. Cost of revenues increased 46% to $100.5 million for
the second quarter of 2021 from $68.8 million for the prior year
period. Compensation and benefits increased 10% to $105.5 million
for the second quarter of 2021 from $95.6 million for the prior
year period. Compensation and benefits were 37% of total revenues
for the second quarter of 2021, compared to 41% for the prior year
period. General and administration expenses increased 9% to $41.8
million for the second quarter of 2021 from $38.4 million for the
prior year period. General and administrative expenses were 14% of
total revenues for the second quarter of 2021, compared to 16% for
the prior year period.
Income from operations was $10.9 million for the second quarter
of 2021 compared to $4.0 million for the second quarter of 2020.
Net loss was $8.4 million for the second quarter of 2021 compared
to net loss of $5.5 million for the second quarter of 2020. Net
loss per diluted share attributable to Envestnet, Inc. was $0.15
for the second quarter of 2021 compared to net loss per diluted
share attributable to Envestnet, Inc. of $0.09 for the second
quarter of 2020.
Adjusted revenues(1) for the second quarter of 2021 increased
23% to $288.8 million from $235.4 million for the prior year
period. Adjusted EBITDA(1) for the second quarter of 2021 increased
27% to $71.1 million from $55.8 million for the prior year period.
Adjusted net income(1) increased 37% for the second quarter of 2021
to $43.5 million from $31.8 million for the prior year period.
Adjusted net income per diluted share(1) for the second quarter of
2021 increased 14% to $0.67 from $0.59 in the second quarter of
2020.
Balance Sheet and Liquidity
As of June 30, 2021, Envestnet had $369.5 million in cash and
cash equivalents and $862.5 million in outstanding debt. The
outstanding debt as of June 30, 2021 included $345 million in
convertible notes maturing in 2023 and $517.5 million in
convertible notes maturing in 2025. The Company's $500 million
revolving credit facility was undrawn as of June 30, 2021.
Outlook
Envestnet provided the following outlook for the third quarter
ending September 30, 2021 and full year ending December 31, 2021.
This outlook is based on the market value of assets as of June 30,
2021. We caution that we cannot predict the market value of our
assets on any future date. See “Cautionary Statement Regarding
Forward-Looking Statements.”
In Millions Except Adjusted EPS
3Q 2021
FY 2021
GAAP:
Revenues:
Asset-based
$
181.0
-
$
182.0
Subscription-based
113.0
-
114.0
Total recurring revenues
$
294.0
-
$
296.0
Professional services and other
revenues
4.0
-
4.5
Total revenues
$
298.0
-
$
300.5
$
1,168.0
-
$
1,174.0
Asset-based cost of revenues
$
101.2
-
$
101.7
Total cost of revenues
$
109.5
-
$
110.0
Net income
(a)
-
(a)
(a)
-
(a)
Diluted shares outstanding
65.6
65.6
Net income per diluted share
(a)
-
(a)
(a)
-
(a)
Non-GAAP:
Adjusted revenues (1):
Asset-based
$
181.0
-
$
182.0
Subscription-based
113.0
-
114.0
Total recurring revenues
$
294.0
-
$
296.0
Professional services and other
revenues
4.0
-
4.5
Total revenues
$
298.0
-
$
300.5
$
1,169.0
-
$
1,174.0
Adjusted EBITDA(1)
$
61.0
-
$
63.0
$
253.0
-
$
257.0
Adjusted net income per diluted
share(1)
$
0.58
$
2.30
-
$
2.35
(a) Envestnet does not forecast net income and net income per
diluted share due to the unpredictable nature of various items
adjusted for non-GAAP disclosure purposes, including the periodic
GAAP income tax provision.
Conference Call
Envestnet will host a conference call to discuss second quarter
2021 financial results today at 5:00 p.m. ET. The live webcast and
accompanying presentation can be accessed from Envestnet’s investor
relations website at http://investor.envestnet.com/. A replay of
the webcast will be available on the investor relations website
following the call.
About Envestnet
Envestnet, Inc. (NYSE: ENV) is transforming the way financial
advice and wellness are delivered. Our mission is to empower
advisors and financial service providers with innovative
technology, solutions and intelligence to make financial wellness a
reality for everyone. Nearly 108,000 advisors and more than 6,000
companies including: 17 of the 20 largest U.S. banks, 46 of the 50
largest wealth management and brokerage firms, over 500 of the
largest RIAs and hundreds of FinTech companies, leverage Envestnet
technology and services that help drive better outcomes for
enterprises, advisors and their clients.
For more information on Envestnet, please visit
www.envestnet.com and follow us on Twitter @ENVintel.
(1) Non-GAAP Financial Measures
“Adjusted revenues” excludes the effect of purchase accounting
on the fair value of acquired deferred revenue. Under 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 revenues has limitations as a financial measure,
should be considered as supplemental in nature and is not meant as
a substitute for revenue prepared in accordance with GAAP.
“Adjusted EBITDA” represents net income (loss) before deferred
revenue fair value adjustment, interest income, interest expense,
accretion on contingent consideration and purchase liability,
income tax provision (benefit), depreciation and amortization,
non-cash compensation expense, restructuring charges and
transaction costs, severance, fair market value adjustment on
contingent consideration liability, non-recurring litigation and
regulatory related expenses, foreign currency, non-income tax
expense adjustment, non-recurring gain, fair market value
adjustment to investment in private company, loss allocation from
equity method investments and income attributable to
non-controlling interest.
“Adjusted net income” represents net income before deferred
revenue fair value adjustment, accretion on contingent
consideration and purchase liability, non-cash interest expense,
cash interest on our convertible notes (subsequent to the adoption
of ASU 2020-06 on January 1, 2021), non-cash compensation expense,
restructuring charges and transaction costs, severance, fair market
value adjustment on contingent consideration liability,
amortization of acquired intangibles, non-recurring litigation and
regulatory related expenses, foreign currency, non-income tax
expense adjustment, non-recurring gain, fair market value
adjustment to investment in private company, loss allocation from
equity method investments and income 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 normalized
tax rate is based solely on the estimated blended statutory income
tax rates in the jurisdictions in which we operate. We monitor the
normalized tax rate based on events or trends that could materially
impact the rate, including tax legislation changes and changes in
the geographic mix of our operations.
“Adjusted net income per diluted share” represents adjusted net
income attributable to common stockholders divided by the diluted
number of weighted-average shares outstanding. Beginning January 1,
2021, the dilutive effect of our Convertible Notes are calculated
using the if-converted method in accordance with the adoption of
ASU 2020-06. As a result, 9.9 million potential shares to be issued
in connection with our Convertible Notes are considered to be
dilutive for purposes of the adjusted net income per share
calculation beginning January 1, 2021.
See reconciliations of Non-GAAP Financial Measures on pages 9-15
of this press release. Reconciliations are not provided for
guidance on such measures 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 and
its attachments concerning, among other things, Envestnet, Inc.’s
expected financial performance and outlook for the third quarter
and full year of 2021, its strategic operational plans and growth
strategy 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, a pandemic or health crisis, including the COVID-19
pandemic, and its impact on financial institutions, the global
economy or capital markets, as well as our products, clients,
vendors and employees, and our results of operations, the full
extent of which is currently unknown; changes and volatility in
financial and capital markets, which could result in changes in
demand for our products or services or in the value of assets on
which we earn revenue; the possibility that the anticipated
benefits of any of our acquisitions will not be realized to the
extent or when expected, difficulty in sustaining rapid revenue
growth, which may place significant demands on our administrative,
operational and financial resources, the concentration of nearly
all of our revenues from the delivery of our solutions and services
to clients in the financial services industry, our reliance on a
limited number of clients for a material portion of our revenues,
the renegotiation of fee percentages or termination of our services
by our clients, our ability to identify potential acquisition
candidates, complete acquisitions and successfully integrate
acquired companies, the impact of market and economic conditions on
revenues, our inability to successfully execute the conversion of
clients’ assets from their technology platform to our technology
platforms in a timely and accurate manner, our ability to expand
our relationships with existing customers, grow the number of
customers and derive revenue from new offerings such as our data
analytics solutions and market research services and premium
financial applications, compliance failures, adverse judicial or
regulatory proceedings against us, liabilities associated with
potential, perceived or actual breaches of fiduciary duties and/or
conflicts of interest, changes in laws and regulations, including
tax laws and regulations, general economic conditions, political
and regulatory conditions, the impact of fluctuations in market
condition and interest rates on the demand for our products and
services and the value of assets under management or
administration, the impact of market conditions on our ability to
issue debt and equity, the impact of fluctuations in interest rates
on our cost of borrowing, our financial performance, the results of
our investments in research and development, our data center and
other infrastructure, our ability to maintain the security and
integrity of our systems and facilities and to maintain the privacy
of personal information, failure of our systems to work properly,
our ability to realize operating efficiencies, the advantages of
our solutions as compared to those of others, the failure to
protect our intellectual property rights, our ability to establish
and maintain intellectual property rights, our ability to retain
and hire necessary employees and appropriately staff our operations
and management’s response to these factors. More information
regarding these and other risks, uncertainties and factors is
contained in our filings with the Securities and Exchange
Commission (“SEC”) which are available on the SEC’s website at
www.sec.gov or our Investor Relations website at
http://investor.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 and its attachments is as of August 5, 2021 and, unless
required by law, we undertake 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.
Condensed Consolidated Balance
Sheets
(in thousands)
(unaudited)
June 30,
December 31,
2021
2020
Assets
Current assets:
Cash and cash equivalents
$
369,524
$
384,565
Fees receivable, net
81,037
80,064
Prepaid expenses and other current
assets
40,619
40,570
Total current assets
491,180
505,199
Property and equipment, net
50,008
47,969
Internally developed software, net
114,770
96,501
Intangible assets, net
435,023
435,041
Goodwill
928,493
906,773
Operating lease right-of-use-assets,
net
93,298
105,249
Other non-current assets
57,924
47,558
Total assets
$
2,170,696
$
2,144,290
Liabilities and Equity
Current liabilities:
Accrued expenses and other liabilities
$
174,957
$
158,548
Accounts payable
20,423
18,003
Operating lease liabilities
12,477
13,649
Contingent consideration
1,312
11,251
Deferred revenue
38,645
34,918
Total current liabilities
247,814
236,369
Long-term debt
846,411
756,503
Non-current operating lease
liabilities
107,045
112,182
Deferred tax liabilities, net
33,576
34,740
Other non-current liabilities
18,384
28,678
Total liabilities
1,253,230
1,168,472
Equity:
Total stockholders’ equity
917,117
976,337
Non-controlling interest
349
(519
)
Total liabilities and equity
$
2,170,696
$
2,144,290
Envestnet, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except share
and per share information)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Revenues:
Asset-based
$
170,075
$
122,246
$
329,450
$
257,057
Subscription-based
112,504
104,979
222,333
209,530
Total recurring revenues
282,579
227,225
551,783
466,587
Professional services and other
revenues
6,159
8,088
12,060
15,265
Total revenues
288,738
235,313
563,843
481,852
Operating expenses:
Cost of revenues
100,494
68,849
193,363
143,782
Compensation and benefits
105,548
95,565
206,262
205,995
General and administration
41,755
38,448
78,070
79,558
Depreciation and amortization
30,010
28,443
58,402
56,126
Total operating expenses
277,807
231,305
536,097
485,461
Income (loss) from operations
10,931
4,008
27,746
(3,609
)
Other expense, net
(3,784
)
(8,173
)
(11,252
)
(9,710
)
Income (loss) before income tax provision
(benefit)
7,147
(4,165
)
16,494
(13,319
)
Income tax provision (benefit)
15,516
1,306
9,928
(658
)
Net income (loss)
(8,369
)
(5,471
)
6,566
(12,661
)
Add: Net loss attributable to
non-controlling interest
88
547
99
401
Net income (loss) attributable to
Envestnet, Inc.
$
(8,281
)
$
(4,924
)
$
6,665
$
(12,260
)
Net income (loss) per share attributable
to Envestnet, Inc.:
Basic
$
(0.15
)
$
(0.09
)
$
0.12
$
(0.23
)
Diluted
$
(0.15
)
$
(0.09
)
$
0.12
$
(0.23
)
Weighted average common shares
outstanding:
Basic
54,440,388
53,562,850
54,325,353
53,288,741
Diluted
54,440,388
53,562,850
55,136,946
53,288,741
Envestnet, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
June 30,
2021
2020
OPERATING ACTIVITIES:
Net income (loss)
$
6,566
$
(12,661
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
58,402
56,126
Provision for doubtful accounts
455
1,515
Deferred income taxes
8,137
(1,598
)
Non-cash compensation expense
31,422
29,869
Non-cash interest expense
2,906
5,907
Accretion on contingent consideration and
purchase liability
575
910
Payments of contingent consideration
(2,360
)
—
Fair market value adjustment to contingent
consideration liability
(140
)
(1,982
)
Fair market value adjustment to investment
in private company
(758
)
—
Gain on acquisition of equity method
investment
—
(4,230
)
Loss allocation from equity method
investments
4,045
3,286
Impairment of right of use assets
1,110
1,426
Other
282
556
Changes in operating assets and
liabilities, net of acquisitions:
Fees receivables, net
(1,334
)
(8,560
)
Prepaid expenses and other current
assets
(155
)
(7,756
)
Other non-current assets
3,665
(353
)
Accrued expenses and other liabilities
527
(4,484
)
Accounts payable
2,333
(2,130
)
Deferred revenue
2,789
7,236
Other non-current liabilities
692
1,946
Net cash provided by operating
activities
119,159
65,023
INVESTING ACTIVITIES:
Purchases of property and equipment
(11,357
)
(4,329
)
Capitalization of internally developed
software
(31,802
)
(25,703
)
Investments in private companies
(4,549
)
(12,625
)
Acquisition of proprietary technology
(25,517
)
—
Acquisitions of businesses, net of cash
acquired
(33,143
)
(20,257
)
Advance for technology solutions
(3,000
)
—
Net cash used in investing activities
(109,368
)
(62,914
)
-continued-
Envestnet, Inc.
Condensed Consolidated
Statements of Cash Flows (continued)
(in thousands)
(unaudited)
Six Months Ended
June 30,
2021
2020
FINANCING ACTIVITIES:
Proceeds from borrowings on revolving
credit facility
—
45,000
Payments on revolving credit facility
—
(30,000
)
Capital contributions - non-controlling
shareholders
23
—
Payments of contingent consideration
(9,200
)
—
Proceeds from exercise of stock
options
573
6,683
Taxes paid in lieu of shares issued for
stock-based compensation
(13,020
)
(12,816
)
Share repurchases
(2,097
)
—
Other
(587
)
3
Net cash (used in) provided by financing
activities
(24,308
)
8,870
EFFECT OF EXCHANGE RATE CHANGES ON
CASH
(524
)
(1,342
)
INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
(15,041
)
9,637
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, BEGINNING OF PERIOD
384,714
82,755
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, END OF PERIOD (a)
$
369,673
$
92,392
(a) The following table provides a reconciliation of cash, cash
equivalents and restricted cash to amounts reported within the
Condensed Consolidated Balance Sheets:
June 30,
June 30,
2021
2020
Cash and cash equivalents
$
369,524
$
92,244
Restricted cash included in prepaid
expenses and other current assets
149
—
Restricted cash included in other
non-current assets
—
148
Total cash, cash equivalents and
restricted cash
$
369,673
$
92,392
Reconciliation of Non-GAAP
Financial Measures
(in thousands)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Total revenues
$
288,738
$
235,313
$
563,843
$
481,852
Deferred revenue fair value adjustment
(a)
80
77
160
516
Adjusted revenues
$
288,818
$
235,390
$
564,003
$
482,368
Net income (loss)
$
(8,369
)
$
(5,471
)
$
6,566
$
(12,661
)
Add (deduct):
Deferred revenue fair value adjustment
(a)
80
77
160
516
Interest income (b)
(197
)
(197
)
(367
)
(588
)
Interest expense (b)
4,225
6,634
8,440
13,768
Accretion on contingent consideration and
purchase
liability (c)
187
311
575
910
Income tax provision (benefit)
15,516
1,306
9,928
(658
)
Depreciation and amortization
30,010
28,443
58,402
56,126
Non-cash compensation expense (d)
17,285
13,875
31,422
27,345
Restructuring charges and transaction
costs (f)
5,028
6,648
7,812
9,468
Severance (e)
5,377
1,869
10,291
15,851
Fair market value adjustment on contingent
consideration liability (c)
—
(1,982
)
(140
)
(1,982
)
Non-recurring litigation and regulatory
related expenses (c)
1,938
3,517
3,647
4,220
Foreign currency (b)
(138
)
463
13
(31
)
Non-income tax expense adjustment (c)
295
(642
)
(271
)
(454
)
Non-recurring gain (b)
—
—
—
(4,230
)
Fair market value adjustment to investment
in private company (b)
(758
)
—
(758
)
—
Loss allocation from equity method
investments (b)
757
1,256
4,045
3,286
Income attributable to non-controlling
interest
(175
)
(299
)
(440
)
(500
)
Adjusted EBITDA
$
71,061
$
55,808
$
139,325
$
110,386
(a)
Included within subscription-based revenues in the condensed
consolidated statements of operations.
(b)
Included within other expense, net in the condensed consolidated
statements of operations.
(c)
Included within general and
administrative expenses in the condensed consolidated statements of
operations.
(d)
All of 2021 included in
compensation and benefits in the condensed consolidated statements
of operations. For the three months ended June 30, 2020, $13,875
was included in compensation and benefits in the condensed
consolidated statements of operations. For the six months ended
June 30, 2020, $29,869 was included in compensation and benefits
and a fair value adjustment of $(2,524) was included in other
expense, net, in the condensed consolidated statements of
operations.
(e)
Included within compensation and
benefits in the condensed consolidated statements of
operations.
(f)
For the three months ended June
30, 2021 and 2020, $2,708 and $5,569 were included within general
and administrative expenses, respectively, in the condensed
consolidated statements of operations. For the three months ended
June 30, 2021 and 2020, $2,320 and $968 were included within
compensation and benefits, respectively, in the condensed
consolidated statements of operations. For the three months ended
June 30, 2021 and 2020, $0 and $111 were included within other
expense, net, respectively, in the condensed consolidated
statements of operations. For the six months ended June 30, 2021
and 2020, $4,489 and $7,493 were included within general and
administrative expenses, respectively, in the condensed
consolidated statements of operations. For the six months ended
June 30, 2021 and 2020, $3,323 and $1,795 were included within
compensation and benefits, respectively, in the condensed
consolidated statements of operations. For the six months ended
June 30, 2021 and 2020, $0 and $180 were included within other
expense, net, respectively, in the condensed consolidated
statements of operations.
Envestnet, Inc.
Reconciliation of Non-GAAP
Financial Measures
(in thousands, except share
and per share information)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Net income (loss)
$
(8,369
)
$
(5,471
)
$
6,566
$
(12,661
)
Income tax provision (benefit) (a)
15,516
1,306
9,928
(658
)
Income (loss) before income tax provision
(benefit)
7,147
(4,165
)
16,494
(13,319
)
Add (deduct):
Deferred revenue fair value adjustment
(b)
80
77
160
516
Accretion on contingent consideration and
purchase
liability (c)
187
311
575
910
Non-cash interest expense (d)
1,429
2,983
2,852
5,945
Cash interest - Convertible Notes (d)
2,480
—
4,960
—
Non-cash compensation expense (e)
17,285
13,875
31,422
27,345
Restructuring charges and transaction
costs (h)
5,028
6,648
7,812
9,468
Severance (f)
5,377
1,869
10,291
15,851
Fair market value adjustment on contingent
consideration liability (c)
—
(1,982
)
(140
)
(1,982
)
Amortization of acquired intangibles
(g)
17,502
18,746
33,980
37,504
Non-recurring litigation and regulatory
related expenses (c)
1,938
3,517
3,647
4,220
Foreign currency (d)
(138
)
463
13
(31
)
Non-income tax expense adjustment (c)
295
(642
)
(271
)
(454
)
Non-recurring gain (d)
—
—
—
(4,230
)
Fair market value adjustment to investment
in private company (d)
(758
)
—
(758
)
—
Loss allocation from equity method
investments (d)
757
1,256
4,045
3,286
Income attributable to non-controlling
interest
(175
)
(299
)
(440
)
(500
)
Adjusted net income before income tax
effect
58,434
42,657
114,642
84,529
Income tax effect (i)
(14,901
)
(10,884
)
(29,234
)
(21,554
)
Adjusted net income
$
43,533
$
31,773
$
85,408
$
62,975
Basic number of weighted-average shares
outstanding
54,440,388
53,562,850
54,325,353
53,288,741
Effect of dilutive shares:
Options to purchase common stock
198,277
374,070
210,381
519,886
Unvested restricted stock units
435,023
322,140
536,186
475,990
Convertible notes
9,898,549
—
9,898,549
11,719
Warrants
53,648
—
65,026
22,714
Diluted number of weighted-average shares
outstanding
65,025,885
54,259,060
65,035,495
54,319,050
Adjusted net income per share -
diluted
$
0.67
$
0.59
$
1.31
$
1.16
(a)
For the three months ended June 30, 2021 and 2020, the effective
tax rate computed in accordance with GAAP equaled 217.1% and
(31.4)%, respectively. For the six months ended June 30, 2021 and
2020, the effective tax rate computed in accordance with GAAP
equaled 60.2% and 4.9%, respectively.
(b)
Included within subscription-based revenues in the condensed
consolidated statements of operations.
(c)
Included within general and
administrative expenses in the condensed consolidated statements of
operations.
(d)
Included within other expense,
net in the condensed consolidated statements of operations.
(e)
All of 2021 included in
compensation and benefits in the condensed consolidated statements
of operations. For the three months ended June 30, 2020, $13,875
was included in compensation and benefits in the condensed
consolidated statements of operations. For the six months ended
June 30, 2020, $29,869 was included in compensation and benefits
and a fair value adjustment of $(2,524) was included in other
expense, net, in the condensed consolidated statements of
operations.
(f)
Included within compensation and
benefits in the condensed consolidated statements of
operations.
(g)
Included within depreciation and
amortization in the condensed consolidated statements of
operations.
(h)
For the three months ended June
30, 2021 and 2020, $2,708 and $5,569 were included within general
and administrative expenses, respectively, in the condensed
consolidated statements of operations. For the three months ended
June 30, 2021 and 2020, $2,320 and $968 were included within
compensation and benefits, respectively, in the condensed
consolidated statements of operations. For the three months ended
June 30, 2021 and 2020, $0 and $111 were included within other
expense, net, respectively, in the condensed consolidated
statements of operations. For the six months ended June 30, 2021
and 2020, $4,489 and $7,493 were included within general and
administrative expenses, respectively, in the condensed
consolidated statements of operations. For the six months ended
June 30, 2021 and 2020, $3,323 and $1,795 were included within
compensation and benefits, respectively, in the condensed
consolidated statements of operations. For the six months ended
June 30, 2021 and 2020, $0 and $180 were included within other
expense, net, respectively, in the condensed consolidated
statements of operations.
(i)
An estimated normalized effective
tax rate of 25.5% have been used to compute adjusted net income for
the three and six months ended June 30, 2021 and 2020.
Reconciliation of Non-GAAP
Financial Measures
Segment Information
(in thousands)
(unaudited)
Three months ended June 30,
2021
Envestnet Wealth
Solutions
Envestnet Data &
Analytics
Nonsegment
Total
Total Revenues
$
240,297
$
48,441
$
—
$
288,738
Deferred revenue fair value adjustment
(a)
80
—
—
80
Adjusted revenues
$
240,377
$
48,441
$
—
$
288,818
Revenues:
Asset-based
$
170,075
$
—
$
—
$
170,075
Subscription-based
66,663
45,841
—
112,504
Total recurring revenues
236,738
45,841
—
282,579
Professional services and other
revenues
3,559
2,600
—
6,159
Total revenues
240,297
48,441
—
288,738
Operating expenses:
Cost of revenues:
Asset-based
93,341
—
—
93,341
Subscription-based
1,294
5,733
—
7,027
Professional services and other
78
48
—
126
Total cost of revenues
94,713
5,781
—
100,494
Compensation and benefits
65,114
25,008
15,426
105,548
General and administration
24,884
9,427
7,444
41,755
Depreciation and amortization
23,127
6,883
—
30,010
Total operating expenses
$
207,838
$
47,099
$
22,870
$
277,807
Income (loss) from operations
$
32,459
$
1,342
$
(22,870
)
$
10,931
Add:
Deferred revenue fair value adjustment
(a)
80
—
—
80
Accretion on contingent consideration and
purchase liability (b)
168
19
—
187
Depreciation and amortization
23,127
6,883
—
30,010
Non-cash compensation expense (c)
9,590
3,183
4,512
17,285
Restructuring charges and transaction
costs (d)
3,821
27
1,180
5,028
Non-income tax expense adjustment (b)
105
190
—
295
Severance (c)
1,096
1,687
2,594
5,377
Non-recurring litigation and regulatory
related expenses (b)
—
1,938
—
1,938
Income attributable to non-controlling
interest
(175
)
—
—
(175
)
Other
88
9
8
105
Adjusted EBITDA
$
70,359
$
15,278
$
(14,576
)
$
71,061
(a)
Included within subscription-based revenues in the condensed
consolidated statements of operations.
(b)
Included within general and administrative expenses in the
condensed consolidated statements of operations.
(c)
Included within compensation and
benefits in the condensed consolidated statements of
operations.
(d)
For the three months ended June
30, 2021, $2,708 was included within general and administrative
expenses and $2,320 was included within compensation and benefits
in the condensed consolidated statements of operations.
Reconciliation of Non-GAAP
Financial Measures
Segment Information
(continued)
(in thousands)
(unaudited)
Six months ended June 30,
2021
Envestnet Wealth
Solutions
Envestnet Data &
Analytics
Nonsegment
Total
Total Revenues
$
466,707
$
97,136
$
—
$
563,843
Deferred revenue fair value adjustment
(a)
160
—
—
160
Adjusted revenues
$
466,867
$
97,136
$
—
$
564,003
Revenues:
Asset-based
$
329,450
$
—
$
—
$
329,450
Subscription-based
130,675
91,658
—
222,333
Total recurring revenues
460,125
91,658
—
551,783
Professional services and other
revenues
6,582
5,478
—
12,060
Total revenues
466,707
97,136
—
563,843
Operating expenses:
Cost of revenues:
Asset-based
179,531
—
—
179,531
Subscription-based
2,507
11,124
—
13,631
Professional services and other
107
94
—
201
Total cost of revenues
182,145
11,218
—
193,363
Compensation and benefits
127,968
51,297
26,997
206,262
General and administration
45,583
17,943
14,544
78,070
Depreciation and amortization
44,355
14,047
—
58,402
Total operating expenses
$
400,051
$
94,505
$
41,541
$
536,097
Income (loss) from operations
$
66,656
$
2,631
$
(41,541
)
$
27,746
Add:
Deferred revenue fair value adjustment
(a)
160
—
—
160
Accretion on contingent consideration and
purchase liability (b)
510
65
—
575
Depreciation and amortization
44,355
14,047
—
58,402
Non-cash compensation expense (c)
17,419
6,024
7,979
31,422
Restructuring charges and transaction
costs (d)
5,186
174
2,452
7,812
Non-income tax expense adjustment (b)
(430
)
159
—
(271
)
Severance (c)
4,183
3,407
2,701
10,291
Fair market value adjustment on contingent
consideration liability (b)
—
(140
)
—
(140
)
Non-recurring litigation and regulatory
related expenses (b)
—
3,647
—
3,647
Income attributable to non-controlling
interest
(440
)
—
—
(440
)
Other
104
9
8
121
Adjusted EBITDA
$
137,703
$
30,023
$
(28,401
)
$
139,325
(a)
Included within
subscription-based revenues in the condensed consolidated
statements of operations.
(b)
Included within general and
administrative expenses in the condensed consolidated statements of
operations.
(c)
Included within compensation and
benefits in the condensed consolidated statements of
operations.
(d)
For the six months ended June 30,
2021, $4,489 was included within general and administrative
expenses and $3,323 was included within compensation and benefits
in the condensed consolidated statements of operations.
Reconciliation of Non-GAAP
Financial Measures
Segment Information
(continued)
(in thousands)
(unaudited)
Three months ended June 30,
2020
Envestnet Wealth
Solutions
Envestnet Data &
Analytics
Nonsegment
Total
Revenues
$
187,685
$
47,628
$
—
$
235,313
Deferred revenue fair value adjustment
(a)
77
—
—
77
Adjusted revenues
$
187,762
$
47,628
$
—
$
235,390
Revenues:
Asset-based
$
122,246
$
—
$
—
$
122,246
Subscription-based
61,410
43,569
—
104,979
Total recurring revenues
183,656
43,569
—
227,225
Professional services and other
revenues
4,029
4,059
—
8,088
Total revenues
187,685
47,628
—
235,313
Operating expenses:
Cost of revenues:
Asset-based
61,875
—
—
61,875
Subscription-based
1,227
5,580
—
6,807
Professional services and other
9
158
—
167
Total cost of revenues
63,111
5,738
—
68,849
Compensation and benefits
62,796
25,802
6,967
95,565
General and administration
21,830
8,667
7,951
38,448
Depreciation and amortization
20,081
8,362
—
28,443
Total operating expenses
$
167,818
$
48,569
$
14,918
$
231,305
Income (loss) from operations
$
19,867
$
(941
)
$
(14,918
)
$
4,008
Add:
Deferred revenue fair value adjustment
(a)
77
—
—
77
Accretion on contingent consideration and
purchase liability (b)
373
(62
)
—
311
Depreciation and amortization
20,081
8,362
—
28,443
Non-cash compensation expense (c)
9,055
2,981
1,839
13,875
Restructuring charges and transaction
costs (d)
3,731
271
2,646
6,648
Non-income tax expense adjustment (b)
(578
)
(64
)
—
(642
)
Severance (c)
1,437
432
—
1,869
Fair market value adjustment on contingent
consideration liability (b)
—
(1,982
)
—
(1,982
)
Non-recurring litigation and regulatory
related expenses (b)
—
3,517
—
3,517
Loss attributable to non-controlling
interest
(17
)
—
—
(17
)
Other
(299
)
—
—
(299
)
Adjusted EBITDA
$
53,727
$
12,514
$
(10,433
)
$
55,808
(a)
Included within
subscription-based revenues in the condensed consolidated
statements of operations.
(b)
Included within general and
administrative expenses in the condensed consolidated statements of
operations.
(c)
Included within compensation and
benefits in the condensed consolidated statements of
operations.
(d)
For the three months ended June
30, 2020, $5,569 was included within general and administrative
expenses, $968 was included within compensation and benefits and
$111 was included within other expense, net, in the condensed
consolidated statements of operations.
Reconciliation of Non-GAAP
Financial Measures
Segment Information
(continued)
(in thousands)
(unaudited)
Six Months Ended June 30,
2020
Envestnet Wealth
Solutions
Envestnet Data &
Analytics
Nonsegment
Total
Revenues
$
386,105
$
95,747
$
—
$
481,852
Deferred revenue fair value adjustment
(a)
516
—
—
516
Adjusted revenues
$
386,621
$
95,747
$
—
$
482,368
Revenues:
Asset-based
$
257,057
$
—
$
—
$
257,057
Subscription-based
121,733
87,797
—
209,530
Total recurring revenues
378,790
87,797
—
466,587
Professional services and other
revenues
7,315
7,950
—
15,265
Total revenues
386,105
95,747
—
481,852
Operating expenses:
Cost of revenues:
Asset-based
130,467
—
—
130,467
Subscription-based
2,419
10,665
—
13,084
Professional services and other
17
214
—
231
Total cost of revenues
132,903
10,879
—
143,782
Compensation and benefits
135,384
55,915
14,696
205,995
General and administration
47,110
17,854
14,594
79,558
Depreciation and amortization
39,501
16,625
—
56,126
Total operating expenses
$
354,898
$
101,273
$
29,290
$
485,461
Income (loss) from operations
$
31,207
$
(5,526
)
$
(29,290
)
$
(3,609
)
Add:
Deferred revenue fair value adjustment
(a)
516
—
—
516
Accretion on contingent consideration and
purchase liability (b)
746
164
—
910
Depreciation and amortization
39,501
16,625
—
56,126
Non-cash compensation expense (c)
18,752
7,207
3,910
29,869
Restructuring charges and transaction
costs (d)
4,920
456
4,092
9,468
Non-income tax expense adjustment (b)
(328
)
(126
)
—
(454
)
Severance (c)
12,439
2,092
1,320
15,851
Fair market value adjustment on contingent
consideration liability (b)
—
(1,982
)
—
(1,982
)
Non-recurring litigation and regulatory
related expenses (b)
—
4,220
—
4,220
Loss attributable to non-controlling
interest
(500
)
—
—
(500
)
Other
(29
)
—
—
(29
)
Adjusted EBITDA
$
107,224
$
23,130
$
(19,968
)
$
110,386
(a)
Included within
subscription-based revenues in the condensed consolidated
statements of operations.
(b)
Included within general and
administrative expenses in the condensed consolidated statements of
operations.
(c)
Included within compensation and
benefits in the condensed consolidated statements of
operations.
(d)
For the six months ended June 30,
2020, $7,493 was included within general and administrative
expenses, $1,795 was included within compensation and benefits and
$180 was included within other expense, net, in the condensed
consolidated statements of operations.
Envestnet, Inc.
Historical Assets, Accounts
and Advisors
(in millions, except accounts
and advisors)
(unaudited)
As of
June 30,
September 30,
December 31,
March 31,
June 30,
2020
2020
2020
2021
2021
(in millions, except accounts
and advisors data)
Platform Assets
Assets under Management (“AUM”)
$
215,994
$
228,905
$
263,043
$
286,039
$
315,422
Assets under Administration (“AUA”)
344,957
375,860
405,365
408,858
426,416
Total AUM/A
560,951
604,765
668,408
694,897
741,838
Subscription
3,247,400
3,498,353
3,892,814
4,132,917
4,447,733
Total Platform Assets
$
3,808,351
$
4,103,118
$
4,561,222
$
4,827,814
$
5,189,571
Platform Accounts
AUM
1,007,386
1,018,817
1,073,122
1,138,183
1,209,761
AUA
1,252,247
1,318,730
1,276,975
1,192,668
1,163,991
Total AUM/A
2,259,633
2,337,547
2,350,097
2,330,851
2,373,752
Subscription
10,003,156
10,639,399
11,079,048
11,453,434
11,712,573
Total Platform Accounts
12,262,789
12,976,946
13,429,145
13,784,285
14,086,325
Advisors
AUM/A
41,206
41,450
41,206
41,177
41,259
Subscription
62,404
63,862
65,104
65,724
66,597
Total Advisors
103,610
105,312
106,310
106,901
107,856
The following table summarizes the changes in AUM and AUA for
the three months ended June 30, 2021:
3/31/2021
Gross
Sales
Redemptions
Net
Flows
Market Impact
6/30/2021
(in millions, except account
data)
AUM
$
286,039
$
27,431
$
(12,299
)
$
15,132
$
14,251
$
315,422
AUA
408,858
22,785
(23,688
)
(903
)
18,461
426,416
Total AUM/A
$
694,897
$
50,216
$
(35,987
)
$
14,229
$
32,712
$
741,838
Fee-Based Accounts
2,330,851
42,901
2,373,752
The above AUM/A gross sales figures include $9.3 billion in new
client conversions. The Company onboarded an additional $82.8
billion in subscription conversions during the three months ended
June 30, 2021, bringing total conversions for the quarter to $92.1
billion.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210805006118/en/
Investor Relations investor.relations@envestnet.com (312)
827-3940
Media Relations mediarelations@envestnet.com
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