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,
2020.
Three months ended
Six months ended
Key Financial Metrics
June 30,
%
June 30,
%
(in millions except per share
data)
2020
2019
Change
2020
2019
Change
GAAP:
Total revenues
$
235.3
$
224.4
5%
$
481.9
$
424.1
14%
Net income (loss)
$
(5.5)
$
0.6
n/m
$
(12.7)
$
(17.7)
(28)%
Net income (loss) per diluted share
attributable to Envestnet, Inc.
$
(0.09)
$
0.02
n/m
$
(0.23)
$
(0.35)
(34)%
Non-GAAP:
Adjusted revenues(1)
$
235.4
$
227.9
3%
$
482.4
$
427.5
13%
Adjusted net revenues(1)
$
173.5
$
167.6
4%
$
351.9
$
313.4
12%
Adjusted EBITDA(1)
$
55.8
$
43.2
29%
$
110.4
$
77.2
43%
Adjusted net income(1)
$
31.8
$
24.5
30%
$
63.0
$
43.9
44%
Adjusted net income per diluted
share(1)
$
0.59
$
0.46
28%
$
1.16
$
0.85
36%
n/m - not meaningful
“Envestnet continues to execute, delivering strong second
quarter results, supporting our clients during these challenging
times, and focusing on our strategic roadmap,” said Bill Crager,
Chief Executive Officer.
“We are on our way to establishing the ecosystem that can make
financial wellness a reality for everyone. A new standard for
personal financial services is emerging, and we are helping to
drive it,” concluded Mr. Crager.
Financial Results for the Second Quarter of 2020
Asset-based recurring revenues increased 2% from the second
quarter of 2019, and represented 52% of total revenues for the
second quarter of 2020 compared to 53% for the second quarter 2019.
Subscription-based recurring revenues increased 14% from the second
quarter of 2019, and represented 45% of total revenues for the
second quarter of 2020 compared to 41% for the second quarter 2019.
Professional services and other non-recurring revenues decreased
33% from the prior year period. Total revenues increased 5% to
$235.3 million for the second quarter of 2020 from $224.4 million
for the second quarter of 2019.
Total operating expenses for the second quarter of 2020
decreased 5% to $231.3 million from $244.7 million in the prior
year period. Cost of revenues decreased 4% to $68.8 million for the
second quarter of 2020 from $72.1 million for the prior year
period. Compensation and benefits decreased 7% to $95.6 million for
the second quarter of 2020 from $103.3 million for the prior year
period. Compensation and benefits were 41% of total revenues for
the second quarter of 2020, compared to 46% in the prior year
period. General and administration expenses decreased 9% to $38.4
million for the second quarter of 2020 from $42.4 million for the
prior year period. General and administrative expenses were 16% of
total revenues for the second quarter of 2020, compared to 19% in
the prior year period.
Income from operations was $4.0 million for the second quarter
of 2020 compared to loss of $20.3 million for the second quarter of
2019. Net loss was $5.5 million for the second quarter of 2020
compared to net income of $0.6 million for the second quarter of
2019. Net loss per diluted share attributable to Envestnet, Inc.
was $0.09 for the second quarter of 2020 compared to net income per
diluted share attributable to Envestnet, Inc. of $0.02 for the
second quarter of 2019.
Adjusted revenues(1) for the second quarter of 2020 increased 3%
to $235.4 million from $227.9 million for the prior year period.
Adjusted net revenues(1) for the second quarter of 2020 increased
4% to $173.5 million from $167.6 million for the prior year period.
Adjusted EBITDA(1) for the second quarter of 2020 increased 29% to
$55.8 million from $43.2 million for the prior year period.
Adjusted net income(1) increased 30% for the second quarter of 2020
to $31.8 million from $24.5 million for the prior year period.
Adjusted net income per diluted share(1) for the second quarter of
2020 increased 28% to $0.59 for the second quarter of 2020 from
$0.46 in the second quarter of 2019.
Balance Sheet and Liquidity
As of June 30, 2020, the Company had $92.2 million in cash and
cash equivalents and $620.0 million in outstanding debt. The
outstanding debt as of June 30, 2020 included $275.0 million in
borrowings under the Company's $500.0 million revolving credit
facility and $345.0 million in convertible notes maturing in
2023.
Outlook
The Company provided the following outlook for the third quarter
ending September 30, 2020 and full year ending December 31, 2020.
This outlook is based on the market value of assets on September
30, 2020. We caution that we cannot predict the market value of our
assets on any future date and, in particular, in light of recent
market volatility. See “Cautionary Statement Regarding
Forward-Looking Statements.”
In Millions Except Adjusted EPS
3Q 2020
FY 2020
GAAP:
Revenues:
Asset-based
$
134.0
-
$
134.5
Subscription-based
104.5
-
105.0
Total recurring revenues
$
238.5
-
$
239.5
Professional services and other
revenues
6.0
-
6.5
Total revenues
$
244.5
-
$
246.0
$
976.3
-
$
979.3
Asset-based cost of revenues
$
69.5
-
$
70.0
$
271.5
-
$
272.5
Total cost of revenues
$
77.0
-
$
77.5
Net income
(a)
-
(a)
(a)
-
(a)
Diluted shares outstanding
55.0
55.0
Net income per diluted share
(a)
-
(a)
(a)
-
(a)
Non-GAAP:
Adjusted revenues (1):
Asset-based
$
134.0
-
$
134.5
Subscription-based
104.5
-
105.0
Total recurring revenues
$
238.5
-
$
239.5
Professional services and other
revenues
6.0
-
6.5
Total revenues
$
244.5
-
$
246.0
$
977.0
-
$
980.0
Adjusted net revenues (1)
$
174.5
-
$
176.5
$
704.5
-
$
708.5
Adjusted EBITDA(1)
$
56.0
-
$
57.0
$
221.0
-
$
223.0
Adjusted net income per diluted
share(1)
$
0.59
$
2.28
-
$
2.31
(a) The Company 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
2020 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://ir.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. Over 103,000 advisors and more than 4,900
companies including: 16 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 the
Envestnet platform to grow their business and client
relationships.
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 net revenues” represents adjusted revenues less
asset-based cost of revenues. Under GAAP, we are required to
recognize as revenue certain fees paid to investment managers and
other third parties needed for implementation of investment
solutions included in our assets under management. Those fees also
are required to be recorded as cost of revenues. This non-GAAP
metric presents adjusted revenues without such fees included, as
they have no impact on our profitability.
Adjusted revenues and Adjusted net revenues have limitations as
financial measures, should be considered as supplemental in nature
and are not meant as a substitute for revenue prepared in
accordance with GAAP.
“Adjusted EBITDA” represents net income 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, litigation and regulatory related expenses, foreign
currency, non-income tax expense adjustment, gain on acquisition of
equity method investment, loss allocation from equity method
investments and (income) loss 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,
non-cash compensation expense, restructuring charges and
transaction costs, severance, fair market value adjustment on
contingent consideration liability, amortization of acquired
intangibles, litigation and regulatory related expenses, foreign
currency, non-income tax expense adjustment, gain on acquisition of
equity method investment, loss allocation from equity method
investments and (income) 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 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.
See reconciliation of Non-GAAP Financial Measures on pages 9-14
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 2020, 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 the our 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 and
its attachments is as of August 6, 2020 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,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
92,244
$
82,505
Fees receivable, net
74,871
67,815
Prepaid expenses and other current
assets
38,665
32,183
Total current assets
205,780
182,503
Property and equipment, net
49,752
53,756
Internally developed software, net
78,024
60,263
Intangible assets, net
471,091
505,589
Goodwill
906,499
879,850
Operating lease right-of-use-assets,
net
73,537
82,796
Other non-current assets
46,722
37,127
Total assets
$
1,831,405
$
1,801,884
Liabilities and Equity
Current liabilities:
Accrued expenses and other liabilities
$
134,763
$
137,944
Accounts payable
16,132
17,277
Operating lease liabilities
13,926
13,816
Contingent consideration
1,603
—
Deferred revenue
42,861
34,753
Total current liabilities
209,285
203,790
Convertible Notes due 2023
311,031
305,513
Revolving credit facility
275,000
260,000
Contingent consideration
11,422
9,045
Deferred revenue
5,231
5,754
Non-current operating lease
liabilities
81,600
88,365
Deferred tax liabilities, net
27,106
29,481
Other non-current liabilities
36,993
32,360
Total liabilities
957,668
934,308
Equity:
Total stockholders’ equity
875,795
869,094
Non-controlling interest
(2,058)
(1,518)
Total liabilities and equity
$
1,831,405
$
1,801,884
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,
2020
2019
2020
2019
Revenues:
Asset-based
$
122,246
$
120,070
$
257,057
$
229,004
Subscription-based
104,979
92,258
209,530
175,345
Total recurring revenues
227,225
212,328
466,587
404,349
Professional services and other
revenues
8,088
12,117
15,265
19,762
Total revenues
235,313
224,445
481,852
424,111
Operating expenses:
Cost of revenues
68,849
72,080
143,782
133,725
Compensation and benefits
95,565
103,286
205,995
190,003
General and administration
38,448
42,421
79,558
82,945
Depreciation and amortization
28,443
26,915
56,126
46,432
Total operating expenses
231,305
244,702
485,461
453,105
Income (loss) from operations
4,008
(20,257)
(3,609)
(28,994)
Other expense, net
(8,173)
(7,512)
(9,710)
(13,275)
Loss before income tax provision
(benefit)
(4,165)
(27,769)
(13,319)
(42,269)
Income tax provision (benefit)
1,306
(28,382)
(658)
(24,614)
Net income (loss)
(5,471)
613
(12,661)
(17,655)
Add: Net loss attributable to
non-controlling interest
547
280
401
363
Net income (loss) attributable to
Envestnet, Inc.
$
(4,924)
$
893
$
(12,260)
$
(17,292)
Net income (loss) per share attributable
to Envestnet, Inc.:
Basic
$
(0.09)
$
0.02
$
(0.23)
$
(0.35)
Diluted
$
(0.09)
$
0.02
$
(0.23)
$
(0.35)
Weighted average common shares
outstanding:
Basic
53,562,850
50,870,296
53,288,741
49,526,774
Diluted
53,562,850
52,982,688
53,288,741
49,526,774
Envestnet, Inc. Condensed
Consolidated Statements of Cash Flows (in thousands)
(unaudited)
Six Months Ended
June 30,
2020
2019
OPERATING ACTIVITIES:
Net loss
$
(12,661)
$
(17,655)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
56,126
46,432
Provision for doubtful accounts
1,515
713
Deferred income taxes
(1,598)
(28,991)
Non-cash compensation expense
29,869
27,852
Non-cash interest expense
5,907
9,896
Accretion on contingent consideration and
purchase liability
910
742
Payments of contingent consideration
—
(578)
Fair market value adjustment to contingent
consideration liability
(1,982)
—
Gain on acquisition of equity method
investment
(4,230)
—
Loss allocation from equity method
investment
3,286
550
Impairment of right of use assets
1,426
—
Other
556
—
Changes in operating assets and
liabilities, net of acquisitions:
Fees receivables, net
(8,560)
(536)
Prepaid expenses and other current
assets
(7,756)
(15,507)
Other non-current assets
(353)
(3,241)
Accrued expenses and other liabilities
(4,484)
(19,060)
Accounts payable
(2,130)
(4,768)
Deferred revenue
7,236
3,940
Other non-current liabilities
1,946
2,602
Net cash provided by operating
activities
65,023
2,391
INVESTING ACTIVITIES:
Purchases of property and equipment
(4,329)
(8,815)
Capitalization of internally developed
software
(25,703)
(15,583)
Investments in private companies
(12,625)
(2,000)
Acquisitions of businesses, net of cash
acquired
(20,257)
(321,571)
Net cash used in investing activities
(62,914)
(347,969)
FINANCING ACTIVITIES:
Proceeds from borrowings on revolving
credit facility
45,000
175,000
Payments on revolving credit facility
(30,000)
(30,000)
Payments of contingent consideration
—
(171)
Proceeds from exercise of stock
options
6,683
4,914
Purchase of treasury stock for stock-based
tax withholdings
(12,816)
(15,962)
Issuance of restricted stock units
3
3
Net cash provided by financing
activities
8,870
133,784
EFFECT OF EXCHANGE RATE CHANGES ON
CASH
(1,342)
166
INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
9,637
(211,628)
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, BEGINNING OF PERIOD
82,755
289,671
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, END OF PERIOD (a)
$
92,392
$
78,043
(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,
2020
2019
Cash and cash equivalents
$
92,244
$
77,717
Restricted cash included in prepaid
expenses and other current assets
—
158
Restricted cash included in other
non-current assets
148
168
Total cash, cash equivalents and
restricted cash
$
92,392
$
78,043
Reconciliation of Non-GAAP
Financial Measures (in thousands) (unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Total revenues
$
235,313
$
224,445
$
481,852
$
424,111
Deferred revenue fair value adjustment
(a)
77
3,414
516
3,420
Adjusted revenues
235,390
227,859
482,368
427,531
Asset-based cost of revenues
(61,875)
(60,293)
(130,467)
(114,135)
Adjusted net revenues
$
173,515
$
167,566
$
351,901
$
313,396
Net income (loss)
$
(5,471)
$
613
$
(12,661)
$
(17,655)
Add (deduct):
Deferred revenue fair value adjustment
(a)
77
3,414
516
3,420
Interest income (b)
(197)
(901)
(588)
(2,411)
Interest expense (b)
6,634
8,263
13,768
15,359
Accretion on contingent consideration and
purchase
liability (c)
311
502
910
742
Income tax provision (benefit)
1,306
(28,382)
(658)
(24,614)
Depreciation and amortization
28,443
26,915
56,126
46,432
Non-cash compensation expense (d)
13,875
14,988
27,345
27,852
Restructuring charges and transaction
costs (c)
6,648
13,208
9,468
20,574
Severance (e)
1,869
3,280
15,851
5,760
Fair market value adjustment on contingent
consideration liability (c)
(1,982)
—
(1,982)
—
Non-recurring litigation and regulatory
related expenses (c)
3,517
—
4,220
—
Foreign currency (b)
463
(154)
(31)
(155)
Non-income tax expense adjustment (c)
(642)
908
(454)
1,118
Non-recurring gain (b)
—
—
(4,230)
—
Loss allocation from equity method
investments (b)
1,256
347
3,286
550
(Income) loss attributable to
non-controlling interest
(299)
210
(500)
241
Adjusted EBITDA
$
55,808
$
43,211
$
110,386
$
77,213
(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)
For the 2020 period, $29,869 included in
compensation and benefits, and a fair value adjustment of $(2,524)
included in other expense, net in the condensed consolidated
statements of operations. All of 2019 included in compensation and
benefits in the condensed consolidated statements of
operations.
(e)
Included within compensation and benefits
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,
2020
2019
2020
2019
Net income (loss)
$
(5,471)
$
613
$
(12,661)
$
(17,655)
Income tax provision (benefit) (a)
1,306
(28,382)
(658)
(24,614)
Loss before income tax provision
(benefit)
(4,165)
(27,769)
(13,319)
(42,269)
Add (deduct):
Deferred revenue fair value adjustment
(b)
77
3,414
516
3,420
Accretion on contingent consideration and
purchase
liability (d)
311
502
910
742
Non-cash interest expense (c)
2,983
4,646
5,945
9,262
Non-cash compensation expense (e)
13,875
14,988
27,345
27,852
Restructuring charges and transaction
costs (d)
6,648
13,208
9,468
20,574
Severance (f)
1,869
3,280
15,851
5,760
Fair market value adjustment on contingent
consideration liability (d)
(1,982)
—
(1,982)
—
Amortization of acquired intangibles
(g)
18,746
19,278
37,504
31,806
Non-recurring litigation and regulatory
related expenses (d)
3,517
—
4,220
—
Foreign currency (c)
463
(154)
(31)
(155)
Non-income tax expense adjustment (d)
(642)
908
(454)
1,118
Non-recurring gain (c)
—
—
(4,230)
—
Loss allocation from equity method
investments (c)
1,256
347
3,286
550
(Income) loss attributable to
non-controlling interest
(299)
210
(500)
241
Adjusted net income before income tax
effect
42,657
32,858
84,529
58,901
Income tax effect (h)
(10,884)
(8,388)
(21,554)
(15,020)
Adjusted net income
$
31,773
$
24,470
$
62,975
$
43,881
Basic number of weighted-average shares
outstanding
53,562,850
50,870,296
53,288,741
49,526,774
Effect of dilutive shares:
Options to purchase common stock
374,070
1,164,246
519,886
1,185,480
Unvested restricted stock units
322,140
662,853
475,990
666,116
Convertible notes
—
261,075
11,719
12,532
Warrants
—
24,218
22,714
—
Diluted number of weighted-average shares
outstanding
54,259,060
52,982,688
54,319,050
51,390,902
Adjusted net income per share -
diluted
$
0.59
$
0.46
$
1.16
$
0.85
(a)
For the three months ended June 30, 2020
and 2019, the effective tax rate computed in accordance with GAAP
equaled (31.4)% and 102.2%, respectively. For the six months ended
June 30, 2020 and 2019, the effective tax rate computed in
accordance with GAAP equaled 4.9% and 58.2%, respectively.
(b)
Included within subscription-based
revenues in the condensed consolidated statements of
operations.
(c)
Included within other expense, net in the
condensed consolidated statements of operations.
(d)
Included within general and administrative
expenses in the condensed consolidated statements of
operations.
(e)
For the 2020 period, $29,869 included in
compensation and benefits, and a fair value adjustment of $(2,524)
included in other expense, net in the condensed consolidated
statements of operations. All of 2019 included in compensation and
benefits 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)
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, 2020 and 2019.
Reconciliation of Non-GAAP
Financial Measures Segment Information (in thousands)
(unaudited)
Three months ended June 30,
2020
Envestnet Wealth
Solutions
Envestnet Data &
Analytics
Nonsegment
Total
Total Revenues
$
187,685
$
47,628
$
—
$
235,313
Deferred revenue fair value adjustment
(a)
77
—
—
77
Adjusted revenues
187,762
47,628
—
235,390
Less: Asset-based cost of revenues
(61,875)
—
—
(61,875)
Adjusted net revenues
$
125,887
$
47,628
$
—
$
173,515
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 (b)
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
Income attributable to non-controlling
interest
(299)
—
—
(299)
Other
(17)
—
—
(17)
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.
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
Total Revenues
$
386,105
$
95,747
$
—
$
481,852
Deferred revenue fair value adjustment
(a)
516
—
—
516
Adjusted revenues
386,621
95,747
—
482,368
Less: Asset-based cost of revenues
(130,467)
—
—
(130,467)
Adjusted net revenues
$
256,154
$
95,747
$
—
$
351,901
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 (b)
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
Income 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.
Reconciliation of Non-GAAP
Financial Measures Segment Information (continued) (in thousands)
(unaudited)
Three months ended June 30,
2019
Envestnet Wealth
Solutions
Envestnet Data &
Analytics
Nonsegment
Total
Revenues
$
176,890
$
47,555
$
—
$
224,445
Deferred revenue fair value adjustment
(a)
3,414
—
—
3,414
Adjusted revenues
180,304
47,555
—
227,859
Less: Asset-based cost of revenues
(60,293)
—
—
(60,293)
Adjusted net revenues
$
120,011
$
47,555
$
—
$
167,566
Revenues:
Asset-based
$
120,070
$
—
$
—
$
120,070
Subscription-based
50,078
42,180
—
92,258
Total recurring revenues
170,148
42,180
—
212,328
Professional services and other
revenues
6,742
5,375
—
12,117
Total revenues
176,890
47,555
—
224,445
Operating expenses:
Cost of revenues:
Asset-based
60,293
—
—
60,293
Subscription-based
1,115
5,582
—
6,697
Professional services and other
4,842
248
—
5,090
Total cost of revenues
66,250
5,830
—
72,080
Compensation and benefits
56,219
31,593
15,474
103,286
General and administration
25,666
8,553
8,202
42,421
Depreciation and amortization
16,376
10,539
—
26,915
Total operating expenses
$
164,511
$
56,515
$
23,676
$
244,702
Income (loss) from operations
$
12,379
$
(8,960)
$
(23,676)
$
(20,257)
Add:
Deferred revenue fair value adjustment
(a)
3,414
—
—
3,414
Accretion on contingent consideration and
purchase liability (b)
502
—
—
502
Depreciation and amortization
16,376
10,539
—
26,915
Non-cash compensation expense (c)
8,592
3,767
2,629
14,988
Restructuring charges and transaction
costs (b)
794
(196)
12,610
13,208
Non-income tax expense adjustment (b)
908
—
—
908
Severance (c)
818
2,448
14
3,280
Loss attributable to non-controlling
interest
210
—
—
210
Other
43
—
—
43
Adjusted EBITDA
$
44,036
$
7,598
$
(8,423)
$
43,211
(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.
Reconciliation of Non-GAAP
Financial Measures Segment Information (continued) (in thousands)
(unaudited)
Six Months Ended June 30,
2019
Envestnet Wealth
Solutions
Envestnet Data &
Analytics
Nonsegment
Total
Revenues
$
329,595
$
94,516
$
—
$
424,111
Deferred revenue fair value adjustment
(a)
3,420
—
—
3,420
Adjusted revenues
333,015
94,516
—
427,531
Less: Asset-based cost of revenues
(114,135)
—
—
(114,135)
Adjusted net revenues
$
218,880
$
94,516
$
—
$
313,396
Revenues:
Asset-based
$
229,004
$
—
$
—
$
229,004
Subscription-based
91,104
84,241
—
175,345
Total recurring revenues
320,108
84,241
—
404,349
Professional services and other
revenues
9,487
10,275
—
19,762
Total revenues
329,595
94,516
—
424,111
Operating expenses:
Cost of revenues:
Asset-based
114,135
—
—
114,135
Subscription-based
3,123
11,251
—
14,374
Professional services and other
4,847
369
—
5,216
Total cost of revenues
122,105
11,620
—
133,725
Compensation and benefits
104,774
62,957
22,272
190,003
General and administration
45,850
18,038
19,057
82,945
Depreciation and amortization
27,643
18,789
—
46,432
Total operating expenses
$
300,372
$
111,404
$
41,329
$
453,105
Income (loss) from operations
$
29,223
$
(16,888)
$
(41,329)
$
(28,994)
Add:
Deferred revenue fair value adjustment
(a)
3,420
—
—
3,420
Accretion on contingent consideration and
purchase liability (b)
742
—
—
742
Depreciation and amortization
27,643
18,789
—
46,432
Non-cash compensation expense (c)
14,269
7,955
5,628
27,852
Restructuring charges and transaction
costs (b)
1,056
769
18,749
20,574
Non-income tax expense adjustment (b)
1,108
10
—
1,118
Severance (c)
1,168
4,496
96
5,760
Loss attributable to non-controlling
interest
241
—
—
241
Other
65
1
2
68
Adjusted EBITDA
$
78,935
$
15,132
$
(16,854)
$
77,213
(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.
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,
2019
2019
2019
2020
2020
(in millions, except accounts
and advisors data)
Platform Assets
Assets under Management (“AUM”)
$
182,143
$
188,739
$
207,083
$
185,065
$
215,994
Assets under Administration (“AUA”)
330,226
316,742
343,505
312,472
344,957
Total AUM/A
512,369
505,481
550,588
497,537
560,951
Subscription
2,835,780
2,947,582
3,205,281
2,875,394
3,247,400
Total Platform Assets
$
3,348,149
$
3,453,063
$
3,755,869
$
3,372,931
$
3,808,351
Platform Accounts
AUM
907,034
934,811
935,039
970,896
1,007,386
AUA
1,196,114
1,136,430
1,193,882
1,254,856
1,252,247
Total AUM/A
2,103,148
2,071,241
2,128,921
2,225,752
2,259,633
Subscription
9,492,653
9,692,714
9,793,175
10,090,172
10,003,156
Total Platform Accounts
11,595,801
11,763,955
11,922,096
12,315,924
12,262,789
Advisors
AUM/A
39,727
39,735
40,563
40,971
41,206
Subscription
59,292
60,319
61,180
62,077
62,404
Total Advisors
99,019
100,054
101,743
103,048
103,610
The following table summarizes the changes in AUM and AUA for
the three months ended June 30, 2020:
3/31/2020
Gross Sales
Redemptions
Net Flows
Market Impact
6/30/2020
(in millions except account
data)
AUM
$
185,065
$
16,843
$
(9,860)
$
6,983
$
23,946
$
215,994
AUA
312,472
16,526
(23,025)
(6,499)
38,984
344,957
Total AUM/A
$
497,537
$
33,369
$
(32,885)
$
484
$
62,930
$
560,951
Fee-Based Accounts
2,225,752
33,881
2,259,633
The above AUM/A gross sales figures include $1.6 billion in new
client conversions. The Company onboarded an additional $24.1
billion in subscription conversions during the three months ended
June 30, 2020, bringing total conversions for the quarter to $25.7
billion.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200806005971/en/
Investor Relations investor.relations@envestnet.com (312)
827-3940 Media Relations mediarelations@envestnet.com
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