Annual report pursuant to Section 13 and 15(d)

Revenue and Direct Expense

v3.24.0.1
Revenue and Direct Expense
 12 Months Ended
Dec. 31, 2023
Revenue from Contract with Customer [Abstract]  
Revenue and Direct Expense Revenue and Direct Expense
Disaggregation of Revenue
 
The following tables present the Company’s revenue by segment disaggregated by major source:

  Year Ended December 31, 2023
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenue:
Asset-based $ 745,238  $ —  $ 745,238 
Subscription-based 325,398  139,332  464,730 
Total recurring revenue 1,070,636  139,332  1,209,968 
Professional services and other revenue 24,068  11,584  35,652 
Total revenue $ 1,094,704  $ 150,916  $ 1,245,620 

  Year Ended December 31, 2022
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenue:
Asset-based $ 738,228  $ —  $ 738,228 
Subscription-based 310,217  167,627  477,844 
Total recurring revenue 1,048,445  167,627  1,216,072 
Professional services and other revenue 16,799  6,913  23,712 
Total revenue $ 1,065,244  $ 174,540  $ 1,239,784 

Year Ended December 31, 2021
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenue:
Asset-based $ 709,376  $ —  $ 709,376 
Subscription-based 280,076  173,913  453,989 
Total recurring revenue 989,452  173,913  1,163,365 
Professional services and other revenue 14,190  8,962  23,152 
Total revenue $ 1,003,642  $ 182,875  $ 1,186,517 
The following table presents the Company’s revenue disaggregated by geography, based on the billing address of the customer:

  Year Ended December 31,
  2023 2022 2021
(in thousands)
United States $ 1,223,246  $ 1,218,254  $ 1,166,251 
International 22,374  21,530  20,266 
Total revenue $ 1,245,620  $ 1,239,784  $ 1,186,517 

Revenue associated with Fidelity, substantially all of which is included within the Envestnet Wealth Solutions segment, accounted for approximately 16%, 16% and 17% of the Company's total revenue for the years ended December 31, 2023, 2022 and 2021, respectively. No other customer accounted for more than 10% of the Company's total revenue.

Remaining Performance Obligations

As of December 31, 2023, the Company's estimated revenue expected to be recognized in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied is approximately $534.2 million. We expect to recognize approximately 41% of this revenue in 2024, approximately 45% throughout 2025 and 2026, with the balance recognized thereafter. These remaining performance obligations are not indicative of revenue for future periods.

Contract Balances

Total deferred revenue increased $0.7 million for the year ended December 31, 2023 and $4.9 million for the year ended December 31, 2022, primarily the result of timing of cash receipts and revenue recognition. The majority of the Company's deferred revenue as of December 31, 2023 will be recognized over the course of the next twelve months.

The amount of revenue recognized for the years ended December 31, 2023 and 2022 that was included in the opening deferred revenue balance was $35.6 million and $33.1 million, respectively. The majority of this revenue consists of subscription-based services and professional services arrangements. The amount of revenue recognized from performance obligations satisfied in prior periods was not material.

Deferred Sales Incentive Compensation

Deferred sales incentive compensation was $11.5 million and $11.0 million as of December 31, 2023 and 2022, respectively. Amortization expense for deferred sales incentive compensation was $4.8 million and $4.3 million for the years ended December 31, 2023 and 2022, respectively. Deferred sales incentive compensation is included in other assets in the consolidated balance sheets and amortization expense is included in employee compensation expense in the consolidated statements of operations. No significant impairment loss for capitalized costs was recorded for the years ended December 31, 2023 and 2022.

Direct Expense

The following table summarizes direct expense by revenue category:

Year Ended December 31,
  2023 2022 2021
(in thousands)
Asset-based $ 434,123  $ 430,345  $ 393,717 
Subscription-based 30,814  32,577  29,445 
Professional services and other 8,101  7,502  561 
Total direct expense $ 473,038  $ 470,424  $ 423,723