Envestnet Reports Third Quarter 2017 Financial Results

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CHICAGO--(BUSINESS WIRE)-- Envestnet (NYSE:ENV), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for its third quarter ended September 30, 2017.

 
  Three Months Ended     Nine Months Ended  
Key Financial Metrics September 30, % September 30, %
(in millions except per share data)   2017   2016   Change   2017   2016   Change
GAAP:    
Total Revenues $ 175.6 $ 149.2 18 % $ 500.8 $ 422.7 18 %
Net Loss (1.3 ) (4.1 ) (67 %) (20.9 ) $ (23.0 ) (9 %)
Net Loss per Diluted Share $ (0.03 ) $ (0.09 ) (67 %) $ (0.48 ) $ (0.54 ) (11 %)
 
Non-GAAP:
Adjusted Revenues(1) $ 175.6 $ 149.5 17 % $ 500.9 $ 423.5 18 %
Adjusted EBITDA(1) 34.8 27.5 26 % 90.2 69.1 30 %
Adjusted Net Income(1) 17.3 12.5 39 % 41.9 29.5 42 %
Adjusted Net Income per Diluted Share(1) $ 0.37 $ 0.28 32 % $ 0.91 $ 0.67 36 %
 

“Envestnet’s strong execution continued through the third quarter, as we delivered solid organic growth in both revenue and earnings,” said Jud Bergman, Chairman and CEO. “Customers continue to seek innovative ways to broaden their end-client relationships and expand their reach through the adoption of intelligent systems for wealth management and financial wellness.”

“We continue to see growth opportunities in 2018 and beyond, both organic and from acquisition, including the FolioDynamix transaction, which we expect to close early next year,” concluded Mr. Bergman.

Financial Results for the Third Quarter of 2017 Compared to the Third Quarter of 2016:

Total revenues increased 18% to $175.6 million in the three months ended September 30, 2017 from $149.2 million in the three months ended September 30, 2016. Asset-based revenues, which were 60% of total revenues for the third quarter of 2017 and 2016, increased 18% from the prior year period. Subscription and licensing revenues increased 21% from the prior year period.

Total operating expenses for the third quarter of 2017 increased 14% to $171.3 million from $150.4 million in the prior year period. Cost of revenues increased 19% to $56.1 million for the third quarter of 2017 from $47.3 million for the third quarter of 2016. Compensation and benefits increased 14% to $68.6 million for the third quarter of 2017 from $60.3 million for the prior year period. Compensation and benefits were 39% of total revenues for the third quarter of 2017, compared to 40% for the prior year period. General and administration expenses increased 19% to $31.2 million for the third quarter of 2017, from $26.2 million for the prior year period. General and administrative expenses were 18% of total revenues for the third quarter of 2017, compared to 18% for the prior year period.

Income from operations was $4.3 million for the third quarter of 2017 compared to a loss of $1.3 million for the third quarter of 2016. Net loss attributable to Envestnet, Inc. was $1.3 million, or $0.03 per diluted share, for the third quarter of 2017 compared to a loss of $4.1 million, or a loss of $0.09 per diluted share, for the third quarter of 2016.

Adjusted Revenues(1) for the third quarter of 2017 increased 17% to $175.6 million from $149.5 million for the prior year period. Adjusted EBITDA(1) for the third quarter of 2017 increased 26% to $34.8 million from $27.5 million for the prior year period. Adjusted Net Income(1) increased 39% for the third quarter of 2017 to $17.3 million from $12.5 million for the prior year period. Adjusted Net Income Per Share(1) for the third quarter of 2017 increased 32% to $0.37 from $0.28 in the third quarter of 2016.

FolioDynamix Acquisition

On September 25, 2017, the Company announced that it will acquire FolioDynamix, a provider of integrated wealth management technology solutions, for $195 million. The transaction is expected to close in the first quarter of 2018.

Outlook

The Company provided the following outlook for the fourth quarter and full year ended December 31, 2017. This outlook is based on the market value of assets on September 30, 2017 and is risk-adjusted with respect to contributions from client conversions and synergy revenue related to prior acquisitions.

 
In Millions Except Adjusted EPS   4Q 2017   FY 2017
GAAP:    
AUM/A revenue $ 108.0 - $ 109.0 -
Subscription and licensing revenue 64.0 - 64.5 -
Professional services and other revenue   6.0   -   6.5 -
Revenues $ 178.0 - $ 180.0 $ 679 - $ 681
 
Cost of revenues $ 56.5 - $ 57.0 -
Net Income - -
 
Diluted shares outstanding 47.0 -
Net Income per Diluted Share - -
 
Non-GAAP:
Adjusted Revenues(1) $ 178 - $ 180 $ 679 - $ 681
Adjusted EBITDA(1) $ 37.5 - $ 38.5 $ 127.5 - $ 128.5
Adjusted Net Income per Diluted Share(1) $ 0.39 -
 

Included in the fourth quarter and full year 2017 adjusted revenue is an expected deferred revenue fair value adjustment of approximately $0.0 million and $0.1 million, respectively. 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.

Conference Call

Envestnet will host a conference call to discuss third quarter 2017 financial results today at 5:00 p.m. ET. The live webcast can be accessed from Envestnet’s investor relations website at http://ir.envestnet.com/. The call can also be accessed live over the phone by dialing (800) 500-0920, or for international callers (719) 457-2642. A replay will be available two hours after the call and can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers; the conference ID is 1528646. The dial-in replay will be available for one week and the webcast replay will be available for one month following the date of the conference call.

About Envestnet

Envestnet, Inc. (NYSE:ENV) is a 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 59,000 advisors and 2,900 companies including: 16 of the 20 largest U.S. banks, 39 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 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, litigation related expense, foreign currency and related hedging activity, non-income tax expense adjustment, 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, accretion on contingent consideration and purchase liability, non-cash interest expense, non-cash compensation expense, restructuring charges and transaction costs, severance, amortization of acquired intangibles, fair market value adjustment on contingent consideration, litigation related expense, foreign currency and related hedging activity, non-income tax expense adjustment, 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.

“Adjusted net income per diluted share” represents adjusted net income divided by the diluted number of weighted-average shares outstanding.

See reconciliation of Non-GAAP Financial Measures on pages 8-10 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 (the “Company”) expected financial performance and outlook for the fourth quarter and full year of 2017, 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, the inability to complete the Company’s acquisition of FolioDynamix in a timely manner or at all, the possibility that the anticipated benefits of the Company’s acquisition of FolioDynamix will not be realized to the extent or when expected, potential exposure to state and local non-income tax obligations, the Company’s ability to remediate material weaknesses in internal controls over financial reporting and associated costs, difficulty in sustaining rapid revenue growth, which may place significant demands on the Company’s administrative, operational and financial resources, fluctuations in the Company’s revenue, 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, potential dilution from issuing equity securities or a weaker balance sheet from using cash or incurring debt to finance acquisitions, the impact of market conditions on the Company’s ability to issue additional debt and equity to fund acquisitions, compliance failures, regulatory or third-party actions against the Company, the failure to protect the Company’s intellectual property rights, 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, general economic conditions, political and regulatory conditions, the impact of fluctuations in interest rates on the Company’s business, ability to expand our relationships with existing customers, grow the number of customers and derive revenue from new offerings such as our data analytic solutions and market research services and premium FinApps, the results of our investments in research and development, our data center and other infrastructure, our ability to realize operating efficiencies, the advantages of our solutions as compared to those of others, our ability to retain and hire necessary employees and appropriately staff our operations, in particular our India operations, 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 and its attachments is as of November 8, 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.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
 

September 30,

 

December 31,

2017 2016
Assets
Current assets:
Cash and cash equivalents $ 48,704 $ 52,592
Fees and other receivables, net 49,726 44,268
Prepaid expenses and other current assets   23,999   16,224
Total current assets   122,429   113,084
 
Property and equipment, net 35,274 33,000
Internally developed software, net 20,279 14,860
Intangible assets, net 233,525 265,558
Goodwill 432,746 431,936
Other non-current assets   17,969   13,963
Total assets $ 862,222 $ 872,401
 
Liabilities and Equity
Current liabilities:
Accrued expenses and other liabilities $ 102,877 $ 87,763
Accounts payable 13,215 11,480
Current portion of debt — 37,926
Contingent consideration 2,055 2,286
Deferred revenue   18,388   16,499
Total current liabilities   136,535   155,954
 
Convertible Notes 157,353 152,575
Revolving credit facility 101,168 —
Term Notes — 100,409
Contingent consideration 641 2,582
Deferred revenue 14,454 15,643
Deferred rent and lease incentive 14,867 12,060
Deferred tax liabilities, net 12,216 5,555
Other non-current liabilities   14,527   13,436
Total liabilities   451,761   458,214
 
Redeemable units in ERS 900 900
 
Equity:
Stockholders’ equity 409,163 412,889
Non-controlling interest   398   398
Total liabilities and equity $ 862,222 $ 872,401
 
 
Envestnet, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share information)
(unaudited)
 
  Three Months Ended   Nine Months Ended
September 30, September 30,
2017   2016 2017   2016
Revenues:
Assets under management or administration $ 106,147 $ 90,042 $ 299,268 $ 258,969
Subscription and licensing 62,963 51,959 180,675 142,303
Professional services and other   6,504     7,154     20,874     21,412  
Total revenues   175,614     149,155     500,817     422,684  
 
Operating expenses:
Cost of revenues 56,070 47,259 161,031 132,319
Compensation and benefits 68,551 60,345 199,079 180,625
General and administration 31,153 26,150 90,178 80,249
Depreciation and amortization   15,492     16,692     46,792     49,872  
Total operating expenses   171,266     150,446     497,080     443,065  
 
Income (loss) from operations 4,348 (1,291 ) 3,737 (20,381 )
Other expense, net   (3,986 )   (4,434 )   (13,838 )   (13,214 )
Income (loss) before income tax provision (benefit) 362 (5,725 ) (10,101 ) (33,595 )
 
Income tax provision (benefit)   1,682     (1,668 )   10,824     (10,602 )
 
Net loss (1,320 ) (4,057 ) (20,925 ) (22,993 )
Add: Net loss attributable to non-controlling interest   —     —     —     —  
Net loss attributable to Envestnet, Inc. $ (1,320 ) $ (4,057 ) $ (20,925 ) $ (22,993 )
 
Net loss per share attributable to Envestnet, Inc.:
Basic $ (0.03 ) $ (0.09 ) $ (0.48 ) $ (0.54 )
 
Diluted $ (0.03 ) $ (0.09 ) $ (0.48 ) $ (0.54 )
 
Weighted average common shares outstanding:
Basic   44,044,527     42,843,103     43,604,869     42,704,383  
 
Diluted   44,044,527     42,843,103     43,604,869     42,704,383  
 
 
  Nine Months Ended
September 30,
2017   2016
OPERATING ACTIVITIES:
Net loss $ (20,925 ) $ (22,993 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 46,792 49,872
Deferred rent and lease incentive amortization 709 (324 )
Provision for doubtful accounts 828 369
Deferred income taxes 6,646 (10,273 )
Stock-based compensation expense 23,451 25,872
Non-cash interest expense 8,711 6,955
Accretion on contingent consideration and purchase liability 408 143
Fair market value adjustment on contingent consideration — 838
Loss on disposal of fixed assets 69 220
Loss allocation from equity method investment 984 1,130
Changes in operating assets and liabilities, net of acquisitions:
Fees and other receivables (6,286 ) 4,077
Prepaid expenses and other current assets (5,316 ) (4,960 )
Other non-current assets (1,784 ) (4,271 )
Accrued expenses and other liabilities 13,289 275
Accounts payable 1,435 124
Deferred revenue 740 1,959
Other non-current liabilities   1,852     4,337  
Net cash provided by operating activities   71,603     53,350  
 
INVESTING ACTIVITIES:
Purchase of property and equipment (11,432 ) (10,839 )
Capitalization of internally developed software (9,210 ) (6,217 )
Investment in private company (1,450 ) (738 )
Purchase of ERS units — (1,500 )
Acquisition of businesses, net of cash acquired   —     (18,394 )
Net cash used in investing activities   (22,092 )   (37,688 )
 
FINANCING ACTIVITIES:
Payment of Term Notes (35,862 ) (6,000 )
Proceeds from borrowings on revolving credit facility 35,000 25,000
Payments on revolving credit facility (42,500 ) (25,000 )
Debt issuance costs (94 ) —
Payments of contingent consideration (2,286 ) (2,924 )
Payments of definite consideration (445 ) —
Payments of purchase consideration liabilities (235 ) —
Proceeds from exercise of stock options 4,468 3,166
Purchase of treasury stock for stock-based tax withholdings (11,619 ) (9,517 )
Common stock acquired under the share repurchase program — (1,448 )
Issuance of restricted stock units   4     5  
Net cash used in financing activities   (53,569 )   (16,718 )
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH 170 —
 
DECREASE IN CASH AND CASH EQUIVALENTS   (3,888 )   (1,056 )
 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   52,592     51,718  
 
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 48,704   $ 50,662  
 
 
  Three Months Ended   Nine Months Ended
September 30,   September 30,
2017   2016 2017   2016
 
Revenues $ 175,614 $ 149,155 $ 500,817 $ 422,684
Deferred revenue fair value adjustment     15       331       120       781  
Adjusted revenues $   175,629   $   149,486   $   500,937   $   423,465  
 
Net loss $ (1,320 ) $ (4,057 ) $ (20,925 ) $ (22,993 )
Add (deduct):
Deferred revenue fair value adjustment 15 331 120 781
Interest income (58 ) (6 ) (108 ) (28 )
Interest expense 3,858 4,122 12,671 12,345
Accretion on contingent consideration and purchase liability 104 23 408 143
Income tax provision (benefit) 1,682 (1,668 ) 10,824 (10,602 )
Depreciation and amortization 15,492 16,692 46,792 49,872
Non-cash compensation expense 8,048 7,554 23,451 25,872
Restructuring charges and transaction costs 4,608 998 10,235 4,484
Severance 1,597 1,058 2,260 3,104
Fair market value adjustment on contingent consideration - 349 - 838
Litigation related expense - 2,097 1,033 4,065
Foreign currency and related hedging activity (116 ) (383 ) 296 (672 )
Non-income tax expense adjustment 571 - 1,734 -
Loss allocation from equity method investment 282 250 984 1,130
Loss attributable to non-controlling interest     26       145       377       787  
Adjusted EBITDA $   34,789   $   27,505   $   90,152   $   69,126  
 
Net loss $ (1,320 ) $ (4,057 ) $ (20,925 ) $ (22,993 )
Income tax provision (benefit) (1)     1,682       (1,668 )     10,824       (10,602 )
Loss before income tax provision $ 362 $ (5,725 ) $ (10,101 ) $ (33,595 )
Add (deduct):
Deferred revenue fair value adjustment 15 331 120 781
Accretion on contingent consideration and purchase liability 104 23 408 143
Non-cash interest expense 2,931 2,039 7,784 6,070
Non-cash compensation expense 8,048 7,554 23,451 25,872
Restructuring charges and transaction costs 4,608 998 10,235 4,484
Severance 1,597 1,058 2,260 3,104
Amortization of acquired intangibles 10,377 12,035 31,333 36,156
Fair market value adjustment on contingent consideration - 349 - 838
Litigation related expense - 2,097 1,033 4,065
Foreign currency and related hedging activity (116 ) (383 ) 296 (672 )
Non-income tax expense adjustment 571 - 1,734 -
Loss allocation from equity method investment 282 250 984 1,130
Loss attributable to non-controlling interest     26       145       377       787  
Adjusted net income before income tax effect 28,805 20,771 69,914 49,163
Income tax effect (2)     (11,522 )     (8,308 )     (27,966 )     (19,665 )
Adjusted net income $   17,283   $   12,463   $   41,948   $   29,498  
 
Basic number of weighted-average shares outstanding 44,044,527 42,843,103 43,604,869 42,704,383
Effect of dilutive shares:
Options to purchase common stock 1,664,351 1,331,256 1,669,092 1,286,968
Unvested restricted stock units     736,657       350,169       637,580       272,205  
Diluted number of weighted-average shares outstanding     46,445,535       44,524,528       45,911,541       44,263,556  
 
Adjusted net income per share - diluted $ $ 0.37   $ $ 0.28   $ $ 0.91   $ $ 0.67  
 

____________________________

(1) For the three months ended September 30, 2017 and 2016, the effective tax rate computed in accordance with US GAAP equaled 464.6% and 29.1%, respectively. For the nine months ended September 30, 2017 and 2016, the effective tax rate computed in accordance with US GAAP equaled (107.2%) and 31.6%, respectively.

(2) An estimated normalized effective tax rate of 40% has been used to compute adjusted net income.

 
  Three Months Ended September 30, 2017
  Envestnet     Envestnet | Yodlee     Nonsegment     Total
(in thousands)
Revenues $ 135,948 $ 39,666 $ — $ 175,614
Deferred revenue fair value adjustment   —   15     —     15  
Adjusted revenues $ 135,948 $ 39,681   $ —   $ 175,629  
 
Income (loss) from operations $ 18,955 $ (3,364 ) $ (11,243 ) $ 4,348
Add (deduct):
Deferred revenue fair value adjustment — 15 — 15
Accretion on contingent consideration and purchase liability 104 — — 104
Depreciation and amortization 6,414 9,078 — 15,492
Non-cash compensation expense 3,679 2,675 1,694 8,048
Restructuring charges and transaction costs 73 — 4,535 4,608
Non-income tax expense adjustment 571 — — 571
Severance 1,519 78 — 1,597
Litigation related expense — — — —
Other gain — — (20 ) (20 )
Loss attributable to non-controlling interest   26   —     —     26  
Adjusted EBITDA $ 31,341 $ 8,482   $ (5,034 ) $ 34,789  
 
 
  Three Months Ended September 30, 2016
  Envestnet     Envestnet | Yodlee     Nonsegment     Total
(in thousands)
Revenues $ 114,511 $ 34,644 $ — $ 149,155
Deferred revenue fair value adjustment   109   222     —     331  
Adjusted revenues $ 114,620 $ 34,866   $ —   $ 149,486  
 
Income (loss) from operations $ 12,361 $ (8,416 ) $ (5,236 ) $ (1,291 )
Add (deduct):
Deferred revenue fair value adjustment 109 222 — 331
Accretion on contingent consideration and purchase liability 23 — — 23
Depreciation and amortization 6,362 10,330 — 16,692
Non-cash compensation expense 3,565 2,937 1,052 7,554
Restructuring charges and transaction costs 34 3 961 998
Severance 990 68 — 1,058
Fair market value adjustment on contingent consideration — — 349 349
Litigation related expense — 2,086 11 2,097
Foreign currency and related hedging activity — (462 ) — (462 )
Other loss — — 11 11
Loss attributable to non-controlling interest   145   —     —     145  
Adjusted EBITDA $ 23,589 $ 6,768   $ (2,852 ) $ 27,505  
 
 
  Nine Months Ended September 30, 2017
  Envestnet     Envestnet | Yodlee     Nonsegment     Total
(in thousands)
Revenues $ 386,638 $ 114,179 $ — $ 500,817
Deferred revenue fair value adjustment   36   84     —     120
Adjusted revenues $ 386,674 $ 114,263   $ —   $ 500,937
 
Income (loss) from operations $ 48,277 $ (16,707 ) $ (27,833 ) $ 3,737
Add:
Deferred revenue fair value adjustment 36 84 — 120
Accretion on contingent consideration and purchase liability 408 — — 408
Depreciation and amortization 19,196 27,596 — 46,792
Non-cash compensation expense 11,571 8,137 3,743 23,451
Restructuring charges and transaction costs 768 — 9,467 10,235
Non-income tax expense adjustment 1,734 — — 1,734
Severance 1,942 302 16 2,260
Litigation related expense — 1,033 — 1,033
Other loss — — 5 5
Loss attributable to non-controlling interest   377   —     —     377
Adjusted EBITDA $ 84,309 $ 20,445   $ (14,602 ) $ 90,152
 
 
  Nine Months Ended September 30, 2016
  Envestnet     Envestnet | Yodlee     Nonsegment     Total
(in thousands)
Revenues $ 328,417 $ 94,267 $ — $ 422,684
Deferred revenue fair value adjustment   114   667     —     781  
Adjusted revenues $ 328,531 $ 94,934   $ —   $ 423,465  
 
Income (loss) from operations $ 32,425 $ (33,728 ) $ (19,078 ) $ (20,381 )
Add (deduct):
Deferred revenue fair value adjustment 114 667 — 781
Accretion on contingent consideration and purchase liability 143 — — 143
Depreciation and amortization 18,786 31,086 — 49,872
Non-cash compensation expense 9,151 12,186 4,535 25,872
Restructuring charges and transaction costs 361 34 4,089 4,484
Severance 2,019 747 338 3,104
Fair market value adjustment on contingent consideration — — 838 838
Litigation related expense — 3,824 241 4,065
Foreign currency and related hedging activity — (462 ) — (462 )
Other loss — — 23 23
Loss attributable to non-controlling interest   787   —     —     787  
Adjusted EBITDA $ 63,786 $ 14,354   $ (9,014 ) $ 69,126  
 
 
  As of

September 30,

  December 31,   March 31,   June 30,   September 30,
2016 2016 2017 2017 2017
(in millions except accounts and advisors data)
Platform Assets
Assets Under Management (AUM) $ 101,924 $ 105,178 $ 113,544 $ 122,543 $ 131,809
Assets Under Administration (AUA)   231,831   241,682   248,445   271,450   293,963
Subtotal AUM/A 333,755 346,860 361,989 393,993 425,772
Licensing   721,690   748,125   763,372   825,829   867,967
Total Platform Assets $ 1,055,445 $ 1,094,985 $ 1,125,361 $ 1,219,822 $ 1,293,739
Platform Accounts
AUM 519,717 545,130 574,132 614,973 652,060
AUA   961,590   994,583   986,554   1,083,417   1,145,050
Subtotal AUM/A 1,481,307 1,539,713 1,560,686 1,698,390 1,797,110
Licensing   4,394,670   4,558,883   4,263,002   4,811,390   4,925,146
Total Platform Accounts   5,875,977   6,098,596   5,823,688   6,509,780   6,722,256
Advisors
AUM/A 35,861 36,483 36,985 38,498 40,379
Licensing   16,191   17,852   18,159   19,007   19,104
Total Advisors   52,052   54,335   55,144   57,505   59,483
 

The following tables summarize the changes in AUM and AUA for the three months ended September 30, 2017:

 
  Asset Rollforward - Three Months Ended September 30, 2017
As of   Gross     Net   Market   As of
6/30/2017 Sales Redemptions Flows Impact 9/30/2017
(in millions except account data)
Assets under Management (AUM) $ 122,543 $ 10,585 $ (5,178 ) $ 5,407 $ 3,859 $ 131,809
Assets under Administration (AUA)   271,450   24,279   (10,873 )   13,406   9,107   293,963
Total AUM/A $ 393,993 $ 34,864 $ (16,051 ) $ 18,813 $ 12,966 $ 425,772
Fee-Based Accounts 1,698,390 98,720 1,797,110
 

The above AUM/A gross sales figures include $9.7 billion in new client conversions. The Company onboarded an additional $12.4 billion in licensing conversions during the third quarter, bringing total conversions for the quarter to $22.1 billion.

Envestnet, Inc.
Investor Relations
(312) 827-3940
investor.relations@envestnet.com
or
Media Relations
mediarelations@envestnet.com

Source: Envestnet, Inc.

Released November 8, 2017