Envestnet Reports First Quarter 2012 Financial Results
CHICAGO--(BUSINESS WIRE)-- Envestnet (NYSE: ENV), a leading provider of technology-enabled wealth management solutions to investment advisors, today reported financial results for its first quarter ended March 31, 2012.
| Key Financial Metrics | First Quarter |
% Change |
||||||||||||
| (in millions except per share data) | 2012 | 2011 | ||||||||||||
| Revenues from AUM/A | $28.3 | $23.3 | 21% | |||||||||||
| Total Revenues | $32.6 | $29.3 | 12% | |||||||||||
| Adjusted EBITDA(1) | $5.1 | $6.2 | -18% | |||||||||||
| Adjusted Net Income per Share(1) | $0.07 | $0.09 | -22% | |||||||||||
Financial results for the first quarter of 2012 compared to the first quarter of 2011:
- Revenues from assets under management (AUM) or assets under administration (AUA) increased 21% to $28.3 million for the first quarter of 2012 from $23.3 million for the first quarter of 2011; total revenues, which includes licensing and professional services fees, increased 12% to $32.6 million for the first quarter of 2012 from $29.3 million for the first quarter of 2011.
- Net income was $0.7 million, or $0.02 per diluted share, for the first quarter of 2012 compared to $1.4 million, or $0.04 per diluted share, for the first quarter of 2011.
- Adjusted EBITDA(1) was $5.1 million for the first quarter of 2012 compared to $6.2 million for the first quarter of 2011.
- Adjusted Net Income(1) was $2.2 million, or $0.07 per diluted share, for the first quarter of 2012 compared to $3.0 million, or $0.09 per diluted share, for the first quarter of 2011.
“During the first quarter, a growing number of advisors adopted Envestnet’s wealth management solutions, as we experienced positive net flows and strong conversion activity of new reporting clients,” said Jud Bergman, chief executive officer of Envestnet. “Having recently completed the acquisitions of Prima Capital and Tamarac, Envestnet is positioned better than ever to empower advisors to improve client outcomes and strengthen their advisory practices. We are helping advisors transform the wealth management industry to a transparent and unconflicted standard of care for investors.”
Key Operating Metrics as of and for the quarter ended March 31, 2012:
- AUM/A of $80.4 billion, up 17% from March 31, 2011
- Accounts (AUM/A only) of 364,236, up 13% from March 31, 2011
- Advisors (AUM/A only) served totaled 14,386
- Gross sales of AUM/A of $10.2 billion, resulting in net flows of $5.9 billion
The following table summarizes the changes in AUM and AUA for the quarter ended March 31, 2012:
| In Millions Except Account Data |
12/31/11 |
Gross |
Redemp- |
Net |
Market |
3/31/12 | ||||||||||||||||||||||||||
| Assets under Management (AUM) | $ |
22,936 |
|
$ |
3,094 |
|
$ | (1,531 | ) | $ |
1,563 |
|
$ |
1,585 |
|
$ |
26,084 |
|
||||||||||||||
| Assets under Administration (AUA) | 47,148 | 7,119 | (2,751 | ) | 4,368 | 2,820 | 54,336 | |||||||||||||||||||||||||
| Total AUM/A | $ | 70,084 | $ | 10,213 | $ | (4,282 | ) | $ | 5,931 | $ | 4,405 | $ | 80,420 | |||||||||||||||||||
| Fee-Based Accounts | 340,674 | 42,320 | (18,758 | ) | 23,562 | 364,236 | ||||||||||||||||||||||||||
During the first quarter, the Company added $4.1 billion of conversions, which are included in the above AUM/A gross sales figures.
Review of Financial Results
Total revenues increased 12% to $32.6 million for the first quarter of 2012 from $29.3 million for the first quarter of 2011. The increase was primarily due to a 21% increase in revenues from assets under management or administration to $28.3 million from $23.3 million in the prior year period, partially offset by a previously expected reduction in licensing and professional services revenues.
Total operating expenses in the first quarter of 2012 increased 18% to $31.4 million from $26.7 million in the prior year period. Cost of revenues increased 14% to $11.5 million in the first quarter of 2012 from $10.1 million in the first quarter of 2011 due to the increase in revenue from AUM or AUA. Compensation and benefits increased 5% to $10.7 million in the first quarter of 2012 from $10.2 million in the prior year period. General and administration expenses increased 39% to $6.8 million in the first quarter of 2012 from $4.9 million in the prior year period.
Income from operations was $1.2 million for the first quarter of 2012 compared to $2.6 million for the first quarter of 2011. Net income was $0.7 million, or $0.02 per diluted share, for the first quarter of 2012 compared to $1.4 million, or $0.04 per diluted share, for the first quarter of 2011.
Adjusted EBITDA(1) in the first quarter of 2012 was $5.1 million, compared to $6.2 million in the prior year period, reflecting the previously expected reduction in licensing and professional services revenues. Adjusted Net Income(1) was $2.2 million, compared to $3.0 million in the first quarter of 2011. Adjusted Net Income Per Share(1) was $0.07 per diluted share, compared to $0.09 per diluted share in the first quarter of 2011.
Conference Call
The Company will host a conference call to discuss first quarter 2012 financial results today at 5:00 p.m. ET. The live webcast can be accessed from the Company's investor relations website at http://ir.envestnet.com/. The conference call can also be accessed live over the phone by dialing (888) 300-2318, or (719) 457-1509 for international callers. A replay will be available beginning one hour after the call and can be accessed from the Company’s investor relations website, or by dialing (877) 870-5176, or (858) 384-5517 for international callers; the conference ID is 9201314. 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 technology-enabled wealth management solutions to investment advisors. Envestnet's Advisor Suite software empowers advisors to better manage client outcomes and strengthen their practice. Envestnet offers advanced portfolio solutions through its Portfolio Management Consultants Group, Envestnet | PMC. Envestnet | Tamarac provides leading rebalancing, reporting and practice management software. Envestnet | Prima provides institutional-quality research and due diligence on investment and fund managers. Envestnet | Vantage gives advisors an in-depth view of clients’ investments, empowering them to give holistic, personalized advice.
For more information on Envestnet, please visit www.envestnet.com.
(1) Non-GAAP Financial Measures
“Adjusted EBITDA” represents net income before interest income, interest expense, income tax provision, depreciation and amortization, non-cash stock-based compensation expense, gain on investments, other income, restructuring charges and transaction costs, severance, customer inducement costs, and litigation related expense.
“Adjusted net income” represents net income before non-cash stock-based compensation expense, restructuring expense and transaction costs, severance, amortization of acquired intangibles, customer inducement costs, imputed interest expense and litigation related expense. Reconciling items are tax effected using the income tax rates in effect on the applicable date.
“Adjusted net income per share” represents adjusted net income divided by the diluted number of weighted-average shares outstanding.
See reconciliation of Non-GAAP Financial Measures at the end of this press release. These measures should not be viewed as a substitute for net income determined in accordance with United States generally accepted accounting principles (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, 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, 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 advisory industry, the Company’s reliance on a limited number of clients for a material portion of its revenue, the renegotiation of fee percentages or termination of the Company’s services by its clients, the Company’s ability to identify potential acquisition candidates, complete acquisitions and successfully integrate acquired companies, the impact of market and economic conditions on the Company’s revenues, compliance failures, regulatory 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, political and regulatory conditions, as well as 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 May 9, 2012 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, except share information) | ||||||||||||
| (Unaudited) | ||||||||||||
|
March 31, |
December 31, |
|||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ |
70,636 |
|
$ |
64,909 |
|
||||||
| Fees receivable | 8,610 | 9,644 | ||||||||||
| Deferred tax assets, net | 146 | 192 | ||||||||||
| Prepaid expenses and other current assets | 3,137 | 4,040 | ||||||||||
| Total current assets | 82,529 | 78,785 | ||||||||||
| Property and equipment, net | 10,667 | 11,091 | ||||||||||
| Internally developed software, net | 3,487 | 3,524 | ||||||||||
| Intangible assets, net | 11,246 | 12,225 | ||||||||||
| Goodwill | 21,334 | 22,223 | ||||||||||
| Deferred tax assets, net | 6,726 | 6,692 | ||||||||||
| Other non-current assets | 3,165 | 3,162 | ||||||||||
| Total assets | $ | 139,154 | $ | 137,702 | ||||||||
| Liabilities and Stockholders' Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Accrued expenses | $ | 13,186 | $ | 14,919 | ||||||||
| Accounts payable | 2,266 | 1,974 | ||||||||||
| Note payable | 174 | 171 | ||||||||||
| Deferred revenue | 530 | 79 | ||||||||||
| Total current liabilities | 16,156 | 17,143 | ||||||||||
| Deferred rent liability | 1,492 | 1,414 | ||||||||||
| Lease incentive liability | 2,844 | 2,933 | ||||||||||
| Other non-current liabilities | 618 | 573 | ||||||||||
| Total liabilities | 21,110 | 22,063 | ||||||||||
| Stockholders' equity | 118,044 | 115,639 | ||||||||||
| Total liabilities and stockholders' equity | $ | 139,154 | $ | 137,702 | ||||||||
| Envestnet, Inc. | ||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||
| (In thousands, except share and per share information) | ||||||||||||
| (Unaudited) | ||||||||||||
|
Three Months Ended |
||||||||||||
| 2012 | 2011 | |||||||||||
| Revenues: | ||||||||||||
| Assets under management or administration | $ | 28,263 | $ | 23,271 | ||||||||
| Licensing and professional services | 4,379 | 5,991 | ||||||||||
| Total revenues | 32,642 | 29,262 | ||||||||||
| Operating expenses: | ||||||||||||
| Cost of revenues | 11,526 | 10,128 | ||||||||||
| Compensation and benefits | 10,685 | 10,146 | ||||||||||
| General and administration | 6,773 | 4,876 | ||||||||||
| Depreciation and amortization | 2,399 | 1,548 | ||||||||||
| Restructuring charges | 27 | 10 | ||||||||||
| Total operating expenses | 31,410 | 26,708 | ||||||||||
| Income from operations | 1,232 | 2,554 | ||||||||||
| Other income (expense): | ||||||||||||
| Interest income | 9 | 26 | ||||||||||
| Interest expense | (3 | ) | (211 | ) | ||||||||
| Gain on investments | - | 3 | ||||||||||
| Total other income (expense) | 6 | (182 | ) | |||||||||
| Income before income tax provision | 1,238 | 2,372 | ||||||||||
| Income tax provision | 498 | 968 | ||||||||||
| Net income | $ | 740 | $ | 1,404 | ||||||||
| Net income per share: | ||||||||||||
| Basic | $ | 0.02 | $ | 0.04 | ||||||||
| Diluted | $ | 0.02 | $ | 0.04 | ||||||||
| Weighted average common shares outstanding: | ||||||||||||
| Basic | 31,857,598 | 31,433,964 | ||||||||||
| Diluted | 32,901,969 | 32,872,600 | ||||||||||
| Envestnet, Inc. | |||||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||||
| (In thousands, unaudited) | |||||||||||||
|
Three Months Ended March 31, |
|||||||||||||
| 2012 | 2011 | ||||||||||||
| OPERATING ACTIVITIES: | |||||||||||||
| Net income | $ | 740 | $ | 1,404 | |||||||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||
| Depreciation and amortization | 2,399 | 1,548 | |||||||||||
| Amortization of customer inducements | - | 1,206 | |||||||||||
| Deferred rent and lease incentive | (11 | ) | (69 | ) | |||||||||
| Gain on investments | - | (3 | ) | ||||||||||
| Deferred income taxes | 12 | 775 | |||||||||||
| Stock-based compensation | 795 | 816 | |||||||||||
| Interest expense | 3 | 211 | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||||
| Fees receivable | 1,034 | 567 | |||||||||||
| Prepaid expenses and other current assets | 903 | (480 | ) | ||||||||||
| Accrued expenses | (1,733 | ) | (1,212 | ) | |||||||||
| Accounts payable | 292 | 349 | |||||||||||
| Deferred revenue | 451 | (164 | ) | ||||||||||
| Other non-current liabilities | 45 | 60 | |||||||||||
| Net cash provided by operating activities | 4,930 | 5,008 | |||||||||||
| INVESTING ACTIVITIES: | |||||||||||||
| Purchase of property and equipment | (613 | ) | (1,419 | ) | |||||||||
| Capitalization of internally developed software | (346 | ) | (435 | ) | |||||||||
| Proceeds from investments | (3 | ) | 15 | ||||||||||
| Goodwill adjustment | 889 | - | |||||||||||
| Net cash used in investing activities | (73 | ) | (1,839 | ) | |||||||||
| FINANCING ACTIVITIES: | |||||||||||||
| Proceeds from exercise of stock options | 948 | 1,072 | |||||||||||
| Purchase of treasury stock | (78 | ) | (94 | ) | |||||||||
| Net cash provided by financing activities | 870 | 978 | |||||||||||
| INCREASE IN CASH AND CASH EQUIVALENTS | 5,727 | 4,147 | |||||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 64,909 | 67,668 | |||||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 70,636 | $ | 71,815 | |||||||||
|
Envestnet, Inc. Reconciliation of Non-GAAP Financial Measures (in thousands, unaudited) |
|||||||||||
|
Three Months Ended |
|||||||||||
| 2012 | 2011 | ||||||||||
| Net income | $ | 740 | $ | 1,404 | |||||||
| Add (deduct): | |||||||||||
| Interest income | (9 | ) | (26 | ) | |||||||
| Interest expense | 3 | 211 | |||||||||
| Income tax provision | 498 | 968 | |||||||||
| Depreciation and amortization | 2,399 | 1,548 | |||||||||
| Stock-based compensation expense | 795 | 816 | |||||||||
| Gain on investments | - | (3 | ) | ||||||||
| Restructuring charges and transaction costs | 644 | 10 | |||||||||
| Severance | 5 | 57 | |||||||||
| Customer inducement costs | - | 1,206 | |||||||||
| Litigation related expense | 19 | 33 | |||||||||
| Adjusted EBITDA | $ | 5,094 | $ | 6,224 | |||||||
|
Three Months Ended |
|||||||||||
| 2012* | 2011* | ||||||||||
| Net income | $ | 740 | $ | 1,404 | |||||||
| Add: | |||||||||||
| Stock-based compensation expense | 475 | 488 | |||||||||
| Restructuring charges and transaction costs | 386 | 6 | |||||||||
| Severance | 3 | 34 | |||||||||
| Amortization of acquired intangibles | 586 | 169 | |||||||||
| Customer inducement costs | - | 721 | |||||||||
| Imputed interest expense | - | 122 | |||||||||
| Litigation related expense | 11 | 20 | |||||||||
| Adjusted net income | $ | 2,201 | $ | 2,964 | |||||||
| Diluted number of weighted-average shares outstanding | 32,901,969 | 32,872,600 | |||||||||
| Adjusted net income per share - diluted | $ | 0.07 | $ | 0.09 | |||||||
* Adjustments are tax effected using an income tax rate of 40.2% for 2012 and 2011, respectively.
|
Envestnet, Inc. Historical Assets, Accounts and Advisors (in millions, except account and advisor data; unaudited) |
||||||||||||||||||||||
| As of | ||||||||||||||||||||||
|
March 31, |
June 30, |
September 30, |
December 31, |
March 31, |
||||||||||||||||||
| Platform Assets | ||||||||||||||||||||||
| Assets Under Management (AUM) | $ |
15,635 |
|
$ |
16,493 |
|
$ |
15,560 |
|
$ |
22,936 |
|
$ |
26,084 |
|
|||||||
| Assets Under Administration (AUA) | 53,115 | 54,261 | 50,607 | 47,148 | 54,336 | |||||||||||||||||
| Subtotal AUM/A | 68,750 | 70,754 | 66,167 | 70,084 | 80,420 | |||||||||||||||||
| Licensing | 83,538 | 68,531 | 61,571 | 69,514 | 76,235 | |||||||||||||||||
| Total Platform Assets | $ | 152,288 | $ | 139,285 | $ | 127,738 | $ | 139,598 | $ | 156,655 | ||||||||||||
| Platform Accounts | ||||||||||||||||||||||
| AUM | 71,396 | 77,302 | 83,073 | 124,636 | 134,294 | |||||||||||||||||
| AUA | 252,260 | 254,995 | 254,100 | 216,038 | 229,942 | |||||||||||||||||
| Subtotal AUM/A | 323,656 | 332,297 | 337,173 | 340,674 | 364,236 | |||||||||||||||||
| Licensing | 601,512 | 572,612 | 572,791 | 588,038 | 588,936 | |||||||||||||||||
| Total Platform Accounts | 925,168 | 904,909 | 909,964 | 928,712 | 953,172 | |||||||||||||||||
| Advisors | ||||||||||||||||||||||
| AUM/A | 14,140 | 14,613 | 14,206 | 13,887 | 14,386 | |||||||||||||||||
| Licensing | 7,895 | 6,201 | 5,522 | 5,709 | 5,351 | |||||||||||||||||
| Total Advisors | 22,035 | 20,814 | 19,728 | 19,596 | 19,737 | |||||||||||||||||
Envestnet
Investor Relations, 312-827-3940
investor.relations@envestnet.com
or
Media
Relations
mediarelations@envestnet.com
Source: Envestnet
Released May 9, 2012