Envestnet Reports Third Quarter 2020 Financial Results

CHICAGO--(BUSINESS WIRE)-- Envestnet (NYSE: ENV), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for the three and nine months ended September 30, 2020.

 

 

Three months ended

 

 

 

Nine months ended

 

 

Key Financial Metrics

 

September 30,

 

%

 

September 30,

 

%

(in millions except per share data)

 

2020

 

2019

 

Change

 

2020

 

2019

 

Change

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

252.6

 

 

$

236.1

 

 

7

%

 

$

734.4

 

 

$

660.2

 

 

11

%

Net income (loss)

 

$

2.3

 

 

$

(3.0

)

 

n/m

 

 

$

(10.3

)

 

$

(20.6

)

 

(50

)%

Net income (loss) per diluted share attributable to Envestnet, Inc.

 

$

0.03

 

 

$

(0.06

)

 

n/m

 

 

$

(0.19

)

 

$

(0.40

)

 

(53

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenues(1)

 

$

252.7

 

 

$

239.3

 

 

6

%

 

$

735.0

 

 

$

666.9

 

 

10

%

Adjusted net revenues(1)

 

$

181.5

 

 

$

175.0

 

 

4

%

 

$

533.4

 

 

$

488.4

 

 

9

%

Adjusted EBITDA(1)

 

$

67.6

 

 

$

54.5

 

 

24

%

 

$

178.0

 

 

$

131.8

 

 

35

%

Adjusted net income(1)

 

$

40.2

 

 

$

32.4

 

 

24

%

 

$

103.2

 

 

$

76.3

 

 

35

%

Adjusted net income per diluted share(1)

 

$

0.72

 

 

$

0.60

 

 

20

%

 

$

1.88

 

 

$

1.46

 

 

29

%

n/m - not meaningful

"During the third quarter Envestnet again delivered strong financial results, managing through these uncertain days, while supporting our clients and executing on our strategic plan," said Bill Crager, Chief Executive Officer.

"Our mission is to make financial wellness a reality for everyone. We are building the ecosystem that enables a new standard for personal financial services," concluded Mr. Crager.

Financial Results for the Third Quarter of 2020

Asset-based recurring revenues increased 9% from the third quarter of 2019, and represented 55% of total revenues for the third quarter of 2020 compared to 54% for the third quarter 2019. Subscription-based recurring revenues increased 7% from the third quarter of 2019, and represented 43% of total revenues for the third quarter of 2020, consistent with the third quarter of 2019. Professional services and other non-recurring revenues decreased 22% from the prior year period. Total revenues increased 7% to $252.6 million for the third quarter of 2020 from $236.1 million for the third quarter of 2019.

Total operating expenses for the third quarter of 2020 increased 2% to $240.9 million from $236.2 million in the prior year period. Cost of revenues increased 9% to $78.5 million for the third quarter of 2020 from $71.9 million for the prior year period. Compensation and benefits decreased 1% to $94.4 million for the third quarter of 2020 from $95.6 million for the prior year period. Compensation and benefits were 37% of total revenues for the third quarter of 2020, compared to 40% in the prior year period. General and administration expenses decreased 7% to $39.0 million for the third quarter of 2020 from $42.0 million for the prior year period. General and administrative expenses were 15% of total revenues for the third quarter of 2020, compared to 18% in the prior year period.

Income from operations was $11.7 million for the third quarter of 2020 compared to loss of $0.1 million for the third quarter of 2019. Net income was $2.3 million for the third quarter of 2020 compared to net loss of $3.0 million for the third quarter of 2019. Net income per diluted share attributable to Envestnet, Inc. was $0.03 for the third quarter of 2020 compared to net loss per diluted share attributable to Envestnet, Inc. of $0.06 for the third quarter of 2019.

Adjusted revenues(1) for the third quarter of 2020 increased 6% to $252.7 million from $239.3 million for the prior year period. Adjusted net revenues(1) for the third quarter of 2020 increased 4% to $181.5 million from $175.0 million for the prior year period. Adjusted EBITDA(1) for the third quarter of 2020 increased 24% to $67.6 million from $54.5 million for the prior year period. Adjusted net income(1) increased 24% for the third quarter of 2020 to $40.2 million from $32.4 million for the prior year period. Adjusted net income per diluted share(1) for the third quarter of 2020 increased 20% to $0.72 from $0.60 in the third quarter of 2019.

Balance Sheet and Liquidity

As of September 30, 2020, the Company had $362.9 million in cash and cash equivalents and $862.5 million in outstanding debt. The outstanding debt as of September 30, 2020 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 September 30, 2020.

Outlook

The Company provided the following outlook for the fourth quarter 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

 

4Q 2020

 

FY 2020

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based

 

$

141.5

 

 

-

 

$

142.5

 

 

 

 

 

 

 

Subscription-based

 

108.0

 

 

-

 

108.5

 

 

 

 

 

 

 

Total recurring revenues

 

$

249.5

 

 

-

 

$

251.0

 

 

 

 

 

 

 

Professional services and other revenues

 

6.0

 

 

-

 

6.5

 

 

 

 

 

 

 

Total revenues

 

$

255.5

 

 

-

 

$

257.5

 

 

$

989.8

 

 

-

 

$

991.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based cost of revenues

 

$

74.0

 

 

-

 

$

74.5

 

 

$

275.6

 

 

-

 

$

276.1

 

Total cost of revenues

 

$

81.5

 

 

-

 

$

82.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

(a)

 

-

 

(a)

 

(a)

 

-

 

(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

 

 

55.5

 

 

 

 

 

55.0

 

 

Net income per diluted share

 

(a)

 

-

 

(a)

 

(a)

 

-

 

(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenues (1):

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based

 

$

141.5

 

 

-

 

$

142.5

 

 

 

 

 

 

 

Subscription-based

 

108.0

 

 

-

 

108.5

 

 

 

 

 

 

 

Total recurring revenues

 

$

249.5

 

 

-

 

$

251.0

 

 

 

 

 

 

 

Professional services and other revenues

 

6.0

 

 

-

 

6.5

 

 

 

 

 

 

 

Total revenues

 

$

255.5

 

 

-

 

$

257.5

 

 

$

990.5

 

 

-

 

$

992.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net revenues (1)

 

$

181.0

 

 

-

 

$

183.5

 

 

$

714.4

 

 

-

 

$

716.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

60.0

 

 

-

 

$

61.0

 

 

$

238.0

 

 

-

 

$

239.0

 

Adjusted net income per diluted share(1)

 

 

 

$

0.64

 

 

 

 

$

2.51

 

 

-

 

$

2.53

 

(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 third 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 105,000 advisors and more than 5,100 companies including: 17 of the 20 largest U.S. banks, 47 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 reconciliations of Non-GAAP Financial Measures on pages 10-16 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 fourth 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 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 November 5, 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)

 

 

 

September 30,

 

December 31,

 

 

2020

 

2019

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

362,918

 

 

$

82,505

 

Fees receivable, net

 

76,328

 

 

67,815

 

Prepaid expenses and other current assets

 

41,966

 

 

32,183

 

Total current assets

 

481,212

 

 

182,503

 

 

 

 

 

 

Property and equipment, net

 

48,983

 

 

53,756

 

Internally developed software, net

 

87,478

 

 

60,263

 

Intangible assets, net

 

452,583

 

 

505,589

 

Goodwill

 

906,697

 

 

879,850

 

Operating lease right-of-use-assets, net

 

76,090

 

 

82,796

 

Other non-current assets

 

48,218

 

 

37,127

 

Total assets

 

$

2,101,261

 

 

$

1,801,884

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accrued expenses and other liabilities

 

$

141,290

 

 

$

137,944

 

Accounts payable

 

29,609

 

 

17,277

 

Operating lease liabilities

 

13,835

 

 

13,816

 

Contingent consideration

 

1,549

 

 

 

Deferred revenue

 

40,037

 

 

34,753

 

Total current liabilities

 

226,320

 

 

203,790

 

 

 

 

 

 

Convertible Notes

 

749,918

 

 

305,513

 

Revolving credit facility

 

 

 

260,000

 

Contingent consideration

 

11,741

 

 

9,045

 

Deferred revenue

 

2,307

 

 

5,754

 

Non-current operating lease liabilities

 

83,820

 

 

88,365

 

Deferred tax liabilities, net

 

36,088

 

 

29,481

 

Other non-current liabilities

 

37,700

 

 

32,360

 

Total liabilities

 

1,147,894

 

 

934,308

 

 

 

 

 

 

Equity:

 

 

 

 

Total stockholders’ equity

 

954,673

 

 

869,094

 

Non-controlling interest

 

(1,306

)

 

(1,518

)

Total liabilities and equity

 

$

2,101,261

 

 

$

1,801,884

 

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,

 

 

2020

 

2019

 

2020

 

2019

Revenues:

 

 

 

 

 

 

 

 

Asset-based

 

$

137,744

 

 

$

126,591

 

 

$

394,801

 

 

$

355,595

 

Subscription-based

 

107,897

 

 

100,583

 

 

317,427

 

 

275,928

 

Total recurring revenues

 

245,641

 

 

227,174

 

 

712,228

 

 

631,523

 

Professional services and other revenues

 

6,918

 

 

8,906

 

 

22,183

 

 

28,668

 

Total revenues

 

252,559

 

 

236,080

 

 

734,411

 

 

660,191

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenues

 

78,545

 

 

71,870

 

 

222,327

 

 

205,595

 

Compensation and benefits

 

94,428

 

 

95,587

 

 

300,423

 

 

285,590

 

General and administration

 

38,979

 

 

42,016

 

 

118,537

 

 

124,961

 

Depreciation and amortization

 

28,951

 

 

26,735

 

 

85,077

 

 

73,167

 

Total operating expenses

 

240,903

 

 

236,208

 

 

726,364

 

 

689,313

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

11,656

 

 

(128

)

 

8,047

 

 

(29,122

)

Other expense, net

 

(8,836

)

 

(9,813

)

 

(18,546

)

 

(23,088

)

Income (loss) before income tax provision (benefit)

 

2,820

 

 

(9,941

)

 

(10,499

)

 

(52,210

)

 

 

 

 

 

 

 

 

 

Income tax provision (benefit)

 

497

 

 

(6,977

)

 

(161

)

 

(31,591

)

 

 

 

 

 

 

 

 

 

Net income (loss)

 

2,323

 

 

(2,964

)

 

(10,338

)

 

(20,619

)

Add: Net (income) loss attributable to non-controlling interest

 

(413

)

 

(116

)

 

(12

)

 

247

 

Net income (loss) attributable to Envestnet, Inc.

 

$

1,910

 

 

$

(3,080

)

 

$

(10,350

)

 

$

(20,372

)

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to Envestnet, Inc.:

 

 

 

 

 

 

 

 

Basic

 

$

0.04

 

 

$

(0.06

)

 

$

(0.19

)

 

$

(0.40

)

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.03

 

 

$

(0.06

)

 

$

(0.19

)

 

$

(0.40

)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

53,800,048

 

 

52,215,469

 

 

53,464,101

 

 

50,414,427

 

 

 

 

 

 

 

 

 

 

Diluted

 

55,558,983

 

 

52,215,469

 

 

53,464,101

 

 

50,414,427

 

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Nine Months Ended

 

 

September 30,

 

 

2020

 

2019

OPERATING ACTIVITIES:

 

 

 

 

Net loss

 

$

(10,338

)

 

$

(20,619

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

85,077

 

 

73,167

 

Provision for doubtful accounts

 

2,323

 

 

1,243

 

Deferred income taxes

 

79

 

 

(37,626

)

Non-cash compensation expense

 

45,721

 

 

43,167

 

Non-cash interest expense

 

12,255

 

 

17,195

 

Accretion on contingent consideration and purchase liability

 

1,308

 

 

1,240

 

Payments of contingent consideration

 

 

 

(578

)

Fair market value adjustment to contingent consideration liability

 

(2,056

)

 

 

Gain on acquisition of equity method investment

 

(4,230

)

 

 

Loss allocation from equity method investment

 

4,280

 

 

1,507

 

Impairment of right of use assets

 

1,426

 

 

 

Other

 

556

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

Fees receivables, net

 

(10,825

)

 

6,164

 

Prepaid expenses and other current assets

 

(11,139

)

 

(4,784

)

Other non-current assets

 

(1,807

)

 

(6,113

)

Accrued expenses and other liabilities

 

3,393

 

 

(9,732

)

Accounts payable

 

12,084

 

 

(6,859

)

Deferred revenue

 

1,488

 

 

1,231

 

Other non-current liabilities

 

2,084

 

 

3,242

 

Net cash provided by operating activities

 

131,679

 

 

61,845

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

Purchases of property and equipment

 

(8,824

)

 

(16,098

)

Capitalization of internally developed software

 

(40,257

)

 

(23,649

)

Investments in private companies

 

(13,875

)

 

(3,200

)

Acquisitions of businesses, net of cash acquired

 

(20,257

)

 

(321,571

)

Net cash used in investing activities

 

(83,213

)

 

(364,518

)

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)

 

 

 

Nine Months Ended

 

 

September 30,

 

 

2020

 

2019

FINANCING ACTIVITIES:

 

 

 

 

Proceeds from issuance of Convertible Notes due 2025

 

517,500

 

 

 

Convertible Notes due 2025 issuance costs

 

(14,540

)

 

 

Proceeds from borrowings on revolving credit facility

 

45,000

 

 

175,000

 

Payments on revolving credit facility

 

(305,000

)

 

(75,000

)

Revolving credit facility issuance costs

 

 

 

(2,103

)

Payments of deferred consideration on past acquisitions

 

(1,879

)

 

 

Payments of contingent consideration

 

 

 

(171

)

Proceeds from exercise of stock options

 

8,053

 

 

7,029

 

Taxes paid in lieu of shares issued for stock-based compensation

 

(16,283

)

 

(19,697

)

Issuance of restricted stock units

 

3

 

 

4

 

Net cash provided by financing activities

 

232,854

 

 

85,062

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

(1,009

)

 

(178

)

 

 

 

 

 

INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

280,311

 

 

(217,789

)

 

 

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD

 

82,755

 

 

289,671

 

 

 

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (a)

 

$

363,066

 

 

$

71,882

 

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets:

 

 

September 30,

 

September 30,

 

 

2020

 

2019

Cash and cash equivalents

 

$

362,918

 

 

$

71,632

 

Restricted cash included in prepaid expenses and other current assets

 

 

 

82

 

Restricted cash included in other non-current assets

 

148

 

 

168

 

Total cash, cash equivalents and restricted cash

 

$

363,066

 

 

$

71,882

 

Reconciliation of Non-GAAP Financial Measures

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2020

 

2019

 

2020

 

2019

Total revenues

 

$

252,559

 

 

$

236,080

 

 

$

734,411

 

 

$

660,191

 

Deferred revenue fair value adjustment (a)

 

91

 

 

3,250

 

 

607

 

 

6,670

 

Adjusted revenues

 

252,650

 

 

239,330

 

 

735,018

 

 

666,861

 

Asset-based cost of revenues

 

(71,133

)

 

(64,339

)

 

(201,600

)

 

(178,474

)

Adjusted net revenues

 

$

181,517

 

 

$

174,991

 

 

$

533,418

 

 

$

488,387

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

2,323

 

 

$

(2,964

)

 

$

(10,338

)

 

$

(20,619

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

91

 

 

3,250

 

 

607

 

 

6,670

 

Interest income (b)

 

(262

)

 

(448

)

 

(850

)

 

(2,859

)

Interest expense (b)

 

8,139

 

 

8,986

 

 

21,907

 

 

24,345

 

Accretion on contingent consideration and purchase liability (c)

 

398

 

 

498

 

 

1,308

 

 

1,240

 

Income tax provision (benefit)

 

497

 

 

(6,977

)

 

(161

)

 

(31,591

)

Depreciation and amortization

 

28,951

 

 

26,735

 

 

85,077

 

 

73,167

 

Non-cash compensation expense (d)

 

15,852

 

 

15,389

 

 

43,197

 

 

43,241

 

Restructuring charges and transaction costs (e)

 

4,993

 

 

4,151

 

 

14,461

 

 

24,725

 

Severance (f)

 

2,715

 

 

2,387

 

 

18,566

 

 

8,147

 

Fair market value adjustment on contingent consideration liability (c)

 

(74

)

 

 

 

(2,056

)

 

 

Non-recurring litigation and regulatory related expenses (c)

 

1,809

 

 

2,065

 

 

6,029

 

 

2,065

 

Foreign currency (b)

 

(37

)

 

363

 

 

(68

)

 

208

 

Non-income tax expense adjustment (c)

 

1,795

 

 

362

 

 

1,341

 

 

1,480

 

Non-recurring gain (b)

 

 

 

 

 

(4,230

)

 

 

Loss allocation from equity method investments (b)

 

994

 

 

957

 

 

4,280

 

 

1,507

 

(Income) loss attributable to non-controlling interest

 

(603

)

 

(210

)

 

(1,103

)

 

31

 

Adjusted EBITDA

 

$

67,581

 

 

$

54,544

 

 

$

177,967

 

 

$

131,757

 

 

(a)

 

For the three months ended September 30, 2020 and 2019, $91 and $3,249 were included within subscription-based revenues, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2020 and 2019, $605 and $6,664 were included within subscription-based revenues, respectively, in the condensed consolidated statements of operations. The remaining amounts for all periods were included within professional services and other 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 three months ended September 30, 2020, the entire amount was included in compensation and benefits in the condensed consolidated statements of operations. For the nine months ended September 30, 2020, $45,721 was 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) 

 

For the three months ended September 30, 2020 and 2019, $3,992 and $3,240 were included within general and administrative expenses, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2020 and 2019, $969 and $911 were included within compensation and benefits, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2020 and 2019 , $11,485 and $14,071 were included within general and administrative expenses, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2020 and 2019, $2,764 and $10,654 were included within compensation and benefits, respectively, in the condensed consolidated statements of operations. The remaining amounts for the 2020 periods were included within other expense, net in the condensed consolidated statements of operations.

 

(f)

 

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

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2020

 

2019

 

2020

 

2019

Net income (loss)

 

$

2,323

 

 

$

(2,964

)

 

$

(10,338

)

 

$

(20,619

)

Income tax provision (benefit) (a)

 

497

 

 

(6,977

)

 

(161

)

 

(31,591

)

Loss before income tax provision (benefit)

 

2,820

 

 

(9,941

)

 

(10,499

)

 

(52,210

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (b)

 

91

 

 

3,250

 

 

607

 

 

6,670

 

Accretion on contingent consideration and purchase liability (d)

 

398

 

 

498

 

 

1,308

 

 

1,240

 

Non-cash interest expense (c)

 

4,738

 

 

5,006

 

 

10,682

 

 

14,268

 

Non-cash compensation expense (f)

 

15,852

 

 

15,389

 

 

43,197

 

 

43,241

 

Restructuring charges and transaction costs (e)

 

4,993

 

 

4,151

 

 

14,461

 

 

24,725

 

Severance (g)

 

2,715

 

 

2,387

 

 

18,566

 

 

8,147

 

Fair market value adjustment on contingent consideration liability (d)

 

(74

)

 

 

 

(2,056

)

 

 

Amortization of acquired intangibles (h)

 

18,510

 

 

19,242

 

 

56,014

 

 

51,048

 

Non-recurring litigation and regulatory related expenses (d)

 

1,809

 

 

2,065

 

 

6,029

 

 

2,065

 

Foreign currency (c)

 

(37

)

 

363

 

 

(68

)

 

208

 

Non-income tax expense adjustment (d)

 

1,795

 

 

362

 

 

1,341

 

 

1,480

 

Non-recurring gain (c)

 

 

 

 

 

(4,230

)

 

 

Loss allocation from equity method investments (c)

 

994

 

 

957

 

 

4,280

 

 

1,507

 

(Income) loss attributable to non-controlling interest

 

(603

)

 

(210

)

 

(1,103

)

 

31

 

Adjusted net income before income tax effect

 

54,001

 

 

43,519

 

 

138,529

 

 

102,420

 

Income tax effect (i)

 

(13,772

)

 

(11,097

)

 

(35,325

)

 

(26,117

)

Adjusted net income

 

$

40,229

 

 

$

32,422

 

 

$

103,204

 

 

$

76,303

 

 

 

 

 

 

 

 

 

 

Basic number of weighted-average shares outstanding

 

53,800,048

 

 

52,215,469

 

 

53,464,101

 

 

50,414,427

 

Effect of dilutive shares:

 

 

 

 

 

 

 

 

Options to purchase common stock

 

331,728

 

 

953,184

 

 

458,232

 

 

1,107,995

 

Unvested restricted stock units

 

610,442

 

 

548,057

 

 

548,858

 

 

662,364

 

Convertible notes

 

730,267

 

 

9,875

 

 

280,375

 

 

11,637

 

Warrants

 

86,498

 

 

 

 

46,562

 

 

 

Diluted number of weighted-average shares outstanding

 

55,558,983

 

 

53,726,585

 

 

54,798,128

 

 

52,196,423

 

 

 

 

 

 

 

 

 

 

Adjusted net income per share - diluted

 

$

0.72

 

 

$

0.60

 

 

$

1.88

 

 

$

1.46

 

 

(a)

 

For the three months ended September 30, 2020 and 2019, the effective tax rate computed in accordance with GAAP equaled 17.6% and 70.2%, respectively. For the nine months ended September 30, 2020 and 2019, the effective tax rate computed in accordance with GAAP equaled 1.5% and 60.5%, respectively.

 

(b)

 

For the three months ended September 30, 2020 and 2019, $91 and $3,249 were included within subscription-based revenues, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2020 and 2019, $605 and $6,664 were included within subscription-based revenues, respectively, in the condensed consolidated statements of operations. The remaining amounts for all periods were included within professional services and other 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 three months ended September 30, 2020 and 2019, $3,992 and $3,240 were included within general and administrative expenses, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2020 and 2019, $969 and $911 were included within compensation and benefits, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2020 and 2019, $11,485 and $14,071 were included within general and administrative expenses, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2020 and 2019, $2,764 and $10,654 were included within compensation and benefits, respectively, in the condensed consolidated statements of operations. The remaining amounts for the 2020 periods were included within other expense, net in the condensed consolidated statements of operations.

 

(f)

 

For the three months ended September 30, 2020, $15,852 included in compensation and benefits in the condensed consolidated statements of operations. For the nine months ended September 30, 2020, $45,721 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.

 

(g)

 

Included within compensation and benefits in the condensed consolidated statements of operations.

 

(h)

 

Included within depreciation and amortization 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 nine months ended September 30, 2020 and 2019.

Reconciliation of Non-GAAP Financial Measures

Segment Information

(in thousands)

(unaudited)

 

 

 

Three months ended September 30, 2020

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Total Revenues

 

$

204,294

 

 

$

48,265

 

 

$

 

 

$

252,559

 

Deferred revenue fair value adjustment (a)

 

91

 

 

 

 

 

 

91

 

Adjusted revenues

 

204,385

 

 

48,265

 

 

 

 

252,650

 

Less: Asset-based cost of revenues

 

(71,133

)

 

 

 

 

 

(71,133

)

Adjusted net revenues

 

$

133,252

 

 

$

48,265

 

 

$

 

 

$

181,517

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Asset-based

 

$

137,744

 

 

$

 

 

$

 

 

$

137,744

 

Subscription-based

 

62,783

 

 

45,114

 

 

 

 

107,897

 

Total recurring revenues

 

200,527

 

 

45,114

 

 

 

 

245,641

 

Professional services and other revenues

 

3,767

 

 

3,151

 

 

 

 

6,918

 

Total revenues

 

204,294

 

 

48,265

 

 

 

 

252,559

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

Asset-based

 

71,133

 

 

 

 

 

 

71,133

 

Subscription-based

 

1,272

 

 

6,019

 

 

 

 

7,291

 

Professional services and other

 

30

 

 

91

 

 

 

 

121

 

Total cost of revenues

 

72,435

 

 

6,110

 

 

 

 

78,545

 

Compensation and benefits

 

59,522

 

 

26,540

 

 

8,366

 

 

94,428

 

General and administration

 

22,248

 

 

8,308

 

 

8,423

 

 

38,979

 

Depreciation and amortization

 

20,406

 

 

8,545

 

 

 

 

28,951

 

Total operating expenses

 

$

174,611

 

 

$

49,503

 

 

$

16,789

 

 

$

240,903

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

29,683

 

 

$

(1,238

)

 

$

(16,789

)

 

$

11,656

 

Add:

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

91

 

 

 

 

 

 

91

 

Accretion on contingent consideration and purchase liability (b)

 

341

 

 

57

 

 

 

 

398

 

Depreciation and amortization

 

20,406

 

 

8,545

 

 

 

 

28,951

 

Non-cash compensation expense (c)

 

8,685

 

 

4,458

 

 

2,709

 

 

15,852

 

Restructuring charges and transaction costs (d)

 

944

 

 

33

 

 

4,016

 

 

4,993

 

Non-income tax expense adjustment (b)

 

1,860

 

 

(65

)

 

 

 

1,795

 

Severance (c)

 

2,154

 

 

495

 

 

66

 

 

2,715

 

Fair market value adjustment on contingent consideration liability (b)

 

 

 

(74

)

 

 

 

(74

)

Non-recurring litigation and regulatory related expenses (b)

 

 

 

1,809

 

 

 

 

1,809

 

Income attributable to non-controlling interest

 

(603

)

 

 

 

 

 

(603

)

Other

 

(2

)

 

 

 

 

 

(2

)

Adjusted EBITDA

 

$

63,559

 

 

$

14,020

 

 

$

(9,998

)

 

$

67,581

 

 

(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)

 

$3,992 included within general and administrative expenses, $969 included within compensation and benefits and $32 included within other expense, net in the condensed consolidated statements of operations.

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

 

 

 

Nine months ended September 30, 2020

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Total Revenues

 

$

590,399

 

 

$

144,012

 

 

$

 

 

$

734,411

 

Deferred revenue fair value adjustment (a)

 

607

 

 

 

 

 

 

607

 

Adjusted revenues

 

591,006

 

 

144,012

 

 

 

 

735,018

 

Less: Asset-based cost of revenues

 

(201,600

)

 

 

 

 

 

(201,600

)

Adjusted net revenues

 

$

389,406

 

 

$

144,012

 

 

$

 

 

$

533,418

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Asset-based

 

$

394,801

 

 

$

 

 

$

 

 

$

394,801

 

Subscription-based

 

184,516

 

 

132,911

 

 

 

 

317,427

 

Total recurring revenues

 

579,317

 

 

132,911

 

 

 

 

712,228

 

Professional services and other revenues

 

11,082

 

 

11,101

 

 

 

 

22,183

 

Total revenues

 

590,399

 

 

144,012

 

 

 

 

734,411

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

Asset-based

 

201,600

 

 

 

 

 

 

201,600

 

Subscription-based

 

3,691

 

 

16,684

 

 

 

 

20,375

 

Professional services and other

 

47

 

 

305

 

 

 

 

352

 

Total cost of revenues

 

205,338

 

 

16,989

 

 

 

 

222,327

 

Compensation and benefits

 

194,906

 

 

82,455

 

 

23,062

 

 

300,423

 

General and administration

 

69,358

 

 

26,162

 

 

23,017

 

 

118,537

 

Depreciation and amortization

 

59,907

 

 

25,170

 

 

 

 

85,077

 

Total operating expenses

 

$

529,509

 

 

$

150,776

 

 

$

46,079

 

 

$

726,364

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

60,890

 

 

$

(6,764

)

 

$

(46,079

)

 

$

8,047

 

Add:

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

607

 

 

 

 

 

 

607

 

Accretion on contingent consideration and purchase liability (b)

 

1,087

 

 

221

 

 

 

 

1,308

 

Depreciation and amortization

 

59,907

 

 

25,170

 

 

 

 

85,077

 

Non-cash compensation expense (c)

 

27,437

 

 

11,665

 

 

6,619

 

 

45,721

 

Restructuring charges and transaction costs (d)

 

5,864

 

 

489

 

 

8,108

 

 

14,461

 

Non-income tax expense adjustment (b)

 

1,532

 

 

(191

)

 

 

 

1,341

 

Severance (c)

 

14,593

 

 

2,587

 

 

1,386

 

 

18,566

 

Fair market value adjustment on contingent consideration liability (b)

 

 

 

(2,056

)

 

 

 

(2,056

)

Non-recurring litigation and regulatory related expenses (b)

 

 

 

6,029

 

 

 

 

6,029

 

Income attributable to non-controlling interest

 

(1,103

)

 

 

 

 

 

(1,103

)

Other

 

(31

)

 

 

 

 

 

(31

)

Adjusted EBITDA

 

$

170,783

 

 

$

37,150

 

 

$

(29,966

)

 

$

177,967

 

 

(a)

 

$605 included within subscription-based revenues and $2 included within professional services and other 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)

 

$11,485 included within general and administrative expenses, $2,764 included within compensation and benefits and $212 included within other expense, net in the condensed consolidated statements of operations.

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

 

 

 

Three months ended September 30, 2019

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Revenues

 

$

188,224

 

 

$

47,856

 

 

$

 

 

$

236,080

 

Deferred revenue fair value adjustment (a)

 

3,250

 

 

 

 

 

 

3,250

 

Adjusted revenues

 

191,474

 

 

47,856

 

 

 

 

239,330

 

Less: Asset-based cost of revenues

 

(64,339

)

 

 

 

 

 

(64,339

)

Adjusted net revenues

 

$

127,135

 

 

$

47,856

 

 

$

 

 

$

174,991

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Asset-based

 

$

126,591

 

 

$

 

 

$

 

 

$

126,591

 

Subscription-based

 

57,353

 

 

43,230

 

 

 

 

100,583

 

Total recurring revenues

 

183,944

 

 

43,230

 

 

 

 

227,174

 

Professional services and other revenues

 

4,280

 

 

4,626

 

 

 

 

8,906

 

Total revenues

 

188,224

 

 

47,856

 

 

 

 

236,080

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

Asset-based

 

64,339

 

 

 

 

 

 

64,339

 

Subscription-based

 

1,248

 

 

6,030

 

 

 

 

7,278

 

Professional services and other

 

165

 

 

88

 

 

 

 

253

 

Total cost of revenues

 

65,752

 

 

6,118

 

 

 

 

71,870

 

Compensation and benefits

 

60,836

 

 

28,956

 

 

5,795

 

 

95,587

 

General and administration

 

25,476

 

 

11,573

 

 

4,967

 

 

42,016

 

Depreciation and amortization

 

18,414

 

 

8,321

 

 

 

 

26,735

 

Total operating expenses

 

$

170,478

 

 

$

54,968

 

 

$

10,762

 

 

$

236,208

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

17,746

 

 

$

(7,112

)

 

$

(10,762

)

 

$

(128

)

Add:

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

3,250

 

 

 

 

 

 

3,250

 

Accretion on contingent consideration and purchase liability (b)

 

498

 

 

 

 

 

 

498

 

Depreciation and amortization

 

18,414

 

 

8,321

 

 

 

 

26,735

 

Non-cash compensation expense (c)

 

9,317

 

 

3,844

 

 

2,228

 

 

15,389

 

Restructuring charges and transaction costs (d)

 

733

 

 

624

 

 

2,794

 

 

4,151

 

Non-income tax expense adjustment (b)

 

299

 

 

63

 

 

 

 

362

 

Severance (c)

 

1,076

 

 

1,218

 

 

93

 

 

2,387

 

Non-recurring litigation and regulatory related expenses (b)

 

 

 

2,065

 

 

 

 

2,065

 

Loss attributable to non-controlling interest

 

(210

)

 

 

 

 

 

(210

)

Other

 

46

 

 

(1

)

 

 

 

45

 

Adjusted EBITDA

 

$

51,169

 

 

$

9,022

 

 

$

(5,647

)

 

$

54,544

 

 

(a)

 

$3,249 included within subscription-based revenues and $1 included within professional services and other 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)

 

$3,240 included within general and administrative expenses and $911 included within compensation and benefits in the condensed consolidated statements of operations.

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

 

 

 

Nine Months Ended September 30, 2019

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Revenues

 

$

517,819

 

 

$

142,372

 

 

$

 

 

$

660,191

 

Deferred revenue fair value adjustment (a)

 

6,670

 

 

 

 

 

 

6,670

 

Adjusted revenues

 

524,489

 

 

142,372

 

 

 

 

666,861

 

Less: Asset-based cost of revenues

 

(178,474

)

 

 

 

 

 

(178,474

)

Adjusted net revenues

 

$

346,015

 

 

$

142,372

 

 

$

 

 

$

488,387

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Asset-based

 

$

355,595

 

 

$

 

 

$

 

 

$

355,595

 

Subscription-based

 

148,457

 

 

127,471

 

 

 

 

275,928

 

Total recurring revenues

 

504,052

 

 

127,471

 

 

 

 

631,523

 

Professional services and other revenues

 

13,767

 

 

14,901

 

 

 

 

28,668

 

Total revenues

 

517,819

 

 

142,372

 

 

 

 

660,191

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

Asset-based

 

178,474

 

 

 

 

 

 

178,474

 

Subscription-based

 

4,371

 

 

17,281

 

 

 

 

21,652

 

Professional services and other

 

5,012

 

 

457

 

 

 

 

5,469

 

Total cost of revenues

 

187,857

 

 

17,738

 

 

 

 

205,595

 

Compensation and benefits

 

165,610

 

 

91,913

 

 

28,067

 

 

285,590

 

General and administration

 

71,326

 

 

29,611

 

 

24,024

 

 

124,961

 

Depreciation and amortization

 

46,057

 

 

27,110

 

 

 

 

73,167

 

Total operating expenses

 

$

470,850

 

 

$

166,372

 

 

$

52,091

 

 

$

689,313

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

46,969

 

 

$

(24,000

)

 

$

(52,091

)

 

$

(29,122

)

Add:

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

6,670

 

 

 

 

 

 

6,670

 

Accretion on contingent consideration and purchase liability (b)

 

1,240

 

 

 

 

 

 

1,240

 

Depreciation and amortization

 

46,057

 

 

27,110

 

 

 

 

73,167

 

Non-cash compensation expense (c)

 

23,586

 

 

11,799

 

 

7,856

 

 

43,241

 

Restructuring charges and transaction costs (d)

 

1,789

 

 

1,393

 

 

21,543

 

 

24,725

 

Non-income tax expense adjustment (b)

 

1,407

 

 

73

 

 

 

 

1,480

 

Severance (c)

 

2,244

 

 

5,714

 

 

189

 

 

8,147

 

Non-recurring litigation and regulator related expenses (b)

 

 

 

2,065

 

 

 

 

2,065

 

Loss attributable to non-controlling interest

 

31

 

 

 

 

 

 

31

 

Other

 

111

 

 

 

 

2

 

 

113

 

Adjusted EBITDA

 

$

130,104

 

 

$

24,154

 

 

$

(22,501

)

 

$

131,757

 

 

(a)

 

$6,664 included within subscription-based revenues and $6 included within professional services and other 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)

 

$14,071 included within general and administrative expenses and $10,654 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

 

 

September 30,

 

December 31,

 

March 31,

 

June 30,

 

September 30,

 

 

2019

 

2019

 

2020

 

2020

 

2020

 

 

(in millions, except accounts and advisors data)

Platform Assets

 

 

 

 

 

 

 

 

 

 

Assets under Management (“AUM”)

 

$

188,739

 

 

$

207,083

 

 

$

185,065

 

 

$

215,994

 

 

$

228,905

 

Assets under Administration (“AUA”)

 

316,742

 

 

343,505

 

 

312,472

 

 

344,957

 

 

375,860

 

Total AUM/A

 

505,481

 

 

550,588

 

 

497,537

 

 

560,951

 

 

604,765

 

Subscription

 

2,947,582

 

 

3,205,281

 

 

2,875,394

 

 

3,247,400

 

 

3,498,353

 

Total Platform Assets

 

$

3,453,063

 

 

$

3,755,869

 

 

$

3,372,931

 

 

$

3,808,351

 

 

$

4,103,118

 

Platform Accounts

 

 

 

 

 

 

 

 

 

 

AUM

 

934,811

 

 

935,039

 

 

970,896

 

 

1,007,386

 

 

1,018,817

 

AUA

 

1,136,430

 

 

1,193,882

 

 

1,254,856

 

 

1,252,247

 

 

1,318,730

 

Total AUM/A

 

2,071,241

 

 

2,128,921

 

 

2,225,752

 

 

2,259,633

 

 

2,337,547

 

Subscription

 

9,692,714

 

 

9,793,175

 

 

10,090,172

 

 

10,003,156

 

 

10,639,399

 

Total Platform Accounts

 

11,763,955

 

 

11,922,096

 

 

12,315,924

 

 

12,262,789

 

 

12,976,946

 

Advisors

 

 

 

 

 

 

 

 

 

 

AUM/A

 

39,735

 

 

40,563

 

 

40,971

 

 

41,206

 

 

41,450

 

Subscription

 

60,319

 

 

61,180

 

 

62,077

 

 

62,404

 

 

63,862

 

Total Advisors

 

100,054

 

 

101,743

 

 

103,048

 

 

103,610

 

 

105,312

 

The following table summarizes the changes in AUM and AUA for the three months ended September 30, 2020:

 

 

6/30/2020

 

Gross

Sales

 

Redemptions

 

Net

Flows

 

Market

Impact

 

9/30/2020

 

 

(in millions except account data)

AUM

 

$

215,994

 

 

$

12,526

 

 

$

(10,151

)

 

$

2,375

 

 

$

10,536

 

 

$

228,905

 

AUA

 

344,957

 

 

33,944

 

 

(19,618

)

 

14,326

 

 

16,577

 

 

375,860

 

Total AUM/A

 

$

560,951

 

 

$

46,470

 

 

$

(29,769

)

 

$

16,701

 

 

$

27,113

 

 

$

604,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-Based Accounts

 

2,259,633

 

 

 

 

 

 

77,914

 

 

 

 

2,337,547

 

The above AUM/A gross sales figures include $8.4 billion in new client conversions. The Company onboarded an additional $33.9 billion in subscription conversions during the three months ended September 30, 2020, bringing total conversions for the quarter to $42.3 billion.

Investor Relations
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Source: Envestnet