Exhibit 99.1

 

Envestnet Reports Second Quarter 2014 Financial Results

 

Chicago, IL — August 6, 2014 — Envestnet (NYSE: ENV), a leading provider of unified wealth management technology and services to financial advisors, today reported financial results for its second quarter ended June 30, 2014.

 

Key Financial Metrics

 

Three Months
Ended June 30,

 

%

 

Six Months
Ended June 30,

 

%

 

(in millions except per share data)

 

2014

 

2013

 

Change

 

2014

 

2013

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Revenues(1)

 

$

84.8

 

$

51.7

 

64

%

$

163.4

 

$

98.4

 

66

%

Adjusted EBITDA(1)

 

$

12.8

 

$

9.3

 

38

%

$

24.6

 

$

17.5

 

40

%

Adjusted Net Income per Share(1)

 

$

0.18

 

$

0.13

 

38

%

$

0.35

 

$

0.25

 

40

%

 

Financial Results for the Second Quarter of 2014 Compared to the Second Quarter of 2013:

 

·                  Adjusted Revenues(1) increased 64% to $84.8 million for the second quarter of 2014 from $51.7 million for the second quarter of 2013.

·                  Revenues from assets under management (AUM) or assets under administration (AUA) increased 72% to $70.7 million for the second quarter of 2014 from $41.2 million for the second quarter of 2013; total revenues, which include licensing and professional services fees, increased 64% to $84.8 million for the second quarter of 2014 from $51.6 million for the second quarter of 2013.

·                  Adjusted EBITDA(1) increased 38% to $12.8 million for the second quarter of 2014 compared to $9.3 million for the second quarter of 2013.

·                  Adjusted Net Income(1) was $6.6 million, or $0.18 per diluted share, for the second quarter of 2014 compared to $4.5 million, or $0.13 per diluted share, for the second quarter of 2013.

·                  Net income attributable to Envestnet, Inc. was $3.7 million, or $0.10 per diluted share, for the second quarter of 2014 compared to $1.1 million, or $0.03 per diluted share, for the second quarter of 2013.

 

“Envestnet empowers advisors to achieve better portfolio outcomes for their clients and to reach higher standards in the management of their practices,” said Jud Bergman, Chairman and CEO.

 

“Our second quarter results reflect growing adoption from advisors and enterprise firms. We believe Envestnet remains well positioned to deliver meaningful organic growth, in 2014 and beyond, and to accelerate that growth through disciplined strategic activity, such as the recently announced Placemark acquisition,” concluded Mr. Bergman.

 

Key Operating Metrics (AUM/A Only) as of and for the Quarter Ended June 30, 2014:

 

·                  Assets: $209.8 billion, up 69% from June 30, 2013

·                  Accounts: 836,253, up 53% from June 30, 2013

·                  Advisors: 24,945, up 37% from June 30, 2013

·                  Gross sales: $18.5 billion, resulting in net flows of $7.3 billion

 

The following table summarizes the changes in AUM and AUA for the quarter ended June 30, 2014:

 

In Millions Except Accounts

 

3/31/14

 

Gross
Sales

 

Redemp-
tions

 

Net
Flows

 

Market
Impact

 

6/30/14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets under Management (AUM)

 

$

49,383

 

$

4,949

 

$

(2,789

)

$

2,160

 

$

1,520

 

$

53,063

 

Assets under Administration (AUA)

 

146,748

 

13,581

 

(8,485

)

5,096

 

4,879

 

156,723

 

Total AUM/A

 

$

196,131

 

$

18,530

 

$

(11,274

)

$

7,256

 

$

6,399

 

$

209,786

 

Fee-Based Accounts

 

792,591

 

75,442

 

(31,780

)

43,662

 

 

 

836,253

 

 

During the second quarter, the Company added $2.0 billion of conversions included in the above AUM/A gross sales figures, and an additional $19.3 billion of conversions in Licensing.

 



 

Review of Second Quarter 2014 Financial Results

 

Adjusted revenues increased 64% to $84.8 million for the second quarter of 2014 from $51.7 million for the second quarter of 2013. The increase was primarily due to a 72% increase in revenues from AUM or AUA to $70.7 million from $41.2 million in the prior year period. Revenue from Prudential’s Wealth Management Solutions (“WMS”) business, acquired by the Company in July 2013, is included for the entire second quarter of 2014.

 

Total operating expenses increased 62% to $80.7 million in the second quarter of 2014 from $49.9 million in the second quarter of 2013. Cost of revenues increased 93% to $38.0 million in the second quarter of 2014 from $19.6 million in the second quarter of 2013 due to the increase in revenue from AUM or AUA, additional costs attributable to WMS revenues, which have a higher cost profile than the Company’s non-WMS business, and costs incurred related to our annual Advisor Summit. Compensation and benefits increased 46% to $25.2 million in the second quarter of 2014 from $17.2 million in the prior year period, primarily due to WMS, as well as higher non-cash compensation expense. General and administration expenses increased 30% to $12.9 million in the second quarter of 2014 from $10.0 million in the prior year period, primarily due to WMS.

 

Income from operations was $4.2 million for the second quarter of 2014 compared to $1.8 million for the second quarter of 2013. Net income attributable to Envestnet, Inc. was $3.7 million, or $0.10 per diluted share, for the second quarter of 2014 compared to $1.1 million, or $0.03 per diluted share, for the second quarter of 2013. Adjusted EBITDA(1) in the second quarter of 2014 was $12.8 million, compared to $9.3 million in the prior year period. Adjusted Net Income(1) was $6.6 million, compared to $4.5 million in the second quarter of 2013. Adjusted Net Income Per Share(1) was $0.18, compared to $0.13 in the second quarter of 2013.

 

At June 30, 2014, the Company had $64.5 million in cash and cash equivalents with no debt.

 

Conference Call

 

The Company will host a conference call to discuss second quarter 2014 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 call can also be accessed live over the phone by dialing (800) 347-6311, or for international callers (719) 325-2209. A replay will be available one hour after the call and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the conference ID is 1052509.  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 unified wealth management technology and services to investment advisors. Its open-architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective and fully-aligned standard of care, and empower advisors to deliver better results.

 

Envestnet’s Advisor Suite® software empowers financial advisors to better manage client outcomes and strengthen their practice. Envestnet provides institutional-quality research and advanced portfolio solutions through its Portfolio Management Consultants group, Envestnet | PMC®. Envestnet | TamaracTM provides leading rebalancing, reporting and practice management software. For more information on Envestnet, please visit www.envestnet.com.

 

2



 


(1) Non-GAAP Financial Measures

 

“Adjusted revenues” exclude 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 EBITDA” represents net income before deferred revenue fair value adjustment, interest income, imputed interest on contingent consideration, income tax provision, depreciation and amortization, non-cash compensation expense, restructuring charges and transaction costs, re-audit related expenses, severance, fair market value adjustment on contingent consideration, litigation related expense and pre-tax loss attributable to non-controlling interest.

 

“Adjusted net income” represents net income before deferred revenue fair value adjustment, imputed interest on contingent consideration, non-cash compensation expense, restructuring charges and transaction costs, re-audit related expenses, severance, fair market value adjustment on contingent consideration, amortization of acquired intangibles, litigation related expense and net loss attributable to non-controlling interest. Reconciling items are tax effected using the income tax rates noted in the reconciliation table found in this release.

 

“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 revenues, net income or net income per share 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 conditions, changes to the Company’s previously reported financial information as a result of 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 August 6, 2014 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.

 

Contacts

 

Investor Relations

Media Relations

investor.relations@envestnet.com

mediarelations@envestnet.com

(312) 827-3940

 

 

3



 

Envestnet, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

 

June 30,

 

December 31,

 

 

 

2014

 

2013

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

64,464

 

$

49,942

 

Fees and other receivables, net

 

24,857

 

19,848

 

Deferred tax assets, net

 

2,462

 

2,462

 

Prepaid expenses and other current assets

 

4,700

 

7,155

 

Total current assets

 

96,483

 

79,407

 

 

 

 

 

 

 

Property and equipment, net

 

14,565

 

12,766

 

Internally developed software, net

 

6,394

 

5,740

 

Intangible assets, net

 

31,398

 

35,698

 

Goodwill

 

74,868

 

74,335

 

Deferred tax assets, net

 

8,367

 

8,367

 

Other non-current assets

 

5,110

 

4,929

 

Total assets

 

$

237,185

 

$

221,242

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accrued expenses

 

$

33,683

 

$

35,242

 

Accounts payable

 

6,728

 

5,528

 

Contingent consideration

 

6,000

 

6,008

 

Deferred revenue

 

6,566

 

6,245

 

Total current liabilities

 

52,977

 

53,023

 

 

 

 

 

 

 

Contingent consideration

 

11,389

 

11,297

 

Deferred revenue

 

3,017

 

1,148

 

Deferred rent

 

2,575

 

2,051

 

Lease incentive

 

4,146

 

3,547

 

Other non-current liabilities

 

2,548

 

2,404

 

Total liabilities

 

76,652

 

73,470

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

Stockholders’ equity

 

159,977

 

147,772

 

Non-controlling interest

 

556

 

 

Total liabilities and equity

 

$

237,185

 

$

221,242

 

 

4



 

Envestnet, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share information)

(unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Assets under management or administration

 

$

70,727

 

$

41,234

 

$

137,808

 

$

77,570

 

Licensing and professional services

 

14,102

 

10,398

 

25,560

 

20,687

 

Total revenues

 

84,829

 

51,632

 

163,368

 

98,257

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of revenues

 

37,955

 

19,638

 

72,392

 

36,446

 

Compensation and benefits

 

25,157

 

17,194

 

48,616

 

34,412

 

General and administration

 

12,936

 

9,962

 

25,086

 

18,855

 

Depreciation and amortization

 

4,615

 

3,081

 

9,037

 

6,199

 

Total operating expenses

 

80,663

 

49,875

 

155,131

 

95,912

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

4,166

 

1,757

 

8,237

 

2,345

 

Other income

 

1,839

 

186

 

1,920

 

191

 

Income before income tax provision

 

6,005

 

1,943

 

10,157

 

2,536

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

2,355

 

825

 

3,639

 

877

 

 

 

 

 

 

 

 

 

 

 

Net income

 

3,650

 

1,118

 

6,518

 

1,659

 

 

 

 

 

 

 

 

 

 

 

Add: Net loss attributable to non-controlling interest

 

69

 

 

195

 

 

Net income attributable to Envestnet, Inc.

 

$

3,719

 

$

1,118

 

$

6,713

 

$

1,659

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to Envestnet, Inc.:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.11

 

$

0.03

 

$

0.20

 

$

0.05

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.10

 

$

0.03

 

$

0.18

 

$

0.05

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

34,547,277

 

32,661,196

 

34,332,759

 

32,518,943

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

36,805,758

 

35,164,106

 

36,726,121

 

34,760,568

 

 

5



 

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

6,518

 

$

1,659

 

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

 

 

 

 

 

Depreciation and amortization

 

9,037

 

6,199

 

Deferred rent and lease incentive

 

1,123

 

(48

)

Provision for doubtful accounts

 

 

60

 

Deferred income taxes

 

 

(1,094

)

Stock-based compensation

 

5,767

 

4,266

 

Excess tax benefits from stock-based compensation

 

 

(1,047

)

Imputed interest expense

 

824

 

 

Fair market value adjustment to contingent consideration

 

(460

)

 

Changes in operating assets and liabilities:

 

 

 

 

 

Fees and other receivables, net

 

(5,009

)

(3,672

)

Prepaid expenses and other current assets

 

2,455

 

(672

)

Other non-current assets

 

(1,136

)

(568

)

Accrued expenses

 

(1,559

)

3,490

 

Accounts payable

 

1,200

 

1,489

 

Deferred revenue

 

2,190

 

80

 

Other non-current liabilities

 

144

 

25

 

Net cash provided by operating activities

 

21,094

 

10,167

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

Purchases of property and equipment

 

(4,841

)

(1,638

)

Capitalization of internally developed software

 

(1,651

)

(1,503

)

Net cash used in investing activities

 

(6,492

)

(3,141

)

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

Proceeds from exercise of warrants

 

 

4

 

Proceeds from exercise of stock options

 

1,615

 

2,204

 

Issuance of restricted stock

 

 

1

 

Purchase of treasury stock for stock-based minimum tax withholdings

 

(1,695

)

(586

)

Excess tax benefits from stock-based compensation

 

 

1,047

 

Net cash (used in) provided by financing activities

 

(80

)

2,670

 

 

 

 

 

 

 

INCREASE IN CASH AND CASH EQUIVALENTS

 

14,522

 

9,696

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

49,942

 

29,983

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

64,464

 

$

39,679

 

 

6



 

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands, except share and per share information)

(unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

84,829

 

$

51,632

 

$

163,368

 

$

98,257

 

Deferred revenue fair value adjustment

 

 

23

 

 

160

 

Adjusted revenues

 

$

84,829

 

$

51,655

 

$

163,368

 

$

98,417

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

3,650

 

$

1,118

 

$

6,518

 

$

1,659

 

Add (deduct):

 

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment

 

 

23

 

 

160

 

Interest income

 

(14

)

(4

)

(95

)

(9

)

Imputed interest expense on contingent consideration

 

412

 

 

824

 

 

Fair market value adjustment on contingent consideration

 

(460

)

 

(460

)

 

Income tax provision

 

2,355

 

825

 

3,639

 

877

 

Depreciation and amortization

 

4,615

 

3,081

 

9,037

 

6,199

 

Non-cash compensation expense

 

3,199

 

1,960

 

5,767

 

4,447

 

Restructuring charges and transaction costs

 

583

 

704

 

687

 

1,054

 

Re-audit related expenses

 

 

1,554

 

 

2,887

 

Severance

 

 

44

 

4

 

232

 

Litigation related expense

 

17

 

 

17

 

7

 

Other income

 

(1,825

)

 

(1,825

)

 

Pre-tax loss attributable to non-controlling interest

 

296

 

 

486

 

 

Adjusted EBITDA

 

$

12,828

 

$

9,305

 

$

24,599

 

$

17,513

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

3,650

 

$

1,118

 

$

6,518

 

$

1,659

 

Add (deduct):

 

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment

 

 

13

 

 

93

 

Imputed interest expense on contingent consideration

 

247

 

 

494

 

 

Fair market value adjustment on contingent consideration

 

(276

)

 

(276

)

 

Non-cash compensation expense

 

1,920

 

1,137

 

3,461

 

2,579

 

Restructuring charges and transaction costs

 

451

 

408

 

513

 

611

 

Re-audit related expenses

 

 

901

 

 

1,674

 

Severance

 

 

26

 

2

 

135

 

Amortization of acquired intangibles

 

1,532

 

910

 

2,998

 

1,829

 

Litigation related expense

 

10

 

 

10

 

4

 

Other income

 

(1,095

)

 

(1,095

)

 

Net loss attributable to non-controlling interest

 

177

 

 

292

 

 

Adjusted net income

 

$

6,616

 

$

4,513

 

$

12,917

 

$

8,584

 

 

 

 

 

 

 

 

 

 

 

Diluted number of weighted-average shares outstanding

 

36,805,758

 

35,164,106

 

36,726,121

 

34,760,568

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income per share - diluted

 

$

0.18

 

$

0.13

 

$

0.35

 

$

0.25

 

 

Note:    Adjustments, excluding non-deductible transaction costs, are tax effected using an income tax rate of 40.0% and 42.0% for 2014 and 2013, respectively.  Pre-tax loss attributable to non-controlling interest assumes losses are allocated to Envestnet Retirement Solutions, LLC members pro-rata based on ownership percentage.

 

7



 

Envestnet, Inc.

Historical Assets, Accounts and Advisors

(in millions, except accounts and advisors)

(Unaudited)

 

 

 

As of

 

 

 

June 30,
2013

 

September 30,
2013

 

December 31,
2013

 

March 31,
2014

 

June 30,
2014

 

 

 

 

 

 

 

 

 

 

 

 

 

Platform Assets

 

 

 

 

 

 

 

 

 

 

 

Assets Under Management (AUM)

 

$

38,705

 

$

41,932

 

$

45,706

 

$

49,383

 

$

53,063

 

Assets Under Administration (AUA)

 

85,601

 

118,228

 

132,215

 

146,748

 

156,723

 

Subtotal AUM/A

 

124,306

 

160,160

 

177,921

 

196,131

 

209,786

 

Licensing

 

302,604

 

326,567

 

358,919

 

376,341

 

412,141

 

Total Platform Assets

 

$

426,910

 

$

486,727

 

$

536,840

 

$

572,472

 

$

621,927

 

 

 

 

 

 

 

 

 

 

 

 

 

Platform Accounts

 

 

 

 

 

 

 

 

 

 

 

AUM

 

190,883

 

200,648

 

211,039

 

226,452

 

239,367

 

AUA

 

357,283

 

456,461

 

524,806

 

566,139

 

596,886

 

Subtotal AUM/A

 

548,166

 

657,109

 

735,845

 

792,591

 

836,253

 

Licensing

 

1,365,773

 

1,425,102

 

1,508,254

 

1,559,188

 

1,659,313

 

Total Platform Accounts

 

1,913,939

 

2,082,211

 

2,244,099

 

2,351,779

 

2,495,566

 

 

 

 

 

 

 

 

 

 

 

 

 

Advisors

 

 

 

 

 

 

 

 

 

 

 

AUM/A

 

18,154

 

21,759

 

22,838

 

24,369

 

24,945

 

Licensing

 

7,261

 

7,511

 

7,794

 

8,025

 

8,583

 

Total Advisors

 

25,415

 

29,270

 

30,632

 

32,394

 

33,528

 

 

Note:                  AUM/A metrics include WMS, which added approximately $25 billion in assets, 86,000 accounts and 3,100 advisors as of July 1, 2013.

 

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