Exhibit 99.1
Envestnet Reports Third Quarter 2010 Financial Results
Chicago, IL – November 4, 2010 – Envestnet, Inc. (NYSE: ENV), a leading provider of technology-enabled investment and practice management solutions to financial advisors, today reported financial results for its third quarter ended September 30, 2010.
Financial results for the third quarter of 2010 compared to the third quarter of 2009:
| • | Revenue increased 25% to $24.6 million for the third quarter of 2010 from $19.7 million for the third quarter of 2009; revenue from assets under management or administration increased 31% to $19.0 million for the third quarter of 2010 from $14.5 million for the third quarter of 2009 |
| • | Net income attributable to common stockholders was $0.5 million, or $0.02 per diluted share, for the third quarter of 2010 compared to $0.3 million, or $0.02 per diluted share, for the third quarter of 2009 |
| • | Adjusted EBITDA(1) increased 84% to $5.0 million for the third quarter of 2010 from $2.7 million for the third quarter of 2009 |
| • | Adjusted Net Income(1) increased 118% to $2.1 million, or $0.07 per diluted share, for the third quarter of 2010 from $1.0 million, or $0.03 per diluted share, for the third quarter of 2009 |
“We are pleased with our third quarter results and the momentum in our overall business, as reflected in our increase in advisors and accounts, as well as our gross sales and net flows,” said Jud Bergman, founder and chief executive officer of Envestnet. “As investors seek a higher standard for advice, we believe more advisors will turn to Envestnet for a comprehensive, integrated wealth management solution for their clients.”
Key Operating Metrics as of and for the quarter ended September 30, 2010:
| • | Assets under Management (AUM) of $12.4 billion |
| • | Assets under Administration (AUA) of $46.7 billion |
| • | Accounts (AUM/A only) of 285,248 |
| • | Advisors (AUM/A only) of 13,011 |
| • | Gross sales of AUM/A of $5.7 billion, resulting in net flows of $2.0 billion |
The following table summarizes the changes in AUM and AUA for the quarter ended September 30, 2010:
| Amounts in Millions Except Account Data |
Actual 6/30/10 |
Gross Sales |
Redemptions | Net Flows |
Market Impact |
Actual 9/30/10 |
||||||||||||||||||
| Assets under Management (AUM) |
$ | 10,863 | $ | 1,323 | $ | (797 | ) | $ | 526 | $ | 963 | $ | 12,352 | |||||||||||
| Assets under Administration (AUA) |
42,555 | $ | 4,376 | $ | (2,875 | ) | 1,501 | 2,599 | 46,655 | |||||||||||||||
| Total AUM/A |
$ | 53,418 | $ | 5,699 | $ | (3,672 | ) | $ | 2,027 | $ | 3,562 | $ | 59,007 | |||||||||||
| Fee-Based Accounts |
274,959 | 25,137 | (14,848 | ) | 10,289 | 285,248 | ||||||||||||||||||
Review of Financial Results
Total revenue increased 25% to $24.6 million for the third quarter of 2010 from $19.7 million for the third quarter of 2009. The increase was primarily due to a 31% increase in revenues from assets under management or administration to $19.0 million from $14.5 million in the prior year period.
Cost of revenues increased 18% to $7.4 million in the third quarter of 2010 from $6.3 million from the third quarter of 2009 due to the increase in revenue from AUM and AUA. Compensation and benefits increased 36% to $9.9 million in the third quarter of 2010 from $7.3 million in the prior year period, primarily due to an increase in headcount between periods as the Company staffed to support the growth of the business.
Income from operations was $1.2 million for the third quarter of 2010 compared to $1.3 million for the third quarter of 2009. Net income attributable to common stockholders was $0.5 million, or $0.02 per diluted share, for the third quarter of 2010 compared to $0.3 million, or $0.02 per diluted share, for the third quarter of 2009.
On a non-GAAP basis, Adjusted EBITDA(1) in the third quarter of 2010 was $5.0 million, up 84% from $2.7 million in the prior year period. Adjusted Operating Income(1) was $3.6 million, up 129% from $1.6 million in the prior year period. Adjusted Net Income(1) was $2.1 million, up 118% from $1.0 million in the third quarter of 2009. Adjusted Net Income Per Share(1) was $0.07 per diluted share, up 133% from $0.03 per diluted share in the third quarter of 2009.
Conference Call
The Company will host a conference call to discuss third quarter 2010 financial results today at 5:00 p.m. ET. The call will be webcast live from the Company’s investor relations website at http://ir.envestnet.com/ and can also be accessed live over the phone by dialing (888) 300-2336, or (719) 325-2389 for international callers. A replay will be available beginning 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 9674857. The replay will be available until Thursday, November 11, 2010.
About Envestnet
Envestnet, Inc. is a leading provider of technology-enabled investment and practice management solutions to financial advisors who are independent, as well as those who are associated with small or mid-sized financial advisory firms and larger financial institutions. Envestnet’s technology is focused on addressing financial advisors’ front-, middle- and back-office needs. Envestnet is headquartered in Chicago. For more information on Envestnet, Inc. please go to www.envestnet.com.
(1) Non-GAAP Financial Measures
“Adjusted EBITDA” represents net income (loss) before interest income, interest expense, net income tax provision (benefit), depreciation and amortization, non-cash stock-based compensation expense, unrealized gain (loss) on investments, impairment of investments, restructuring charges, severance, bad debt expense, customer inducement costs and litigation related expense.
“Adjusted operating income” represents income (loss) from operations before non-cash stock-based compensation expense, restructuring charges, severance, bad debt expense, customer inducement costs and litigation related expense.
“Adjusted net income” represents net income (loss) before non-cash stock-based compensation expense, impairment of investments, restructuring expense, severance, bad debt expense, 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 attributable to common stockholders 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).
2
Forward-Looking Statements
This press release and its attachments contain forward-looking statements that involve risks, uncertainties and other factors concerning, among other things, Envestnet, Inc.’s (the “Company”) expected financial performance and outlook, its strategic operational plans and growth strategy. The Company’s actual results could differ materially from the results expressed or implied by such forward-looking statements, and 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 impact of market and economic conditions on the Company’s revenues, compliance failures, regulatory actions against us, the failure to protect the Company’s intellectual property rights and its 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. More information regarding these and other risks, uncertainties and factors is contained in the section entitled “Risk Factors” in the Company’s Form 10-Q dated September 3, 2010, which is on file with the Securities and Exchange Commission (“SEC”) and available on the SEC’s website at www.sec.gov or the Company’s Investor Relations website at http://ir.envestnet.com/. You are cautioned not to unduly rely on these forward-looking statements, which speak only as of the date of this press release. All information in this press release and its attachments is as of November 4, 2010 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
(312) 827-3940
investor.relations@envestnet.com
Media Relations
mediarelations@envestnet.com
3
Envestnet, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share information)
(Unaudited)
| December 31, 2009 |
September 30, 2010 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 31,525 | $ | 63,565 | ||||
| Fees receivable, net of allowance for doubtful accounts of $76 and $0, respectively |
5,800 | 7,762 | ||||||
| Deferred tax assets - current |
134 | — | ||||||
| Notes receivable including affiliate - current, net of allowance of $103 and $0, respectively |
714 | — | ||||||
| Prepaid expenses and other current assets |
1,427 | 2,597 | ||||||
| Total current assets |
39,600 | 73,924 | ||||||
| Notes receivable including affiliate and officer, net of allowance of $206 and $0, respectively |
2,322 | — | ||||||
| Property and equipment, net |
8,560 | 9,730 | ||||||
| Internally developed software, net |
3,887 | 3,645 | ||||||
| Intangible assets, net |
2,238 | 1,661 | ||||||
| Goodwill |
1,023 | 1,983 | ||||||
| Deferred tax assets |
13,998 | 14,370 | ||||||
| Customer inducements |
282 | 30,016 | ||||||
| Other non-current assets |
2,154 | 2,053 | ||||||
| Total assets |
$ | 74,064 | $ | 137,382 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accrued expenses |
$ | 10,272 | $ | 11,573 | ||||
| Accounts payable |
1,892 | 1,760 | ||||||
| Customer inducements payable - current |
150 | 1,000 | ||||||
| Note payable - current |
— | 156 | ||||||
| Deferred tax liabilities - current |
— | 108 | ||||||
| Deferred revenue |
24 | 81 | ||||||
| Total current liabilities |
12,338 | 14,678 | ||||||
| Deferred rent and lease incentive liability |
3,999 | 4,085 | ||||||
| Customer inducements payable |
— | 16,878 | ||||||
| Note payable |
— | 156 | ||||||
| Other non-current liabilities |
475 | 576 | ||||||
| Total liabilities |
16,812 | 36,373 | ||||||
| Stockholders’ equity |
||||||||
| Preferred stock (total liquidation preference of $81,779 and $0 as of December 31, 2009 and September 30, 2010, respectively) |
— | — | ||||||
| Common stock, par value $0.005, 60,000,000 shares authorized as of December 31, 2009 and September 30, 2010; 13,524,276 and 42,976,973 shares issued as of December 31, 2009 and September 30, 2010, respectively; 12,910,676 and 31,342,043 shares outstanding as of December 31, 2009 and September 30, 2010, respectively |
68 | 189 | ||||||
| Additional paid-in capital |
106,893 | 156,599 | ||||||
| Accumulated deficit |
(43,375 | ) | (46,214 | ) | ||||
| Treasury stock at cost, 613,600 shares and 11,634,930 shares as of December, 31, 2009 and September 30, 2010, respectively |
(6,334 | ) | (9,565 | ) | ||||
| Total stockholders’ equity |
57,252 | 101,009 | ||||||
| Total liabilities and stockholders’ equity |
$ | 74,064 | $ | 137,382 | ||||
4
Envestnet, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share information)
(Unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2009 | 2010 | 2009 | 2010 | |||||||||||||
| Revenues: |
||||||||||||||||
| Assets under management or administration |
$ | 14,507 | $ | 19,001 | $ | 40,430 | $ | 54,112 | ||||||||
| Licensing and professional services |
5,221 | 5,569 | 15,699 | 16,337 | ||||||||||||
| Total revenues |
19,728 | 24,570 | 56,129 | 70,449 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Cost of revenues |
6,264 | 7,405 | 17,694 | 22,123 | ||||||||||||
| Compensation and benefits |
7,284 | 9,917 | 21,118 | 27,190 | ||||||||||||
| General and administration |
3,667 | 4,454 | 10,854 | 16,645 | ||||||||||||
| Depreciation and amortization |
1,167 | 1,451 | 3,290 | 4,210 | ||||||||||||
| Restructuring charges |
— | 96 | — | 915 | ||||||||||||
| Total operating expenses |
18,382 | 23,323 | 52,956 | 71,083 | ||||||||||||
| Income (loss) from operations |
1,346 | 1,247 | 3,173 | (634 | ) | |||||||||||
| Other income (expense): |
||||||||||||||||
| Interest income |
54 | 34 | 172 | 119 | ||||||||||||
| Interest expense |
— | (193 | ) | — | (321 | ) | ||||||||||
| Unrealized gain on investments |
9 | 7 | 17 | 7 | ||||||||||||
| Impairment of investments |
— | — | (18 | ) | — | |||||||||||
| Total other income (expense) |
63 | (152 | ) | 171 | (195 | ) | ||||||||||
| Income (loss) before income tax provision |
1,409 | 1,095 | 3,344 | (829 | ) | |||||||||||
| Income tax provision |
563 | 470 | 1,233 | 664 | ||||||||||||
| Net income (loss) |
846 | 625 | 2,111 | (1,493 | ) | |||||||||||
| Less preferred stock dividends |
(181 | ) | (65 | ) | (539 | ) | (422 | ) | ||||||||
| Less net income allocated to participating preferred stock |
(330 | ) | (75 | ) | (780 | ) | — | |||||||||
| Net income (loss) attributable to common stockholders |
$ | 335 | $ | 485 | $ | 792 | $ | (1,915 | ) | |||||||
| Net income (loss) per share attributable to common stockholders: |
||||||||||||||||
| Basic |
$ | 0.03 | $ | 0.02 | $ | 0.06 | $ | (0.11 | ) | |||||||
| Diluted |
$ | 0.02 | $ | 0.02 | $ | 0.06 | $ | (0.11 | ) | |||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
12,908,068 | 25,567,700 | 12,911,089 | 17,247,149 | ||||||||||||
| Diluted |
13,558,871 | 26,348,651 | 13,522,791 | 17,247,149 | ||||||||||||
5
Envestnet, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands, unaudited)
| Nine Months Ended September 30, |
||||||||
| 2009 | 2010 | |||||||
| OPERATING ACTIVITIES: |
||||||||
| Net income (loss) |
$ | 2,111 | $ | (1,493 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
3,290 | 4,210 | ||||||
| Amortization of customer inducements |
— | 1,931 | ||||||
| Amortization of deferred rent and lease incentive |
408 | 128 | ||||||
| Provision for doubtful accounts |
— | 2,668 | ||||||
| Unrealized (gain) on investments |
(17 | ) | (7 | ) | ||||
| Impairment of investments |
18 | — | ||||||
| Deferred income taxes |
1,122 | 709 | ||||||
| Stock-based compensation |
568 | 1,108 | ||||||
| Interest expense |
— | 321 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Fees receivable |
(788 | ) | (2,345 | ) | ||||
| Prepaid expenses and other current assets |
(351 | ) | (1,170 | ) | ||||
| Other non-current assets |
106 | 82 | ||||||
| Customer inducements |
— | (11,300 | ) | |||||
| Accrued expenses |
(1,697 | ) | 1,151 | |||||
| Accounts payable |
(743 | ) | (132 | ) | ||||
| Deferred revenue |
(147 | ) | 57 | |||||
| Other non-current liabilities |
— | 101 | ||||||
| Net cash provided by (used in) operating activities |
3,880 | (3,981 | ) | |||||
| INVESTING ACTIVITIES: |
||||||||
| Purchase of property and equipment |
(2,473 | ) | (3,378 | ) | ||||
| Capitalization of internally developed software |
(1,005 | ) | (962 | ) | ||||
| Proceeds from repayment of notes receivable |
— | 985 | ||||||
| Increase in notes receivable |
(53 | ) | (90 | ) | ||||
| Investments in non-marketable securities |
(489 | ) | — | |||||
| Proceeds from investments |
195 | 26 | ||||||
| Acquisition of businesses, net |
— | (917 | ) | |||||
| Net cash (used in) investing activities |
(3,825 | ) | (4,336 | ) | ||||
| FINANCING ACTIVITIES: |
||||||||
| Proceeds from exercise of warrants |
— | 1,525 | ||||||
| Proceeds from exercise of stock options |
3 | 1,343 | ||||||
| Net proceeds from issuance of common stock |
— | 42,066 | ||||||
| Purchase of treasury stock |
(248 | ) | (3,231 | ) | ||||
| Preferred stock dividends |
— | (1,346 | ) | |||||
| Net cash provided by (used in) financing activities |
(245 | ) | 40,357 | |||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(190 | ) | 32,040 | |||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
28,445 | 31,525 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 28,255 | $ | 63,565 | ||||
6
Envestnet, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2009 | 2010 | 2009 | 2010 | |||||||||||||
| Net income (loss) |
$ | 846 | $ | 625 | $ | 2,111 | $ | (1,493 | ) | |||||||
| Add (deduct): |
||||||||||||||||
| Interest income |
(54 | ) | (34 | ) | (172 | ) | (119 | ) | ||||||||
| Interest expense |
— | 193 | — | 321 | ||||||||||||
| Income tax provision |
563 | 470 | 1,233 | 664 | ||||||||||||
| Depreciation and amortization |
1,167 | 1,451 | 3,290 | 4,210 | ||||||||||||
| Stock-based compensation expense |
209 | 584 | 568 | 1,108 | ||||||||||||
| Unrealized (gain) loss on investments |
(9 | ) | (7 | ) | (17 | ) | (7 | ) | ||||||||
| Impairment of investments |
— | — | 18 | — | ||||||||||||
| Restructuring charges (excluding severance) |
— | 96 | — | 819 | ||||||||||||
| Severance |
— | 409 | — | 533 | ||||||||||||
| Bad debt expense |
— | — | — | 2,668 | ||||||||||||
| Customer inducement costs |
— | 1,146 | — | 1,931 | ||||||||||||
| Litigation related expense |
— | 85 | — | 1,933 | ||||||||||||
| Adjusted EBITDA |
$ | 2,722 | $ | 5,018 | $ | 7,031 | $ | 12,568 | ||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2009 | 2010 | 2009 | 2010 | |||||||||||||
| Income (loss) from operations |
$ | 1,346 | $ | 1,247 | $ | 3,173 | $ | (634 | ) | |||||||
| Add: |
||||||||||||||||
| Stock-based compensation expense |
209 | 584 | 568 | 1,108 | ||||||||||||
| Restructuring charges (excluding severance) |
— | 96 | — | 819 | ||||||||||||
| Severance |
— | 409 | — | 533 | ||||||||||||
| Bad debt expense |
— | — | — | 2,668 | ||||||||||||
| Customer inducement costs |
— | 1,146 | — | 1,931 | ||||||||||||
| Litigation related expense |
— | 85 | — | 1,933 | ||||||||||||
| Adjusted operating income |
$ | 1,555 | $ | 3,567 | $ | 3,741 | $ | 8,358 | ||||||||
7
Envestnet, Inc.
Reconciliation of Non-GAAP Financial Measures (continued)
(In thousands, except share and per share information; unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2009 | 2010 | 2009 | 2010 | |||||||||||||
| Net income (loss) |
$ | 846 | $ | 625 | $ | 2,111 | $ | (1,493 | ) | |||||||
| Add: |
||||||||||||||||
| Stock-based compensation expense |
129 | 350 | 350 | 663 | ||||||||||||
| Impairment of investments |
— | — | 11 | — | ||||||||||||
| Restructuring charges (excluding severance) |
— | 58 | — | 490 | ||||||||||||
| Severance |
— | 245 | — | 319 | ||||||||||||
| Bad debt expense |
— | — | — | 2,668 | ||||||||||||
| Customer inducement costs |
— | 686 | — | 1,155 | ||||||||||||
| Imputed interest expense |
— | 111 | — | 185 | ||||||||||||
| Litigation related expense |
— | 51 | — | 1,156 | ||||||||||||
| Adjusted net income |
975 | 2,126 | 2,472 | 5,143 | ||||||||||||
| Less: Preferred stock dividends |
(181 | ) | (65 | ) | (539 | ) | (422 | ) | ||||||||
| Less: Net income allocated to participating preferred stock |
(394 | ) | (276 | ) | (959 | ) | (1,718 | ) | ||||||||
| Adjusted net income attributable to common stockholders |
$ | 400 | $ | 1,785 | $ | 974 | $ | 3,003 | ||||||||
| Basic number of weighted-average shares outstanding |
12,908,068 | 25,567,700 | 12,911,089 | 17,247,149 | ||||||||||||
| Effect of dilutive shares: |
||||||||||||||||
| Options to purchase common stock |
372,846 | 768,393 | 340,145 | 921,838 | ||||||||||||
| Common warrants |
277,957 | 12,558 | 271,557 | 119,511 | ||||||||||||
| Diluted number of weighted-average shares outstanding |
13,558,871 | 26,348,651 | 13,522,791 | 18,288,498 | ||||||||||||
| Adjusted net income per share |
$ | 0.03 | $ | 0.07 | $ | 0.07 | $ | 0.16 | ||||||||
Envestnet, Inc.
Historical Assets, Accounts and Advisors
(in millions, except account and advisor data)
| As of | ||||||||||||||||||||
| September 30, 2009 |
December 31, 2009 |
March 31, 2010 |
June 30, 2010 |
September 30, 2010 |
||||||||||||||||
| Platform Assets |
||||||||||||||||||||
| Assets Under Management (AUM) |
$ | 9,754 | $ | 10,269 | $ | 10,916 | $ | 10,863 | $ | 12,352 | ||||||||||
| Assets Under Administration (AUA) |
26,283 | 27,322 | 29,580 | 42,555 | 46,655 | |||||||||||||||
| Subtotal AUM/A |
36,037 | 37,591 | 40,496 | 53,418 | 59,007 | |||||||||||||||
| Licensing |
49,161 | 51,450 | 54,135 | 53,199 | 67,343 | |||||||||||||||
| Total Platform Assets |
$ | 85,198 | $ | 89,041 | $ | 94,631 | $ | 106,617 | $ | 126,350 | ||||||||||
| Platform Accounts |
||||||||||||||||||||
| AUM |
43,441 | 48,541 | 49,020 | 52,477 | 56,094 | |||||||||||||||
| AUA |
126,311 | 126,634 | 136,335 | 222,482 | 229,154 | |||||||||||||||
| Subtotal AUM/A |
169,752 | 175,175 | 185,355 | 274,959 | 285,248 | |||||||||||||||
| Licensing |
506,663 | 510,865 | 545,299 | 550,651 | 574,903 | |||||||||||||||
| Total Platform Accounts |
676,415 | 686,040 | 730,654 | 825,610 | 860,151 | |||||||||||||||
| Advisors |
||||||||||||||||||||
| AUM/A |
8,041 | 8,408 | 8,465 | 12,871 | 13,011 | |||||||||||||||
| Licensing |
5,501 | 5,542 | 5,740 | 6,505 | 6,609 | |||||||||||||||
| Total Advisors |
13,542 | 13,950 | 14,205 | 19,376 | 19,620 | |||||||||||||||
Note: certain 2009 data have been reclassified between AUM and AUA to conform to current presentation format.
8