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).

 

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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

 

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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   
                

 

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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   
                                

 

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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   
                

 

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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   
                                

 

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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.

 

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