Exhibit 99.1

FOR IMMEDIATE RELEASE

Envestnet Reports Second Quarter 2011 Financial Results

Chicago, IL – August 9, 2011 – Envestnet (NYSE: ENV), a leading provider of technology-enabled wealth management solutions to financial advisors, today reported financial results for its second quarter ended June 30, 2011.

Financial results for the second quarter of 2011 compared to the second quarter of 2010:

 

   

Revenues from assets under management (AUM) or assets under administration (AUA) increased 36% to $25.4 million for the second quarter of 2011 from $18.7 million for the second quarter of 2010; total revenues, which includes licensing and professional services fees, increased 29% to $31.3 million for the second quarter of 2011 from $24.2 million for the second quarter of 2010

 

   

Adjusted EBITDA(1) increased 58% to $7.1 million for the second quarter of 2011 from $4.5 million for the second quarter of 2010

 

   

Adjusted Net Income(1) increased to $3.3 million, or $0.10 per diluted share, for the second quarter of 2011 from $1.8 million, or $0.06 per diluted share, for the second quarter of 2010

 

   

Net income attributable to common stockholders was $2.4 million, or $0.07 per diluted share, for the second quarter of 2011 compared to $0.1 million, or $0.01 per diluted share, for the second quarter of 2010

“Our second quarter results show continued progress in our empowering advisors to better serve their clients, as we grew revenue year-over-year by nearly 30 percent,” said Jud Bergman, founder and chief executive officer of Envestnet.

“Envestnet benefits from several long-term trends, including an increase in advisors seeking independence, a move toward fee-based business, and outsourcing of wealth management solutions. In addition, we believe our solid organic growth can be enhanced by consolidating transactions,” Bergman continued. “The acquisition of FundQuest should accelerate Envestnet’s growth and provide benefits to both our advisors and shareholders in the coming quarters. As part of Envestnet, the acquisition of FundQuest will enable us to offer advisors more fully integrated wealth management solutions and strengthen our relationships with them.”

Key Operating Metrics as of and for the quarter ended June 30, 2011:

 

   

AUM of $16.5 billion, up 52% from June 30, 2010

 

   

AUA of $54.3 billion, up 28% from June 30, 2010

 

   

Advisors (AUM/A only) of 14,613, up 14% from June 30, 2010

 

   

Gross sales of AUM/A of $6.9 billion, resulting in net flows of $1.9 billion

The following table summarizes the changes in AUM and AUA for the quarter ended June 30, 2011:

 

In Millions Except Account Data

   3/31/11      Gross
Sales
     Redemptions     Net
Flows
     Market
Impact
     6/30/11  

Assets under Management (AUM)

   $ 15,635       $ 1,880       $ (1,074   $ 806       $ 52       $ 16,493   

Assets under Administration (AUA)

     53,115         4,986         (3,895     1,091         55         54,261   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total AUM/A

   $ 68,750       $ 6,866       $ (4,969   $ 1,897       $ 107       $ 70,754   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Fee-Based Accounts

     323,656         26,858         (18,217     8,641            332,297   

During the second quarter, the Company added $0.5 billion of conversions, which are included in the above AUM/A gross sales figures.


Review of Financial Results

Total revenues increased 29% to $31.3 million for the second quarter of 2011 from $24.3 million for the second quarter of 2010. The increase was primarily due to a 36% increase in revenues from assets under management or administration to $25.4 million from $18.7 million in the prior year period.

Total operating expenses in the second quarter of 2011 increased 20% to $28.2 million from $23.5 million in the prior year period. After certain non-GAAP adjustments(2) included in our Adjusted EBITDA reconciliation, total operating expenses increased 23% compared to the prior year. Cost of revenues increased 42% to $10.9 million in the second quarter of 2011 from $7.7 million in the second quarter of 2010 due to the increase in revenue from AUM or AUA. Compensation and benefits increased 13% to $10.4 million in the second quarter of 2011 from $9.2 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 $3.2 million for the second quarter of 2011 compared to $0.8 million for the second quarter of 2010. Net income attributable to common stockholders was $2.4 million, or $0.07 per diluted share, for the second quarter of 2011 compared to $0.1 million, or $0.01 per diluted share, for the second quarter of 2010.

Adjusted EBITDA(1) in the second quarter of 2011 was $7.1 million, up 58% from $4.5 million in the prior year period, reflecting expanding margins. Adjusted Operating Income(1) was $5.5 million, up 81% from $3.1 million in the prior year period. Adjusted Net Income(1) was $3.3 million, compared to $1.8 million in the second quarter of 2010. Adjusted Net Income Per Share(1) was $0.10 per diluted share, compared to $0.06 per diluted share in the second quarter of 2010.

Recent Events

The Company announced on August 5, 2011 that it signed a definitive agreement to acquire FundQuest Inc., a division of BNP Paribas, for approximately $24.4 million in cash. The transaction is subject to customary closing conditions and is expected to close during the fourth quarter of 2011. For more information, the press release can be found at http://ir.envestnet.com/.

Conference Call

The Company will host a conference call to discuss second quarter 2011 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) 510-1762, or (719) 325-2199 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 1431688. The replay will be available until Tuesday, August 23, 2011.

About Envestnet

Envestnet, Inc. is a leading provider of technology-enabled wealth management solutions to financial advisors. Envestnet’s technology is focused on addressing financial advisors’ front-, middle- and back-office needs. Envestnet is headquartered in Chicago with offices in Boston, Denver, New York, Silicon Valley and Trivandrum, India. For more information on Envestnet please go to www.envestnet.com.

(1) Non-GAAP Financial Measures

“Adjusted EBITDA” represents net income (loss) before interest income, interest expense, income tax provision (benefit), depreciation and amortization, non-cash stock-based compensation expense, unrealized gain (loss) on investments, other income, restructuring charges and transaction costs, severance, bad debt expense, customer inducement costs and litigation related expense.

 

2


“Adjusted operating income” represents income (loss) from operations before non-cash stock-based compensation expense, restructuring charges and transaction costs, 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, restructuring expense and transaction costs, severance, bad debt expense, customer inducement costs, other income, 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) Adjustments include stock-based compensation expense, restructuring charges and transaction costs, severance and litigation related expense. See the Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA table for 2011 and 2010 amounts.

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 impact of market and economic conditions on the Company’s revenues, compliance failures, regulatory actions against the Company, the failure to protect the Company’s intellectual property rights, the Company’s inability to successfully execute the conversion of its clients’ assets from their technology platform to the Company’s technology platform in a timely and accurate manner, general economic, political and regulatory conditions, as well as management’s response to these factors. More information regarding these and other risks, uncertainties and factors is contained in the Company’s filings with the Securities and Exchange Commission (“SEC”) which are available on the SEC’s website at www.sec.gov or the Company’s Investor Relations website at http://ir.envestnet.com/. You are cautioned not to unduly rely on these forward-looking statements, which speak only as of the date of this press release. All information in this press release and its attachments is as of August 9, 2011 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, except share information)

(Unaudited)

 

     June 30,
2011
    December 31,
2010
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 78,600      $ 67,668   

Fees receivable

     8,693        9,135   

Deferred tax assets - current

     51        107   

Prepaid expenses and other current assets

     2,448        2,026   
  

 

 

   

 

 

 

Total current assets

     89,792        78,936   
  

 

 

   

 

 

 

Property and equipment, net

     10,816        9,713   

Internally developed software, net

     3,639        3,621   

Intangible assets, net

     817        1,330   

Goodwill

     2,031        2,031   

Deferred tax assets

     11,588        13,649   

Customer inducements

     27,987        30,400   

Other non-current assets

     2,175        2,188   
  

 

 

   

 

 

 

Total assets

   $ 148,845      $ 141,868   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities:

    

Accrued expenses

   $ 12,978      $ 12,859   

Accounts payable

     1,758        1,707   

Customer inducements payable - current

     1,000        1,000   

Note payable - current

     164        159   

Deferred revenue

     102        232   
  

 

 

   

 

 

 

Total current liabilities

     16,002        15,957   
  

 

 

   

 

 

 

Deferred rent liability

     1,285        1,244   

Lease incentive liability

     2,620        2,771   

Customer inducements payable

     18,213        18,806   

Note payable

     —          159   

Other non-current liabilities

     744        612   
  

 

 

   

 

 

 

Total liabilities

     38,864        39,549   
  

 

 

   

 

 

 

Stockholders’ equity

    

Preferred stock

     —          —     

Common stock, par value $0.005, 500,000,000 shares authorized as of June 30, 2011 and December 31, 2010, respectively; 43,438,322 and 43,068,371 shares issued as of June 30, 2011 and December 31, 2010, respectively; 31,733,149 and 31,368,822 shares outstanding as of June 30, 2011 and December 31, 2010, respectively

     217        215   

Additional paid-in capital

     161,681        157,778   

Accumulated deficit

     (41,496     (45,347

Treasury stock at cost, 11,705,173 and 11,699,549 shares as of June 30, 2011 and December 31, 2010, respectively

     (10,421     (10,327
  

 

 

   

 

 

 

Total stockholders’ equity

     109,981        102,319   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 148,845      $ 141,868   
  

 

 

   

 

 

 

 

4


Envestnet, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share information)

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2011     2010     2011     2010  

Revenues:

        

Assets under management or administration

   $ 25,427      $ 18,715      $ 48,698      $ 35,111   

Licensing and professional services

     5,907        5,532        11,898        10,768   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     31,334        24,247        60,596        45,879   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Cost of revenues

     10,917        7,698        21,045        14,718   

Compensation and benefits

     10,387        9,183        20,533        17,273   

General and administration

     5,258        5,082        10,134        12,191   

Depreciation and amortization

     1,578        1,428        3,126        2,759   

Restructuring charges

     43        67        53        819   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     28,183        23,458        54,891        47,760   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     3,151        789        5,705        (1,881
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense):

        

Interest income

     20        41        46        85   

Interest expense

     (204     (128     (415     (128

Other income

     1,100        —          1,100        —     

Unrealized gain (loss) on investments

     1        (3     4        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense)

     917        (90     735        (43
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax provision

     4,068        699        6,440        (1,924
  

 

 

   

 

 

   

 

 

   

 

 

 

Income tax provision

     1,621        306        2,589        194   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     2,447        393        3,851        (2,118

Less preferred stock dividends

     —          (179     —          (357

Less net income allocated to participating preferred stock

     —          (107     —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to common stockholders

   $ 2,447      $ 107      $ 3,851      $ (2,475
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share attributable to common stockholders:

        

Basic

   $ 0.08      $ 0.01      $ 0.12      $ (0.19
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.07      $ 0.01      $ 0.12      $ (0.19
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

Basic

     31,591,412        13,068,492        31,502,139        13,017,943   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     32,969,824        14,081,578        32,912,916        13,017,943   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

5


Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands, unaudited)

 

     Six Months Ended
June 30,
 
     2011     2010  

OPERATING ACTIVITIES:

    

Net income (loss)

   $ 3,851      $ (2,118

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

    

Depreciation and amortization

     3,126        2,759   

Amortization of customer inducements

     2,413        785   

Deferred rent and lease incentive

     (110     196   

Provision for doubtful accounts

     —          2,668   

Unrealized gain on investments

     (4     —     

Deferred income taxes

     2,117        158   

Stock-based compensation

     1,645        524   

Interest expense

     415        128   

Changes in operating assets and liabilities:

    

Fees receivable

     442        (226

Prepaid expenses and other current assets

     (422     (2,468

Other non-current assets

     —          20   

Customer inducements

     (1,000     (11,300

Accrued expenses

     119        2,537   

Accounts payable

     51        249   

Deferred revenue

     (130     173   

Other non-current liabilities

     132        67   
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     12,645        (5,848
  

 

 

   

 

 

 

INVESTING ACTIVITIES:

    

Purchase of property and equipment

     (2,917     (2,714

Capitalization of internally developed software

     (817     (640

Repayment of notes payable

     (162     —     

Proceeds from repayment of notes receivable

     —          128   

Increase in notes receivable

     —          (82

Proceeds from investments

     17        21   

Acquisition of businesses, net of cash acquired

     —          (300
  

 

 

   

 

 

 

Net cash used in investing activities

     (3,879     (3,587
  

 

 

   

 

 

 

FINANCING ACTIVITIES:

    

Proceeds from issuance of preferred stock

     —          1,505   

Proceeds from exercise of stock options

     2,260        1,250   

Purchase of treasury stock

     (94     (2,015
  

 

 

   

 

 

 

Net cash provided by financing activities

     2,166        740   
  

 

 

   

 

 

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     10,932        (8,695
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

     67,668        31,525   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

   $ 78,600      $ 22,830   
  

 

 

   

 

 

 

 

 

6


Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands, unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2011     2010     2011     2010  

Net income (loss)

   $ 2,447      $ 393      $ 3,851      $ (2,118

Add (deduct):

        

Interest income

     (20     (41     (46     (85

Interest expense

     204        128        415        128   

Income tax provision

     1,621        306        2,589        194   

Depreciation and amortization

     1,578        1,428        3,126        2,759   

Stock-based compensation expense

     829        292        1,645        524   

Unrealized (gain) loss on investments

     (1     3        (4     —     

Other income

     (1,100     —          (1,100     —     

Restructuring charges (excluding severance) and transaction costs

     53        67        63        723   

Severance

     246        28        303        124   

Bad debt expense

     —          —          —          2,668   

Customer inducement costs

     1,207        770        2,413        785   

Litigation related expense

     58        1,124        91        1,848   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 7,122      $ 4,498      $ 13,346      $ 7,550   
  

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2011     2010     2011     2010  

Income (loss) from operations

   $ 3,151      $ 789      $ 5,705      $ (1,881

Add:

        

Stock-based compensation expense

     829        292        1,645        524   

Restructuring charges (excluding severance) and transaction costs

     53        67        63        723   

Severance

     246        28        303        124   

Bad debt expense

     —          —          —          2,668   

Customer inducement costs

     1,207        770        2,413        785   

Litigation related expense

     58        1,124        91        1,848   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted operating income

   $ 5,544      $ 3,070      $ 10,220      $ 4,791   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

7


Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures (continued)

(In thousands, except share and per share information; unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2011*     2010*     2011*     2010*  

Net income (loss)

   $ 2,447      $ 393      $ 3,851      $ (2,118

Add (deduct):

        

Stock-based compensation expense

     496        175        984        313   

Restructuring charges (excluding severance) and transaction costs

     32        40        38        432   

Severance

     147        16        181        74   

Bad debt expense

     —          —          —          2,668   

Customer inducement costs

     722        460        1,443        469   

Other income

     (658     —          (658     —     

Imputed interest expense

     121        74        243        74   

Litigation related expense

     35        672        54        1,105   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

     3,342        1,830        6,136        3,017   

Less: Preferred stock dividends

     —          (179     —          (357

Less: Net income allocated to participating preferred stock

     —          (823     —          (1,323
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income attributable to common stockholders

   $ 3,342      $ 828      $ 6,136      $ 1,337   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic number of weighted-average shares outstanding

     31,591,412        13,068,492        31,502,139        13,017,943   

Effect of dilutive shares:

        

Options to purchase common stock

     1,082,818        1,013,086        1,112,797        965,571   

Common warrants

     295,594        —          297,980        119,535   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted number of weighted-average shares outstanding

     32,969,824        14,081,578        32,912,916        14,103,049   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income per share

   $ 0.10      $ 0.06      $ 0.19      $ 0.09   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* Adjustments, excluding bad debt expense, are tax effected using an income tax rate of 40.2% for 2011 and 2010.

Envestnet, Inc.

Historical Assets, Accounts and Advisors

(in millions, except account and advisor data; unaudited)

 

     As of  
     June 30,
2010
     September 30,
2010
     December 31,
2010
     March 31,
2011
     June 30,
2011
 

Platform Assets

              

Assets Under Management (AUM)

   $ 10,863       $ 12,352       $ 14,486       $ 15,635       $ 16,493   

Assets Under Administration (AUA)

     42,555         46,655         49,202         53,115         54,261   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal AUM/A

     53,418         59,007         63,688         68,750         70,754   

Licensing

     53,199         67,343         75,668         83,538         68,531   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Platform Assets

   $ 106,617       $ 126,350       $ 139,356       $ 152,288       $ 139,285   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Platform Accounts

              

AUM

     52,477         56,094         65,663         71,396         77,302   

AUA

     222,482         229,154         241,162         252,260         254,995   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal AUM/A

     274,959         285,248         306,825         323,656         332,297   

Licensing

     550,651         574,903         603,950         601,512         572,612   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Platform Accounts

     825,610         860,151         910,775         925,168         904,909   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Advisors

              

AUM/A

     12,871         13,011         13,833         14,140         14,613   

Licensing

     6,505         6,609         7,746         7,895         6,201   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Advisors

     19,376         19,620         21,579         22,035         20,814   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

8