Exhibit 99.1

Envestnet Reports Third Quarter 2012 Financial Results

Chicago, IL – November 8, 2012 – Envestnet (NYSE: ENV), a leading provider of technology-enabled wealth management solutions to investment advisors, today reported financial results for its third quarter ended September 30, 2012.

 

Key Financial Metrics    Third Quarter      %  

(in millions except per share data)

   2012      2011      Change  

Revenues from AUM/A

   $ 33.2       $ 26.0         28

Total Revenues

   $ 42.3       $ 32.0         32

Adjusted Revenues(1)

   $ 42.7       $ 32.0         33

Adjusted EBITDA(1)

   $ 6.4       $ 7.6         -16

Adjusted Net Income per Share(1)

   $ 0.09       $ 0.12         -25

Financial results for the third quarter of 2012 compared to the third quarter of 2011:

 

  Revenues from assets under management (AUM) or assets under administration (AUA) increased 28% to $33.2 million for the third quarter of 2012 from $26.0 million for the third quarter of 2011; total revenues, which include licensing and professional services fees, increased 32% to $42.3 million for the third quarter of 2012 from $32.0 million for the third quarter of 2011.

 

  Adjusted revenues, which exclude the effect of purchase accounting on the fair value of acquired deferred revenue, increased 33% to $42.7 million for the third quarter of 2012 from $32.0 million for the third quarter of 2011.

 

  Net income was $0.6 million, or $0.02 per diluted share, for the third quarter of 2012 compared to net income of $1.9 million, or $0.06 per diluted share, for the third quarter of 2011.

 

 

Adjusted EBITDA(1) was $6.4 million for the third quarter of 2012 compared to $7.6 million for the third quarter of 2011.

 

 

Adjusted Net Income(1) was $2.9 million, or $0.09 per diluted share, for the third quarter of 2012 compared to $3.8 million, or $0.12 per diluted share, for the third quarter of 2011.

“We continue to enable and benefit from the trends in our business toward fee-based advice and advisor service models that highlight transparency and are free from conflicts,” said Jud Bergman, chairman and chief executive officer of Envestnet. “Our opportunity to grow revenue and profits is substantial, as Envestnet empowers advisors to improve client outcomes and strengthen their practices.”

Key Operating Metrics as of and for the quarter ended September 30, 2012:

 

  AUM/A of $93.5 billion, up 41% from September 30, 2011

 

  Accounts (AUM/A only) of 427,112, up 27% from September 30, 2011

 

  Advisors (AUM/A only) served totaled 15,735, up 11% from September 30, 2011

 

  Gross sales of AUM/A of $7.9 billion, resulting in net flows of $2.9 billion

The following table summarizes the changes in AUM and AUA for the quarter ended September 30, 2012:

 

In Millions Except Account Data

   6/30/12      Gross
Sales
     Redemp-
tions
    Net
Flows
     Market
Impact
     9/30/12  

Assets under Management (AUM)

   $ 26,758       $ 2,955       $ (1,568   $ 1,387       $ 1,087       $ 29,232   

Assets under Administration (AUA)

     60,511         4,914         (3,377     1,537         2,181         64,229   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total AUM/A

   $ 87,269       $ 7,869       $ (4,945   $ 2,924       $ 3,268       $ 93,461   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

        Fee-Based Accounts

     416,017         35,620         (24,525     11,095            427,112   


During the third quarter, the Company added $0.2 billion of conversions included in the above AUM/A gross sales figures, and an additional $4.1 billion of conversions in Licensing.

Review of Financial Results

Adjusted revenues increased 33% to $42.7 million for the third quarter of 2012 from $32.0 million for the third quarter of 2011. The increase was primarily due to a 28% increase in revenues from AUM or AUA to $33.2 million from $26.0 million in the prior year period, as well as higher licensing and professional services revenues related to the acquisitions of Tamarac Inc. and Prima Capital Holding, Inc., both of which closed during the second quarter of 2012.

Total operating expenses in the third quarter of 2012 increased 44% to $41.4 million from $28.8 million in the prior year period. Cost of revenues increased 32% to $15.1 million in the third quarter of 2012 from $11.4 million in the third quarter of 2011 due to the increase in revenue from AUM or AUA and additional cost from acquired businesses. Compensation and benefits increased 50% to $15.3 million in the third quarter of 2012 from $10.2 million in the prior year period due to higher personnel cost from completed acquisitions, as well as higher stock-based compensation expense. General and administration expenses increased 34% to $7.6 million in the third quarter of 2012 from $5.7 million in the prior year period, primarily due to transaction costs related to the completed acquisitions, and ongoing expense from the acquired companies.

Income from operations was $0.9 million for the third quarter of 2012 compared to $3.2 million for the third quarter of 2011. Net income was $0.6 million, or $0.02 per diluted share, for the third quarter of 2012 compared to $1.9 million, or $0.06 per diluted share, for the third quarter of 2011.

Adjusted EBITDA(1) in the third quarter of 2012 was $6.4 million, compared to $7.6 million in the prior year period. Adjusted Net Income(1) was $2.9 million, compared to $3.8 million in the third quarter of 2011. Adjusted Net Income Per Share(1) was $0.09 per diluted share, compared to $0.12 per diluted share in the third quarter of 2011.

Conference Call

The Company will host a conference call to discuss third quarter 2012 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 conference call can also be accessed live over the phone by dialing (888) 401-4691, or (719) 325-2333 for international callers. A replay will be available beginning one hour after the call and can be accessed from the Company’s investor relations website, or by dialing (877) 870-5176, or (858) 384-5517 for international callers; the conference ID is 5587845. 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 technology-enabled wealth management solutions to investment advisors. Envestnet’s Advisor Suite software empowers advisors to better manage client outcomes and strengthen their practice. Envestnet offers advanced portfolio solutions through its Portfolio Management Consultants Group, Envestnet | PMC. Envestnet | Tamarac provides leading rebalancing, reporting and practice management software. Envestnet | Prima provides institutional-quality research and due diligence on investment and fund managers. Envestnet | Vantage gives advisors an in-depth view of clients’ investments, empowering them to give holistic, personalized advice.

For more information on Envestnet, please visit www.envestnet.com.


(1) Non-GAAP Financial Measures

“Adjusted revenues” exclude the effect of purchase accounting on the fair value of acquired deferred revenue. Under U.S. 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, interest expense, income tax provision, depreciation and amortization, non-cash stock-based compensation expense, gain on investments, other income, restructuring charges and transaction costs, severance, customer inducement costs, and litigation related expense.

“Adjusted net income” represents net income before deferred revenue fair value adjustment, non-cash stock-based compensation expense, restructuring expense and transaction costs, severance, amortization of acquired intangibles, 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 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 or net income 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, 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 November 8, 2012 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   


Envestnet, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share information)

(Unaudited)

 

     September 30,      December 31,  
     2012      2011  

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 21,133       $ 64,909   

Fees receivable

     10,692         9,644   

Deferred tax assets, net

     611         192   

Prepaid expenses and other current assets

     2,936         4,040   
  

 

 

    

 

 

 

Total current assets

     35,372         78,785   
  

 

 

    

 

 

 

Property and equipment, net

     12,294         11,091   

Internally developed software, net

     4,053         3,524   

Intangible assets, net

     28,910         12,225   

Goodwill

     66,152         22,223   

Deferred tax assets, net

     7,187         6,692   

Other non-current assets

     3,544         3,162   
  

 

 

    

 

 

 

Total assets

   $ 157,512       $ 137,702   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current liabilities:

     

Accrued expenses

   $ 18,892       $ 14,919   

Accounts payable

     2,519         1,974   

Note payable

     —           171   

Deferred revenue

     5,340         79   
  

 

 

    

 

 

 

Total current liabilities

     26,751         17,143   
  

 

 

    

 

 

 

Deferred rent liability

     2,038         1,414   

Lease incentive liability

     4,020         2,933   

Other non-current liabilities

     752         573   
  

 

 

    

 

 

 

Total liabilities

     33,561         22,063   

Stockholders’ equity

     123,951         115,639   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 157,512       $ 137,702   
  

 

 

    

 

 

 


Envestnet, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share information)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2012      2011     2012     2011  

Revenues:

         

Assets under management or administration

   $ 33,223       $ 25,971      $ 92,498      $ 74,669   

Licensing and professional services

     9,060         6,069        20,389        17,967   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total revenues

     42,283         32,040        112,887        92,636   
  

 

 

    

 

 

   

 

 

   

 

 

 

Operating expenses:

         

Cost of revenues

     15,088         11,429        40,163        32,474   

Compensation and benefits

     15,261         10,160        40,031        30,693   

General and administration

     7,621         5,675        22,542        15,809   

Depreciation and amortization

     3,393         1,550        9,016        4,676   

Restructuring charges

     —           —          115        53   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total operating expenses

     41,363         28,814        111,867        83,705   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income from operations

     920         3,226        1,020        8,931   
  

 

 

    

 

 

   

 

 

   

 

 

 

Other income (expense):

         

Interest income

     3         19        26        65   

Interest expense

     —           (206     (3     (621

Other income

     —           —          —          1,100   

Loss on investments

     —           (8     —          (4
  

 

 

    

 

 

   

 

 

   

 

 

 

Total other income (expense)

     3         (195     23        540   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income before income tax provision

     923         3,031        1,043        9,471   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income tax provision

     372         1,106        420        3,695   
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income

   $ 551       $ 1,925      $ 623      $ 5,776   
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income per share:

         

Basic

   $ 0.02       $ 0.06      $ 0.02      $ 0.18   
  

 

 

    

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.02       $ 0.06      $ 0.02      $ 0.18   
  

 

 

    

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

         

Basic

     32,296,636         31,760,998        32,102,386        31,589,279   
  

 

 

    

 

 

   

 

 

   

 

 

 

Diluted

     33,358,706         32,871,269        33,179,044        32,937,601   
  

 

 

    

 

 

   

 

 

   

 

 

 


Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands, unaudited)

 

     Nine Months Ended  
     September 30,  
     2012     2011  

OPERATING ACTIVITIES:

    

Net income

   $ 623      $ 5,776   

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

    

Depreciation and amortization

     9,016        4,676   

Amortization of customer inducements

     —          3,620   

Deferred rent and lease incentive

     1,366        357   

Gain on investments

     —          4   

Impairment of customer inducement asset

       174   

Deferred income taxes

     (562     2,794   

Stock-based compensation

     3,125        2,359   

Interest expense

     3        621   

Changes in operating assets and liabilities:

    

Fees receivable

     (487     544   

Prepaid expenses and other current assets

     3,084        (872

Customer inducements

     —          (1,077

Other non-current assets

     (194     (1,000

Accrued expenses

     1,791        441   

Accounts payable

     545        306   

Deferred revenue

     600        (119

Other non-current liabilities

     179        204   
  

 

 

   

 

 

 

Net cash provided by operating activities

     19,089        18,808   
  

 

 

   

 

 

 

INVESTING ACTIVITIES:

    

Purchase of property and equipment

     (4,098     (4,257

Capitalization of internally developed software

     (1,698     (1,135

Repayment of notes payable assumed in acquisition

     (174     (162

Proceeds from investments

     4        23   

Goodwill—working capital settlement

     889        —     

Acquisition of businesses, net

     (62,352     —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (67,429     (5,531
  

 

 

   

 

 

 

FINANCING ACTIVITIES:

    

Proceeds from exercise of stock options

     1,927        2,702   

Issuance of restricted stock

     2,759        —     

Purchase of treasury stock

     (122     (94
  

 

 

   

 

 

 

Net cash provided by financing activities

     4,564        2,608   
  

 

 

   

 

 

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     (43,776     15,885   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

     64,909        67,668   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

   $ 21,133      $ 83,553   
  

 

 

   

 

 

 


Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands, unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2012     2011     2012     2011  

Revenue

   $ 42,283      $ 32,040      $ 112,887      $ 92,636   

Deferred revenue fair value adjustment

     401        —          1,018        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted revenues

   $ 42,684      $ 32,040      $ 113,905      $ 92,636   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 551      $ 1,925      $ 623      $ 5,776   

Deferred revenue fair value adjustment

     401        —          1,018        —     

Interest income

     (3     (19     (26     (65

Interest expense

     —          206        3        621   

Income tax provision

     372        1,106        420        3,695   

Depreciation and amortization

     3,393        1,550        9,016        4,676   

Stock-based compensation expense

     1,195        714        3,125        2,359   

Restructuring charges and transaction costs

     215        302        2,212        365   

Severance

     146        370        229        673   

Litigation related expense

     92        24        150        115   

Gain on investments

     —          8        —          4   

Impairment of customer inducement asset

     —          174        —          174   

Other income

     —          —          —          (1,100

Customer inducement costs

     —          1,207        —          3,620   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 6,362      $ 7,567      $ 16,770      $ 20,913   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 551      $ 1,925      $ 623      $ 5,776   

Deferred revenue fair value adjustment

     240        —          609        —     

Stock-based compensation expense

     714        427        1,868        1,411   

Restructuring charges and transaction costs

     129        181        1,322        218   

Severance

     87        221        137        402   

Amortization of acquired intangibles

     1,077        76        2,633        383   

Litigation related expense

     55        14        90        69   

Customer inducement costs

     —          722        —          2,165   

Impairment of customer inducement asset

     —          104        —          104   

Other income

     —          —          —          (658

Imputed interest expense

     —          121        —          364   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 2,853      $ 3,791      $ 7,282      $ 10,234   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted number of weighted-average shares outstanding

     33,358,706        32,871,269        33,179,044        32,937,601   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income per share

   $ 0.09      $ 0.12      $ 0.22      $ 0.31   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* Adjustments are tax effected using an income tax rate of 40.2% for 2012 and 2011, respectively.


Envestnet, Inc.

Historical Assets, Accounts and Advisors

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

 

     As of  
     September 30,
2011
     December 31,
2011
     March 31,
2012
     June 30,
2012
     September 30,
2012
 

Platform Assets

              

Assets Under Management (AUM)

   $ 15,560       $ 22,936       $ 26,084       $ 26,758       $ 29,232   

Assets Under Administration (AUA)

     50,607         47,148         54,336         60,511         64,229   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal AUM/A

     66,167         70,084         80,420         87,269         93,461   

Licensing

     61,571         69,514         76,235         229,268         254,256   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Platform Assets

   $ 127,738       $ 139,598       $ 156,655       $ 316,537       $ 347,717   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Platform Accounts

              

AUM

     83,073         124,636         134,294         141,695         148,920   

AUA

     254,100         216,038         229,942         274,322         278,192   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal AUM/A

     337,173         340,674         364,236         416,017         427,112   

Licensing

     572,791         588,038         588,936         1,138,233         1,170,978   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Platform Accounts

     909,964         928,712         953,172         1,554,250         1,598,090   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Advisors

              

AUM/A

     14,206         13,887         14,386         15,045         15,735   

Licensing

     5,522         5,709         5,351         6,758         6,878   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Advisors

     19,728         19,596         19,737         21,803         22,613