Exhibit 99.1

Envestnet Reports First Quarter 2020 Financial Results

Chicago, IL — May 7, 2020 — Envestnet (NYSE: ENV), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for the three months ended March 31, 2020.

 
 
Three months ended
 
 
Key Financial Metrics
 
March 31,
 
%
(in millions except per share data)
 
2020
 
2019
 
Change
GAAP:
 
 
 
 
 
 
Total revenues
 
$
246.5

 
$
199.7

 
23%
Net income (loss)
 
$
(7.2
)
 
$
(18.3
)
 
(61)%
Net income (loss) per diluted share attributable to Envestnet, Inc.
 
$
(0.14
)
 
$
(0.38
)
 
(63)%
 
 
 
 
 
 
 
Non-GAAP:
 
 
 
 
 
 
Adjusted revenues(1)
 
$
247.0

 
$
199.7

 
24%
Adjusted net revenues(1)
 
$
178.4

 
$
145.8

 
22%
Adjusted EBITDA(1)
 
$
54.6

 
$
34.0

 
61%
Adjusted net income(1)
 
$
31.2

 
$
19.4

 
61%
Adjusted net income per diluted share(1)
 
$
0.57

 
$
0.39

 
46%
n/m - not meaningful

“During these unprecedented times, supporting our clients while ensuring the health and safety of our employees is our top priority. While we are accustomed to functioning effectively across multiple locations, today nearly 100% of our workforce is remote. Even so, our people and technology platforms have demonstrated the ability to support an historic level of volatility and client activity,” said Bill Crager, Chief Executive Officer.
 
“As we move forward, we are well positioned to help our clients navigate our new landscape. I am grateful for the commitment and dedication of our teams across the globe as we help advisors and firms improve the financial lives of their clients. Envestnet has been there for them throughout this extraordinary time.  And we are ready to power the next phase of advice, with the ultimate goal of improving the financial lives of millions of American households,” concluded Mr. Crager.

COVID-19 Pandemic

We are closely monitoring developments with the COVID-19 pandemic and taking proactive measures to ensure business continuity. Our priority is to protect the well-being of our employees, while we continue to provide uninterrupted service and support to our clients. As part of our existing business continuity protocol, we created a pandemic steering committee that meets regularly and communicates information or guidance to employees and customers. Currently, nearly 100% of our employees are working remotely, with the tools they need to perform their jobs. We are implementing location-specific back-to-office plans incorporating guidance from the CDC, OSHA and in consideration of local regulations and ordinances. As the situation evolves, we will continue to support our customers and the health and well-being of our employees and other stakeholders.

Financial Results for the First Quarter of 2020

Asset-based recurring revenues increased 24% from the first quarter of 2019, and represented 55% of total revenues for the first quarters of both 2020 and 2019. Subscription-based recurring revenues increased 26% from the first quarter of 2019, and represented 42% of total revenues the first quarter of 2020 and 2019. Professional services and other non-recurring revenues decreased 6% from the prior year period. Total revenues increased 23% to $246.5 million for the

1



first quarter of 2020 from $199.7 million for the first quarter of 2019. When excluding $17.4 million of revenue from acquisitions not included in the prior period, total revenue grew 15% for the three months ended March 31, 2020, compared to the first quarter of 2019.

Total operating expenses for the first quarter of 2020 increased 22% to $254.2 million from $208.4 million in the prior year period. Cost of revenues increased 22% to $74.9 million for the first quarter of 2020 from $61.6 million for the prior year period. Compensation and benefits increased 27% to $110.4 million for the first quarter of 2020 from $86.7 million for the prior year period. Compensation and benefits were 45% of total revenues for the first quarter of 2020, compared to 43% in the prior year period. General and administration expenses increased 1% to $41.1 million for the first quarter of 2020 from $40.5 million for the prior year period. General and administrative expenses were 17% of total revenues for the first quarter of 2020, compared to 20% in the prior year period. 

Loss from operations was $7.6 million for the first quarter of 2020 compared to loss of $8.7 million for the first quarter of 2019. Net loss was $7.2 million for the first quarter of 2020 compared to net loss of $18.3 million for the first quarter of 2019. Net loss per diluted share attributable to Envestnet, Inc. was $0.14 for the first quarter of 2020 compared to net loss per diluted share attributable to Envestnet, Inc. of $0.38 for the first quarter of 2019.
 
Adjusted revenues(1) for the first quarter of 2020 increased 24% to $247.0 million from $199.7 million for the prior year period. Adjusted net revenues(1) for the first quarter of 2020 increased 22% to $178.4 million from $145.8 million for the prior year period. Adjusted EBITDA(1) for the first quarter of 2020 increased 61% to $54.6 million from $34.0 million for the prior year period. Adjusted net income(1) increased 61% for the first quarter of 2020 to $31.2 million from $19.4 million for the prior year period. Adjusted net income per diluted share(1) for the first quarter of 2020 increased 46% to $0.57 for the first quarter of 2020 from $0.39 in the first quarter of 2019.


Balance Sheet and Liquidity

As of March 31, 2020, the Company had $68.6 million in cash and cash equivalents and $635.0 million in outstanding debt. The outstanding debt as of March 31, 2020 included $290.0 million in borrowings under the Company's $500.0 million revolving credit facility and $345.0 million in convertible notes maturing in 2023.

Outlook

The Company provided the following outlook for the second quarter ending June 30, 2020 and full year ending December 31, 2020. This outlook is based on the market value of assets on March 31, 2020. We caution that we cannot predict the market value of our assets on any future date and, in particular, in light of recent market volatility. See “Cautionary Statement Regarding Forward-Looking Statements.”


2



In Millions Except Adjusted EPS
 
2Q 2020
 
FY 2020
GAAP:
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Asset-based
 
$
116.0

 
-
 
$
116.5

 
 
 
 
 
 
Subscription-based
 
103.4

 
-
 
103.9

 
 
 
 
 
 
Total recurring revenues
 
$
219.4

 
-
 
$
220.4

 
 
 
 
 
 
Professional services and other revenues
 
6.5

 
-
 
7.0

 
 
 
 
 
 
Total revenues
 
$
225.9

 
-
 
$
227.4

 
$
939.5

 
-
 
$
945.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Asset-based cost of revenues
 
$
60.5

 
-
 
$
61.0

 
$
257.0

 
-
 
$
262.0

Total cost of revenues
 
$
68.0

 
-
 
$
68.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
(a)

 
-
 
(a)

 
(a)

 
-
 
(a)

 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted shares outstanding
 
 
 
55.0
 
 
 
 
 
55.0
 
 
Net income per diluted share
 
(a)

 
-
 
(a)

 
(a)

 
-
 
(a)

 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP:
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted revenues (1):
 
 
 
 
 
 
 
 
 
 
 
 
  Asset-based
 
$
116.0

 
-
 
$
116.5

 
 
 
 
 
 
  Subscription-based
 
103.5

 
-
 
104.0

 
 
 
 
 
 
Total recurring revenues
 
$
219.5

 
-
 
$
220.5

 
 
 
 
 
 
  Professional services and other revenues
 
6.5

 
-
 
7.0

 
 
 
 
 
 
Total revenues
 
$
226.0

 
-
 
$
227.5

 
$
940.0

 
-
 
$
946.0

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net revenues (1)
 
$
165.0

 
-
 
$
167.0

 
$
678.0

 
-
 
$
689.0

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA(1)
 
$
47.5

 
-
 
$
48.5

 
$
200.0

 
-
 
$
203.0

Adjusted net income per diluted share(1)
 
 
 
$
0.47

 
 
 
$
1.92

 
-
 
$
2.02



(a) The Company does not forecast net income and net income per diluted share due to the unpredictable nature of various items adjusted for non-GAAP disclosure purposes, including the periodic GAAP income tax provision.

Conference Call

Envestnet will host a conference call to discuss first quarter 2020 financial results today at 5:00 p.m. ET. The live webcast and accompanying presentation can be accessed from Envestnet’s investor relations website at http://ir.envestnet.com/. A replay of the webcast will be available on the investor relations website following the call.

About Envestnet

Envestnet, Inc. (NYSE: ENV) is a leading provider of intelligent systems for wealth management and financial wellness. Envestnet's unified technology empowers enterprises and advisors to more fully understand their clients and deliver actionable intelligence that drives better outcomes and improves lives.

Envestnet Wealth Solutions enables enterprises and advisors to better manage client outcomes and strengthen their practices through its leading Wealth Management Operating System and advanced portfolio solutions. Envestnet | Tamarac provides portfolio management, reporting, trading, rebalancing and client portal solutions for registered independent advisers (“RIAs”). Envestnet | MoneyGuide provides goals-based financial planning applications. Envestnet Data & Analytics enables innovation and insights through its Envestnet | Yodlee data aggregation platform.


3



More than 103,000 advisors and more than 4,900 companies including: 16 of the 20 largest U.S. banks, 46 of the 50 largest wealth management and brokerage firms, over 500 of the largest RIAs and hundreds of internet services companies, leverage Envestnet technology and services. Envestnet solutions enhance knowledge of the client, accelerate client on-boarding, improve client digital experiences and help drive better outcomes for enterprises, advisors and their clients.

For more information on Envestnet, please visit www.envestnet.com and follow us on twitter @ENVintel.

 

(1) Non-GAAP Financial Measures

Adjusted revenues” excludes the effect of purchase accounting on the fair value of acquired deferred revenue. Under GAAP, we record at fair value the acquired deferred revenue for contracts in effect at the time the entities were acquired. Consequently, revenue related to acquired entities for periods subsequent to the acquisition does not reflect the full amount of revenue that would have been recorded by these entities had they remained stand‑alone entities.

Adjusted net revenues” represents adjusted revenues less asset-based costs of revenues. Under GAAP, we are required to recognize as revenue certain fees paid to investment managers and other third parties needed for implementation of investment solutions included in our assets under management. Those fees also are required to be recorded as cost of revenues. This non-GAAP metric presents adjusted revenues without such fees included, as they have no impact on our profitability.

Adjusted revenues and Adjusted net revenues have limitations as financial measures, should be considered as supplemental in nature and are not meant as a substitute for revenue prepared in accordance with GAAP.

Adjusted EBITDA” represents net loss before deferred revenue fair value adjustment, interest income, interest expense, accretion on contingent consideration and purchase liability, income tax provision (benefit), depreciation and amortization, non-cash compensation expense, restructuring charges and transaction costs, severance, non-recurring litigation and regulatory related expenses, foreign currency, non-income tax expense adjustment, non-recurring gain, loss allocation from equity method investment and (income) loss attributable to non-controlling interest.

Adjusted net income” represents net loss before deferred revenue fair value adjustment, accretion on contingent consideration and purchase liability, non-cash interest expense, non-cash compensation expense, restructuring charges and transaction costs, severance, amortization of acquired intangibles, non-recurring litigation and regulatory related expenses, foreign currency,  non-income tax expense adjustment, non-recurring gain, loss allocation from equity method investment and (income) loss attributable to non-controlling interest. Reconciling items are presented gross of tax, and a normalized tax rate is applied to the total of all reconciling items to arrive at adjusted net income. The normalized tax rate is based solely on the estimated blended statutory income tax rates in the jurisdictions in which we operate. We monitor the normalized tax rate based on events or trends that could materially impact the rate, including tax legislation changes and changes in the geographic mix of our operations.

“Adjusted net income per diluted 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 on pages 9-12 of this press release. Reconciliations are not provided for guidance on such measures as the Company is unable to predict the amounts to be adjusted, such as the GAAP tax provision. The Company’s Non-GAAP Financial Measures should not be viewed as a substitute for revenues, net income or net income per share determined in accordance with GAAP.


4



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 expected financial performance and outlook for the second quarter and full year of 2020, 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, a pandemic or health crisis, including the COVID-19 pandemic, and its impact on financial institutions, the global economy or capital markets, as well as our products, clients, vendors and employees, and our results of operations, the full extent of which is currently unknown; changes and volatility in financial and capital markets, which could result in changes in demand for our products or services or in the value of assets on which we earn revenue; the possibility that the anticipated benefits of any of our acquisitions will not be realized to the extent or when expected, difficulty in sustaining rapid revenue growth, which may place significant demands on our administrative, operational and financial resources, the concentration of nearly all of our revenues from the delivery of our solutions and services to clients in the financial services industry, our reliance on a limited number of clients for a material portion of our revenues, the renegotiation of fee percentages or termination of our services by our clients, our ability to identify potential acquisition candidates, complete acquisitions and successfully integrate acquired companies, the impact of market and economic conditions on revenues, our inability to successfully execute the conversion of clients’ assets from their technology platform to our technology platforms in a timely and accurate manner, our ability to expand our relationships with existing customers, grow the number of customers and derive revenue from new offerings such as our data analytics solutions and market research services and premium financial applications, compliance failures, adverse judicial or regulatory proceedings against us, liabilities associated with potential, perceived or actual breaches of fiduciary duties and/or conflicts of interest, changes in laws and regulations, including tax laws and regulations, general economic conditions, political and regulatory conditions, the impact of fluctuations in market condition and interest rates on the demand for our products and services and the value of assets under management or administration, the impact of market conditions on our ability to issue debt and equity, the impact of fluctuations in interest rates on our cost of borrowing, our financial performance, the results of our investments in research and development, our data center and other infrastructure, our ability to maintain the security and integrity of our systems and facilities and to maintain the privacy of personal information, failure of our systems to work properly, our ability to realize operating efficiencies, the advantages of our solutions as compared to those of others, the failure to protect our intellectual property rights, our ability to establish and maintain intellectual property rights, our ability to retain and hire necessary employees and appropriately staff our operations and management’s response to these factors. More information regarding these and other risks, uncertainties and factors is contained in our filings with the Securities and Exchange Commission (“SEC”) which are available on the SEC’s website at www.sec.gov or the our 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 May 7, 2020 and, unless required by law, we undertake 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
 
 


5



Envestnet, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
 
 
March 31,
 
December 31,
 
 
2020
 
2019
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
68,601

 
$
82,505

Fees receivable, net
 
81,133

 
67,815

Prepaid expenses and other current assets
 
37,699

 
32,183

Total current assets
 
187,433

 
182,503

 
 
 
 
 
Property and equipment, net
 
53,190

 
53,756

Internally developed software, net
 
68,227

 
60,263

Intangible assets, net
 
489,840

 
505,589

Goodwill
 
906,501

 
879,850

Operating lease right-of-use-assets, net
 
78,860

 
82,796

Other non-current assets
 
46,407

 
37,127

Total assets
 
$
1,830,458

 
$
1,801,884

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accrued expenses and other liabilities
 
$
132,142

 
$
137,944

Accounts payable
 
14,294

 
17,277

Operating lease liabilities
 
13,736

 
13,816

Contingent consideration
 
2,569

 

Deferred revenue
 
40,177

 
34,753

Total current liabilities
 
202,918

 
203,790

 
 
 
 
 
Convertible Notes due 2023
 
308,262

 
305,513

Revolving credit facility
 
290,000

 
260,000

Contingent consideration
 
12,222

 
9,045

Deferred revenue
 
6,277

 
5,754

Non-current operating lease liabilities
 
84,935

 
88,365

Deferred tax liabilities, net
 
26,680

 
29,481

Other non-current liabilities
 
34,967

 
32,360

Total liabilities
 
966,261

 
934,308

 
 
 
 
 
Equity:
 
 
 
 
Total stockholders’ equity
 
865,569

 
869,094

Non-controlling interest
 
(1,372
)
 
(1,518
)
Total liabilities and equity
 
$
1,830,458

 
$
1,801,884



6



Envestnet, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share information)
(unaudited)
 
 
 
Three Months Ended
 
 
March 31,
 
 
2020
 
2019
Revenues:
 
 
 
 
Asset-based
 
$
134,811

 
$
108,934

Subscription-based
 
104,551

 
83,087

Total recurring revenues
 
239,362

 
192,021

Professional services and other revenues
 
7,177

 
7,645

Total revenues
 
246,539

 
199,666

 
 
 
 
 
Operating expenses:
 
 
 
 
Cost of revenues
 
74,933

 
61,645

Compensation and benefits
 
110,430

 
86,717

General and administration
 
41,110

 
40,524

Depreciation and amortization
 
27,683

 
19,517

Total operating expenses
 
254,156

 
208,403

 
 
 
 
 
Loss from operations
 
(7,617
)
 
(8,737
)
Other expense, net
 
(1,537
)
 
(5,763
)
Loss before income tax provision (benefit)
 
(9,154
)
 
(14,500
)
 
 
 
 
 
Income tax provision (benefit)
 
(1,964
)
 
3,768

 
 
 
 
 
Net loss
 
(7,190
)
 
(18,268
)
Add: Net (income) loss attributable to non-controlling interest
 
(146
)
 
83

Net loss attributable to Envestnet, Inc.
 
$
(7,336
)
 
$
(18,185
)
 
 
 
 
 
Net loss per share attributable to Envestnet, Inc.:
 
 
 
 
Basic
 
$
(0.14
)
 
$
(0.38
)
 
 
 
 
 
Diluted
 
$
(0.14
)
 
$
(0.38
)
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
Basic
 
53,016,511

 
48,237,265

 
 
 
 
 
Diluted
 
53,016,511

 
48,237,265



7



Envestnet, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
 
Three Months Ended
 
 
March 31,
 
 
2020
 
2019
OPERATING ACTIVITIES:
 
 
 
 
Net loss
 
$
(7,190
)
 
$
(18,268
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
27,683

 
19,517

Provision for doubtful accounts
 
1,026

 
451

Deferred income taxes
 
(1,587
)
 
169

Non-cash compensation expense
 
15,985

 
12,864

Non-cash interest expense
 
4,463

 
6,880

Accretion on contingent consideration and purchase liability
 
599

 
240

Gain on acquisition of equity method investment
 
(4,230
)
 

Loss allocation from equity method investment
 
2,030

 
203

Changes in operating assets and liabilities, net of acquisitions:
 
 
 
 
Fees receivables, net
 
(14,333
)
 
1,198

Prepaid expenses and other current assets
 
(6,793
)
 
(13,346
)
Other non-current assets
 
641

 
(1,060
)
Accrued expenses and other liabilities
 
(11,554
)
 
(34,495
)
Accounts payable
 
(3,205
)
 
5,179

Deferred revenue
 
5,598

 
7,039

Other non-current liabilities
 
(145
)
 
854

Net cash provided by (used in) operating activities
 
8,988

 
(12,575
)
 
 
 
 
 
INVESTING ACTIVITIES:
 
 
 
 
Purchases of property and equipment
 
(2,160
)
 
(5,247
)
Capitalization of internally developed software
 
(11,572
)
 
(7,185
)
Investments in private companies
 
(11,700
)
 
(1,000
)
Acquisitions of businesses, net of cash acquired
 
(20,257
)
 
(11,061
)
Net cash used in investing activities
 
(45,689
)
 
(24,493
)
 
 
 
 
 
FINANCING ACTIVITIES:
 
 
 
 
Proceeds from borrowings on revolving credit facility
 
45,000

 

Payments on revolving credit facility
 
(15,000
)
 

Proceeds from exercise of stock options
 
3,408

 
3,163

Purchase of treasury stock for stock-based tax withholdings
 
(9,199
)
 
(9,819
)
Issuance of restricted stock units
 
2

 
2

Net cash provided by (used in) financing activities
 
24,211

 
(6,654
)
 
 
 
 
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
 
(1,496
)
 
112

 
 
 
 
 
DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
 
(13,986
)
 
(43,610
)
 
 
 
 
 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD
 
82,755

 
289,671

 
 
 
 
 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (a)
 
$
68,769

 
$
246,061




8



(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets:

 
 
March 31,
 
March 31,
 
 
2020
 
2019
Cash and cash equivalents
 
$
68,601

 
$
245,735

Restricted cash included in prepaid expenses and other current assets
 

 
158

Restricted cash included in other non-current assets
 
168

 
168

Total cash, cash equivalents and restricted cash
 
$
68,769

 
$
246,061


Reconciliation of Non-GAAP Financial Measures
(in thousands)
(unaudited) 

 
 
Three Months Ended
 
 
March 31,
 
 
2020
 
2019
Total revenues
 
$
246,539

 
$
199,666

Deferred revenue fair value adjustment (a)
 
439

 
6

Adjusted revenues
 
246,978

 
199,672

Asset-based cost of revenues
 
(68,592
)
 
(53,842
)
Adjusted net revenues
 
$
178,386

 
$
145,830

 
 
 
 
 
Net loss
 
$
(7,190
)
 
$
(18,268
)
Add (deduct):
 
 
 
 
Deferred revenue fair value adjustment (a)
 
439

 
6

Interest income (b)
 
(391
)
 
(1,510
)
Interest expense (b)
 
7,134

 
7,096

Accretion on contingent consideration and purchase liability (c)
 
599

 
240

Income tax provision (benefit)
 
(1,964
)
 
3,768

Depreciation and amortization
 
27,683

 
19,517

Non-cash compensation expense (d)
 
13,470

 
12,864

Restructuring charges and transaction costs (c)
 
2,820

 
7,366

Severance (e)
 
13,982

 
2,480

Non-recurring litigation and regulatory related expenses (c)
 
703

 

Foreign currency (b)
 
(494
)
 
(1
)
Non-income tax expense adjustment (c)
 
188

 
210

Non-recurring gain (b)
 
(4,230
)
 

Loss allocation from equity method investment (b)
 
2,030

 
203

(Income) loss attributable to non-controlling interest
 
(201
)
 
31

Adjusted EBITDA
 
$
54,578

 
$
34,002


(a)
Included within subscription-based revenues in the condensed consolidated statements of operations.
(b)
Included within other expense, net in the condensed consolidated statements of operations.
(c)
Included within general and administrative expenses in the condensed consolidated statements of operations.
(d)
For the 2020 period, $15,994 included in compensation and benefits, and a fair value adjustment of $(2,524) of other included in other expense, net in the condensed consolidated statements of operations. All of 2019 included in compensation and benefits in the condensed consolidated statements of operations.
(e)
Included within compensation and benefits in the condensed consolidated statements of operations.

9



Envestnet, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except share and per share information)
(unaudited) 

 
 
Three Months Ended
 
 
March 31,
 
 
2020
 
2019
Net loss
 
$
(7,190
)
 
$
(18,268
)
Income tax provision (benefit) (a)
 
(1,964
)
 
3,768

Loss before income tax provision (benefit)
 
(9,154
)
 
(14,500
)
Add (deduct):
 
 
 
 
Deferred revenue fair value adjustment (b)
 
439

 
6

Accretion on contingent consideration and purchase liability (d)
 
599

 
240

Non-cash interest expense (c)
 
2,962

 
4,616

Non-cash compensation expense (e)
 
13,470

 
12,864

Restructuring charges and transaction costs (d)
 
2,820

 
7,366

Severance (f)
 
13,982

 
2,480

Amortization of acquired intangibles (g)
 
18,758

 
12,528

Non-recurring litigation and regulatory related expenses (d)
 
703

 

Foreign currency (c)
 
(494
)
 
(1
)
Non-income tax expense adjustment (d)
 
188

 
210

Non-recurring gain (c)
 
(4,230
)
 

Loss allocation from equity method investment (c)
 
2,030

 
203

(Income) loss attributable to non-controlling interest
 
(201
)
 
31

Adjusted net income before income tax effect
 
41,872

 
26,043

Income tax effect (h)
 
(10,670
)
 
(6,632
)
Adjusted net income
 
$
31,202

 
$
19,411

 
 
 
 
 
Basic number of weighted-average shares outstanding
 
53,016,511

 
48,237,265

Effect of dilutive shares:
 
 
 
 
Options to purchase common stock
 
664,796

 
1,198,197

Unvested restricted stock units
 
600,567

 
656,798

Convertible notes
 
235,182

 

Warrants
 
42,551

 

Diluted number of weighted-average shares outstanding
 
54,559,607

 
50,092,260

 
 
 
 
 
Adjusted net income per share - diluted
 
$
0.57

 
$
0.39


(a)
For the three months ended March 31, 2020 and 2019, the effective tax rate computed in accordance with GAAP equaled 21.5% and (26.0)%, respectively.
(b)
Included within subscription-based revenues in the condensed consolidated statements of operations.
(c)
Included within other expense, net in the condensed consolidated statements of operations.
(d)
Included within general and administrative expenses in the condensed consolidated statements of operations.
(e)
For the 2020 period, $15,994 included in compensation and benefits, and a fair value adjustment of $(2,524) of other included in other expense, net in the condensed consolidated statements of operations. All of 2019 included in compensation and benefits in the condensed consolidated statements of operations.
(f)
Included within compensation and benefits in the condensed consolidated statements of operations.
(g)
Included within depreciation and amortization in the condensed consolidated statements of operations.
(h)
Estimated normalized effective tax rates of 25.5% have been used to compute adjusted net income for the three months ended March 31, 2020 and 2019.


10



Reconciliation of Non-GAAP Financial Measures
Segment Information
(in thousands)
(unaudited) 
 
 

 
 
Three months ended March 31, 2020
 
 
Envestnet Wealth Solutions
 
Envestnet Data & Analytics
 
Nonsegment
 
Total
Total Revenues
 
$
198,420

 
$
48,119

 
$

 
$
246,539

Deferred revenue fair value adjustment (a)
 
439

 

 

 
439

Adjusted revenues
 
198,859

 
48,119

 

 
246,978

Less: Asset-based cost of revenues
 
(68,592
)
 

 

 
(68,592
)
Adjusted net revenues
 
$
130,267

 
$
48,119

 
$

 
$
178,386

 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
Asset-based
 
$
134,811

 
$

 
$

 
$
134,811

Subscription-based
 
60,323

 
44,228

 

 
104,551

Total recurring revenues
 
195,134

 
44,228

 

 
239,362

Professional services and other revenues
 
3,286

 
3,891

 

 
7,177

Total revenues
 
198,420

 
48,119

 

 
246,539

 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 


Cost of revenues:
 
 
 
 
 
 
 


Asset-based
 
68,592

 

 

 
68,592

Subscription-based
 
1,192

 
5,085

 

 
6,277

Professional services and other
 
8

 
56

 

 
64

Total cost of revenues
 
69,792

 
5,141

 

 
74,933

Compensation and benefits
 
72,588

 
30,113

 
7,729

 
110,430

General and administration
 
25,280

 
9,187

 
6,643

 
41,110

Depreciation and amortization
 
19,420

 
8,263

 

 
27,683

Total operating expenses
 
$
187,080

 
$
52,704

 
$
14,372

 
$
254,156

 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
$
11,340

 
$
(4,585
)
 
$
(14,372
)
 
$
(7,617
)
Add:
 
 
 
 
 
 
 
 
Deferred revenue fair value adjustment (a)
 
439

 

 

 
439

Accretion on contingent consideration and purchase liability (b)
 
373

 
226

 

 
599

Depreciation and amortization
 
19,420

 
8,263

 

 
27,683

Non-cash compensation expense (c)
 
9,697

 
4,226

 
2,071

 
15,994

Restructuring charges and transaction costs (b)
 
1,189

 
185

 
1,446

 
2,820

Non-income tax expense adjustment (b)
 
250

 
(62
)
 

 
188

Severance (c)
 
11,002

 
1,660

 
1,320

 
13,982

Non-recurring litigation and regulatory related expenses (b)
 

 
703

 

 
703

Income attributable to non-controlling interest
 
(201
)
 

 

 
(201
)
Other
 
(12
)
 

 

 
(12
)
Adjusted EBITDA
 
$
53,497

 
$
10,616

 
$
(9,535
)
 
$
54,578


(a)
Included within subscription-based revenues in the condensed consolidated statements of operations.
(b)
Included within general and administrative expenses in the condensed consolidated statements of operations.
(c)
Included within compensation and benefits in the condensed consolidated statements of operations.



11




Reconciliation of Non-GAAP Financial Measures
Segment Information
(in thousands)
(unaudited) 

 
 
Three Months Ended March 31, 2019
 
 
Envestnet Wealth Solutions
 
Envestnet Data & Analytics
 
Nonsegment
 
Total
Revenues
 
$
152,705

 
$
46,961

 
$

 
$
199,666

Deferred revenue fair value adjustment (a)
 
6

 

 

 
6

Adjusted revenues
 
152,711

 
46,961

 

 
199,672

Less: Asset-based cost of revenues
 
(53,842
)
 

 

 
(53,842
)
Adjusted net revenues
 
$
98,869

 
$
46,961

 
$

 
$
145,830

 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
Asset-based
 
$
108,934

 
$

 
$

 
$
108,934

Subscription-based
 
41,026

 
42,061

 

 
83,087

Total recurring revenues
 
149,960

 
42,061

 

 
192,021

Professional services and other revenues
 
2,745

 
4,900

 

 
7,645

Total revenues
 
152,705

 
46,961

 

 
199,666

 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
 
Asset-based
 
53,842

 

 

 
53,842

Subscription-based
 
2,008

 
5,669

 

 
7,677

Professional services and other
 
5

 
121

 

 
126

Total cost of revenues
 
55,855

 
5,790

 

 
61,645

Compensation and benefits
 
48,555

 
31,364

 
6,798

 
86,717

General and administration
 
20,184

 
9,485

 
10,855

 
40,524

Depreciation and amortization
 
11,267

 
8,250

 

 
19,517

Total operating expenses
 
$
135,861

 
$
54,889

 
$
17,653

 
$
208,403

 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
$
16,844

 
$
(7,928
)
 
$
(17,653
)
 
$
(8,737
)
Add:
 
 
 
 
 
 
 
 
Deferred revenue fair value adjustment (a)
 
6

 

 

 
6

Accretion on contingent consideration and purchase liability (b)
 
240

 

 

 
240

Depreciation and amortization
 
11,267

 
8,250

 

 
19,517

Non-cash compensation expense (c)
 
5,677

 
4,188

 
2,999

 
12,864

Restructuring charges and transaction costs (b)
 
262

 
965

 
6,139

 
7,366

Non-income tax expense adjustment (b)
 
200

 
10

 

 
210

Severance (c)
 
350

 
2,048

 
82

 
2,480

Loss attributable to non-controlling interest
 
31

 

 

 
31

Other
 
22

 
1

 
2

 
25

Adjusted EBITDA
 
$
34,899

 
$
7,534

 
$
(8,431
)
 
$
34,002


(a)
Included within subscription-based revenues in the condensed consolidated statements of operations.
(b)
Included within general and administrative expenses in the condensed consolidated statements of operations.
(c)
Included within compensation and benefits in the condensed consolidated statements of operations.


12



Envestnet, Inc.
Historical Assets, Accounts and Advisors
(in millions, except accounts and advisors)
(unaudited)
 
 
 
As of
 
 
March 31,
 
June 30,
 
September 30,
 
December 31,
 
March 31,
 
 
2019
 
2019
 
2019
 
2019
 
2020
 
 
(in millions, except accounts and advisors data)
Platform Assets
 
 
 
 
 
 
 
 
 
 
Assets under Management (AUM)
 
$
176,144

 
$
182,143

 
$
188,739

 
$
207,083

 
$
185,065

Assets under Administration (“AUA”)
 
319,129

 
330,226

 
316,742

 
343,505

 
312,472

Total AUM/A
 
495,273

 
512,369

 
505,481

 
550,588

 
497,537

Subscription
 
2,546,483

 
2,835,780

 
2,947,582

 
3,205,281

 
2,875,394

Total Platform Assets
 
$
3,041,756

 
$
3,348,149

 
$
3,453,063

 
$
3,755,869

 
$
3,372,931

Platform Accounts
 
 
 
 
 
 
 
 
 
 
AUM
 
874,574

 
907,034

 
934,811

 
935,039

 
970,896

AUA
 
1,187,589

 
1,196,114

 
1,136,430

 
1,193,882

 
1,254,856

Total AUM/A
 
2,062,163

 
2,103,148

 
2,071,241

 
2,128,921

 
2,225,752

Subscription
 
8,909,581

 
9,492,653

 
9,692,714

 
9,793,175

 
10,090,172

Total Platform Accounts
 
10,971,744

 
11,595,801

 
11,763,955

 
11,922,096

 
12,315,924

Advisors
 
 
 
 
 
 
 
 
 
 
AUM/A
 
39,035

 
39,727

 
39,735

 
40,563

 
40,971

Subscription
 
57,594

 
59,292

 
60,319

 
61,180

 
62,077

Total Advisors
 
96,629

 
99,019

 
100,054

 
101,743

 
103,048


The following table summarizes the changes in AUM and AUA for the three months ended March 31, 2020:

 
 
12/312019
 
Gross
Sales
 
Redemptions
 
Net
Flows
 
Market Impact
 
Reclass to Subscription
 
3/31/2020
 
 
(in millions except account data)
AUM
 
$
207,083

 
$
20,986

 
$
(11,099
)
 
$
9,887

 
$
(31,905
)
 
$

 
$
185,065

AUA
 
343,505

 
39,934

 
(18,878
)
 
21,056

 
(50,144
)
 
(1,945
)
 
312,472

Total AUM/A
 
$
550,588

 
$
60,920

 
$
(29,977
)
 
$
30,943

 
$
(82,049
)
 
$
(1,945
)
 
$
497,537

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Based Accounts
 
2,128,921

 
 
 
 
 
117,673

 
 
 
(20,842
)
 
2,225,752


The above AUM/A gross sales figures include $20.1 billion in new client conversions. The Company onboarded an additional $25.0 billion in subscription conversions during the three months ended March 31, 2020, bringing total conversions for the quarter to $45.1 billion.

Asset and account figures in the “Reclass to Subscription” columns for the three months ended March 31, 2020 represent enterprise customers whose billing arrangements in future periods are subscription-based, rather than asset-based. Such amounts are included in Subscription metrics at the end of the quarter in which the reclassification occurred, with no impact on total platform assets or accounts.

13