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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
 
Commission file number 001-34835
env-20210630_g1.jpg
Envestnet, Inc.
(Exact name of registrant as specified in its charter)
Delaware20-1409613
(State or other jurisdiction of
incorporation or organization)
(I.R.S Employer
Identification No.)
35 East Wacker Drive, Suite 2400, Chicago, Illinois
60601
(Address of principal executive offices)(Zip Code)
 Registrant’s telephone number, including area code:
(312) 827-2800
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of exchange on which registered
Common Stock, par value $0.005 per shareENVNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ý  No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerý Accelerated filer
Non-accelerated filer 
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes   No 
As of July 30, 2021, Envestnet, Inc. had 54,515,307 shares of common stock outstanding.



TABLE OF CONTENTS
Page
2




Envestnet, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share information)
(unaudited)
June 30,December 31,
20212020
Assets
Current assets:
Cash and cash equivalents$369,524 $384,565 
Fees receivable, net81,037 80,064 
Prepaid expenses and other current assets40,619 40,570 
Total current assets491,180 505,199 
Property and equipment, net50,008 47,969 
Internally developed software, net114,770 96,501 
Intangible assets, net435,023 435,041 
Goodwill928,493 906,773 
Operating lease right-of-use assets, net93,298 105,249 
Other non-current assets57,924 47,558 
Total assets$2,170,696 $2,144,290 
Liabilities and Equity
Current liabilities:
Accrued expenses and other liabilities$174,957 $158,548 
Accounts payable20,423 18,003 
Operating lease liabilities12,477 13,649 
Contingent consideration1,312 11,251 
Deferred revenue38,645 34,918 
Total current liabilities247,814 236,369 
Long-term debt846,411 756,503 
Non-current operating lease liabilities107,045 112,182 
Deferred tax liabilities, net33,576 34,740 
Other non-current liabilities18,384 28,678 
Total liabilities1,253,230 1,168,472 
Commitments and contingencies
Equity:
Stockholders’ equity:
Preferred stock, par value $0.005, 50,000,000 shares authorized; no shares issued and outstanding as of June 30, 2021 and December 31, 2020
  
Common stock, par value $0.005, 500,000,000 shares authorized; 68,459,262 and 67,832,706 shares issued as of June 30, 2021 and December 31, 2020, respectively; 54,495,863 and 54,093,535 shares outstanding as of June 30, 2021 and December 31, 2020, respectively
342 339 
Additional paid-in capital1,089,263 1,166,774 
Accumulated deficit(44,619)(79,912)
Treasury stock at cost, 13,963,399 and 13,739,171 shares as of June 30, 2021 and December 31, 2020, respectively
(125,583)(110,466)
Accumulated other comprehensive loss(2,286)(398)
Total stockholders’ equity917,117 976,337 
Non-controlling interest349 (519)
Total equity917,466 975,818 
Total liabilities and equity$2,170,696 $2,144,290 
See accompanying notes to unaudited Condensed Consolidated Financial Statements.
3


Envestnet, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share information)
(unaudited)

Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Revenues:
Asset-based$170,075 $122,246 $329,450 $257,057 
Subscription-based112,504 104,979 222,333 209,530 
Total recurring revenues282,579 227,225 551,783 466,587 
Professional services and other revenues6,159 8,088 12,060 15,265 
Total revenues288,738 235,313 563,843 481,852 
Operating expenses:
Cost of revenues100,494 68,849 193,363 143,782 
Compensation and benefits105,548 95,565 206,262 205,995 
General and administration41,755 38,448 78,070 79,558 
Depreciation and amortization30,010 28,443 58,402 56,126 
Total operating expenses277,807 231,305 536,097 485,461 
Income (loss) from operations10,931 4,008 27,746 (3,609)
Other expense, net(3,784)(8,173)(11,252)(9,710)
Income (loss) before income tax provision (benefit)7,147 (4,165)16,494 (13,319)
Income tax provision (benefit)15,516 1,306 9,928 (658)
Net income (loss)(8,369)(5,471)6,566 (12,661)
Add: Net loss attributable to non-controlling interest88 547 99 401 
Net income (loss) attributable to Envestnet, Inc.$(8,281)$(4,924)$6,665 $(12,260)
Net income (loss) per share attributable to Envestnet, Inc.:
Basic$(0.15)$(0.09)$0.12 $(0.23)
Diluted$(0.15)$(0.09)$0.12 $(0.23)
Weighted average common shares outstanding:
Basic54,440,388 53,562,850 54,325,353 53,288,741 
Diluted54,440,388 53,562,850 55,136,946 53,288,741 

See accompanying notes to unaudited Condensed Consolidated Financial Statements.
4


Envestnet, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
 
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Net income (loss) attributable to Envestnet, Inc.
$(8,281)$(4,924)$6,665 $(12,260)
Foreign currency translation gains (losses), net of taxes(1,264)1,575 (1,888)(1,449)
Comprehensive income (loss) attributable to Envestnet, Inc.$(9,545)$(3,349)$4,777 $(13,709)

See accompanying notes to unaudited Condensed Consolidated Financial Statements.

5


Envestnet, Inc.
Condensed Consolidated Statements of Stockholders' Equity
(in thousands, except share information)
(unaudited)
 
Accumulated
Common StockTreasury StockAdditionalOtherNon-
CommonPaid-inComprehensiveAccumulatedcontrollingTotal
SharesAmountSharesAmountCapitalLossDeficitInterestEquity
Balance, December 31, 202067,832,706 $339 (13,739,171)$(110,466)$1,166,774 $(398)$(79,912)$(519)$975,818 
Adoption of ASU 2020-06, net of taxes of $7,641 (See Note 2)
— — — — (108,470)— 28,628 — (79,842)
Exercise of stock options27,043 — — — 522 — — — 522 
Issuance of common stock - vesting of restricted stock units455,349 2 — — — — — — 2 
Stock-based compensation expense— — — — 14,013 — — — 14,013 
Shares withheld to satisfy tax withholdings— — (147,041)(9,541)— — — — (9,541)
Share repurchase— — (24,227)(1,672)— — — — (1,672)
Foreign currency translation loss, net of taxes— — — — — (624)— — (624)
Other— — — — — — — 118 118 
Net income (loss)— — — — — — 14,946 (11)14,935 
Balance, March 31, 202168,315,098 $341 (13,910,439)$(121,679)$1,072,839 $(1,022)$(36,338)$(412)$913,729 
Exercise of stock options4,082 — — — 51 — — — 51 
Issuance of common stock - vesting of restricted stock units140,082 1 — — — — — — 1 
Stock-based compensation expense— — — — 17,161 — — — 17,161 
Shares withheld to satisfy tax withholdings— — (46,699)(3,479)— — — — (3,479)
Share repurchase— — (6,261)(425)— — — — (425)
Capital contribution - non-controlling interest— — — — (788)— — 811 23 
Foreign currency translation loss, net of taxes— — — — — (1,264)— — (1,264)
Other— — — — — — — 38 38 
Net loss— — — — — — (8,281)(88)(8,369)
Balance, June 30, 202168,459,262 $342 (13,963,399)$(125,583)$1,089,263 $(2,286)$(44,619)$349 $917,466 

See accompanying notes to unaudited Condensed Consolidated Financial Statements.







6


Envestnet, Inc.
Condensed Consolidated Statements of Stockholders' Equity (continued)
(in thousands, except share information)
(unaudited)

Accumulated
Common StockTreasury StockAdditionalOtherNon-
CommonPaid-inComprehensiveAccumulatedcontrollingTotal
SharesAmountSharesAmountCapitalLossDeficitInterestEquity
Balance, December 31, 201966,320,706 $331 (13,479,000)$(90,965)$1,037,141 $(1,749)$(75,664)$(1,518)$867,576 
Adoption of ASC 326, net of taxes— — — — — — (1,141)— (1,141)
Exercise of stock options357,974 2 — — 3,406 — — — 3,408 
Issuance of common stock - vesting of restricted stock units398,881 2 — — — — — — 2 
Stock-based compensation expense— — — — 13,765 — — — 13,765 
Shares withheld to satisfy tax withholdings— — (130,164)(9,199)— — — — (9,199)
Foreign currency translation loss, net of taxes— — — — — (3,024)— — (3,024)
Net income (loss)— — — — — — (7,336)146 (7,190)
Balance, March 31, 202067,077,561 $335 (13,609,164)$(100,164)$1,054,312 $(4,773)$(84,141)$(1,372)$864,197 
Exercise of stock options184,475 1 — — 3,274 — — — 3,275 
Issuance of common stock - vesting of restricted stock units134,207 1 — — — — — — 1 
Stock-based compensation expense— — — — 13,006 — — — 13,006 
Shares withheld to satisfy tax withholdings— — (43,697)(3,617)— — — — (3,617)
Transfer of non-controlling units— — — — 910 — — (139)771 
Foreign currency translation gain (loss)— — — — — 1,575 — — 1,575 
Net loss— — — — — — (4,924)(547)(5,471)
Balance, June 30, 202067,396,243 $337 (13,652,861)$(103,781)$1,071,502 $(3,198)$(89,065)$(2,058)$873,737 

See accompanying notes to unaudited Condensed Consolidated Financial Statements.
7


Envestnet, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
June 30,
20212020
OPERATING ACTIVITIES:
Net income (loss) $6,566 $(12,661)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization58,402 56,126 
Provision for doubtful accounts455 1,515 
Deferred income taxes8,137 (1,598)
Non-cash compensation expense31,422 29,869 
Non-cash interest expense2,906 5,907 
Accretion on contingent consideration and purchase liability575 910 
Payments of contingent consideration(2,360) 
Fair market value adjustment to contingent consideration liability(140)(1,982)
Fair market value adjustment to investment in private company(758) 
Gain on acquisition of equity method investment (4,230)
Loss allocation from equity method investments4,045 3,286 
Impairment of right of use assets1,110 1,426 
Other282 556 
Changes in operating assets and liabilities, net of acquisitions:
Fees receivable, net(1,334)(8,560)
Prepaid expenses and other current assets(155)(7,756)
Other non-current assets3,665 (353)
Accrued expenses and other liabilities527 (4,484)
Accounts payable2,333 (2,130)
Deferred revenue2,789 7,236 
Other non-current liabilities692 1,946 
Net cash provided by operating activities119,159 65,023 
INVESTING ACTIVITIES:
Purchases of property and equipment(11,357)(4,329)
Capitalization of internally developed software(31,802)(25,703)
Investments in private companies(4,549)(12,625)
Acquisition of proprietary technology(25,517) 
Acquisitions of businesses, net of cash acquired(33,143)(20,257)
Advance for technology solutions(3,000) 
Net cash used in investing activities(109,368)(62,914)

-continued-













8


Envestnet, Inc.
Condensed Consolidated Statements of Cash Flows (continued)
(in thousands)
(unaudited)
Six Months Ended
June 30,
20212020
FINANCING ACTIVITIES:
Proceeds from borrowings on revolving credit facility 45,000 
Payments on revolving credit facility (30,000)
Capital contributions - non-controlling shareholders23  
Payments of contingent consideration(9,200) 
Proceeds from exercise of stock options573 6,683 
Taxes paid in lieu of shares issued for stock-based compensation(13,020)(12,816)
Share repurchases(2,097) 
Other(587)3 
Net cash (used in) provided by financing activities(24,308)8,870 
EFFECT OF EXCHANGE RATE CHANGES ON CASH(524)(1,342)
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(15,041)9,637 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD384,714 82,755 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
(See Note 2)
$369,673 $92,392 
Supplemental disclosure of cash flow information - net cash paid during the period for income taxes$3,077 $2,136 
Supplemental disclosure of cash flow information - cash paid during the period for interest5,533 7,861 
Supplemental disclosure of non-cash operating, investing and financing activities:
Contingent consideration issued in acquisition of businesses 5,239 
Purchase liabilities included in accrued expenses and other liabilities 632 
Purchase liabilities included in other non-current liabilities3,300  
Purchase of fixed assets included in accounts payable and accrued expenses and other liabilities832 1,139 
Membership interest liabilities included in other non-current liabilities248 3,098 
Leasehold improvements funded by lease incentive164 1,710 
Assets obtained in exchange for lease liabilities999  
Transfer of non-controlling units 771 

See accompanying notes to unaudited Condensed Consolidated Financial Statements.


9

Table of Contents
Envestnet, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

1.Organization and Description of Business

Envestnet, Inc. (“Envestnet”) through its subsidiaries (collectively, the “Company”) is transforming the way financial advice and wellness are delivered. Its mission is to empower advisors and financial service providers with innovative technology, solutions and intelligence to make financial wellness a reality for everyone. Through a combination of platform enhancements, partnerships and acquisitions, Envestnet provides a unique financial network connecting technology, solutions and data, delivering better intelligence and enabling its customers to drive better outcomes.

Envestnet is organized around two primary, complementary business segments. Financial information about each business segment is contained in “Note 15—Segment Information” to the condensed consolidated financial statements.

2.Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements of the Company as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 have not been audited by an independent registered public accounting firm. These unaudited condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements for the year ended December 31, 2020 and reflect all normal recurring adjustments which are, in the opinion of management, necessary to present fairly the Company’s financial position as of June 30, 2021 and the results of operations, equity, comprehensive income (loss) and cash flows for the periods presented herein. The unaudited condensed consolidated financial statements include the accounts of the Company. All significant intercompany transactions and balances have been eliminated in consolidation. Accounts for the Envestnet Wealth Solutions segment that are denominated in a non-U.S. currency have been re-measured using the U.S. dollar as the functional currency. Certain accounts within the Envestnet Data & Analytics segment are recorded and measured in foreign currencies. The assets and liabilities for those subsidiaries with a functional currency other than the U.S. dollar are translated at exchange rates in effect at the balance sheet date, and revenues and expenses are translated at average exchange rates. Differences arising from these foreign currency translations are recorded in the unaudited condensed consolidated balance sheets as accumulated other comprehensive income (loss) within stockholders' equity. The Company is also subject to gains and losses from foreign currency denominated transactions and the remeasurement of foreign currency denominated balance sheet accounts, both of which are included in other expense, net in the condensed consolidated statements of operations.

The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the operating results to be expected for other interim periods or for the full fiscal year.

The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. References to GAAP in these notes are to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification, sometimes referred to as the codification or “ASC.” These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021.
 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates.
 
10

Table of Contents
Envestnet, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
The following table reconciles cash, cash equivalents and restricted cash from the condensed consolidated balance sheets to amounts reported within the condensed consolidated statements of cash flows:
June 30,June 30,
20212020
(in thousands)
Cash and cash equivalents$369,524 $92,244 
Restricted cash included in prepaid expenses and other current assets149  
Restricted cash included in other non-current assets 148 
Total cash, cash equivalents and restricted cash$369,673 $92,392 
 
Financial Impacts Related To COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19, a novel strain of Coronavirus, a global pandemic. This outbreak continues to cause disruptions to businesses and markets worldwide as the virus spreads. The extent of the effect on the Company’s operational and financial performance will continue to depend on future developments, including the duration, spread and intensity of the pandemic, and governmental, regulatory and private sector responses, all of which are uncertain and difficult to predict. Although the Company is unable to estimate the overall financial effect of the pandemic at this time, as the pandemic continues, it could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. As of June 30, 2021, these condensed consolidated financial statements do not reflect any adjustments as a result of the pandemic.

Related Party Transactions

The Company has a 4.3% membership interest in a private services company that it accounts for using the equity method of accounting and is considered to be a related party. Revenues from the private services company totaled $3.9 million and $2.4 million in the three months ended June 30, 2021 and 2020, respectively. Revenues from the private services company totaled $7.7 million and $5.1 million in the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021 and December 31, 2020, the Company had recorded a net receivable of $2.4 million and $2.1 million, respectively, from the private services company.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements—In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This update aims to reduce complexity within the accounting for income taxes as part of the simplification initiative. This standard is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2020. These changes became effective for the Company's fiscal year beginning January 1, 2021. This standard will be applied prospectively. Adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.” This update simplifies the accounting for certain convertible instruments by reducing the number of accounting models available for convertible debt instruments and revises Topic 815-40, which provides guidance on how an entity must determine whether a contract qualifies for a scope exception from derivative accounting. Under the new guidance, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. The convertible debt instruments will be accounted for as a single liability measured at amortized cost. In addition, the new guidance requires the if-converted method to be applied for all convertible instruments. This standard is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2021. Early adoption of the standard is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Adoption of the standard requires using either a modified retrospective or a full retrospective approach.

11

Table of Contents
Envestnet, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
The Company has early adopted this standard as of January 1, 2021 using the modified retrospective approach. Adoption of this standard resulted in a decrease to accumulated deficit of $28.6 million (net of $0.9 million in taxes), a decrease to paid-in capital of $108.5 million (net of $6.7 million in taxes) and an increase to Convertible Notes of $87.5 million. Interest expense recognized in future periods is expected to be reduced as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost, with an expected decrease of approximately $22.1 million in 2021 as a result of the adoption. The adoption of ASU 2020-06 had no impact on the Company's consolidated statements of cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

3.Acquisitions

Acquisition of Proprietary Technology

The Company previously owned approximately 29% of the outstanding units in a privately held company and accounted for it as an equity method investment. On March 11, 2021, the Company entered into an intellectual property purchase agreement with this privately held company to acquire all of the proprietary technology developed by the privately held company for approximately $35.5 million. Concurrent with the intellectual property purchase agreement, the Company also entered into a redemption agreement with the same privately held company to redeem its previously held equity interest for approximately $10.0 million. The Company accounted for these two arrangements as a single unit of account. As of the acquisition date, the net cost of the proprietary technology acquired, including capitalized transaction costs, was approximately $24.5 million, which will be amortized over a five-year period on a straight-line basis. The proprietary technology has been integrated into the Envestnet Wealth Solutions segment.

Acquisition of Harvest
 
On April 7, 2021, pursuant to an agreement and plan of merger (the “Merger Agreement”), dated as of March 31, 2021, between, among others, Harvest Savings & Wealth Technologies (“Harvest”), a Delaware corporation, and Bounty Merger Sub, Inc, a wholly-owned subsidiary of the Company (“Merger Sub”), the Company completed the merger of Harvest with and into Merger Sub, with Merger Sub continuing as the surviving corporation (the “Harvest Acquisition”) and operating as a wholly-owned subsidiary of Envestnet. Harvest has been integrated into the Envestnet Wealth Solutions segment.

Harvest provides automated goals-based saving tools and wealth solutions to banks, credit unions, trust companies, and other financial institutions. The acquisition optimizes Envestnet's API-based financial wellness ecosystem, and also helps strengthen the Company's foothold to enable embedded finance, which Envestnet sees as a key driver of the future of financial services.

In connection with the Harvest Acquisition, Envestnet paid estimated consideration of $32.8 million (of which $3.3 million is being held in escrow for 18 months after the closing date), net of cash acquired, subject to certain post-closing adjustments. Envestnet funded the acquisition with cash on hand.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

Preliminary Estimate
(in thousands)
Total tangible assets acquired, net of cash$2,032 
Total liabilities assumed(596)
Identifiable intangible assets9,500 
Goodwill21,858 
Total net assets acquired$32,794 

The goodwill arising from the acquisition represents the expected synergistic benefits of the transaction, primarily related to an increase in future revenues as a result of potential cross selling opportunities, as well as enhancements to our existing technologies. The goodwill is not deductible for income tax purposes.

12

Table of Contents
Envestnet, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
A summary of estimated intangible assets acquired, estimated useful lives and amortization method is as follows:

Preliminary Estimate
(in thousands)
Estimated Useful Life in YearsAmortization Method
Proprietary technology$6,900 6Straight-line
Customer list$2,600 14Accelerated
Total intangible assets acquired$9,500 

The estimated fair values of certain of the assets and liabilities acquired are provisional and based on information that was available to the Company as of the acquisition date. The estimated fair values of these provisional items are based on certain valuation and other studies that are in progress and not yet at the point where there is sufficient information for a definitive measurement. The Company believes the preliminary information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair values reflected herein are subject to change and such changes could be significant. The Company expects to finalize the valuation of tangible assets acquired, liabilities assumed, identifiable intangible assets and goodwill balances and complete the acquisition accounting as soon as reasonably practicable but no later than April 7, 2022.

The results of Harvest’s operations are included in the condensed consolidated statements of operations beginning April 7, 2021 and were not considered material to the Company’s results of operations.

For the three and six months ended June 30, 2021, the Company’s acquisition related costs were not material, and are included in general and administration expenses. The Company may incur additional acquisition related costs over the remainder of 2021.

4.Prepaid Expenses and Other Current Assets
 
Prepaid expenses and other current assets consisted of the following:
June 30,December 31,
 20212020
(in thousands)
Prepaid technology$17,032 $13,165 
Non-income tax receivables8,447 6,571 
Income tax prepayments and receivables2,928 1,684 
Prepaid insurance2,788 1,777 
Advance payroll taxes and benefits1,046 6,429 
Other8,378 10,944 
Total prepaid expenses and other current assets$40,619 $40,570 
 
13

Table of Contents
Envestnet, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
5.Property and Equipment, Net
 
Property and equipment, net consisted of the following:
  June 30,December 31,
 Estimated Useful Life20212020
(in thousands)
Cost:   
Computer equipment and software3 years$71,506 $72,443 
Leasehold improvementsShorter of the lease term or useful life of the asset43,731 37,671 
Office furniture and fixtures
3-7 years
12,148 11,249 
Office equipment and other
3-5 years
5,709 7,151 
Building and building improvements
7-39 years
2,669 2,669 
LandNot applicable940 940 
  136,703 132,123 
Less: accumulated depreciation and amortization(86,695)(84,154)
Total property and equipment, net$50,008 $47,969 
 
During the three and six months ended June 30, 2021, the Company retired property and equipment that was no longer in service for the Envestnet Wealth Solutions segment with an historical cost of $5.1 million and $7.8 million, respectively. During the three and six months ended June 30, 2021, the Company retired an immaterial amount of property and equipment that was no longer in service for the Envestnet Data & Analytics segment.

During the three and six months ended June 30, 2020, the Company retired property and equipment that was no longer in service for the Envestnet Wealth Solutions segment with an historical cost of $2.9 million and $4.5 million, respectively. During the three and six months ended June 30, 2020, the Company retired an immaterial amount of property and equipment that was no longer in service for the Envestnet Data & Analytics segment.

Gains and losses on asset retirements during the three and six months ended June 30, 2021 and 2020 were not material.
 
Depreciation and amortization expense was as follows:
 Three Months EndedSix Months Ended
 June 30,June 30,
 2021202020212020
(in thousands)
Depreciation and amortization expense$5,246 $5,363 $10,889 $10,680 
 
6.Internally Developed Software
 
Internally developed software, net consisted of the following:
  June 30,December 31,
 Estimated Useful Life20212020
(in thousands)
Internally developed software5 years$191,421 $159,619 
Less: accumulated amortization (76,651)(63,118)
Internally developed software, net $114,770 $96,501 
 
14

Table of Contents
Envestnet, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
Amortization expense was as follows:
 Three Months EndedSix Months Ended
 June 30,June 30,
 2021202020212020
(in thousands)
Amortization expense$7,262 $4,334 $13,533 $