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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 September 30, 2022
☐ 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
Envestnet, Inc.
(Exact name of registrant as specified in its charter)
| | | | | | | | |
Delaware | | 20-1409613 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S Employer Identification No.) |
| | | | | | | | | | | | | | |
1000 Chesterbrook Boulevard, Suite 250, Berwyn, Pennsylvania | | 19312 |
(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 class | Trading symbol(s) | Name of exchange on which registered |
Common Stock, par value $0.005 per share | ENV | New 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 filer | ý | | 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. Yes ☐ No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of November 2, 2022, Envestnet, Inc. had 55,326,136 shares of common stock outstanding.
TABLE OF CONTENTS
Envestnet, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share information)
(unaudited)
| | | | | | | | | | | | | | |
| | September 30, | | December 31, |
| | 2022 | | 2021 |
Assets | | | | |
Current assets: | | | | |
Cash and cash equivalents | | $ | 241,330 | | | $ | 429,279 | |
Fees receivable, net | | 96,098 | | | 95,291 | |
Prepaid expenses and other current assets | | 55,078 | | | 42,706 | |
Total current assets | | 392,506 | | | 567,276 | |
| | | | |
Property and equipment, net | | 60,061 | | | 50,215 | |
Internally developed software, net | | 173,285 | | | 133,659 | |
Intangible assets, net | | 398,082 | | | 400,396 | |
Goodwill | | 996,267 | | | 925,154 | |
Operating lease right-of-use assets, net | | 83,472 | | | 90,714 | |
Other non-current assets | | 99,548 | | | 73,768 | |
Total assets | | $ | 2,203,221 | | | $ | 2,241,182 | |
| | | | |
Liabilities and Equity | | | | |
Current liabilities: | | | | |
Accrued expenses and other liabilities | | $ | 207,025 | | | $ | 225,159 | |
Accounts payable | | 19,447 | | | 19,092 | |
Operating lease liabilities | | 12,133 | | | 10,999 | |
| | | | |
Deferred revenue | | 34,082 | | | 33,473 | |
Current portion of long-term debt | | 343,581 | | | — | |
Total current liabilities | | 616,268 | | | 288,723 | |
| | | | |
Long-term debt, net of current portion | | 509,006 | | | 848,862 | |
Non-current operating lease liabilities | | 109,749 | | | 105,920 | |
Deferred tax liabilities, net | | 14,976 | | | 21,021 | |
Other non-current liabilities | | 12,938 | | | 17,114 | |
Total liabilities | | 1,262,937 | | | 1,281,640 | |
| | | | |
Commitments and contingencies | | | | |
| | | | |
Equity: | | | | |
Stockholders’ equity: | | | | |
Preferred stock, par value $0.005, 50,000,000 shares authorized; no shares issued and outstanding as of September 30, 2022 and December 31, 2021 | | — | | | — | |
Common stock, par value $0.005, 500,000,000 shares authorized; 69,866,788 and 68,879,152 shares issued as of September 30, 2022 and December 31, 2021, respectively; 55,323,222 and 54,793,088 shares outstanding as of September 30, 2022 and December 31, 2021, respectively | | 349 | | | 344 | |
Additional paid-in capital | | 1,195,624 | | | 1,131,628 | |
Accumulated deficit | | (82,422) | | | (37,988) | |
Treasury stock at cost, 14,543,566 and 14,086,064 shares as of September 30, 2022 and December 31, 2021, respectively | | (164,844) | | | (134,996) | |
Accumulated other comprehensive loss | | (7,949) | | | (1,899) | |
Total stockholders’ equity | | 940,758 | | | 957,089 | |
Non-controlling interest | | (474) | | | 2,453 | |
Total equity | | 940,284 | | | 959,542 | |
Total liabilities and equity | | $ | 2,203,221 | | | $ | 2,241,182 | |
See accompanying notes to unaudited Condensed Consolidated Financial Statements.
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, |
| | 2022 | | 2021 | | 2022 | | 2021 |
Revenues: | | | | | | | | |
Asset-based | | $ | 177,131 | | | $ | 184,008 | | | $ | 571,820 | | | $ | 513,458 | |
Subscription-based | | 123,747 | | | 113,572 | | | 356,601 | | | 335,905 | |
Total recurring revenues | | 300,878 | | | 297,580 | | | 928,421 | | | 849,363 | |
Professional services and other revenues | | 5,817 | | | 5,473 | | | 18,489 | | | 17,533 | |
Total revenues | | 306,695 | | | 303,053 | | | 946,910 | | | 866,896 | |
| | | | | | | | |
Operating expenses: | | | | | | | | |
Cost of revenues | | 110,108 | | | 109,836 | | | 361,872 | | | 303,199 | |
Compensation and benefits | | 116,837 | | | 109,839 | | | 369,453 | | | 316,101 | |
General and administration | | 47,388 | | | 39,393 | | | 157,867 | | | 117,463 | |
Depreciation and amortization | | 33,408 | | | 29,850 | | | 97,208 | | | 88,252 | |
Total operating expenses | | 307,741 | | | 288,918 | | | 986,400 | | | 825,015 | |
| | | | | | | | |
Income (loss) from operations | | (1,046) | | | 14,135 | | | (39,490) | | | 41,881 | |
Other expense, net | | (5,346) | | | (3,551) | | | (9,691) | | | (14,803) | |
Income (loss) before income tax provision (benefit) | | (6,392) | | | 10,584 | | | (49,181) | | | 27,078 | |
| | | | | | | | |
Income tax provision (benefit) | | 2,271 | | | (854) | | | (1,542) | | | 9,074 | |
| | | | | | | | |
Net income (loss) | | (8,663) | | | 11,438 | | | (47,639) | | | 18,004 | |
Add: Net loss attributable to non-controlling interest | | 1,373 | | | 302 | | | 3,205 | | | 401 | |
Net income (loss) attributable to Envestnet, Inc. | | $ | (7,290) | | | $ | 11,740 | | | $ | (44,434) | | | $ | 18,405 | |
| | | | | | | | |
Net income (loss) per share attributable to Envestnet, Inc.: | | | | | | | | |
Basic | | $ | (0.13) | | | $ | 0.22 | | | $ | (0.81) | | | $ | 0.34 | |
Diluted | | $ | (0.13) | | | $ | 0.21 | | | $ | (0.81) | | | $ | 0.33 | |
| | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | |
Basic | | 55,226,777 | | | 54,547,858 | | | 55,109,387 | | | 54,400,247 | |
Diluted | | 55,226,777 | | | 55,388,627 | | | 55,109,387 | | | 55,287,972 | |
See accompanying notes to unaudited Condensed Consolidated Financial Statements.
Envestnet, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30, | | September 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
Net income (loss) attributable to Envestnet, Inc. | | $ | (7,290) | | | $ | 11,740 | | | $ | (44,434) | | | $ | 18,405 | |
Foreign currency translation gains (losses), net of taxes | | (1,479) | | | 270 | | | (6,050) | | | (1,618) | |
Comprehensive income (loss) attributable to Envestnet, Inc. | | $ | (8,769) | | | $ | 12,010 | | | $ | (50,484) | | | $ | 16,787 | |
See accompanying notes to unaudited Condensed Consolidated Financial Statements.
Envestnet, Inc.
Condensed Consolidated Statements of Stockholders' Equity
(in thousands, except share information)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Accumulated | | | | | | |
| | Common Stock | | Treasury Stock | | Additional | | Other | | | | Non- | | |
| | | | | | Common | | | | Paid-in | | Comprehensive | | Accumulated | | controlling | | Total |
| | Shares | | Amount | | Shares | | Amount | | Capital | | Loss | | Deficit | | Interest | | Equity |
Balance, December 31, 2021 | | 68,879,152 | | | $ | 344 | | | (14,086,064) | | | $ | (134,996) | | | $ | 1,131,628 | | | $ | (1,899) | | | $ | (37,988) | | | $ | 2,453 | | | $ | 959,542 | |
Exercise of stock options | | 38,681 | | | — | | | — | | | — | | | 658 | | | — | | | — | | | — | | | 658 | |
Issuance of common stock - vesting of restricted stock units | | 514,319 | | | 3 | | | — | | | — | | | — | | | — | | | — | | | — | | | 3 | |
Stock-based compensation expense | | — | | | — | | | — | | | — | | | 21,690 | | | — | | | — | | | — | | | 21,690 | |
Shares withheld to satisfy tax withholdings | | — | | | — | | | (170,992) | | | (12,570) | | | — | | | — | | | — | | | — | | | (12,570) | |
| | | | | | | | | | | | | | | | | | |
Foreign currency translation loss, net of taxes | | — | | | — | | | — | | | — | | | — | | | (1,478) | | | — | | | — | | | (1,478) | |
Other | | — | | | — | | | — | | | — | | | (84) | | | — | | | — | | | 102 | | | 18 | |
Net loss | | — | | | — | | | — | | | — | | | — | | | — | | | (13,859) | | | (849) | | | (14,708) | |
Balance, March 31, 2022 | | 69,432,152 | | | $ | 347 | | | (14,257,056) | | | $ | (147,566) | | | $ | 1,153,892 | | | $ | (3,377) | | | $ | (51,847) | | | $ | 1,706 | | | $ | 953,155 | |
Exercise of stock options | | 2,503 | | | — | | | — | | | — | | | 84 | | | — | | | — | | | — | | | 84 | |
Issuance of common stock - vesting of restricted stock units | | 232,328 | | | 1 | | | — | | | — | | | — | | | — | | | — | | | — | | | 1 | |
Stock-based compensation expense | | — | | | — | | | — | | | — | | | 22,876 | | | — | | | — | | | — | | | 22,876 | |
Shares withheld to satisfy tax withholdings | | — | | | — | | | (78,506) | | | (5,543) | | | — | | | — | | | — | | | — | | | (5,543) | |
Share repurchases | | — | | | — | | | (152,020) | | | (9,235) | | | — | | | — | | | — | | | — | | | (9,235) | |
| | | | | | | | | | | | | | | | | | |
Foreign currency translation loss, net of taxes | | — | | | — | | | — | | | — | | | — | | | (3,093) | | | — | | | — | | | (3,093) | |
Other | | — | | | — | | | — | | | — | | | (89) | | | — | | | — | | | 104 | | | 15 | |
Net loss | | — | | | — | | | — | | | — | | | — | | | — | | | (23,285) | | | (983) | | | (24,268) | |
Balance, June 30, 2022 | | 69,666,983 | | | $ | 348 | | | (14,487,582) | | | $ | (162,344) | | | $ | 1,176,763 | | | $ | (6,470) | | | $ | (75,132) | | | $ | 827 | | | $ | 933,992 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
-continued-
Envestnet, Inc.
Condensed Consolidated Statements of Stockholders' Equity (continued)
(in thousands, except share information)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Accumulated | | | | | | | |
| | Common Stock | | Treasury Stock | | Additional | | Other | | | | Non- | | | |
| | | | | | Common | | | | Paid-in | | Comprehensive | | Accumulated | | controlling | | Total | |
| | Shares | | Amount | | Shares | | Amount | | Capital | | Loss | | Deficit | | Interest | | Equity | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Balance, June 30, 2022 | | 69,666,983 | | | $ | 348 | | | (14,487,582) | | | $ | (162,344) | | | $ | 1,176,763 | | | $ | (6,470) | | | $ | (75,132) | | | $ | 827 | | | $ | 933,992 | | |
Exercise of stock options | | 37,618 | | | — | | | — | | | — | | | 1,817 | | | — | | | — | | | — | | | 1,817 | | |
Issuance of common stock - vesting of restricted stock units | | 162,187 | | | 1 | | | — | | | — | | | — | | | — | | | — | | | — | | | 1 | | |
Stock-based compensation expense | | — | | | — | | | — | | | — | | | 17,265 | | | — | | | — | | | — | | | 17,265 | | |
Shares withheld to satisfy tax withholdings | | — | | | — | | | (55,984) | | | (2,500) | | | — | | | — | | | — | | | — | | | (2,500) | | |
Foreign currency translation loss, net of taxes | | — | | | — | | | — | | | — | | | — | | | (1,479) | | | — | | | — | | | (1,479) | | |
Other | | — | | | — | | | — | | | — | | | (221) | | | — | | | — | | | 72 | | | (149) | | |
Net loss | | — | | | — | | | — | | | — | | | — | | | — | | | (7,290) | | | (1,373) | | | (8,663) | | |
Balance, September 30, 2022 | | 69,866,788 | | | $ | 349 | | | (14,543,566) | | | $ | (164,844) | | | $ | 1,195,624 | | | $ | (7,949) | | | $ | (82,422) | | | $ | (474) | | | $ | 940,284 | | |
See accompanying notes to unaudited Condensed Consolidated Financial Statements.
Envestnet, Inc.
Condensed Consolidated Statements of Stockholders' Equity (continued)
(in thousands, except share information)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Accumulated | | | | | | |
| | Common Stock | | Treasury Stock | | Additional | | Other | | | | Non- | | |
| | | | | | Common | | | | Paid-in | | Comprehensive | | Accumulated | | controlling | | Total |
| | Shares | | Amount | | Shares | | Amount | | Capital | | Loss | | Deficit | | Interest | | Equity |
Balance, December 31, 2020 | | 67,832,706 | | | $ | 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 | | — | | | — | | | — | | | — | | | (108,470) | | | — | | | 28,628 | | | — | | | (79,842) | |
Exercise of stock options | | 27,043 | | | — | | | — | | | — | | | 522 | | | — | | | — | | | — | | | 522 | |
Issuance of common stock - vesting of restricted stock units | | 455,349 | | | 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, 2021 | | 68,315,098 | | | $ | 341 | | | (13,910,439) | | | $ | (121,679) | | | $ | 1,072,839 | | | $ | (1,022) | | | $ | (36,338) | | | $ | (412) | | | $ | 913,729 | |
Exercise of stock options | | 4,082 | | | — | | | — | | | — | | | 51 | | | — | | | — | | | — | | | 51 | |
Issuance of common stock - vesting of restricted stock units | | 140,082 | | | 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, 2021 | | 68,459,262 | | | $ | 342 | | | (13,963,399) | | | $ | (125,583) | | | $ | 1,089,263 | | | $ | (2,286) | | | $ | (44,619) | | | $ | 349 | | | $ | 917,466 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
-continued-
Envestnet, Inc.
Condensed Consolidated Statements of Stockholders' Equity (continued)
(in thousands, except share information)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Accumulated | | | | | | |
| | Common Stock | | Treasury Stock | | Additional | | Other | | | | Non- | | |
| | | | | | Common | | | | Paid-in | | Comprehensive | | Accumulated | | controlling | | Total |
| | Shares | | Amount | | Shares | | Amount | | Capital | | Loss | | Deficit | | Interest | | Equity |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Balance, June 30, 2021 | | 68,459,262 | | | $ | 342 | | | (13,963,399) | | | $ | (125,583) | | | $ | 1,089,263 | | | $ | (2,286) | | | $ | (44,619) | | | $ | 349 | | | $ | 917,466 | |
Exercise of stock options | | 12,954 | | | — | | | — | | | — | | | 347 | | | — | | | — | | | — | | | 347 | |
Issuance of common stock - vesting of restricted stock units | | 163,999 | | | 1 | | | — | | | — | | | — | | | — | | | — | | | — | | | 1 | |
Stock-based compensation expense | | — | | | — | | | — | | | — | | | 18,760 | | | — | | | — | | | — | | | 18,760 | |
Shares withheld to satisfy tax withholdings | | — | | | — | | | (54,912) | | | (4,294) | | | — | | | — | | | — | | | — | | | (4,294) | |
Capital contribution - non-controlling interest | | — | | | — | | | — | | | — | | | 661 | | | — | | | — | | | 2,517 | | | 3,178 | |
Foreign currency translation gain, net of taxes | | — | | | — | | | — | | | — | | | — | | | 270 | | | — | | | — | | | 270 | |
Other | | — | | | — | | | — | | | — | | | (167) | | | — | | | — | | | 76 | | | (91) | |
Net income (loss) | | — | | | — | | | — | | | — | | | — | | | — | | | 11,740 | | | (302) | | | 11,438 | |
Balance, September 30, 2021 | | 68,636,215 | | | $ | 343 | | | (14,018,311) | | | $ | (129,877) | | | $ | 1,108,864 | | | $ | (2,016) | | | $ | (32,879) | | | $ | 2,640 | | | $ | 947,075 | |
See accompanying notes to unaudited Condensed Consolidated Financial Statements.
Envestnet, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| | | | | | | | | | | | | | |
| | Nine Months Ended |
| | September 30, |
| | 2022 | | 2021 |
OPERATING ACTIVITIES: | | | | |
Net income (loss) | | $ | (47,639) | | | $ | 18,004 | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | |
Depreciation and amortization | | 97,208 | | | 88,252 | |
Provision for doubtful accounts | | (468) | | | 2,051 | |
Deferred income taxes | | (4,380) | | | 7,078 | |
Release of uncertain tax positions | | (3,095) | | | — | |
Non-cash compensation expense | | 62,583 | | | 50,307 | |
Non-cash interest expense | | 5,436 | | | 4,889 | |
Accretion on contingent consideration and purchase liability | | — | | | 656 | |
Payments of contingent consideration | | — | | | (2,360) | |
Fair market value adjustment to contingent consideration liability | | — | | | (1,067) | |
Fair market value adjustment to investment in private company | | — | | | (758) | |
Gain on settlement of liability | | — | | | (1,206) | |
Loss allocations from equity method investments | | 5,332 | | | 5,553 | |
Dilution gain on equity method investee share issuance | | (6,934) | | | — | |
Lease related impairments, including right of use assets | | 14,050 | | | 1,537 | |
Loss on property and equipment disposals - office closures | | 3,710 | | | — | |
Other | | 319 | | | 249 | |
Changes in operating assets and liabilities, net of acquisitions: | | | | |
Fees receivable, net | | 1,546 | | | (38,030) | |
Prepaid expenses and other current assets | | (8,610) | | | 569 | |
Other non-current assets | | (3,914) | | | 4,854 | |
Accrued expenses and other liabilities | | (23,168) | | | 26,637 | |
Accounts payable | | (867) | | | 4,122 | |
Deferred revenue | | (2,329) | | | (1,065) | |
Other non-current liabilities | | (2,545) | | | (298) | |
Net cash provided by operating activities | | 86,235 | | | 169,974 | |
| | | | |
INVESTING ACTIVITIES: | | | | |
Purchases of property and equipment | | (13,114) | | | (15,779) | |
Capitalization of internally developed software | | (67,755) | | | (49,024) | |
Acquisition of proprietary technology | | (15,000) | | | (25,517) | |
Acquisitions of businesses, net of cash acquired | | (104,185) | | | (32,794) | |
Investments in private companies | | (16,351) | | | (8,926) | |
Advance for technology solutions | | (4,000) | | | (3,000) | |
Issuance of notes receivable to equity method investees | | (6,350) | | | — | |
Net cash used in investing activities | | (226,755) | | | (135,040) | |
| | | | |
-continued-
Envestnet, Inc.
Condensed Consolidated Statements of Cash Flows (continued)
(in thousands)
(unaudited)
| | | | | | | | | | | | | | |
| | Nine Months Ended |
| | September 30, |
| | 2022 | | 2021 |
FINANCING ACTIVITIES: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Proceeds from exercise of stock options | | 2,559 | | | 920 | |
Capital contributions - non-controlling shareholders | | — | | | 3,201 | |
Taxes paid in lieu of shares issued for stock-based compensation | | (20,613) | | | (17,314) | |
Finance lease payments | | (14,544) | | | |