Envestnet, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Revenue

Revenue

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue

Disaggregation of revenue

The following table presents the Company’s revenues disaggregated by major source:



	Three Months Ended June 30,
	2019						2018
	Envestnet Wealth Solutions		Envestnet Data & Analytics		Consolidated		Envestnet Wealth Solutions		Envestnet Data & Analytics		Consolidated
Revenues:
Asset-based	$	120,070	$	—	$	120,070	$	118,111	$	—	$	118,111
Subscription-based	50,078		42,180		92,258		33,023		38,756		71,779
Total recurring revenues	170,148		42,180		212,328		151,134		38,756		189,890
Professional services and other revenues	6,742		5,375		12,117		5,794		5,432		11,226
Total revenues	$	176,890	$	47,555	$	224,445	$	156,928	$	44,188	$	201,116



	Six Months Ended June 30,
	2019						2018
	Envestnet Wealth Solutions		Envestnet Data & Analytics		Consolidated		Envestnet Wealth Solutions		Envestnet Data & Analytics		Consolidated
Revenues:
Asset-based	$	229,004	$	—	$	229,004	$	239,264	$	—	$	239,264
Subscription-based	91,104		84,241		175,345		65,608		75,866		141,474
Total recurring revenues	320,108		84,241		404,349		304,872		75,866		380,738
Professional services and other revenues	9,487		10,275		19,762		8,044		10,345		18,389
Total revenues	$	329,595	$	94,516	$	424,111	$	312,916	$	86,211	$	399,127

One customer accounted for more than 10% of the Company’s total revenues:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Fidelity	15	%	16	%	15	%	16	%

Fidelity accounted for 19% and 20% of Envestnet Wealth Solutions revenues for the three and six months ended June 30, 2019, respectively. Fidelity accounted for 21% and 21% of Envestnet Wealth Solutions revenues for the three and six months ended June 30, 2018, respectively.

No single customer amounts for Envestnet Data & Analytics exceeded 10% of the segment total for any period presented.

The following table presents the Company’s revenues disaggregated by geography, based on the billing address of the customer:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
United States	$	217,462	$	193,237	$	409,581	$	381,552
International ⁽¹⁾	6,983		7,879		14,530		17,575
Total	$	224,445	$	201,116	$	424,111	$	399,127


(1)	No foreign country accounted for more than 10% of the Company's total revenues.

Remaining performance obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2019:



Years ending December 31,
Remainder of 2019	$	122,303
2020	171,252
2021	106,389
2022	70,046
2023	32,354
Thereafter	41,237
Total	$	543,581

Only fixed consideration from significant contracts with customers is included in the amounts presented above.

The Company has applied the practical expedients and exemption and therefore does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less; (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed; and (iii) contracts for which the variable consideration is allocated entirely to a wholly unsatisfied performance obligations or to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation.

Contract balances

Total deferred revenue as of June 30, 2019 increased by $13,362, which is primarily the result of the PIEtech and PortfolioCenter acquisitions and an increase in deferred revenue related to subscription-based services during the six months ended June 30, 2019, the majority of which will be recognized over the course of the next twelve months.

The amount of revenue recognized that was included in the opening deferred revenue balance was $6,865 and $5,737 for the three months ended June 30, 2019 and 2018, respectively. The amount of revenue recognized that was included in the opening deferred revenue balance was $16,588 and $13,253 for the six months ended June 30, 2019 and 2018, respectively. The majority of this revenue consists of subscription-based services and professional services arrangements. The amount of revenue recognized from performance obligations satisfied in prior periods was not material.

Deferred sales incentive compensation

Deferred sales incentive compensation was $9,598 and $7,014 as of June 30, 2019 and December 31, 2018, respectively. Amortization expense for the deferred sales incentive compensation was $753 and $536 for the three months ended June 30, 2019, and 2018, respectively. Amortization expense for the deferred sales incentive compensation was $1,404 and $1,018 for the six months ended June 30, 2019, and 2018, respectively. No significant impairment loss for capitalized costs was recorded during the period.

The Company has applied the practical expedient to recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period would have been one year or less. These costs are included in compensation and benefits expenses on the condensed consolidated statements of operations.