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

Quarterly report pursuant to Section 13 or 15(d)

Revenue

Revenue

9 Months Ended

Sep. 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 September 30,
	2019						2018
	Envestnet Wealth Solutions		Envestnet Data & Analytics		Consolidated		Envestnet Wealth Solutions		Envestnet Data & Analytics		Consolidated
Revenues:
Asset-based	$	126,591	$	—	$	126,591	$	119,097	$	—	$	119,097
Subscription-based	57,353		43,230		100,583		36,228		39,966		76,194
Total recurring revenues	183,944		43,230		227,174		155,325		39,966		195,291
Professional services and other revenues	4,280		4,626		8,906		2,142		5,723		7,865
Total revenues	$	188,224	$	47,856	$	236,080	$	157,467	$	45,689	$	203,156



	Nine Months Ended September 30,
	2019						2018
	Envestnet Wealth Solutions		Envestnet Data & Analytics		Consolidated		Envestnet Wealth Solutions		Envestnet Data & Analytics		Consolidated
Revenues:
Asset-based	$	355,595	$	—	$	355,595	$	358,361	$	—	$	358,361
Subscription-based	148,457		127,471		275,928		101,836		115,832		217,668
Total recurring revenues	504,052		127,471		631,523		460,197		115,832		576,029
Professional services and other revenues	13,767		14,901		28,668		10,186		16,068		26,254
Total revenues	$	517,819	$	142,372	$	660,191	$	470,383	$	131,900	$	602,283

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



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Fidelity	15	%	17	%	15	%	17	%

Fidelity accounted for 19% of the Envestnet Wealth Solutions segment's revenues for the three and nine months ended September 30, 2019, respectively. Fidelity accounted for 21% of the Envestnet Wealth Solutions segment's revenues for the three and nine months ended September 30, 2018, respectively.

No single customer amounts for the Envestnet Data & Analytics segment 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				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
United States	$	228,427	$	195,063	$	638,008	$	576,616
International ⁽¹⁾	7,653		8,093		22,183		25,667
Total	$	236,080	$	203,156	$	660,191	$	602,283


(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 September 30, 2019:



Years ending December 31,
Remainder of 2019	$	62,669
2020	182,307
2021	115,379
2022	76,483
2023	37,144
Thereafter	46,268
Total	$	520,250

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 September 30, 2019 increased by $10,653, primarily the result of the PIEtech and PortfolioCenter acquisitions and an increase in deferred revenue related to subscription-based services during the nine months ended September 30, 2019. The majority of the Company's deferred revenue 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 $4,434 and $3,250 for the three months ended September 30, 2019 and 2018, respectively. The amount of revenue recognized that was included in the opening deferred revenue balance was $21,022 and $16,503 for the nine months ended September 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 $9,431 and $7,014 as of September 30, 2019 and December 31, 2018, respectively. Amortization expense for the deferred sales incentive compensation was $1,099 and $552 for the three months ended September 30, 2019, and 2018, respectively. Amortization expense for the deferred sales incentive compensation was $2,503 and $1,570 for the nine months ended September 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.