Quarterly report pursuant to Section 13 or 15(d)

Revenues and Cost of Revenues

v3.20.2
Revenues and Cost of Revenues
 6 Months Ended
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenues and Cost of Revenues Revenues and Cost of Revenues
Disaggregation of Revenue
 
The following table presents the Company’s revenues disaggregated by major source:

Three Months Ended June 30,
2020 2019
Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
Revenues:
Asset-based $ 122,246    $ —    $ 122,246    $ 120,070    $ —    $ 120,070   
Subscription-based 61,410    43,569    104,979    50,078    42,180    92,258   
Total recurring revenues 183,656    43,569    227,225    170,148    42,180    212,328   
Professional services and other revenues 4,029    4,059    8,088    6,742    5,375    12,117   
Total revenues $ 187,685    $ 47,628    $ 235,313    $ 176,890    $ 47,555    $ 224,445   
 
  Six Months Ended June 30,
  2020 2019
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
Revenues:            
Asset-based $ 257,057    $ —    $ 257,057    $ 229,004    $ —    $ 229,004   
Subscription-based 121,733    87,797    209,530    91,104    84,241    175,345   
Total recurring revenues 378,790    87,797    466,587    320,108    84,241    404,349   
Professional services and other revenues 7,315    7,950    15,265    9,487    10,275    19,762   
Total revenues $ 386,105    $ 95,747    $ 481,852    $ 329,595    $ 94,516    $ 424,111   

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

  Three Months Ended Six Months Ended
  June 30, June 30,
  2020 2019 2020 2019
Fidelity 15  % 15  % 15  % 15  %
 
Fidelity accounted for 18% and 18% of the Envestnet Wealth Solutions segment's revenues for the three and six months ended June 30, 2020, respectively. Fidelity accounted for 19% and 20% of the Envestnet Wealth Solutions segment's revenues for the three and six months ended June 30, 2019, respectively.

No single customer accounted for over 10% of the Envestnet Data & Analytics segment's revenue 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,
  2020 2019 2020 2019
United States $ 230,102    $ 217,462    $ 470,554    $ 409,581   
International (1)
5,211    6,983    11,298    14,530   
Total revenues $ 235,313    $ 224,445    $ 481,852    $ 424,111   
(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, 2020: 
Years ending December 31,  
Remainder of 2020 $ 114,905   
2021 181,322   
2022 135,410   
2023 65,759   
2024 35,319   
Thereafter 35,393   
Total $ 568,108   

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, 2020 increased by $7,585 during the six months ended June 30, 2020, primarily the result of revenue growth, timing of cash receipts and revenue recognition. 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 $10,350 and $6,865 for the three months ended June 30, 2020 and 2019, respectively. The amount of revenue recognized that was included in the opening deferred revenue balance was $25,829 and $16,588 for the six months ended June 30, 2020 and 2019, 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 $10,072 and $9,387 as of June 30, 2020 and December 31, 2019, respectively. Amortization expense for the deferred sales incentive compensation was $1,043 and $753 for the three months ended June 30, 2020, and 2019, respectively. Amortization expense for the deferred sales incentive compensation was $2,072 and $1,404 for the six months ended June 30, 2020, and 2019, respectively. Deferred sales incentive compensation is included in other non-current assets on the condensed consolidated balance sheets and amortization expense is included in compensation and benefits expenses on the condensed consolidated statements of operations. No significant impairment loss for capitalized costs was recorded during the periods.
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 in the condensed consolidated statements of operations.

Cost of Revenues

The following table summarizes cost of revenues by revenue category:
  Three Months Ended Six Months Ended
  June 30, June 30,
  2020 2019 2020 2019
Asset-based $ 61,875    $ 60,293    $ 130,467    $ 114,135   
Subscription-based 6,807    6,697    13,084    14,374   
Professional services and other 167    5,090    231    5,216   
Total cost of revenues $ 68,849    $ 72,080    $ 143,782    $ 133,725