Quarterly report pursuant to Section 13 or 15(d)

Revenues and Cost of Revenues

v3.21.1
Revenues and Cost of Revenues
 3 Months Ended
Mar. 31, 2021
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 March 31,
  2021 2020
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenues:            
Asset-based $ 159,375  $ —  $ 159,375  $ 134,811  $ —  $ 134,811 
Subscription-based 64,012  45,817  109,829  60,323  44,228  104,551 
Total recurring revenues 223,387  45,817  269,204  195,134  44,228  239,362 
Professional services and other revenues 3,023  2,878  5,901  3,286  3,891  7,177 
Total revenues $ 226,410  $ 48,695  $ 275,105  $ 198,420  $ 48,119  $ 246,539 

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

  Three Months Ended
  March 31,
  2021 2020
Fidelity 14  % 15  %
 
Fidelity accounted for 17% and 19% of the Envestnet Wealth Solutions segment's revenues for the three months ended March 31, 2021 and 2020, 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
  March 31,
  2021 2020
(in thousands)
United States $ 270,072  $ 240,452 
International (1)
5,033  6,087 
Total revenues $ 275,105  $ 246,539 
(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 March 31, 2021: 
Years ending December 31, (in thousands)
Remainder of 2021 $ 193,004 
2022 187,479 
2023 113,545 
2024 58,523 
2025 31,985 
Thereafter 13,532 
Total $ 598,068 

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 March 31, 2021 increased by $7,882 during the three months ended March 31, 2021, 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 $16.9 million and $15.5 million for the three months ended March 31, 2021 and 2020, 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 $10.4 million and $10.8 million as of March 31, 2021 and December 31, 2020, respectively. Amortization expense for the deferred sales incentive compensation was $1.1 million and $1.0 million for the three months ended March 31, 2021 and 2020, 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
  March 31,
  2021 2020
(in thousands)
Asset-based $ 86,190  $ 68,592 
Subscription-based 6,604  6,277 
Professional services and other 75  64 
Total cost of revenues $ 92,869  $ 74,933