Quarterly report pursuant to Section 13 or 15(d)

Revenues and Cost of Revenues

v3.21.2
Revenues and Cost of Revenues
 9 Months Ended
Sep. 30, 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 September 30,
2021 2020
Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenues:
Asset-based $ 184,008  $ —  $ 184,008  $ 137,744  $ —  $ 137,744 
Subscription-based 66,988  46,584  113,572  62,783  45,114  107,897 
Total recurring revenues 250,996  46,584  297,580  200,527  45,114  245,641 
Professional services and other revenues 3,738  1,735  5,473  3,767  3,151  6,918 
Total revenues $ 254,734  $ 48,319  $ 303,053  $ 204,294  $ 48,265  $ 252,559 

  Nine Months Ended September 30,
  2021 2020
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenues:            
Asset-based $ 513,458  $ —  $ 513,458  $ 394,801  $ —  $ 394,801 
Subscription-based 197,663  138,242  335,905  184,516  132,911  317,427 
Total recurring revenues 711,121  138,242  849,363  579,317  132,911  712,228 
Professional services and other revenues 10,320  7,213  17,533  11,082  11,101  22,183 
Total revenues $ 721,441  $ 145,455  $ 866,896  $ 590,399  $ 144,012  $ 734,411 

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

  Three Months Ended Nine Months Ended
  September 30, September 30,
  2021 2020 2021 2020
Fidelity 17  % 15  % 17  % 15  %
 
One customer accounted for more than 10% of the Envestnet Wealth Solutions segment’s revenues:

  Three Months Ended Nine Months Ended
  September 30, September 30,
  2021 2020 2021 2020
Fidelity 21  % 18  % 20  % 18  %

No single customer accounted for more than 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 Nine Months Ended
  September 30, September 30,
  2021 2020 2021 2020
(in thousands)
United States $ 298,022  $ 247,692  $ 851,683  $ 718,246 
International 5,031  4,867  15,213  16,165 
Total revenues $ 303,053  $ 252,559  $ 866,896  $ 734,411 

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, 2021: 
Years ending December 31, (in thousands)
Remainder of 2021 $ 72,598 
2022 236,203 
2023 150,088 
2024 79,617 
2025 42,978 
Thereafter 22,606 
Total $ 604,090 

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, 2021 decreased by $1.0 million during the nine months ended September 30, 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 $5.3 million and $5.2 million for the three months ended September 30, 2021 and 2020, respectively. The amount of revenue recognized that was included in the opening deferred revenue balance was $31.6 million and $31.0 million for the nine months ended September 30, 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 $11.1 million and $10.8 million as of September 30, 2021 and December 31, 2020, respectively. Amortization expense for the deferred sales incentive compensation was $1.2 million and $0.9 million for the three months ended September 30, 2021 and 2020, respectively. Amortization expense for the deferred sales incentive compensation was $3.3 million and $2.9 million for the nine months ended September 30, 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 Nine Months Ended
  September 30, September 30,
  2021 2020 2021 2020
(in thousands)
Asset-based $ 102,298  $ 71,133  $ 281,829  $ 201,600 
Subscription-based 7,355  7,291  20,986  20,375 
Professional services and other 183  121  384  352 
Total cost of revenues $ 109,836  $ 78,545  $ 303,199  $ 222,327