Quarterly report pursuant to Section 13 or 15(d)

Property and Equipment, Net

v3.22.2
Property and Equipment, Net
 6 Months Ended
Jun. 30, 2022
Property, Plant and Equipment [Abstract]  
Property and Equipment, Net Property and Equipment, Net
 
Property and equipment, net consisted of the following:
  June 30, December 31,
  Estimated Useful Life 2022 2021
(in thousands)
Cost:      
Computer equipment and software 3 years $ 72,638  $ 72,289 
Leasehold improvements Shorter of the lease term or useful life of the asset 36,707  43,544 
Leased data servers 3 years 15,108  590 
Office furniture and fixtures
3-7 years
 10,789  12,214 
Office equipment and other
3-5 years
 9,027  7,973 
Building and building improvements
7-39 years
 2,729  2,729 
Land Not applicable 940  940 
    147,938  140,279 
Less: accumulated depreciation and amortization (86,546) (90,064)
Total property and equipment, net $ 61,392  $ 50,215 
 
During the six months ended June 30, 2022, the Company entered into an arrangement with a third party cloud service provider for the use of dedicated servers to migrate its infrastructure to the cloud. As the terms of the arrangement convey a finance lease under FASB Topic 842 - Leases (“ASC 842”), the Company accounts for those dedicated servers as leased assets when the lease term commences. The Company accounts for each lease and any non-lease components associated with that lease as a single lease component for all asset classes. The leased dedicated servers are presented as a component of property and equipment, net in the condensed consolidated balance sheets as of June 30, 2022. To take advantage of the favorable savings programs offered by the cloud service provider, the Company prepaid the lease payments and therefore does not have a lease liability recorded for the leased assets. Gross property and equipment under finance leases as of June 30, 2022 was $15.1 million with accumulated depreciation of $2.3 million. Finance lease activity as of and for the year ended December 31, 2021 was not material.
Office Closures

In April 2022, in response to changing needs and an increase in employees working remotely, the Company closed three offices in the United States. The Company is currently exploring alternative uses for these properties, including sublease options.

During the three and six months ended June 30, 2022, including the office closures, the Company retired property and equipment that was no longer in service for the Envestnet Wealth Solutions segment with an historical cost of $13.6 million and $16.5 million, respectively. Including the office closures, gains and losses on asset retirements were $3.7 million in the three and six months ended June 30, 2022 for the Envestnet Wealth Solutions segment. The Company also recognized $13.0 million of lease restructuring costs in the three and six months ended June 30, 2022 which are included in general and administration expense in the condensed consolidated statements of operations. Gains and losses on asset retirements during the three and six months ended June 30, 2022 were not material for the Envestnet Data & Analytics segment.

During the three and six months ended June 30, 2021, the Company retired property and equipment that was no longer in service for the Envestnet Wealth Solutions segment with an historical cost of $5.1 million and $7.8 million, respectively. During the three and six months ended June 30, 2021, the Company retired an immaterial amount of property and equipment that was no longer in service for the Envestnet Data & Analytics segment. Gains and losses on asset retirements during the three and six months ended June 30, 2021 were not material.
 
Depreciation and amortization expense was as follows:
  Three Months Ended Six Months Ended
  June 30, June 30,
  2022 2021 2022 2021
(in thousands)
Depreciation and amortization expense $ 5,450  $ 5,246  $ 11,054  $ 10,889