Quarterly report pursuant to Section 13 or 15(d)

Revenues and Cost of Revenues

v3.22.2.2
Revenues and Cost of Revenues
 9 Months Ended
Sep. 30, 2022
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,
  2022 2021
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenues:            
Asset-based $ 177,131  $ —  $ 177,131  $ 184,008  $ —  $ 184,008 
Subscription-based 75,975  47,772  123,747  66,988  46,584  113,572 
Total recurring revenues 253,106  47,772  300,878  250,996  46,584  297,580 
Professional services and other revenues 4,229  1,588  5,817  3,738  1,735  5,473 
Total revenues $ 257,335  $ 49,360  $ 306,695  $ 254,734  $ 48,319  $ 303,053 

  Nine Months Ended September 30,
  2022 2021
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenues:            
Asset-based $ 571,820  $ —  $ 571,820  $ 513,458  $ —  $ 513,458 
Subscription-based 218,080  138,521  356,601  197,663  138,242  335,905 
Total recurring revenues 789,900  138,521  928,421  711,121  138,242  849,363 
Professional services and other revenues 13,003  5,486  18,489  10,320  7,213  17,533 
Total revenues $ 802,903  $ 144,007  $ 946,910  $ 721,441  $ 145,455  $ 866,896 

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,
  2022 2021 2022 2021
(in thousands)
United States $ 300,465  $ 298,022  $ 931,465  $ 851,683 
International 6,230  5,031  15,445  15,213 
Total revenues $ 306,695  $ 303,053  $ 946,910  $ 866,896 
Remaining Performance Obligations
 
The following table includes estimated revenue expected to be recognized in the future as of September 30, 2022: 

Years ending December 31, (in thousands)
Remainder of 2022 $ 73,189 
2023 212,908 
2024 126,098 
2025 73,464 
2026 40,655 
Thereafter 16,890 
Total $ 543,204 

The remaining performance obligations disclosed above are not indicative of revenue for future periods.

Remaining performance obligations represent the transaction price allocated to unsatisfied or partially satisfied performance obligations. The disclosure includes estimates of variable consideration. The Company applies the practical expedients and exemption not to 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, 2022 increased by $2.9 million from December 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 $5.5 million and $5.3 million for the three months ended September 30, 2022 and 2021, respectively. The amount of revenue recognized that was included in the opening deferred revenue balance was $31.7 million and $31.6 million for the nine months ended September 30, 2022 and 2021, 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 $11.0 million and $11.8 million as of September 30, 2022 and December 31, 2021, respectively. Amortization expense for the deferred sales incentive compensation was $1.0 million and $1.2 million for the three months ended September 30, 2022 and 2021. Amortization expense for the deferred sales incentive compensation was $3.2 million and $3.3 million for the nine months ended September 30, 2022 and 2021. 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,
  2022 2021 2022 2021
(in thousands)
Asset-based $ 102,409  $ 102,298  $ 332,138  $ 281,829 
Subscription-based 7,768  7,355  22,820  20,986 
Professional services and other (69) 183  6,914  384 
Total cost of revenues $ 110,108  $ 109,836  $ 361,872  $ 303,199