Quarterly report pursuant to Section 13 or 15(d)

Revenue and Direct Expense

v3.23.1
Revenue and Direct Expense
 3 Months Ended
Mar. 31, 2023
Revenue from Contract with Customer [Abstract]  
Revenue and Direct Expense Revenue and Direct Expense
Disaggregation of Revenue
 
The following table presents the Company’s revenue by segment disaggregated by major source:

  Three Months Ended March 31,
  2023 2022
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenue:            
Asset-based $ 176,932  $ —  $ 176,932  $ 202,717  $ —  $ 202,717 
Subscription-based 76,485  40,594  117,079  68,537  46,197  114,734 
Total recurring revenue 253,417  40,594  294,011  271,254  46,197  317,451 
Professional services and other revenue 3,243  1,453  4,696  2,314  1,598  3,912 
Total revenue $ 256,660  $ 42,047  $ 298,707  $ 273,568  $ 47,795  $ 321,363 
The following table presents the Company’s revenue disaggregated by geography, based on the billing address of the customer:
  Three Months Ended
  March 31,
  2023 2022
(in thousands)
United States $ 293,214  $ 316,729 
International 5,493  4,634 
Total revenue $ 298,707  $ 321,363 

Remaining Performance Obligations
 
As of March 31, 2023, the Company's estimated revenue expected to be recognized in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied is approximately $527.0 million. We expect to recognize approximately 35% of this revenue during the remainder of 2023, with the balance recognized thereafter. These remaining performance obligations are not indicative of revenue for future periods.

Contract Balances

Total deferred revenue as of March 31, 2023 increased by $8.1 million from December 31, 2022, 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 $16.8 million and $15.9 million for the three months ended March 31, 2023 and 2022, 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 $11.3 million and $11.0 million as of March 31, 2023 and December 31, 2022, respectively. Amortization expense for the deferred sales incentive compensation was $1.1 million for the three months ended March 31, 2023 and 2022. No significant impairment loss for capitalized costs was recorded during the three months ended March 31, 2023 and 2022.

Direct Expense

The following table summarizes direct expense by revenue category:
  Three Months Ended
  March 31,
  2023 2022
(in thousands)
Asset-based $ 102,623  $ 117,428 
Subscription-based 6,362  7,811 
Professional services and other 4  43 
Total direct expense $ 108,989  $ 125,282