Quarterly report pursuant to Section 13 or 15(d)

Revenue and Direct Expense

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Revenue and Direct Expense
 3 Months Ended
Mar. 31, 2024
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,
  2024 2023
  Envestnet Wealth Solutions Envestnet Data & Analytics Total Envestnet Wealth Solutions Envestnet Data & Analytics Total
(in thousands)
Revenue:            
Asset-based $ 202,616  $ —  $ 202,616  $ 176,932  $ —  $ 176,932 
Subscription-based 84,168  33,294  117,462  80,470  36,609  117,079 
Total recurring revenue 286,784  33,294  320,078  257,402  36,609  294,011 
Professional services and other revenue 3,026  1,846  4,872  3,247  1,449  4,696 
Total revenue $ 289,810  $ 35,140  $ 324,950  $ 260,649  $ 38,058  $ 298,707 

The following table presents the Company’s revenue disaggregated by geography, based on the billing address of the customer:

  Three Months Ended
  March 31,
  2024 2023
(in thousands)
United States $ 319,571  $ 293,214 
International 5,379  5,493 
Total revenue $ 324,950  $ 298,707 

Remaining Performance Obligations
 
As of March 31, 2024, 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 $554.5 million. The Company expects to recognize approximately 31% of this revenue during the remainder of 2024, approximately 50% throughout 2025 and 2026, 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, 2024 decreased by $4.1 million from December 31, 2023, primarily the result of timing of cash receipts and revenue recognition. The majority of the Company's deferred revenue as of March 31, 2024 will be recognized over the course of the next twelve months.

The amount of revenue recognized for the three months ended March 31, 2024 and 2023 that was included in the opening deferred revenue balance was $15.9 million and $16.8 million, 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 $11.5 million as of March 31, 2024 and December 31, 2023, respectively. Amortization expense for deferred sales incentive compensation was $1.2 million and $1.1 million for the three months ended March 31, 2024 and 2023, respectively. Deferred sales incentive compensation is included in other assets in
the condensed consolidated balance sheets and amortization expense is included in employee compensation expense in the condensed consolidated statements of operations. No significant impairment loss for capitalized costs was recorded during the three months ended March 31, 2024 and 2023.

Direct Expense

The following table summarizes direct expense by revenue category:

  Three Months Ended
  March 31,
  2024 2023
(in thousands)
Asset-based $ 118,403  $ 102,623 
Subscription-based 8,230  7,052 
Professional services and other —  4 
Total direct expense $ 126,633  $ 109,679