Quarterly report pursuant to Section 13 or 15(d)

Revenue and Direct Expense

v3.24.3
Revenue and Direct Expense
 9 Months Ended
Sep. 30, 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 September 30,
  2024 2023
  Envestnet Wealth Solutions Envestnet Data & Analytics Total Envestnet Wealth Solutions Envestnet Data & Analytics Total
(in thousands)
Revenue:            
Asset-based $ 224,980  $ —  $ 224,980  $ 193,901  $ —  $ 193,901 
Subscription-based 82,717  32,685  115,402  81,000  33,939  114,939 
Total recurring revenue 307,697  32,685  340,382  274,901  33,939  308,840 
Professional services and other revenue 3,826  1,741  5,567  4,342  3,665  8,007 
Total revenue $ 311,523  $ 34,426  $ 345,949  $ 279,243  $ 37,604  $ 316,847 

  Nine Months Ended September 30,
  2024 2023
  Envestnet Wealth Solutions Envestnet Data & Analytics Total Envestnet Wealth Solutions Envestnet Data & Analytics Total
(in thousands)
Revenue:            
Asset-based $ 647,081  $ —  $ 647,081  $ 556,595  $ —  $ 556,595 
Subscription-based 251,619  99,233  350,852  241,214  105,763  346,977 
Total recurring revenue 898,700  99,233  997,933  797,809  105,763  903,572 
Professional services and other revenue 14,741  6,498  21,239  17,907  6,509  24,416 
Total revenue $ 913,441  $ 105,731  $ 1,019,172  $ 815,716  $ 112,272  $ 927,988 
The following table presents the Company’s revenue disaggregated by geography, based on the billing address of the customer:

  Three Months Ended Nine Months Ended
  September 30, September 30,
  2024 2023 2024 2023
(in thousands)
United States $ 339,415  $ 311,045  $ 1,001,735  $ 911,205 
International 6,534  5,802  17,437  16,783 
Total revenue $ 345,949  $ 316,847  $ 1,019,172  $ 927,988 

Remaining Performance Obligations
 
As of September 30, 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 $583.1 million. The Company expects to recognize approximately 11% of this revenue during the remainder of 2024, approximately 60% 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 September 30, 2024 decreased by $10.0 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 September 30, 2024 will be recognized over the course of the next twelve months.

The amount of revenue recognized for the three months ended September 30, 2024 and 2023 that was included in the opening deferred revenue balance was $6.1 million and $5.4 million, respectively. The amount of revenue recognized for the nine months ended September 30, 2024 and 2023 that was included in the opening deferred revenue balance was $31.5 million and $33.6 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 $10.0 million and $11.5 million as of September 30, 2024 and December 31, 2023, respectively. Amortization expense for deferred sales incentive compensation was $1.1 million for the three months ended September 30, 2024 and 2023. Amortization expense for deferred sales incentive compensation was $3.5 million and $3.4 million for the nine months ended September 30, 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 nine months ended September 30, 2024 and 2023.

Direct Expense

The following table summarizes direct expense by revenue category:

  Three Months Ended Nine Months Ended
  September 30, September 30,
  2024 2023 2024 2023
(in thousands)
Asset-based $ 127,979  $ 112,938  $ 376,498  $ 324,093 
Subscription-based 8,597  7,857  25,475  22,554 
Professional services and other (88) (374) 5,499  7,662 
Total direct expense $ 136,488  $ 120,421  $ 407,472  $ 354,309