Annual report pursuant to Section 13 and 15(d)

Revenues and Cost of Revenues

v3.22.4
Revenues and Cost of Revenues
 12 Months Ended
Dec. 31, 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:

  Year Ended December 31, 2022
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenues:
Asset-based $ 738,228  $ —  $ 738,228 
Subscription-based 294,997  182,847  477,844 
Total recurring revenues 1,033,225  182,847  1,216,072 
Professional services and other revenues 16,568  7,144  23,712 
Total revenues $ 1,049,793  $ 189,991  $ 1,239,784 
  Year Ended December 31, 2021
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenues:
Asset-based $ 709,376  $ —  $ 709,376 
Subscription-based 267,720  186,269  453,989 
Total recurring revenues 977,096  186,269  1,163,365 
Professional services and other revenues 14,070  9,082  23,152 
Total revenues $ 991,166  $ 195,351  $ 1,186,517 

Year Ended December 31, 2020
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenues:
Asset-based $ 540,947  $ —  $ 540,947 
Subscription-based 248,810  177,697  426,507 
Total recurring revenues 789,757  177,697  967,454 
Professional services and other revenues 16,333  14,443  30,776 
Total revenues $ 806,090  $ 192,140  $ 998,230 

One customer accounted for more than 10% of the Company’s total revenues, substantially all of which are included within the Envestnet Wealth Solutions segment:

  Year Ended December 31,
  2022 2021 2020
Fidelity 16  % 17  % 15  %

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

  Year Ended December 31,
  2022 2021 2020
(in thousands)
United States $ 1,218,254  $ 1,166,251  $ 977,047 
International (1)
21,530  20,266  21,183 
Total revenues $ 1,239,784  $ 1,186,517  $ 998,230 
__________________________________________________________
(1) No foreign country accounted for more than 10% of total revenues.

Remaining Performance Obligations

As of December 31, 2022, 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 $544.6 million. We expect to recognize approximately 43% of this revenue in 2023, approximately 42% throughout 2024 and 2025, with the balance recognized thereafter. These remaining performance obligations are not indicative of revenue for future periods.
Contract Balances

Total deferred revenue increased $4.9 million for the year ended December 31, 2022 and decreased $2.0 million for the year ended December 31, 2021. These fluctuations are primarily due to timing differences related to the satisfaction of outstanding performance obligations and the Company's billing cycles during the years then ended. The majority of the Company's deferred revenue as of December 31, 2022 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 $33.1 million and $33.8 million for the years ended December 31, 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 December 31, 2022 and 2021, respectively. Amortization expense for the deferred sales incentive compensation was $4.3 million and $4.4 million for the years ended December 31, 2022 and 2021, respectively. Deferred sales incentive compensation is included in other non-current assets on the consolidated balance sheets and amortization expense is included in compensation and benefits expenses on the consolidated statements of operations. No significant impairment loss for capitalized costs was recorded during the periods.

Cost of Revenues

The following table summarizes cost of revenues by revenue category:

Year Ended December 31,
  2022 2021 2020
(in thousands)
Asset-based $ 430,345  $ 393,717  $ 278,569 
Subscription-based 30,613  29,445  26,934 
Professional services and other 7,502  561  426 
Total cost of revenues $ 468,460  $ 423,723  $ 305,929