Quarterly report pursuant to Section 13 or 15(d)

Revenues and Cost of Revenues

v3.20.2
Revenues and Cost of Revenues
 9 Months Ended
Sep. 30, 2020
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,
2020 2019
Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
Revenues:
Asset-based $ 137,744  $ —  $ 137,744  $ 126,591  $ —  $ 126,591 
Subscription-based 62,783  45,114  107,897  57,353  43,230  100,583 
Total recurring revenues 200,527  45,114  245,641  183,944  43,230  227,174 
Professional services and other revenues 3,767  3,151  6,918  4,280  4,626  8,906 
Total revenues $ 204,294  $ 48,265  $ 252,559  $ 188,224  $ 47,856  $ 236,080 
 
  Nine Months Ended September 30,
  2020 2019
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
Revenues:            
Asset-based $ 394,801  $ —  $ 394,801  $ 355,595  $ —  $ 355,595 
Subscription-based 184,516  132,911  317,427  148,457  127,471  275,928 
Total recurring revenues 579,317  132,911  712,228  504,052  127,471  631,523 
Professional services and other revenues 11,082  11,101  22,183  13,767  14,901  28,668 
Total revenues $ 590,399  $ 144,012  $ 734,411  $ 517,819  $ 142,372  $ 660,191 

One customer accounted for more than 10% of the Company’s total revenues:

  Three Months Ended Nine Months Ended
  September 30, September 30,
  2020 2019 2020 2019
Fidelity 15  % 15  % 15  % 15  %
 
Fidelity accounted for 18% of the Envestnet Wealth Solutions segment's revenues for each of the three and nine months ended September 30, 2020. Fidelity accounted for 19% of the Envestnet Wealth Solutions segment's revenues for each of the three and nine months ended September 30, 2019.

No single customer accounted for over 10% of the Envestnet Data & Analytics segment's revenue for any period presented.
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,
  2020 2019 2020 2019
United States $ 247,692  $ 228,427  $ 718,246  $ 638,008 
International (1)
4,867  7,653  16,165  22,183 
Total revenues $ 252,559  $ 236,080  $ 734,411  $ 660,191 
(1) No foreign country accounted for more than 10% of the Company's total revenues.

Remaining Performance Obligations
 
The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2020: 
Years ending December 31,  
Remainder of 2020 $ 62,167 
2021 198,655 
2022 141,388 
2023 74,195 
2024 39,180 
Thereafter 31,013 
Total $ 546,598 

Only fixed consideration from significant contracts with customers is included in the amounts presented above.

The Company has applied the practical expedients and exemption and therefore does not 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, 2020 increased by $1,837 during the nine months ended September 30, 2020, 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 $5,209 and $4,434 for the three months ended September 30, 2020 and 2019, respectively. The amount of revenue recognized that was included in the opening deferred revenue balance was $31,038 and $21,022 for the nine months ended September 30, 2020 and 2019, 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 $10,326 and $9,387 as of September 30, 2020 and December 31, 2019, respectively. Amortization expense for the deferred sales incentive compensation was $861 and $1,099 for the three months ended September 30, 2020, and 2019, respectively. Amortization expense for the deferred sales incentive compensation was $2,933 and $2,503 for the nine months ended September 30, 2020, and 2019, respectively. 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,
  2020 2019 2020 2019
Asset-based $ 71,133  $ 64,339  $ 201,600  $ 178,474 
Subscription-based 7,291  7,278  20,375  21,652 
Professional services and other 121  253  352  5,469 
Total cost of revenues $ 78,545  $ 71,870  $ 222,327  $ 205,595