Quarterly report pursuant to Section 13 or 15(d)

Revenues and Cost of Revenues

v3.22.2
Revenues and Cost of Revenues
 6 Months Ended
Jun. 30, 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:

  Three Months Ended June 30, 2022
  2022 2021
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenues:            
Asset-based $ 191,972  $ —  $ 191,972  $ 170,075  $ —  $ 170,075 
Subscription-based 73,568  44,552  118,120  66,663  45,841  112,504 
Total recurring revenues 265,540  44,552  310,092  236,738  45,841  282,579 
Professional services and other revenues 6,460  2,300  8,760  3,559  2,600  6,159 
Total revenues $ 272,000  $ 46,852  $ 318,852  $ 240,297  $ 48,441  $ 288,738 

  Six Months Ended June 30,
  2022 2021
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenues:            
Asset-based $ 394,689  $ —  $ 394,689  $ 329,450  $ —  $ 329,450 
Subscription-based 142,105  90,749  232,854  130,675  91,658  222,333 
Total recurring revenues 536,794  90,749  627,543  460,125  91,658  551,783 
Professional services and other revenues 8,774  3,898  12,672  6,582  5,478  12,060 
Total revenues $ 545,568  $ 94,647  $ 640,215  $ 466,707  $ 97,136  $ 563,843 

The following table presents the Company’s revenues disaggregated by geography, based on the billing address of the customer:
  Three Months Ended Six Months Ended
  June 30, June 30,
  2022 2021 2022 2021
(in thousands)
United States $ 314,271  $ 283,589  $ 631,000  $ 553,661 
International 4,581  5,149  9,215  10,182 
Total revenues $ 318,852  $ 288,738  $ 640,215  $ 563,843 
Remaining Performance Obligations
 
The following table includes estimated revenue expected to be recognized in the future as of June 30, 2022: 

Years ending December 31, (in thousands)
Remainder of 2022 $ 137,741 
2023 196,180 
2024 114,774 
2025 67,070 
2026 35,991 
Thereafter 8,228 
Total $ 559,984 

The remaining performance obligations disclosed above are not indicative of revenue for future periods.

Remaining performance obligations represent the transaction price allocated to unsatisfied or partially satisfied performance obligations. The disclosure includes estimates of variable consideration. The Company applies the practical expedients and exemption not to 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 June 30, 2022 increased by $4.3 million from December 31, 2021, 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 $10.2 million and $9.5 million for the three months ended June 30, 2022 and 2021, respectively. The amount of revenue recognized that was included in the opening deferred revenue balance was $26.1 million and $26.3 million for the six months ended June 30, 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 $11.4 million and $11.8 million as of June 30, 2022 and December 31, 2021, respectively. Amortization expense for the deferred sales incentive compensation was $1.1 million for each of the three months ended June 30, 2022 and 2021. Amortization expense for the deferred sales incentive compensation was $2.2 million and $2.1 million for the six months ended June 30, 2022 and 2021. 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 Six Months Ended
  June 30, June 30,
  2022 2021 2022 2021
(in thousands)
Asset-based $ 112,301  $ 93,341  $ 229,729  $ 179,531 
Subscription-based 7,241  7,027  15,052  13,631 
Professional services and other 6,940  126  6,983  201 
Total cost of revenues $ 126,482  $ 100,494  $ 251,764  $ 193,363