Quarterly report pursuant to Section 13 or 15(d)

Revenue and Direct Expense

v3.23.2
Revenue and Direct Expense
 6 Months Ended
Jun. 30, 2023
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 June 30,
  2023 2022
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenue:            
Asset-based $ 185,762  $ —  $ 185,762  $ 191,972  $ —  $ 191,972 
Subscription-based 75,509  39,450  114,959  73,568  44,552  118,120 
Total recurring revenue 261,271  39,450  300,721  265,540  44,552  310,092 
Professional services and other revenue 10,310  1,403  11,713  6,460  2,300  8,760 
Total revenue $ 271,581  $ 40,853  $ 312,434  $ 272,000  $ 46,852  $ 318,852 

  Six Months Ended June 30,
  2023 2022
  Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated Envestnet Wealth Solutions Envestnet Data & Analytics Consolidated
(in thousands)
Revenue:            
Asset-based $ 362,694  $ —  $ 362,694  $ 394,689  $ —  $ 394,689 
Subscription-based 151,994  80,044  232,038  142,105  90,749  232,854 
Total recurring revenue 514,688  80,044  594,732  536,794  90,749  627,543 
Professional services and other revenue 13,553  2,856  16,409  8,774  3,898  12,672 
Total revenue $ 528,241  $ 82,900  $ 611,141  $ 545,568  $ 94,647  $ 640,215 

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

  Three Months Ended Six Months Ended
  June 30, June 30,
  2023 2022 2023 2022
(in thousands)
United States $ 306,946  $ 314,271  $ 600,160  $ 631,000 
International 5,488  4,581  10,981  9,215 
Total revenue $ 312,434  $ 318,852  $ 611,141  $ 640,215 

Remaining Performance Obligations
 
As of June 30, 2023, 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 $531.0 million. We expect to recognize approximately 24% of this revenue during the remainder of 2023, approximately 55% 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 as of June 30, 2023 decreased by $0.9 million from December 31, 2022, primarily the result of 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 for the three months ended June 30, 2023 and 2022 that was included in the opening deferred revenue balance was $11.5 million and $10.2 million, respectively. The amount of revenue recognized for the six months ended June 30, 2023 and 2022,that was included in the opening deferred revenue balance was $28.2 million and $26.1 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 $10.9 million and $11.0 million as of June 30, 2023 and December 31, 2022, respectively. Amortization expense for the deferred sales incentive compensation was $1.2 million and $1.1 million for the three months ended June 30, 2023 and 2022, respectively. Amortization expense for the deferred sales incentive compensation was $2.3 million and $2.2 million for the six months ended June 30, 2023 and 2022, 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 six months ended June 30, 2023 and 2022.

Direct Expense

The following table summarizes direct expense by revenue category:

  Three Months Ended Six Months Ended
  June 30, June 30,
  2023 2022 2023 2022
(in thousands)
Asset-based $ 108,532  $ 112,301  $ 211,155  $ 229,729 
Subscription-based 6,933  7,241  13,295  15,052 
Professional services and other 8,032  6,940  8,036  6,983 
Total direct expense $ 123,497  $ 126,482  $ 232,486  $ 251,764