Envestnet (NYSE: ENV), a leading provider of intelligent systems
for wealth management and financial wellness, today reported
financial results for the three and six months ended June 30,
2024.
Three months ended
Six months ended
Key Financial Metrics
June 30,
%
June 30,
%
(in millions, except per share
data)
2024
2023
Change
2024
2023
Change
GAAP:
Total revenue
$
348.3
$
312.4
11
%
$
673.2
$
611.1
10
%
Net loss attributable to Envestnet,
Inc.
$
(79.2
)
$
(21.4
)
*
$
(76.7
)
$
(62.6
)
(22
)%
Net loss attributable to Envestnet, Inc.
per diluted share
$
(1.44
)
$
(0.39
)
*
$
(1.39
)
$
(1.15
)
(21
)%
Non-GAAP:
Adjusted EBITDA(1)
$
77.8
$
56.0
39
%
$
148.2
$
110.0
35
%
Adjusted net income(1)
$
36.4
$
30.4
20
%
$
75.8
$
60.5
25
%
Adjusted net income per diluted
share(1)
$
0.55
$
0.46
20
%
$
1.14
$
0.91
25
%
Free cash flow(1)
$
67.0
$
36.7
83
%
$
47.1
$
(25.1
)
*
__________________________________________________
*Not meaningful
Jim Fox, Board Chair and Interim CEO, said: "We look forward to
the successful completion of our pending transaction with Bain
Capital and the value it will deliver to our shareholders. We
remain committed to maintaining our leading position, which is
based on executing on what our clients need and deepening our
relationships with them."
Financial Results for the Second Quarter 2024 Compared to the
Second Quarter 2023
Total revenue increased 11% to $348.3 million for the second
quarter of 2024 from $312.4 million for the second quarter of 2023.
Asset-based recurring revenue increased 18% and represented 63% of
total revenue for the second quarter of 2024, compared to 59% of
total revenue for the second quarter of 2023. Subscription-based
recurring revenue increased 3% and represented 34% of total revenue
for the second quarter of 2024, compared to 37% of total revenue
for the second quarter of 2023. Professional services and other
non-recurring revenue decreased 8% for the second quarter of 2024
from the second quarter of 2023.
Total operating expenses increased 29% to $423.8 million for the
second quarter of 2024 from $327.7 million for the second quarter
of 2023. Direct expense increased 16% to $144.4 million for the
second quarter of 2024 from $124.2 million for the second quarter
of 2023. Employee compensation decreased 11% to $104.1 million for
the second quarter of 2024 from $117.1 million for the second
quarter of 2023. Employee compensation was 30% of total revenue for
the second quarter of 2024, compared to 37% of total revenue for
the second quarter of 2023. General and administrative expense
decreased 3% to $52.9 million for the second quarter of 2024 from
$54.4 million for the second quarter of 2023. General and
administrative expense was 15% of total revenue for the second
quarter of 2024, compared to 17% of total revenue for the second
quarter of 2023. A non-cash goodwill impairment charge of $96.3
million and a non-cash gain on deconsolidation of non-controlling
interest of $19.5 million were recognized during the second quarter
of 2024.
Loss from operations was $75.5 million for the second quarter of
2024 compared to a loss from operations of $15.3 million for the
second quarter of 2023. Net loss attributable to Envestnet, Inc.
was $79.2 million, or $1.44 per diluted share, for the second
quarter of 2024 compared to a net loss attributable to Envestnet,
Inc. of $21.4 million, or $0.39 per diluted share, for the second
quarter of 2023.
Adjusted EBITDA(1) increased 39% to $77.8 million for the second
quarter of 2024 from $56.0 million for the second quarter of 2023.
Adjusted net income(1) increased 20% to $36.4 million, or $0.55 per
diluted share, for the second quarter of 2024 from $30.4 million,
or $0.46 per diluted share, for the second quarter of 2023. Free
cash flow(1) increased 83%, to $67.0 for the second quarter of 2024
from $36.7 for the second quarter of 2023.
Balance Sheet and Liquidity
As of June 30, 2024, Envestnet had $122.0 million in cash and
cash equivalents and $892.5 million in outstanding debt. Debt as of
June 30, 2024 consisted of $317.5 million in convertible notes
maturing in 2025 and $575.0 million in convertible notes maturing
in 2027. Envestnet's $500.0 million revolving credit facility was
undrawn as of June 30, 2024.
Segment Reporting
On October 1, 2023, the Company changed the composition of its
reportable segments to reflect the way that the Company's chief
operating decision maker reviews the operating results, assesses
performance and allocates resources. All segment information
presented within this Exhibit 99.1 for the three and six months
ended June 30, 2024 is presented in conjunction with the current
organizational structure, with prior periods adjusted
accordingly.
Correction of Immaterial Errors
In July 2024, the Company identified that as a result of a
clerical error an event of default had occurred pursuant to the
indenture under which the Convertible Notes due 2025 had been
issued, and therefore the Convertible Notes due 2025 should have
been classified as current debt instead of as non-current debt as
previously recorded in the condensed consolidated balance sheets.
Upon identification, the Company promptly cured the technical
default. Upon analysis, the Company concluded that the
classification error was immaterial in prior period financial
statements as the event of default was caused by a clerical error
and was not reflective of noncompliance with any factors impacting
the Company’s liquidity or financial covenants. If the Company had
identified the technical default in the prior period and classified
the debt as current, the matter would have been disclosed and
promptly resolved. Therefore, amendment of previously filed reports
was not required. However, the Company corrected this immaterial
error in the prior year reported within this press release.
During the fourth quarter of 2023, the Company identified that
the arrangement with a third-party for the use of cloud hosted
virtual servers which was previously accounted for as a finance
lease transaction and included as a component of property and
equipment, net in the condensed consolidated balance sheets should
have been recognized as a prepayment included within prepaid
expenses and other current assets and other assets in the condensed
consolidated balance sheets. The Company concluded that the
classification of these transactions was immaterial in prior period
financial statements and that amendment of previously filed reports
was not required. However, the Company corrected this immaterial
error in the prior periods reported within this press release.
Conference Call
Envestnet will host a conference call to discuss second quarter
2024 financial results on August 12, 2024 at 5:00 p.m. ET. The live
webcast and accompanying presentation can be accessed from
Envestnet’s investor relations website at
http://investor.envestnet.com/. A replay of the webcast will be
available on the investor relations website following the call.
About Envestnet
Envestnet, Inc. (NYSE: ENV) is transforming the way financial
advice and insight are delivered. Our mission is to empower
financial advisors and service providers with innovative
technology, solutions and intelligence. Envestnet's clients include
more than 110,000 advisors, 17 of the 20 largest U.S. banks, 48 of
the 50 largest wealth management and brokerage firms, over 500 of
the largest RIAs and hundreds of FinTech companies, all of which
leverage Envestnet technology and services that help drive better
outcomes for enterprises, advisors and their clients.
For more information on Envestnet, please visit
http://www.envestnet.com and follow us on Twitter @ENVintel.
__________________________________________________
(1) Non-GAAP Financial Measures
“Adjusted EBITDA” represents net income (loss) before deferred
revenue fair value adjustment, interest income, interest expense,
income tax provision (benefit), depreciation and amortization,
goodwill impairment, gain on deconsolidation, non‑cash compensation
expense, restructuring charges and transaction costs, severance
expense, litigation, regulatory and other governance related
expenses, foreign currency, non-income tax expense adjustment, fair
market value adjustments to investments in private companies,
(gain) loss from equity method investments and loss attributable to
non‑controlling interest.
“Adjusted net income” represents net income (loss) before income
tax provision (benefit), gain (loss) from equity method
investments, deferred revenue fair value adjustment, non‑cash
interest expense, cash interest on our Convertible Notes,
amortization of acquired intangibles, goodwill impairment, gain on
deconsolidation, non‑cash compensation expense, restructuring
charges and transaction costs, severance expense, litigation,
regulatory and other governance related expenses, foreign currency,
non-income tax expense adjustment, fair market value adjustments to
investments in private companies and loss attributable to
non‑controlling interest. Reconciling items are presented gross of
tax, and a normalized tax rate is applied to the total of all
reconciling items to arrive at adjusted net income. The normalized
tax rate is based solely on the estimated blended statutory income
tax rates in the jurisdictions in which we operate. We monitor the
normalized tax rate based on events or trends that could materially
impact the rate, including tax legislation changes and changes in
the geographic mix of our operations.
“Adjusted net income per diluted share” represents adjusted net
income attributable to common stockholders divided by the diluted
number of weighted average shares outstanding. For purposes of the
adjusted net income per share calculation, we assume all potential
shares to be issued in connection with our convertible notes are
dilutive.
"Free cash flow" represents net cash provided by (used in)
operating activities less purchases of property and equipment and
capitalization of internally developed software.
For further information see reconciliations of Non-GAAP
Financial Measures on pages 9-15 of this press release, and the
section entitled "Non-GAAP Financial Measures" in the most recent
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed
with the Securities and Exchange Commission (“SEC”) which are
available on the SEC’s website at http://www.sec.gov or our
Investor Relations website at http://investor.envestnet.com/.
Reconciliations are not provided for guidance on such measures as
the Company is unable to predict the amounts to be adjusted, such
as the GAAP tax provision. The Company’s Non-GAAP Financial
Measures should not be viewed as a substitute for revenue, net
income (loss), net income (loss) per share or net cash provided by
(used in) operating activities determined in accordance with
GAAP.
Cautionary Statement Regarding Forward-Looking
Statements
The forward-looking statements made in this press release and
its attachments concerning its strategic and operational plans and
growth strategy are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. In addition,
any statements that refer to our pending merger with affiliates of
vehicles managed or advised by Bain Capital Private Equity, LP.
(the "Merger"), projections of our future financial performance,
our anticipated growth and trends in our business and other
characteristics of future events or circumstances are
forward-looking statements. These statements involve risks and
uncertainties and our actual results could differ materially from
the results expressed or implied by such forward-looking
statements. Furthermore, reported results should not be considered
as an indication of future performance. The potential risks,
uncertainties and other factors that could cause actual results to
differ from those expressed by the forward-looking statements in
this press release include, but are not limited to, the risk that
the Merger may not be completed on the anticipated terms in a
timely manner or at all, which may adversely affect our business
and the price of our common stock; the failure to satisfy any of
the conditions to the consummation of the Merger, including the
receipt of certain regulatory approvals and the approval of the
holders in a majority of the voting power of our common stock; the
occurrence of any event, change or other circumstance or condition
that could give rise to the termination of the merger agreement,
including in circumstances requiring us to pay a termination fee;
the effect of the announcement or pendency of the Merger on our
business relationships, operating results and business
relationships, operating results and business generally; risks that
the Merger disrupts our current plans and operations (including the
ability of certain customers to terminate or amend contracts upon a
change of control); our ability to retain, hire and integrate
skilled personnel, including our senior management team and
maintain relationships with key business partners and customers,
and others with whom we do business, in light of the Merger; risks
related to diverting management's attention from our ongoing
business operations; unexpected costs, charges or expenses
resulting from the Merger; the ability to obtain the necessary
financing arrangements set forth in the commitment letters received
in connection with the Merger; potential litigation relating to the
Merger that could be instituted against the parties to the merger
agreement or their respective directors, managers or officers; the
effects of any outcomes related thereto; certain restrictions
during the pendency of the Merger that may impact our ability to
pursue certain business opportunities or strategic transactions;
uncertainty as to timing of completion of the Merger; risks that
the benefits of the Merger are not realized when and as expected;
adverse economic or global market conditions, including periods of
rising inflation and market interest rates, and governmental
responses to such conditions; the conflicts in the Middle East and
between Russia and Ukraine, including related sanctions and their
impact on the global economy and capital markets; the concentration
of our revenue from the delivery of our solutions and services to
clients in the financial services industry; our reliance on a
limited number of clients for a material portion of our revenue;
the renegotiation of fees by our clients; changes in the estimates
of fair value of reporting units or of long-lived assets,
particularly goodwill and intangible assets; the amount of our
debt, our ability to service our debt and risks associated with
derivative transactions associated with our debt; limitations on
our ability to access information from third parties or charges for
accessing such information; the targeting of some of our sales
efforts at large financial institutions and large financial
technology companies which prolongs sales cycles, requires
substantial upfront sales costs and results in less predictability
in completing some of our sales; changes in investing patterns on
the assets on which we derive revenue and the freedom of investors
to redeem or withdraw investments generally at any time; the impact
of fluctuations in market conditions and interest rates on the
demand for our products and services and the value of assets under
management or administration; increased geopolitical unrest and
other events outside of our control that could adversely affect the
global economy or specific international, regional and domestic
markets; our ability to keep up with rapid technological change,
evolving industry standards or changing requirements of clients;
risks associated with our international operations; the
competitiveness of our solutions and services as compared to those
of others; liabilities associated with potential, perceived or
actual breaches of fiduciary duties and/or conflicts of interest;
harm to our reputation; the failure to protect our intellectual
property rights; our reliance on outsourcing arrangements; activist
shareholders hindering the execution of our business strategy,
diverting board and management attention and resources and causing
us to incur substantial expenses; public health crises, pandemics
or similar events; our ability to successfully identify potential
acquisition candidates, complete acquisitions and successfully
integrate acquired companies; our ability to successfully execute
the conversion of clients’ assets from their technology platform to
our technology platforms in a timely and accurate manner; our
ability to introduce new solutions and services and enhancements;
regulatory compliance failures; our ability to maintain the
security and integrity of our systems and facilities and to
maintain the privacy of personal information and potential
liabilities for cybersecurity breaches; the effect of privacy laws
and regulations, industry standards and contractual obligations and
changes to these laws, regulations, standards and obligations on
how we operate our business and the negative effects of failure to
comply with these requirements; failure by our customers to obtain
proper permissions or waivers for our use of disclosure of
information; adverse judicial or regulatory proceedings against us;
failure of our solutions, services or systems, or those of third
parties on which we rely, to work properly; potential liability for
use of inaccurate information by third parties provided by us; the
occurrence of a deemed “change of control”; the uncertainty of the
application and interpretation of certain tax laws; issuances of
additional shares of common stock or issuances of shares of
preferred stock or convertible securities on our existing
stockholders; general economic, political and regulatory
conditions; global events, natural disasters, environmental
disasters, terrorist attacks and pandemics, including their impact
on the economy and trading markets; and management’s response to
these factors. More information regarding these and other risks,
uncertainties and factors is contained in our filings with the SEC
which are available on the SEC’s website at http://www.sec.gov or
our Investor Relations website at http://investor.envestnet.com/.
You are cautioned not to unduly rely on these forward-looking
statements, which speak only as of the date of this press release.
All information in this press release and its attachments is as of
August 9, 2024 and, unless required by law, we undertake no
obligation to publicly revise any forward-looking statement to
reflect circumstances or events after the date of this press
release or to report the occurrence of unanticipated events.
Envestnet, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
(unaudited)
June 30,
December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
121,967
$
91,378
Fees receivable, net
129,252
120,958
Prepaid expenses and other current
assets
57,899
51,472
Total current assets
309,118
263,808
Property and equipment, net
45,641
48,223
Internally developed software, net
205,090
224,713
Intangible assets, net
311,868
338,068
Goodwill
690,885
806,563
Operating lease right-of-use assets,
net
65,257
69,154
Investments in unconsolidated entities
96,755
56,292
Other assets
70,358
70,431
Total assets
$
1,794,972
$
1,877,252
Liabilities and equity
Current liabilities:
Accounts payable, accrued expenses and
other current liabilities
$
225,508
$
241,424
Operating lease liabilities
12,149
12,909
Deferred revenue
34,567
38,201
Current portion of debt
—
314,532
Total current liabilities
272,224
607,066
Debt, net of current portion
879,079
562,080
Operating lease liabilities, net of
current portion
95,294
100,830
Deferred tax liabilities, net
15,208
16,568
Other liabilities
16,820
16,202
Total liabilities
1,278,625
1,302,746
Equity:
Total stockholders’ equity attributable to
Envestnet, Inc.
516,347
568,191
Non-controlling interest
—
6,315
Total liabilities and equity
$
1,794,972
$
1,877,252
Envestnet, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except share
and per share information)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Revenue:
Asset-based
$
219,485
$
185,762
$
422,101
$
362,694
Subscription-based
117,988
114,959
235,450
232,038
Total recurring revenue
337,473
300,721
657,551
594,732
Professional services and other
revenue
10,800
11,713
15,672
16,409
Total revenue
348,273
312,434
673,223
611,141
Operating expenses:
Direct expense
144,351
124,209
270,984
233,888
Employee compensation
104,066
117,097
207,718
231,312
General and administrative
52,924
54,375
104,989
108,725
Depreciation and amortization
45,733
32,065
79,625
63,585
Goodwill impairment
96,269
—
96,269
—
Gain on deconsolidation
(19,523
)
—
(19,523
)
—
Total operating expenses
423,820
327,746
740,062
637,510
Loss from operations
(75,547
)
(15,312
)
(66,839
)
(26,369
)
Other expense, net
(4,788
)
(5,016
)
(9,169
)
(10,011
)
Loss before income tax provision (benefit)
and equity method investments
(80,335
)
(20,328
)
(76,008
)
(36,380
)
Income tax provision (benefit)
(652
)
418
853
24,187
Gain (loss) from equity method
investments
482
(2,386
)
(1,801
)
(5,326
)
Net loss
(79,201
)
(23,132
)
(78,662
)
(65,893
)
Add: Net loss attributable to
non-controlling interest
—
1,716
1,974
3,249
Net loss attributable to Envestnet,
Inc.
$
(79,201
)
$
(21,416
)
$
(76,688
)
$
(62,644
)
Net loss attributable to Envestnet, Inc.
per share:
Basic and diluted
$
(1.44
)
$
(0.39
)
$
(1.39
)
$
(1.15
)
Weighted average common shares
outstanding:
Basic and diluted
55,143,013
54,439,733
55,013,544
54,289,443
Envestnet, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
June 30,
2024
2023
Cash flows from operating activities:
Net loss
$
(78,662
)
$
(65,893
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
79,625
63,585
Non-cash compensation expense
36,720
40,843
Non-cash interest expense
2,817
2,251
Non-cash goodwill impairment
96,269
—
Non-cash gain on deconsolidation
(19,523
)
—
Loss from equity method investments
1,801
5,326
Lease related impairments
—
2,483
Other
2,120
(218
)
Changes in operating assets and
liabilities:
Fees receivable, net
(12,813
)
(22,357
)
Prepaid expenses and other assets
(5,745
)
(6,762
)
Accounts payable, accrued expenses and
other liabilities
(14,049
)
20,070
Deferred revenue
2,494
(852
)
Net cash provided by operating
activities
91,054
38,476
Cash flows from investing activities:
Purchases of property and equipment
(5,172
)
(16,735
)
Capitalization of internally developed
software
(38,751
)
(46,801
)
Deconsolidation of non-controlling
interest
(11,073
)
—
Investments in private companies
(3,055
)
(1,450
)
Acquisition of proprietary technology
(3,000
)
(12,000
)
Issuance of loan receivable to private
company
—
(20,000
)
Other
—
319
Net cash used in investing activities
(61,051
)
(96,667
)
Cash flows from financing activities:
Proceeds from borrowings on Revolving
Credit Facility
—
40,000
Payments related to Revolving Credit
Facility
—
(20,000
)
Payments related to Convertible Notes
—
(45,000
)
Proceeds from exercise of stock
options
724
472
Payments related to tax withholdings for
stock-based compensation
(12,155
)
(13,774
)
Payments related to share repurchases
—
(9,289
)
Proceeds from capital contributions
received by non-controlling interest
12,012
—
Purchase of non-controlling units from
third-party shareholders
—
(1,008
)
Other
3
3
Net cash provided by (used in) financing
activities
584
(48,596
)
Effect of exchange rate on changes on cash
and cash equivalents
2
3,633
Net change in cash and cash
equivalents
30,589
(103,154
)
Cash and cash equivalents, beginning of
period
91,378
162,173
Cash and cash equivalents, end of
period
$
121,967
$
59,019
Envestnet, Inc.
Reconciliation of Non-GAAP
Financial Measures
(in thousands)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Net loss
$
(79,201
)
$
(23,132
)
$
(78,662
)
$
(65,893
)
Add (deduct):
Deferred revenue fair value adjustment
(a)
—
17
—
69
Interest income (b)
(2,588
)
(1,656
)
(4,571
)
(3,014
)
Interest expense (b)
6,097
6,531
12,186
12,851
Income tax provision (benefit)
(652
)
418
853
24,187
Depreciation and amortization
45,733
32,065
79,625
63,585
Goodwill impairment
96,269
—
96,269
—
Gain on deconsolidation
(19,523
)
—
(19,523
)
—
Non-cash compensation expense (d)
17,822
21,390
36,720
40,843
Restructuring charges and transaction
costs (e)
8,405
6,508
10,461
10,671
Severance expense (d)
669
8,234
4,094
14,422
Litigation, regulatory and other
governance related expenses (c)
4,020
2,145
6,308
5,219
Foreign currency (b)
(229
)
74
46
107
Non-income tax expense adjustment (c)
(39
)
(30
)
(88
)
(198
)
Fair market value adjustments to
investments in private companies (b)
1,508
67
1,508
67
(Gain) loss from equity method
investments
(482
)
2,386
1,801
5,326
Loss attributable to non-controlling
interest
—
1,027
1,160
1,805
Adjusted EBITDA
$
77,809
$
56,044
$
148,187
$
110,047
__________________________________________________________
(a)
Included within subscription-based revenue
in the condensed consolidated statements of operations.
(b)
Included within other expense, net in the
condensed consolidated statements of operations.
(c)
Included within general and administrative
expense in the condensed consolidated statements of operations.
(d)
Included within employee compensation
expense in the condensed consolidated statements of operations.
(e)
For the three months ended June 30, 2024
and 2023, $6.7 million and $5.0 million, respectively, were
included within general and administrative expense and $1.7 million
and $1.5 million, respectively, were included within employee
compensation expense in the condensed consolidated statements of
operations. For the six months ended June 30, 2024 and 2023, $9.2
million and $9.1 million, respectively, were included within
general and administrative expense and $1.3 million and $1.6
million, respectively, were included within employee compensation
expense in the condensed consolidated statements of operations.
Envestnet, Inc.
Reconciliation of Non-GAAP
Financial Measures
(in thousands, except share
and per share information)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Net loss
$
(79,201
)
$
(23,132
)
$
(78,662
)
$
(65,893
)
Income tax provision (benefit) (a)
(652
)
418
853
24,187
Gain (loss) from equity method
investments
482
(2,386
)
(1,801
)
(5,326
)
Loss before income tax provision (benefit)
and equity method investments
(80,335
)
(20,328
)
(76,008
)
(36,380
)
Add (deduct):
Deferred revenue fair value adjustment
(b)
—
17
—
69
Non-cash interest expense (d)
1,412
1,427
2,817
2,869
Cash interest - Convertible Notes (d)
4,369
4,543
8,738
9,108
Amortization of acquired intangibles
(e)
14,457
15,720
29,199
32,660
Goodwill impairment
96,269
—
96,269
—
Gain on deconsolidation
(19,523
)
—
(19,523
)
—
Non-cash compensation expense (f)
17,822
21,390
36,720
40,843
Restructuring charges and transaction
costs (g)
8,405
6,508
10,461
10,671
Severance expense (f)
669
8,234
4,094
14,422
Litigation, regulatory and other
governance related expenses (c)
4,020
2,145
6,308
5,219
Foreign currency (d)
(229
)
74
46
107
Non-income tax expense adjustment (c)
(39
)
(30
)
(88
)
(198
)
Fair market value adjustments to
investments in private companies (d)
1,508
67
1,508
67
Loss attributable to non-controlling
interest
—
1,027
1,160
1,805
Adjusted net income before income tax
effect
48,805
40,794
101,701
81,262
Income tax effect (h)
(12,445
)
(10,403
)
(25,934
)
(20,722
)
Adjusted net income
$
36,360
$
30,391
$
75,767
$
60,540
Basic number of weighted average shares
outstanding
55,143,013
54,439,733
55,013,544
54,289,443
Effect of dilutive shares:
Convertible Notes
10,811,884
11,253,471
10,811,884
11,361,458
Non-vested RSUs and PSUs
590,918
316,758
527,360
445,323
Options to purchase common stock
49,692
57,902
38,996
73,271
Diluted number of weighted average shares
outstanding
66,595,507
66,067,864
66,391,784
66,169,495
Adjusted net income per diluted share
$
0.55
$
0.46
$
1.14
$
0.91
__________________________________________________________
(a)
For the three months ended June 30, 2024
and 2023, the effective tax rate computed in accordance with GAAP
equaled 0.8% and (1.8)%, respectively. For the six months ended
June 30, 2024 and 2023, the effective tax rate computed in
accordance with GAAP equaled (1.1)% and (58.0)%, respectively.
(b)
Included within subscription-based revenue
in the condensed consolidated statements of operations.
(c)
Included within general and administrative
expense in the condensed consolidated statements of operations.
(d)
Included within other expense, net in the
condensed consolidated statements of operations.
(e)
Included within depreciation and
amortization expense in the condensed consolidated statements of
operations.
(f)
Included within employee compensation
expense in the condensed consolidated statements of operations.
(g)
For the three months ended June 30, 2024
and 2023, $6.7 million and $5.0 million, respectively, were
included within general and administrative expense and $1.7 million
and $1.5 million, respectively, were included within employee
compensation expense in the condensed consolidated statements of
operations. For the six months ended June 30, 2024 and 2023, $9.2
million and $9.1 million, respectively, were included within
general and administrative expense and $1.3 million and $1.6
million, respectively, were included within employee compensation
expense in the condensed consolidated statements of operations.
(h)
An estimated normalized tax rate of 25.5%
has been used to compute adjusted net income for the three and six
months ended June 30, 2024 and 2023.
Envestnet, Inc.
Reconciliation of Non-GAAP
Financial Measures
(in thousands)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Net cash provided by operating
activities
$
89,110
$
72,149
$
91,054
$
38,476
Less: Purchases of property and
equipment
(3,272
)
(12,333
)
(5,172
)
(16,735
)
Less: Capitalization of internally
developed software
(18,798
)
(23,137
)
(38,751
)
(46,801
)
Free cash flow
$
67,040
$
36,679
$
47,131
$
(25,060
)
Envestnet, Inc.
Reconciliation of Non-GAAP
Financial Measures
Segment Information
(in thousands)
(unaudited)
Three Months Ended June 30,
2024
Envestnet Wealth
Solutions
Envestnet Data &
Analytics
Nonsegment
Total
Revenue:
Asset-based
$
219,485
$
—
$
—
$
219,485
Subscription-based
84,734
33,254
—
117,988
Total recurring revenue
304,219
33,254
—
337,473
Professional services and other
revenue
7,889
2,911
—
10,800
Total revenue
312,108
36,165
—
348,273
Operating expenses:
Direct expense
Asset-based
130,116
—
—
130,116
Subscription-based
1,474
7,174
—
8,648
Professional services and other
5,587
—
—
5,587
Total direct expense
137,177
7,174
—
144,351
Employee compensation
77,210
11,872
14,984
104,066
General and administrative
25,698
15,270
11,956
52,924
Depreciation and amortization
38,375
7,358
—
45,733
Goodwill impairment
—
96,269
—
96,269
Gain on deconsolidation
(19,523
)
—
—
(19,523
)
Total operating expenses
258,937
137,943
26,940
423,820
Income (loss) from operations
53,171
(101,778
)
(26,940
)
(75,547
)
Add (deduct):
Depreciation and amortization
38,375
7,358
—
45,733
Goodwill impairment
—
96,269
—
96,269
Gain on deconsolidation
(19,523
)
—
—
(19,523
)
Non-cash compensation expense (b)
11,360
1,904
4,558
17,822
Restructuring charges and transaction
costs (c)
2,063
60
6,282
8,405
Severance expense (b)
632
—
37
669
Litigation, regulatory and other
governance related expenses (a)
—
4,020
—
4,020
Non-income tax expense adjustment (a)
(39
)
—
—
(39
)
Adjusted EBITDA
$
86,039
$
7,833
$
(16,063
)
$
77,809
__________________________________________________________
(a)
Included within general and administrative
expense in the condensed consolidated statements of operations.
(b)
Included within employee compensation
expense in the condensed consolidated statements of operations.
(c)
$6.7 million was included within general
and administrative expense and $1.7 million was included within
employee compensation expense in the condensed consolidated
statements of operations.
Envestnet, Inc.
Reconciliation of Non-GAAP
Financial Measures
Segment Information
(in thousands)
(unaudited)
Six Months Ended June 30,
2024
Envestnet Wealth
Solutions
Envestnet Data &
Analytics
Nonsegment
Total
Revenue:
Asset-based
$
422,101
$
—
$
—
$
422,101
Subscription-based
168,902
66,548
—
235,450
Total recurring revenue
591,003
66,548
—
657,551
Professional services and other
revenue
10,915
4,757
—
15,672
Total revenue
601,918
71,305
—
673,223
Operating expenses:
Direct expense:
Asset-based
248,519
—
—
248,519
Subscription-based
2,905
13,973
—
16,878
Professional services and other
5,587
—
—
5,587
Total direct expense
257,011
13,973
—
270,984
Employee compensation
152,406
23,564
31,748
207,718
General and administrative
54,730
30,584
19,675
104,989
Depreciation and amortization
65,193
14,432
—
79,625
Goodwill impairment
—
96,269
—
96,269
Gain on deconsolidation
(19,523
)
—
—
(19,523
)
Total operating expenses
509,817
178,822
51,423
740,062
Income (loss) from operations
92,101
(107,517
)
(51,423
)
(66,839
)
Add (deduct):
Depreciation and amortization
65,193
14,432
—
79,625
Goodwill impairment
—
96,269
—
96,269
Gain on deconsolidation
(19,523
)
—
—
(19,523
)
Non-cash compensation expense (b)
22,747
3,768
10,205
36,720
Restructuring charges and transaction
costs (c)
2,106
739
7,616
10,461
Severance expense (b)
2,436
13
1,645
4,094
Litigation, regulatory and other
governance related expenses (a)
—
6,308
—
6,308
Non-income tax expense adjustment (a)
(88
)
—
—
(88
)
Loss attributable to non-controlling
interest
1,160
—
—
1,160
Adjusted EBITDA
$
166,132
$
14,012
$
(31,957
)
$
148,187
__________________________________________________________
(a)
Included within general and administrative
expense in the condensed consolidated statements of operations.
(b)
Included within employee compensation
expense in the condensed consolidated statements of operations.
(c)
$9.2 million was included within general
and administrative expense and $1.3 million was included within
employee compensation expense in the condensed consolidated
statements of operations.
Envestnet, Inc.
Reconciliation of Non-GAAP
Financial Measures
Segment Information
(continued)
(in thousands)
(unaudited)
Three months ended June 30,
2023
Envestnet Wealth
Solutions
Envestnet Data &
Analytics
Nonsegment
Total
Revenue:
Asset-based
$
185,762
$
—
$
—
$
185,762
Subscription-based
79,744
35,215
—
114,959
Total recurring revenue
265,506
35,215
—
300,721
Professional services and other
revenue
10,318
1,395
—
11,713
Total revenue
275,824
36,610
—
312,434
Operating expenses:
Direct expense:
Asset-based
108,532
—
—
108,532
Subscription-based
1,857
5,788
—
7,645
Professional services and other
8,032
—
—
8,032
Total direct expense
118,421
5,788
—
124,209
Employee compensation
77,898
19,839
19,360
117,097
General and administrative
31,225
14,792
8,358
54,375
Depreciation and amortization
25,575
6,490
—
32,065
Total operating expenses
253,119
46,909
27,718
327,746
Income (loss) from operations
22,705
(10,299
)
(27,718
)
(15,312
)
Add (deduct):
Deferred revenue fair value adjustment
(a)
17
—
—
17
Depreciation and amortization
25,575
6,490
—
32,065
Non-cash compensation expense (c)
12,325
2,445
6,620
21,390
Restructuring charges and transaction
costs (d)
5,414
69
1,025
6,508
Severance expense (c)
1,853
3,120
3,261
8,234
Litigation, regulatory and other
governance related expenses (b)
—
2,210
(65
)
2,145
Non-income tax expense adjustment (b)
(25
)
(5
)
—
(30
)
Loss attributable to non-controlling
interest
1,027
—
—
1,027
Adjusted EBITDA
$
68,891
$
4,030
$
(16,877
)
$
56,044
__________________________________________________________
(a)
Included within subscription-based revenue
in the condensed consolidated statements of operations.
(b)
Included within general and administrative
expense in the condensed consolidated statements of operations.
(c)
Included within employee compensation
expense in the condensed consolidated statements of operations.
(d)
$5.0 million was included within general
and administrative expense and $1.5 million was included within
employee compensation expense in the condensed consolidated
statements of operations.
Envestnet, Inc.
Reconciliation of Non-GAAP
Financial Measures
Segment Information
(in thousands)
(unaudited)
Six months ended June 30,
2023
Envestnet Wealth
Solutions
Envestnet Data &
Analytics
Nonsegment
Total
Revenue:
Asset-based
$
362,694
$
—
$
—
$
362,694
Subscription-based
160,214
71,824
—
232,038
Total recurring revenue
522,908
71,824
—
594,732
Professional services and other
revenue
13,565
2,844
—
16,409
Total revenue
536,473
74,668
—
611,141
Operating expenses:
Direct expense:
Asset-based
211,155
—
—
211,155
Subscription-based
3,635
11,062
—
14,697
Professional services and other
8,036
—
—
8,036
Total direct expense
222,826
11,062
—
233,888
Employee compensation
156,945
39,081
35,286
231,312
General and administrative
60,332
29,221
19,172
108,725
Depreciation and amortization
51,067
12,518
—
63,585
Total operating expenses
491,170
91,882
54,458
637,510
Income (loss) from operations
45,303
(17,214
)
(54,458
)
(26,369
)
Add (deduct):
Deferred revenue fair value adjustment
(a)
69
—
—
69
Depreciation and amortization
51,067
12,518
—
63,585
Non-cash compensation expense (c)
23,792
4,882
12,169
40,843
Restructuring charges and transaction
costs (d)
6,553
312
3,806
10,671
Severance expense (c)
5,652
5,325
3,445
14,422
Litigation, regulatory and other
governance related expenses (b)
—
3,534
1,685
5,219
Non-income tax expense adjustment (b)
(127
)
(71
)
—
(198
)
Loss attributable to non-controlling
interest
1,805
—
—
1,805
Adjusted EBITDA
$
134,114
$
9,286
$
(33,353
)
$
110,047
__________________________________________________________
(a)
Included within subscription-based revenue
in the condensed consolidated statements of operations.
(b)
Included within general and administrative
expense in the condensed consolidated statements of operations.
(c)
Included within employee compensation
expense in the condensed consolidated statements of operations.
(d)
$9.1 million was included within general
and administrative expense and $1.6 million was included within
employee compensation expense in the condensed consolidated
statements of operations.
Envestnet, Inc. Key Metrics
(in millions, except accounts, advisors and firms data)
(unaudited)
Envestnet Wealth Solutions Segment
The following table provides information regarding the amount of
assets and number of accounts and advisors supported by the
Envestnet Wealth Solutions platform:
As of
June 30,
September 30,
December 31,
March 31,
June 30,
2023
2023
2023
2024
2024
Platform Assets
Assets under Management (“AUM”)
$
384,773
$
375,408
$
416,001
$
452,464
$
471,978
Assets under Administration (“AUA”)
394,078
398,082
430,846
471,401
471,479
Total AUM/A
778,851
773,490
846,847
923,865
943,457
Subscription
4,643,313
4,579,248
4,959,514
5,158,180
5,327,939
Total Platform Assets
$
5,422,164
$
5,352,738
$
5,806,361
$
6,082,045
$
6,271,396
Platform Accounts
AUM
1,609,677
1,614,873
1,640,879
1,688,044
1,752,768
AUA
1,144,375
1,257,094
1,254,962
1,315,442
1,325,370
Total AUM/A
2,754,052
2,871,967
2,895,841
3,003,486
3,078,138
Subscription
15,916,955
16,072,848
16,248,598
16,641,631
16,364,088
Total Platform Accounts
18,671,007
18,944,815
19,144,439
19,645,117
19,442,226
Advisors
AUM/A
38,809
38,078
38,697
38,814
38,484
Subscription
68,439
69,318
69,973
70,262
71,568
Total Advisors
107,248
107,396
108,670
109,076
110,052
The following tables summarize the changes in the amount of
AUM/A assets and number of AUM/A accounts:
Asset Rollforward - Three
Months Ended June 30, 2024
As of
March 31,
Gross
Net
Market
As of June 30,
2024
Sales
Redemptions
Flows
Impact
Reclassifications
2024
(in millions, except account
data)
AUM
$
452,464
$
32,468
$
(18,900
)
$
13,568
$
4,186
$
1,760
$
471,978
AUA
471,401
32,847
(35,790
)
(2,943
)
6,032
(3,011
)
471,479
Total AUM/A
$
923,865
$
65,315
$
(54,690
)
$
10,625
$
10,218
$
(1,251
)
$
943,457
Fee-Based Accounts
3,003,486
82,230
(7,578
)
3,078,138
The above AUM/A gross sales figures for the three months ended
June 30, 2024 include $18.2 billion in new client conversions. We
onboarded an additional $149.6 billion in subscription conversions
during the three months ended June 30, 2024 bringing total
conversions for the three months ended June 30, 2024 to $167.8
billion.
Asset Rollforward - Six Months
Ended June 30, 2024
As of
December 31,
Gross
Net
Market
As of June 30,
2023
Sales
Redemptions
Flows
Impact
Reclassifications
2024
(in millions, except account
data)
AUM
$
416,001
$
64,595
$
(38,501
)
$
26,094
$
26,880
$
3,003
$
471,978
AUA
430,846
78,443
(61,192
)
17,251
28,715
(5,333
)
471,479
Total AUM/A
$
846,847
$
143,038
$
(99,693
)
$
43,345
$
55,595
$
(2,330
)
$
943,457
Fee-Based Accounts
2,895,841
194,863
(12,566
)
3,078,138
The above AUM/A gross sales figures for the six months ended
June 30, 2024 include $48.0 billion in new client conversions. We
onboarded an additional $180.7 billion in subscription conversions
during the six months ended June 30, 2024 bringing total
conversions for the six months ended June 30, 2024 to $228.7
billion.
Asset and account figures in the “Reclassifications” column for
the three and six months ended June 30, 2024 represent immaterial
amounts that were reclassified between AUM, AUA and subscription to
reflect updated customer billing arrangements. These
reclassifications have no impact on total platform assets or
accounts.
Envestnet Data & Analytics Segment
The following table provides information regarding the number of
paid end-users and firms using the Envestnet Data & Analytics
platform:
As of
June 30,
September 30,
December 31,
March 31,
June 30,
2023
2023
2023
2024
2024
Number of paid end-users
38.0
42.3
38.3
43.8
44.3
Number of firms
1,339
1,322
1,324
1,323
1,182
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808530787/en/
Investor Relations investor.relations@envestnet.com (312)
827-3940 Media Relations media@envestnet.com
Envestnet (NYSE:ENV)
Historical Stock Chart
Von Aug 2024 bis Sep 2024
Envestnet (NYSE:ENV)
Historical Stock Chart
Von Sep 2023 bis Sep 2024
