Envestnet Reports Second Quarter 2017 Financial Results

CHICAGO--()--Envestnet (NYSE:ENV), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for its second quarter ended June 30, 2017.

    Three Months Ended         Six Months Ended    
Key Financial Metrics June 30, % June 30, %

(in millions except per share data)

      2017         2016       Change       2017         2016       Change

GAAP:

       
Total Revenues $ 167.4 $ 141.7 18 % $ 325.2 $ 273.5 19 %
Net Loss (6.5 ) (7.9 ) (19 %) (19.6 ) (18.9 ) 4 %
Net Loss per Diluted Share $ (0.15 ) $ (0.19 ) (22 %) $ (0.45 ) $ (0.44 ) 2 %
 
Non-GAAP:

 

Adjusted Revenues(1) $ 167.5 $ 141.9 18 % $ 325.3 $ 274.0 19 %
Adjusted EBITDA(1) 29.5 22.3 32 % 55.4 41.5 33 %
Adjusted Net Income(1) 13.1 9.2 43 % 24.7 17.0 45 %
Adjusted Net Income per Diluted Share(1) $ 0.29 $ 0.21 38 % $ 0.54 $ 0.39 38 %
 

“Envestnet continues to execute on its growth strategy,” said Jud Bergman, Chairman and CEO. “In the second quarter, we experienced significant growth in recurring subscription revenue, and we further expanded our industry footprint, increasing advisors, accounts and assets served by our integrated wealth management offerings.”

“We see significant opportunities ahead, as enterprises and advisors adopt our intelligent systems for wealth management and financial wellness, delivering better financial outcomes for their clients,” concluded Mr. Bergman.

Financial Results for the Second Quarter of 2017 Compared to the Second Quarter of 2016:

Total revenues increased 18% to $167.4 million in the three months ended June 30, 2017 from $141.7 million in the three months ended June 30, 2016. Asset-based revenues, which were 59% and 61% of total revenues for the second quarter of 2017 and 2016, respectively, increased 15% from the prior year period. Subscription and licensing revenues increased 27% from the prior year period.

Total operating expenses for the second quarter of 2017 increased 11% to $164.7 million from $148.0 million in the prior year period. Cost of revenues increased 24% to $55.7 million for the second quarter of 2017 from $44.9 million for the second quarter of 2016. Compensation and benefits increased 13% to $65.0 million for the second quarter of 2017 from $57.7 million for the prior year period. Compensation and benefits were 39% of total revenues for the second quarter of 2017, compared to 41% for the prior year period. General and administration expenses were $28.5 million for the second quarter of 2017, consistent with $28.4 million for the prior year period. General and administrative expenses were 17% of total revenues for the second quarter of 2017, compared to 20% for the prior year period.

Income from operations was $2.7 million for the second quarter of 2017 compared to a loss of $6.3 million for the second quarter of 2016. Net loss attributable to Envestnet, Inc. was $6.5 million, or a loss of $0.15 per diluted share, for the second quarter of 2017 compared to a loss of $7.9 million, or a loss of $0.19 per diluted share, for the second quarter of 2016.

Adjusted Revenues(1) for the second quarter of 2017 increased 18% to $167.5 million from $141.9 million for the prior year period. Adjusted EBITDA(1) for the second quarter of 2017 increased 32% to $29.5 million from $22.3 million for the prior year period. Adjusted Net Income(1) increased 43% for the second quarter of 2017 to $13.1 million from $9.2 million for the prior year period. Adjusted Net Income Per Share(1) for the second quarter of 2017 increased 38% to $0.29 from $0.21 in the second quarter of 2016.

Outlook

The Company provided the following outlook for the third quarter ended September 30, 2017 and full year ended December 31, 2017. This outlook is based on the market value of assets on June 30, 2017 and is risk-adjusted with respect to contributions from client conversions and synergy revenue related to prior acquisitions.

In Millions Except Adjusted EPS     3Q 2017     FY 2017
GAAP:          
AUM/A revenue $ 103.5 - $ 104.0 -
Subscription and licensing revenue 61.5 - 62.5 -
Professional services and other revenue   5.0     -     5.5 -
Revenues $ 170.0 - $ 172.0 $ 667 - $ 673
 
Cost of revenues $ 54.0 - $ 55.0 -
Net Income - -
 
Diluted shares outstanding

 

46.5

-
Net Income per Diluted Share - -
 
Non-GAAP:
Adjusted Revenues(1) $ 170.0 - $ 172.0 $ 667 - $ 673
Adjusted EBITDA(1) $ 33.0 - $ 34.0 $ 125 - $ 128
Adjusted Net Income per Diluted Share(1)

 

$

0.35

-
 

Included in the full year 2017 adjusted revenue is an expected deferred revenue fair value adjustment of approximately $0.1 million. The Company does not forecast net income and net income per share due to the unpredictable nature of various items adjusted for non-GAAP disclosure purposes, including the periodic GAAP income tax provision.

Conference Call

Envestnet will host a conference call to discuss second quarter 2017 financial results today at 5:00 p.m. ET. The live webcast can be accessed from Envestnet’s investor relations website at http://ir.envestnet.com/. The call can also be accessed live over the phone by dialing (800) 449-5865, or for international callers (719) 325-2356. A replay will be available one hour after the call and can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers; the conference ID is 8728459. The dial-in replay will be available for one week and the webcast replay will be available for one month following the date of the conference call.

About Envestnet

Envestnet, Inc. (NYSE: ENV) is a leading provider of intelligent systems for wealth management and financial wellness. Envestnet's unified technology enhances advisor productivity and strengthens the wealth management process. Envestnet empowers enterprises and advisors to more fully understand their clients and deliver better outcomes.

Envestnet enables financial advisors to better manage client outcomes and strengthen their practices. Institutional-quality research and advanced portfolio solutions are provided through Envestnet | PMC, our Portfolio Management Consultants group. Envestnet | Yodlee is a leading data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services. Envestnet | Tamarac provides leading rebalancing, reporting, and practice management software for advisors. Envestnet | Retirement Solutions provides retirement advisors with an integrated platform that combines leading practice management technology, research and due diligence, data aggregation, compliance tools, fiduciary solutions and intelligent managed account solutions.

More than 57,000 advisors and 2,500 companies including: 16 of the 20 largest U.S. banks, 38 of the 50 largest wealth management and brokerage firms, over 500 of the largest Registered Investment Advisers, and hundreds of Internet services companies, leverage Envestnet technology and services. Envestnet solutions enhance knowledge of the client, accelerate client on-boarding, improve client digital experiences, and help drive better outcomes for enterprises, advisors, and their clients.

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

(1) Non-GAAP Financial Measures

“Adjusted revenues” exclude the effect of purchase accounting on the fair value of acquired deferred revenue. Under United States generally accepted accounting principles (GAAP), we record at fair value the acquired deferred revenue for contracts in effect at the time the entities were acquired. Consequently, revenue related to acquired entities for periods subsequent to the acquisition does not reflect the full amount of revenue that would have been recorded by these entities had they remained stand-alone entities.

“Adjusted EBITDA” represents net income before deferred revenue fair value adjustment, interest income, interest expense, accretion on contingent consideration and purchase liability, income tax provision (benefit), depreciation and amortization, non-cash compensation expense, restructuring charges and transaction costs, severance, fair market value adjustment on contingent consideration, litigation related expense, foreign currency and related hedging activity, non-income tax expense adjustment, loss allocation from equity method investment and loss attributable to non-controlling interest.

“Adjusted net income” represents net income before deferred revenue fair value adjustment, accretion on contingent consideration and purchase liability, non-cash interest expense, non-cash compensation expense, restructuring charges and transaction costs, severance, amortization of acquired intangibles, fair market value adjustment on contingent consideration, litigation related expense, foreign currency and related hedging activity, non-income tax expense adjustment, loss allocation from equity method investment 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.

“Adjusted net income per diluted share” represents adjusted net income divided by the diluted number of weighted-average shares outstanding.

See reconciliation of Non-GAAP Financial Measures on pages 8-10 of this press release. 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 revenues, net income or net income per share determined in accordance with GAAP.

Cautionary Statement Regarding Forward-Looking Statements

The forward-looking statements made in this press release and its attachments concerning, among other things, Envestnet, Inc.’s (the “Company”) expected financial performance and outlook for the third quarter and full year of 2017, its strategic operational plans and growth strategy are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties and the Company’s 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, potential exposure to state and local non-income tax obligations, the Company’s ability to remediate material weaknesses in internal controls over financial reporting and associated costs, difficulty in sustaining rapid revenue growth, which may place significant demands on the Company’s administrative, operational and financial resources, fluctuations in the Company’s revenue, the concentration of nearly all of the Company’s revenues from the delivery of investment solutions and services to clients in the financial services industry, the impact of market and economic conditions on revenues, the Company’s reliance on a limited number of clients for a material portion of its revenue, the renegotiation of fee percentages or termination of the Company’s services by its clients, the Company’s ability to identify potential acquisition candidates, complete acquisitions and successfully integrate acquired companies, potential dilution from issuing equity securities or a weaker balance sheet from using cash or incurring debt to finance acquisitions, the impact of market conditions on the Company’s ability to issue additional debt and equity to fund acquisitions, compliance failures, regulatory or third-party actions against the Company, the failure to protect the Company’s intellectual property rights, the Company’s inability to successfully execute the conversion of its clients’ assets from their technology platform to the Company’s technology platform in a timely and accurate manner, general economic conditions, political and regulatory conditions, the impact of fluctuations in interest rates on the Company’s business, ability to expand our relationships with existing customers, grow the number of customers and derive revenue from new offerings such as our data analytic solutions and market research services and premium FinApps, the results of our investments in research and development, our data center and other infrastructure, our ability to realize operating efficiencies, the advantages of our solutions as compared to those of others, our ability to retain and hire necessary employees and appropriately staff our operations, in particular our India operations, and management’s response to these factors. More information regarding these and other risks, uncertainties and factors is contained in the Company’s filings with the Securities and Exchange Commission (“SEC”) which are available on the SEC’s website at www.sec.gov or the Company’s Investor Relations website at http://ir.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 8, 2017 and, unless required by law, the Company undertakes 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,
2017 2016
Assets
Current assets:
Cash and cash equivalents $ 27,730 $ 52,592
Fees and other receivables, net 49,566 44,268
Prepaid expenses and other current assets   18,938   16,224
Total current assets   96,234   113,084
 
Property and equipment, net 34,787 33,000
Internally developed software, net 18,111 14,860
Intangible assets, net 243,902 265,558
Goodwill 432,850 431,936
Other non-current assets   13,782   13,963
Total assets $ 839,666 $ 872,401
 
Liabilities and Equity
Current liabilities:
Accrued expenses and other liabilities $ 86,230 $ 87,763
Accounts payable 11,542 11,480
Current portion of debt 38,696 37,926
Contingent consideration 1,995 2,286
Deferred revenue   19,055   16,499
Total current liabilities   157,518   155,954
 
Convertible Notes 155,729 152,575
Term Notes 65,350 100,409
Contingent consideration 617 2,582
Deferred revenue 14,865 15,643
Deferred rent and lease incentive 14,398 12,060
Deferred tax liabilities, net 12,094 5,555
Other non-current liabilities   15,027   13,436
Total liabilities   435,598   458,214
 
Redeemable units in ERS 900 900
 
Equity:
Stockholders' equity 402,770 412,889
Non-controlling interest   398   398
Total liabilities and equity $ 839,666 $ 872,401
 
             
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,
  2017     2016     2017     2016  
 
Revenues:
Assets under management or administration $ 98,959 $ 86,056 $ 193,121 $ 168,927
Subscription and licensing 59,802 47,037 117,712 90,657
Professional services and other   8,656     8,615     14,370     13,945  
Total revenues   167,417     141,708     325,203     273,529  
 
Operating expenses:
Cost of revenues 55,735 44,902 104,961 85,060
Compensation and benefits 64,996 57,664 130,528 120,280
General and administration 28,478 28,372 59,025 54,099
Depreciation and amortization   15,465     17,100     31,300     33,180  
Total operating expenses   164,674     148,038     325,814     292,619  
Income (loss) from operations 2,743 (6,330 ) (611 ) (19,090 )
Other expense, net   (4,369 )   (4,831 )   (9,852 )   (8,780 )
Loss before income tax provision (benefit) (1,626 ) (11,161 ) (10,463 ) (27,870 )
Income tax provision (benefit)   4,844     (3,218 )   9,142     (8,934 )
Net loss (6,470 ) (7,943 ) (19,605 ) (18,936 )
Add: Net loss attributable to non-controlling interest   -     -     -     -  
Net loss attributable to Envestnet, Inc. $ (6,470 ) $ (7,943 ) $ (19,605 ) $ (18,936 )
 
Net loss per share attributable to Envestnet, Inc.:
 
Basic $ (0.15 ) $ (0.19 ) $ (0.45 ) $ (0.44 )
Diluted $ (0.15 ) $ (0.19 ) $ (0.45 ) $ (0.44 )
 
Weighted average common shares outstanding:
Basic   43,855,479     42,752,465     43,513,074     42,632,964  
Diluted   43,855,479     42,752,465     43,513,074     42,632,964  
 
       
Envestnet, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
Six Months Ended
June 30,
  2017     2016  
OPERATING ACTIVITIES:
Net loss $ (19,605 ) $ (18,936 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 31,300 33,180
Deferred rent and lease incentive 583 (325 )
Provision for doubtful accounts 341 106
Deferred income taxes 6,524 3,504
Stock-based compensation expense 15,403 18,318
Non-cash interest expense 4,853 4,031
Accretion on contingent consideration and purchase liability 304 120
Fair market value adjustment on contingent consideration - 489
Loss on disposal of fixed assets 69 220
Loss allocation from equity method investment 702 -
Changes in operating assets and liabilities, net of acquisitions:
Fees and other receivables (5,639 ) 4,242
Prepaid expenses and other current assets (2,681 ) (17,116 )
Other non-current assets (514 ) (2,320 )
Accrued expenses and other liabilities (752 ) (4,967 )
Accounts payable (184 ) 2,597
Deferred revenue 1,818 1,447
Other non-current liabilities   3,022     1,535  
Net cash provided by operating activities   35,544     26,125  
 
INVESTING ACTIVITIES:
Purchase of property and equipment (9,181 ) (4,632 )
Capitalization of internally developed software (5,651 ) (3,245 )
Purchase of ERS units - (1,500 )
Acquisition of businesses, net of cash acquired   -     (18,394 )
Net cash used in investing activities   (14,832 )   (27,771 )
 
FINANCING ACTIVITIES:
Proceeds from borrowings on revolving credit facility 25,000 15,000
Payments on revolving credit facility (25,000 ) (15,000 )
Payments of contingent consideration (2,286 ) -
Payments of definite consideration (445 ) -
Payments of purchase consideration liabilities (235 ) -
Payment of Term Notes (35,862 ) (4,000 )
Proceeds from exercise of stock options 2,617 2,279
Purchase of treasury stock for stock-based tax withholdings (9,650 ) (9,834 )
Issuance of restricted stock   4     5  
Net cash used in financing activities   (45,857 )   (11,550 )
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH 283 -
 
DECREASE IN CASH AND CASH EQUIVALENTS   (24,862 )   (13,196 )
 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 52,592 51,718
   
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 27,730   $ 38,522  
 
               
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,
  2017     2016     2017     2016  
 
Revenues $ 167,417 $ 141,708 $ 325,203 $ 273,529
Deferred revenue fair value adjustment   52     240     105     450  
Adjusted revenues $ 167,469   $ 141,948   $ 325,308   $ 273,979  
 
Net loss $ (6,470 ) $ (7,943 ) $ (19,605 ) $ (18,936 )
Add (deduct):
Deferred revenue fair value adjustment 52 240 105 450
Interest income (29 ) (9 ) (50 ) (22 )
Interest expense 3,877 4,131 8,813 8,223
Accretion on contingent consideration and purchase liability 148 58 304 120
Income tax provision (benefit) 4,844 (3,218 ) 9,142 (8,934 )
Depreciation and amortization 15,465 17,100 31,300 33,180
Non-cash compensation expense 7,945 6,703 15,403 18,194
Restructuring charges and transaction costs 2,249 1,157 5,627 3,486
Severance 338 1,419 663 2,046
Fair market value adjustment on contingent consideration - 439 - 489
Litigation related expense 52 1,469 1,033 1,968
Foreign currency and related hedging activity 122 (127 ) 412 (289 )
Non-income tax expense adjustment 414 - 1,163 -
Loss allocation from equity method investment 417 837 702 880
Loss attributable to non-controlling interest   101     48     351     642  
Adjusted EBITDA $ 29,525   $ 22,304   $ 55,363   $ 41,497  
 
Net loss $ (6,470 ) $ (7,943 ) $ (19,605 ) $ (18,936 )
Income tax provision (benefit) (1)   4,844     (3,218 )   9,142     (8,934 )
Loss before income tax provision $ (1,626 ) $ (11,161 ) $ (10,463 ) $ (27,870 )
Add (deduct):
Deferred revenue fair value adjustment 52 240 105 450
Accretion on contingent consideration and purchase liability 148 58 304 120
Non-cash interest expense 1,331 2,018 4,853 4,031
Non-cash compensation expense 7,945 6,703 15,403 18,194
Restructuring charges and transaction costs 2,249 1,157 5,627 3,486
Severance 338 1,419 663 2,046
Amortization of acquired intangibles 10,371 12,195 20,956 24,121
Fair market value adjustment on contingent consideration - 439 - 489
Litigation related expense 52 1,469 1,033 1,968
Foreign currency and related hedging activity 122 (127 ) 412 (289 )
Non-income tax expense adjustment 414 - 1,163 -
Loss allocation from equity method investment 417 837 702 880
Loss attributable to non-controlling interest   101     48     351     642  
Adjusted net income before income tax effect 21,914 15,295 41,109 28,268
Income tax effect (2)   (8,766 )   (6,118 )   (16,444 )   (11,307 )
Adjusted net income $ 13,148   $ 9,177   $ 24,665   $ 16,961  
 
Basic number of weighted-average shares outstanding 43,855,479 42,752,465 43,513,074 42,632,964
Effect of dilutive shares:
Options to purchase common stock 1,597,746 1,307,547 1,670,493 1,269,085
Unvested restricted stock units   473,892     169,824     551,227     104,637  
Diluted number of weighted-average shares outstanding   45,927,117     44,229,836     45,734,794     44,006,686  
 
Adjusted net income per share - diluted $ 0.29   $ 0.21   $ 0.54   $ 0.39  

(1) For the three months ended June 30, 2017 and 2016, the effective tax rate computed in accordance with US GAAP equaled (297.9%) and 28.8%, respectively. For the six months ended June 30, 2017 and 2016, the effective tax rate computed in accordance with US GAAP equaled (87.4%) and 32.1%, respectively.

 
(2) An estimated normalized effective tax rate of 40% has been used to compute adjusted net income.
 
               
Envestnet, Inc.
Reconciliation of Non-GAAP Financial Measures
Segment Information
(in thousands)
(unaudited)
 
Three Months Ended June 30, 2017
Envestnet Envestnet | Yodlee Nonsegment Total
 
Revenues $ 129,372 $ 38,045 $ - $ 167,417
Deferred revenue fair value adjustment   7   45     -     52  
Adjusted revenues $ 129,379 $ 38,090   $ -   $ 167,469  
 
Income (loss) from operations $ 15,811 $ (5,635 ) $ (7,433 ) $ 2,743
Add (deduct):
Deferred revenue fair value adjustment 7 45 - 52
Accretion on contingent consideration and purchase liability 148 - - 148
Depreciation and amortization 6,361 9,104 - 15,465
Non-cash compensation expense 4,218 2,721 1,006 7,945
Restructuring charges and transaction costs 600 - 1,649 2,249
Non-income tax expense adjustment 414 - - 414
Severance 307 15 16 338
Fair market value adjustment on contingent consideration - - - -
Litigation related expense - 52 - 52
Other loss - - 18 18
Loss attributable to non-controlling interest   101   -     -     101  
Adjusted EBITDA $ 27,967 $ 6,302   $ (4,744 ) $ 29,525  
 
 
Three Months Ended June 30, 2016
Envestnet Envestnet | Yodlee Nonsegment Total
 
Revenues $ 110,716 $ 30,992 $ - $ 141,708
Deferred revenue fair value adjustment   17   223     -     240  
Adjusted revenues $ 110,733 $ 31,215   $ -   $ 141,948  
 
Income (loss) from operations $ 10,490 $ (11,271 ) $ (5,549 ) $ (6,330 )
Add (deduct):
Deferred revenue fair value adjustment 17 223 - 240
Accretion on contingent consideration and purchase liability 58 - - 58
Depreciation and amortization 6,360 10,740 - 17,100
Non-cash compensation expense 2,371 3,225 1,107 6,703
Restructuring charges and transaction costs 240 27 890 1,157
Severance 1,029 370 20 1,419
Fair market value adjustment on contingent consideration - - 439 439
Litigation related expense - 1,239 230 1,469
Other loss - - 1 1
Loss attributable to non-controlling interest   48   -     -     48  
Adjusted EBITDA $ 20,613 $ 4,553   $ (2,862 ) $ 22,304  
 
   

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information

(in thousands)

(unaudited)

 
Six Months Ended June 30, 2017
Envestnet     Envestnet | Yodlee     Nonsegment     Total
 
Revenues $ 250,690 $ 74,513 $ - $ 325,203
Deferred revenue fair value adjustment   36   69     -     105  
Adjusted revenues $ 250,726 $ 74,582   $ -   $ 325,308  
 
Income (loss) from operations $ 29,322 $ (13,343 ) $ (16,590 ) $ (611 )
Add (deduct):
Deferred revenue fair value adjustment 36 69 - 105
Accretion on contingent consideration and purchase liability 304 - - 304
Depreciation and amortization 12,782 18,518 - 31,300
Non-cash compensation expense 7,892 5,462 2,049 15,403
Restructuring charges and transaction costs 695 - 4,932 5,627
Non-income tax expense adjustment 1,163 - - 1,163
Severance 423 224 16 663
Fair market value adjustment on contingent consideration - - - -
Litigation related expense - 1,033 - 1,033
Other loss - - 25 25
Loss attributable to non-controlling interest   351   -     -     351  
Adjusted EBITDA $ 52,968 $ 11,963   $ (9,568 ) $ 55,363  
 
 
Six Months Ended June 30, 2016
Envestnet Envestnet | Yodlee Nonsegment Total
 
Revenues $ 213,906 $ 59,623 $ - $ 273,529
Deferred revenue fair value adjustment   6   444     -     450  
Adjusted revenues $ 213,912 $ 60,067   $ -   $ 273,979  
 
Income (loss) from operations $ 20,064 $ (25,312 ) $ (13,842 ) $ (19,090 )
Add (deduct):
Deferred revenue fair value adjustment 6 444 - 450
Accretion on contingent consideration and purchase liability 120 - - 120
Depreciation and amortization 12,424 20,756 - 33,180
Non-cash compensation expense 5,586 9,250 3,358 18,194
Restructuring charges and transaction costs 327 31 3,128 3,486
Severance 1,029 679 338 2,046
Fair market value adjustment on contingent consideration - - 489 489
Litigation related expense - 1,738 230 1,968
Other loss - - 12 12
Loss attributable to non-controlling interest   642   -     -     642  
Adjusted EBITDA $ 40,198 $ 7,586   $ (6,287 ) $ 41,497  
 
           
Envestnet, Inc.
Historical Assets, Accounts and Advisors
(in millions, except accounts and advisors)
(unaudited)
 
As of
June 30, September 30, December 31, March 31, June 30,
2016   2016   2016   2017   2017
 
Platform Assets
Assets Under Management (AUM) $ 96,700 $ 101,924 $ 105,178 $ 113,544 $ 122,543
Assets Under Administration (AUA)   220,690       231,831       241,682       248,445       271,450
Subtotal AUM/A 317,390 333,755 346,860 361,989 393,993
Licensing   685,952       721,690       748,125       763,372       825,829
Total Platform Assets $ 1,003,342     $ 1,055,445     $ 1,094,985     $ 1,125,361     $ 1,219,822
 
Platform Accounts
AUM 503,147 519,717 545,130 574,132 614,973
AUA   935,870       961,590       994,583       986,554       1,083,417
Subtotal AUM/A 1,439,017 1,481,307 1,539,713 1,560,686 1,698,390
Licensing   4,304,645       4,394,670       4,558,883       4,263,002       4,811,390
Total Platform Accounts   5,743,662       5,875,977       6,098,596       5,823,688       6,509,780
 
Advisors
AUM/A 35,067 35,861 36,483 36,985 38,498
Licensing   16,081       16,191       17,852       18,159       19,007
Total Advisors   51,148       52,052       54,335       55,144       57,505
 

The following tables summarize the changes in AUM and AUA for the three months ended June 30, 2017:

          Gross   Redemp-  

Net

  Market  
In Millions Except Accounts     3/31/2017 Sales tions

Flows

Impact   6/30/2017
 
Assets under Management (AUM) $ 113,544 $ 13,690 $ (7,222 ) $ 6,468 $ 2,531 $ 122,543
Assets under Administration (AUA)   248,445   30,282   (12,667 )   17,615   5,390   271,450
Total AUM/A $ 361,989 $ 43,972 $ (19,889 ) $ 24,083 $ 7,921 $ 393,993
 
Fee-Based Accounts 1,560,686 137,704 1,698,390
 

The above AUM/A gross sales figures include $10.9 billion in new client conversions. The Company onboarded an additional $8.9 billion in licensing conversions during the second quarter, bringing total conversions for the quarter to $19.8 billion.

Contacts

Envestnet, Inc.
Investor Relations
312-827-3940
investor.relations@envestnet.com
or
Media Relations
mediarelations@envestnet.com

Contacts

Envestnet, Inc.
Investor Relations
312-827-3940
investor.relations@envestnet.com
or
Media Relations
mediarelations@envestnet.com