Envestnet Reports Fourth Quarter 2023 Financial Results

BERWYN, Pa.--()--Envestnet (NYSE: ENV), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for the quarter and year ended December 31, 2023.

 

 

Three Months Ended

 

 

 

Year Ended

 

 

Key Financial Metrics

 

December 31,

 

%

 

December 31,

 

%

(in millions, except per share data) (unaudited)

 

 

2023

 

 

 

2022

 

 

Change

 

 

2023

 

 

 

2022

 

 

Change

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

317.6

 

 

$

292.9

 

 

8%

 

$

1,245.6

 

 

$

1,239.8

 

 

—%

Net loss attributable to Envestnet, Inc.

 

$

(183.2

)

 

$

(36.5

)

 

*

 

$

(238.7

)

 

$

(80.9

)

 

*

Net loss attributable to Envestnet, Inc., per diluted share

 

$

(3.35

)

 

$

(0.85

)

 

*

 

$

(4.38

)

 

$

(1.59

)

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenue(1)

 

$

317.6

 

 

$

292.9

 

 

8%

 

$

1,245.7

 

 

$

1,240.0

 

 

—%

Adjusted EBITDA(1)

 

$

75.5

 

 

$

52.4

 

 

44%

 

$

250.9

 

 

$

215.4

 

 

16%

Adjusted net income(1)

 

$

43.0

 

 

$

29.9

 

 

44%

 

$

140.2

 

 

$

122.5

 

 

14%

Adjusted net income per diluted share(1)

 

$

0.65

 

 

$

0.45

 

 

44%

 

$

2.12

 

 

$

1.86

 

 

14%

__________________________________________________________

*Not meaningful

For 25 years it has been a privilege to be a part of and lead the amazing journey that is Envestnet — how foundational it is to the industry, our clients and the advisors who grow, serve and enrich the lives of millions of families,” said Bill Crager, Chief Executive Officer.

The foundation of the business is strong and Envestnet has the right strategy and people to continue delivering for clients and the industry.”

Financial Results for the Fourth Quarter 2023 Compared to the Fourth Quarter 2022:

Total revenue increased 8% to $317.6 million for the fourth quarter of 2023 from $292.9 million for the fourth quarter of 2022. Asset-based recurring revenue increased 13% and represented 59% of total revenue for the fourth quarter of 2023, compared to 57% of total revenue for the fourth quarter of 2022. Subscription-based recurring revenue decreased 3% and represented 37% of total revenue for the fourth quarter of 2023, compared to 41% of total revenue for the fourth quarter of 2022. Professional services and other non-recurring revenue increased 115% for the fourth quarter of 2023 from the fourth quarter of 2022.

Total operating expenses increased 55% to $496.3 million for the fourth quarter of 2023 from $319.4 million for the fourth quarter of 2022. Direct expense increased 11% to $118.7 million for the fourth quarter of 2023 from $107.2 million for the fourth quarter of 2022. Employee compensation decreased 17% to $100.2 million for the fourth quarter of 2023 from $121.3 million for the fourth quarter of 2022. Employee compensation was 32% of total revenue for the fourth quarter of 2023, compared to 41% of total revenue for the fourth quarter of 2022. General and administrative expense decreased 13% to $51.3 million for the fourth quarter of 2023 from $59.0 million for the fourth quarter of 2022. General and administrative expense was 16% of total revenue for the fourth quarter of 2023, compared to 20% of total revenue for the fourth quarter of 2022. A goodwill impairment charge of $191.8 million was recognized for the fourth quarter of 2023.

Loss from operations was $178.7 million for the fourth quarter of 2023 compared to $26.5 million for the fourth quarter of 2022. Net loss attributable to Envestnet, Inc. was $183.2 million, or $3.35 per diluted share, for the fourth quarter of 2023 compared to $36.5 million, or $0.85 per diluted share, for the fourth quarter of 2022.

Adjusted revenue(1) increased 8% to $317.6 million for the fourth quarter of 2023 from $292.9 million for the fourth quarter of 2022. Adjusted EBITDA(1) increased 44% to $75.5 million for the fourth quarter of 2023 from $52.4 million for the fourth quarter of 2022. Adjusted net income(1) increased 44% to $43.0 million, or $0.65 per diluted share, for the fourth quarter of 2023 from $29.9 million, or $0.45 per diluted share, for the fourth quarter of 2022.

Financial Results for the Full Year 2023 Compared to the Full Year 2022:

Total revenue remained consistent at $1.2 billion for the years ended December 31, 2023 and 2022. Asset-based recurring revenue increased 1% and represented 60% of total revenue for the years ended December 31, 2023 and 2022. Subscription-based recurring revenue decreased 3% and represented 37% of total revenue for the year ended December 31, 2023 compared to 39% of total revenue for the year ended December 31, 2022. Professional services and other non-recurring revenue increased 50% for the year ended December 31, 2023 from the year ended December 31, 2022.

Total operating expenses increased 11% to $1.5 billion for the year ended December 31, 2023 from $1.3 billion for the year ended December 31, 2022. Direct expense increased 1% to $473.0 million for the year ended December 31, 2023 from $470.4 million for the year ended December 31, 2022. Employee compensation decreased 9% to $444.8 million for the year ended December 31, 2023 from $490.7 million for the year ended December 31, 2022. Employee compensation was 36% of total revenue for the year ended December 31, 2023, compared to 40% of total revenue for the year ended December 31, 2022. General and administrative expense decreased 4% to $210.1 million for the year ended December 31, 2023 from $218.8 million for the year ended December 31, 2022. General and administrative expense was 17% of total revenue for the year ended December 31, 2023, compared to 18% for the year ended December 31, 2022. A goodwill impairment charge of $191.8 million was recognized for the year ended December 31, 2023.

Loss from operations was $204.5 million for the year ended December 31, 2023 compared to $66.0 million for the year ended December 31, 2022. Net loss attributable to Envestnet, Inc. was $238.7 million, or $4.38 per diluted share, for the year ended December 31, 2023 compared to $80.9 million, or $1.59 per diluted share, for the year ended December 31, 2022.

Adjusted revenue(1) remained consistent at $1.2 billion for the years ended December 31, 2023 and 2022. Adjusted EBITDA(1) increased 16% to $250.9 million for the year ended December 31, 2023 from $215.4 million for the year ended December 31, 2022. Adjusted net income(1) increased 14% to $140.2 million, or $2.12 per diluted share, for the year ended December 31, 2023 from $122.5 million, or $1.86 per diluted share, for the year ended December 31, 2022.

Balance Sheet and Liquidity

As of December 31, 2023, Envestnet had $91.4 million in cash and cash equivalents and $892.5 million in outstanding debt. Debt as of December 31, 2023 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 December 31, 2023.

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. As a result, the advisor-focused Wealth Analytics business has been reclassified from the Envestnet Data & Analytics segment to the Envestnet Wealth Solutions segment. The segment change does not impact nonsegment results or the Company's consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows. All segment information presented within this Exhibit 99.1 for the quarter and full year ended December 31, 2023 is presented in conjunction with the current organizational structure, with prior periods adjusted accordingly.

Correction of Immaterial Error

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 consolidated balance sheets should have been recognized as a prepayment included within prepaid expenses and other current assets and other assets in the 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 Exhibit 99.1.

Outlook

Envestnet provided the following outlook for the first quarter ending March 31, 2024. This outlook is based on the market value of assets under management or administration on December 31, 2023. We caution that we cannot predict the market value of these assets on any future date. See “Cautionary Statement Regarding Forward-Looking Statements.”

In Millions Except Adjusted EPS

 

1Q 2024

GAAP:

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

Asset-based

 

$

200.0

 

-

 

$

203.0

Subscription-based

 

 

117.0

 

-

 

 

119.0

Total recurring revenue

 

 

317.0

 

-

 

 

322.0

Professional services and other revenue

 

 

3.0

 

-

 

 

4.0

Total revenue

 

$

320.0

 

-

 

$

326.0

 

 

 

 

 

 

 

Asset-based direct expense

 

$

117.5

 

-

 

$

119.0

Total direct expense

 

$

125.5

 

-

 

$

127.0

 

 

 

 

 

 

 

Net income (loss)

 

 

 

(a)

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

 

 

66.3

 

Net income (loss) per diluted share

 

 

 

(a)

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

64.0

 

-

 

$

69.0

Adjusted net income per diluted share(1)

 

$

0.52

 

-

 

$

0.57

__________________________________________________________
(a) Envestnet does not forecast net income (loss) and net income (loss) per diluted 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 fourth quarter and full year 2023 financial results today 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 108,000 advisors, 16 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 www.envestnet.com and follow us on Twitter @ENVintel.

(1) Non-GAAP Financial Measures

“Adjusted revenue” excludes the effect of purchase accounting on the fair value of acquired deferred revenue. On January 1, 2022, the Company adopted ASU 2021-08 whereby it now accounts for contract assets and contract liabilities obtained upon a business combination in accordance with ASC 606. Prior to the adoption of ASU 2021-08, we recorded 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 did not reflect the full amount of revenue that would have been recorded by these entities had they remained stand-alone entities. Adjusted revenue has limitations as a financial measure, should be considered as supplemental in nature and is not meant as a substitute for revenue prepared in accordance with GAAP.

“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, non-cash compensation expense, restructuring charges and transaction costs, severance expense, fair market value adjustment on investment in private company, litigation, regulatory and other governance related expenses, foreign currency, non-income tax expense adjustment, dilution gain on equity method investee share issuance, loss allocations from equity method investments and (income) loss attributable to non-controlling interest.

“Adjusted net income” represents net income (loss) before income tax provision (benefit), deferred revenue fair value adjustment, non-cash interest expense, cash interest on our Convertible Notes, goodwill impairment, non-cash compensation expense, restructuring charges and transaction costs, severance expense, amortization of acquired intangibles, fair market value adjustment to investment in private company, litigation, regulatory and other governance related expenses, foreign currency, non-income tax expense adjustment, dilution gain on equity method investee share issuance, loss allocations from equity method investments and (income) 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.

For further information see reconciliations of Non-GAAP Financial Measures on pages 11-16 of this press release, and the section entitled "Non-GAAP Financial Measures" in the most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) which are available on the SEC’s website at 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) or net income (loss) 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 expected financial performance and outlook for the first quarter and full year of 2024, 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. 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, our ability to recruit and retain senior executive leadership and other key employees and to successfully manage transitions, including the transition of our chief executive officer; 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; 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 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 February 22, 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.

Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

 

December 31,

 

 

2023

 

2022

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

91,378

 

$

162,173

Fees receivable, net

 

 

120,958

 

 

101,696

Prepaid expenses and other current assets

 

 

51,472

 

 

47,422

Total current assets

 

 

263,808

 

 

311,291

Property and equipment, net

 

 

48,223

 

 

48,481

Internally developed software, net

 

 

224,713

 

 

184,558

Intangible assets, net

 

 

338,068

 

 

379,995

Goodwill

 

 

806,563

 

 

998,414

Operating lease right-of-use assets, net

 

 

69,154

 

 

81,596

Other assets

 

 

126,723

 

 

107,830

Total assets

 

$

1,877,252

 

$

2,112,165

 

 

 

 

 

Liabilities and equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable, accrued expenses and other current liabilities

 

$

241,424

 

$

233,866

Operating lease liabilities

 

 

12,909

 

 

11,949

Deferred revenue

 

 

38,201

 

 

36,363

Current portion of debt

 

 

 

 

44,886

Total current liabilities

 

 

292,534

 

 

327,064

Debt

 

 

876,612

 

 

871,769

Operating lease liabilities, net of current portion

 

 

100,830

 

 

110,652

Deferred tax liabilities, net

 

 

16,568

 

 

16,196

Other liabilities

 

 

16,202

 

 

18,880

Total liabilities

 

 

1,302,746

 

 

1,344,561

 

 

 

 

 

Equity:

 

 

 

 

Total stockholders’ equity, attributable to Envestnet, Inc.

 

 

568,191

 

 

754,567

Non-controlling interest

 

 

6,315

 

 

13,037

Total liabilities and equity

 

$

1,877,252

 

$

2,112,165

Envestnet, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share information)

(unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

188,643

 

 

$

166,408

 

 

$

745,238

 

 

$

738,228

 

Subscription-based

 

 

117,753

 

 

 

121,243

 

 

 

464,730

 

 

 

477,844

 

Total recurring revenue

 

 

306,396

 

 

 

287,651

 

 

 

1,209,968

 

 

 

1,216,072

 

Professional services and other revenue

 

 

11,236

 

 

 

5,223

 

 

 

35,652

 

 

 

23,712

 

Total revenue

 

 

317,632

 

 

 

292,874

 

 

 

1,245,620

 

 

 

1,239,784

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense

 

 

118,729

 

 

 

107,179

 

 

 

473,038

 

 

 

470,424

 

Employee compensation

 

 

100,182

 

 

 

121,272

 

 

 

444,828

 

 

 

490,725

 

General and administrative

 

 

51,297

 

 

 

59,048

 

 

 

210,113

 

 

 

218,831

 

Depreciation and amortization

 

 

34,319

 

 

 

31,909

 

 

 

130,304

 

 

 

125,828

 

Goodwill impairment

 

 

191,818

 

 

 

 

 

 

191,818

 

 

 

 

Total operating expenses

 

 

496,345

 

 

 

319,408

 

 

 

1,450,101

 

 

 

1,305,808

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(178,713

)

 

 

(26,534

)

 

 

(204,481

)

 

 

(66,024

)

Other income (expense), net

 

 

(8,810

)

 

 

(2,704

)

 

 

(28,516

)

 

 

(12,395

)

Loss before income tax provision (benefit)

 

 

(187,523

)

 

 

(29,238

)

 

 

(232,997

)

 

 

(78,419

)

 

 

 

 

 

 

 

 

 

Income tax provision (benefit)

 

 

(2,586

)

 

 

8,603

 

 

 

12,777

 

 

 

7,061

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(184,937

)

 

 

(37,841

)

 

 

(245,774

)

 

 

(85,480

)

Add: Net loss attributable to non-controlling interest

 

 

1,766

 

 

 

1,336

 

 

 

7,050

 

 

 

4,541

 

Net loss attributable to Envestnet, Inc.

 

$

(183,171

)

 

$

(36,505

)

 

$

(238,724

)

 

$

(80,939

)

 

 

 

 

 

 

 

 

 

Net loss attributable to Envestnet, Inc., per share:

 

 

 

 

 

 

 

 

Basic

 

$

(3.35

)

 

$

(0.66

)

 

$

(4.38

)

 

$

(1.47

)

Diluted

 

$

(3.35

)

 

$

(0.85

)

 

$

(4.38

)

 

$

(1.59

)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

54,689,559

 

 

 

55,119,075

 

 

 

54,457,365

 

 

 

55,199,482

 

Diluted

 

 

54,689,559

 

 

 

56,076,261

 

 

 

54,457,365

 

 

 

56,842,125

 

Envestnet, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Year Ended December 31,

 

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(245,774

)

 

$

(85,480

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

130,304

 

 

 

125,828

 

Deferred income taxes

 

 

(1,479

)

 

 

(3,490

)

Goodwill impairment

 

 

191,818

 

 

 

 

Non-cash compensation expense

 

 

71,031

 

 

 

80,333

 

Non-cash interest expense

 

 

5,037

 

 

 

7,445

 

Fair market value adjustment to investment in private company

 

 

(804

)

 

 

(400

)

Dilution gain on equity method investee share issuance

 

 

(546

)

 

 

(9,517

)

Loss allocations from equity method investments

 

 

10,579

 

 

 

8,874

 

Lease related impairments

 

 

5,120

 

 

 

15,750

 

Loss on extinguishment of Convertible Notes due 2023

 

 

 

 

 

13,421

 

Gain on extinguishment of Convertible Notes due 2025

 

 

 

 

 

(15,089

)

Loss on property and equipment disposals

 

 

 

 

 

5,097

 

Other

 

 

1,781

 

 

 

1,266

 

Changes in operating assets and liabilities:

 

 

 

 

Fees receivable, net

 

 

(20,584

)

 

 

(5,031

)

Prepaid expenses and other assets

 

 

(11,573

)

 

 

(16,090

)

Accounts payable, accrued expenses and other liabilities

 

 

19,229

 

 

 

(24,257

)

Deferred revenue

 

 

729

 

 

 

(305

)

Net cash provided by operating activities

 

 

154,868

 

 

 

98,355

 

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

 

(18,995

)

 

 

(16,172

)

Capitalization of internally developed software

 

 

(94,307

)

 

 

(89,153

)

Acquisitions of businesses, net of cash acquired

 

 

 

 

 

(104,100

)

Investments in private companies

 

 

(4,175

)

 

 

(16,351

)

Acquisition of proprietary technology

 

 

(17,000

)

 

 

(19,000

)

Issuance of loan receivable to private company

 

 

(20,000

)

 

 

 

Issuance of note receivable to equity method investees

 

 

 

 

 

(6,350

)

Other

 

 

414

 

 

 

 

Net cash used in investing activities

 

 

(154,063

)

 

 

(251,126

)

Envestnet, Inc.

Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)

 

 

 

Year Ended December 31,

 

 

 

2023

 

 

 

2022

 

Cash flows from financing activities:

 

 

 

 

Proceeds from borrowings on Revolving Credit Facility

 

 

55,000

 

 

 

 

Payments related to Revolving Credit Facility

 

 

(55,000

)

 

 

 

Settlement of Convertible Notes due 2023

 

 

(45,000

)

 

 

 

Proceeds from issuance of Convertible Notes due 2027

 

 

 

 

 

575,000

 

Convertible Notes due 2027 issuance costs

 

 

 

 

 

(16,323

)

Repurchase of Convertible Notes due 2023

 

 

 

 

 

(312,422

)

Repurchase of Convertible Notes due 2025

 

 

 

 

 

(181,772

)

Payments related to Capped Call Transactions

 

 

 

 

 

(79,585

)

Proceeds from exercise of stock options

 

 

1,608

 

 

 

2,620

 

Payments related to tax withholdings for stock-based compensation

 

 

(19,022

)

 

 

(23,516

)

Payments related to share repurchases

 

 

(9,289

)

 

 

(85,750

)

Purchase of non-controlling units from third-party shareholders

 

 

(1,008

)

 

 

 

Proceeds from capital contributions of non-controlling shareholders

 

 

 

 

 

16,037

 

Payments of contingent consideration

 

 

 

 

 

(743

)

Other

 

 

5

 

 

 

(1,866

)

Net cash used in financing activities

 

 

(72,706

)

 

 

(108,320

)

Effect of exchange rate on changes on cash, cash equivalents and restricted cash

 

 

1,106

 

 

 

(6,164

)

Net change in cash, cash equivalents and restricted cash

 

 

(70,795

)

 

 

(267,255

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

162,173

 

 

 

429,428

 

Cash, cash equivalents and restricted cash, end of period

 

$

91,378

 

 

$

162,173

 

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Total revenue

 

$

317,632

 

 

$

292,874

 

 

$

1,245,620

 

 

$

1,239,784

 

Deferred revenue fair value adjustment (a)

 

 

 

 

 

54

 

 

 

69

 

 

 

216

 

Adjusted revenue

 

$

317,632

 

 

$

292,928

 

 

$

1,245,689

 

 

$

1,240,000

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(184,937

)

 

$

(37,841

)

 

$

(245,774

)

 

$

(85,480

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

 

 

 

54

 

 

 

69

 

 

 

216

 

Interest income (b)

 

 

(1,721

)

 

 

(1,911

)

 

 

(6,288

)

 

 

(4,184

)

Interest expense (b)

 

 

6,085

 

 

 

3,536

 

 

 

25,138

 

 

 

16,843

 

Income tax provision (benefit)

 

 

(2,586

)

 

 

8,603

 

 

 

12,777

 

 

 

7,061

 

Depreciation and amortization

 

 

34,319

 

 

 

31,909

 

 

 

130,304

 

 

 

125,828

 

Goodwill impairment

 

 

191,818

 

 

 

 

 

 

191,818

 

 

 

 

Non-cash compensation expense (d)

 

 

12,890

 

 

 

17,750

 

 

 

71,031

 

 

 

80,333

 

Restructuring charges and transaction costs (e)

 

 

3,897

 

 

 

7,874

 

 

 

16,263

 

 

 

35,141

 

Severance expense (d)

 

 

9,495

 

 

 

18,738

 

 

 

35,399

 

 

 

30,117

 

Litigation, regulatory and other governance related expenses (c)

 

 

1,159

 

 

 

722

 

 

 

6,982

 

 

 

6,055

 

Foreign currency (b)

 

 

107

 

 

 

806

 

 

 

437

 

 

 

1,419

 

Non-income tax expense adjustment (c)

 

 

(168

)

 

 

914

 

 

 

(392

)

 

 

802

 

Fair market value adjustment to investment in private company (b)

 

 

2,000

 

 

 

(400

)

 

 

(804

)

 

 

(400

)

Dilution gain on equity method investee share issuance (b)

 

 

 

 

 

(2,583

)

 

 

(546

)

 

 

(9,517

)

Loss allocations from equity method investments (b)

 

 

2,339

 

 

 

3,542

 

 

 

10,579

 

 

 

8,874

 

Loss attributable to non-controlling interest

 

 

838

 

 

 

663

 

 

 

3,920

 

 

 

2,300

 

Adjusted EBITDA

 

$

75,535

 

 

$

52,376

 

 

$

250,913

 

 

$

215,408

 

__________________________________________________________

(a)

Included within subscription-based revenue in the consolidated statements of operations.

(b)

Included within other income (expense), net in the consolidated statements of operations.

(c)

Included within general and administrative expense in the consolidated statements of operations.

(d)

Included within employee compensation in the consolidated statements of operations.

(e)

For the three months ended December 31, 2023 and 2022, $3.3 million and $7.9 million, respectively, were included within general and administrative expense in the consolidated statements of operations. For the three months ended December 31, 2023 and 2022, $0.6 million and $0.0 million, respectively, were included within employee compensation in the consolidated statements of operations. For the years ended December 31, 2023 and 2022, $13.5 million and $35.1 million, respectively, were included within general and administrative expense in the consolidated statements of operations. For the years ended December 31, 2023 and 2022, $2.8 million and $0.0 million, respectively, were included within employee compensation in the consolidated statements of operations.

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures (continued)

(in thousands, except share and per share information)

(unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net loss

 

$

(184,937

)

 

$

(37,841

)

 

$

(245,774

)

 

$

(85,480

)

Income tax provision (benefit) (a)

 

 

(2,586

)

 

 

8,603

 

 

 

12,777

 

 

 

7,061

 

Loss before income tax provision (benefit)

 

 

(187,523

)

 

 

(29,238

)

 

 

(232,997

)

 

 

(78,419

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (b)

 

 

 

 

 

54

 

 

 

69

 

 

 

216

 

Non-cash interest expense (c)

 

 

1,397

 

 

 

(239

)

 

 

5,655

 

 

 

4,678

 

Cash interest - Convertible Notes (c)

 

 

4,369

 

 

 

3,458

 

 

 

17,845

 

 

 

10,897

 

Amortization of acquired intangibles (g)

 

 

15,143

 

 

 

18,087

 

 

 

62,927

 

 

 

71,901

 

Goodwill impairment

 

 

191,818

 

 

 

 

 

 

191,818

 

 

 

 

Non-cash compensation expense (f)

 

 

12,890

 

 

 

17,750

 

 

 

71,031

 

 

 

80,333

 

Restructuring charges and transaction costs (e)

 

 

3,897

 

 

 

7,874

 

 

 

16,263

 

 

 

35,141

 

Severance expense (f)

 

 

9,495

 

 

 

18,738

 

 

 

35,399

 

 

 

30,117

 

Litigation, regulatory and other governance related expenses (d)

 

 

1,159

 

 

 

722

 

 

 

6,982

 

 

 

6,055

 

Foreign currency (c)

 

 

107

 

 

 

806

 

 

 

437

 

 

 

1,419

 

Non-income tax expense adjustment (d)

 

 

(168

)

 

 

914

 

 

 

(392

)

 

 

802

 

Fair market value adjustment to investment in private company (c)

 

 

2,000

 

 

 

(400

)

 

 

(804

)

 

 

(400

)

Dilution gain on equity method investee share issuance (c)

 

 

 

 

 

(2,583

)

 

 

(546

)

 

 

(9,517

)

Loss allocations from equity method investments (c)

 

 

2,339

 

 

 

3,542

 

 

 

10,579

 

 

 

8,874

 

Loss attributable to non-controlling interest

 

 

838

 

 

 

663

 

 

 

3,920

 

 

 

2,300

 

Adjusted net income before income tax effect

 

 

57,761

 

 

 

40,148

 

 

 

188,186

 

 

 

164,397

 

Income tax effect (h)

 

 

(14,729

)

 

 

(10,238

)

 

 

(47,987

)

 

 

(41,921

)

Adjusted net income

 

$

43,032

 

 

$

29,910

 

 

$

140,199

 

 

$

122,476

 

 

 

 

 

 

 

 

 

 

Basic number of weighted-average shares outstanding

 

 

54,689,559

 

 

 

55,119,075

 

 

 

54,457,365

 

 

 

55,199,482

 

Effect of dilutive shares:

 

 

 

 

 

 

 

 

Convertible Notes

 

 

10,811,884

 

 

 

10,667,509

 

 

 

11,084,413

 

 

 

10,092,369

 

Non-vested RSUs and PSUs

 

 

252,597

 

 

 

265,187

 

 

 

413,734

 

 

 

390,270

 

Options to purchase common stock

 

 

19,509

 

 

 

70,947

 

 

 

47,388

 

 

 

111,327

 

Diluted number of weighted-average shares outstanding

 

 

65,773,549

 

 

 

66,122,718

 

 

 

66,002,900

 

 

 

65,793,448

 

 

 

 

 

 

 

 

 

 

Adjusted net income per share - diluted

 

$

0.65

 

 

$

0.45

 

 

$

2.12

 

 

$

1.86

 

__________________________________________________________

(a)

For the three months ended December 31, 2023 and 2022, the effective tax rate computed in accordance with GAAP equaled 1.4% and (29.4)%, respectively. For the years ended December 31, 2023 and 2022, the effective tax rate computed in accordance with GAAP equaled (5.5)% and (9.0)%, respectively.

(b)

Included within subscription-based revenue in the consolidated statements of operations.

(c)

Included within other income (expense), net in the consolidated statements of operations.

(d)

Included within general and administrative expense in the consolidated statements of operations.

(e)

For the three months ended December 31, 2023 and 2022, $3.3 million and $7.9 million, respectively, were included within general and administrative expense in the consolidated statements of operations. For the three months ended December 31, 2023 and 2022, $0.6 million and $0.0 million, respectively, were included within employee compensation in the consolidated statements of operations. For the years ended December 31, 2023 and 2022, $13.5 million and $35.1 million, respectively, were included within general and administrative expense in the consolidated statements of operations. For the years ended December 31, 2023 and 2022, $2.8 million and $0.0 million, respectively, were included within employee compensation in the consolidated statements of operations.

(f)

Included within employee compensation in the consolidated statements of operations.

(g)

Included within depreciation and amortization in the consolidated statements of operations.

(h)

An estimated normalized effective tax rate of 25.5% has been used to compute adjusted net income for the three months and years ended December 31, 2023 and 2022.

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information

(in thousands)

(unaudited)

 

 

 

Three Months Ended December 31, 2023

 

 

Envestnet Wealth Solutions

 

Envestnet Data
& Analytics

 

Nonsegment

 

Total

Revenue

 

$

278,988

 

 

$

38,644

 

 

$

 

 

$

317,632

 

Deferred revenue fair value adjustment (a)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenue

 

$

278,988

 

 

$

38,644

 

 

$

 

 

$

317,632

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

188,643

 

 

$

 

 

$

 

 

$

188,643

 

Subscription-based

 

 

84,184

 

 

 

33,569

 

 

 

 

 

 

117,753

 

Total recurring revenue

 

 

272,827

 

 

 

33,569

 

 

 

 

 

 

306,396

 

Professional services and other revenue

 

 

6,161

 

 

 

5,075

 

 

 

 

 

 

11,236

 

Total revenue

 

$

278,988

 

 

$

38,644

 

 

$

 

 

$

317,632

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense:

 

 

 

 

 

 

 

 

Asset-based

 

$

110,030

 

 

$

 

 

$

 

 

$

110,030

 

Subscription-based

 

 

1,367

 

 

 

6,893

 

 

 

 

 

 

8,260

 

Professional services and other

 

 

439

 

 

 

 

 

 

 

 

 

439

 

Total direct expense

 

 

111,836

 

 

 

6,893

 

 

 

 

 

 

118,729

 

Employee compensation

 

 

77,520

 

 

 

9,938

 

 

 

12,724

 

 

 

100,182

 

General and administrative

 

 

29,822

 

 

 

13,641

 

 

 

7,834

 

 

 

51,297

 

Depreciation and amortization

 

 

26,631

 

 

 

7,688

 

 

 

 

 

 

34,319

 

Goodwill impairment

 

 

 

 

 

191,818

 

 

 

 

 

 

191,818

 

Total operating expenses

 

$

245,809

 

 

$

229,978

 

 

$

20,558

 

 

$

496,345

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

33,179

 

 

$

(191,334

)

 

$

(20,558

)

 

$

(178,713

)

Add:

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

26,631

 

 

 

7,688

 

 

 

 

 

 

34,319

 

Goodwill impairment

 

 

 

 

 

191,818

 

 

 

 

 

 

191,818

 

Non-cash compensation expense (c)

 

 

9,763

 

 

 

1,136

 

 

 

1,991

 

 

 

12,890

 

Restructuring charges and transaction costs (d)

 

 

2,883

 

 

 

1

 

 

 

1,013

 

 

 

3,897

 

Severance expense (c)

 

 

6,679

 

 

 

586

 

 

 

2,230

 

 

 

9,495

 

Litigation, regulatory and other governance related expenses (b)

 

 

 

 

 

1,159

 

 

 

 

 

 

1,159

 

Non-income tax expense adjustment (b)

 

 

(167

)

 

 

(1

)

 

 

 

 

 

(168

)

Loss attributable to non-controlling interest

 

 

838

 

 

 

 

 

 

 

 

 

838

 

Adjusted EBITDA

 

$

79,806

 

 

$

11,053

 

 

$

(15,324

)

 

$

75,535

 

__________________________________________________________

(a)

Included within subscription-based revenue in the consolidated statements of operations.

(b)

Included within general and administrative expense in the consolidated statements of operations.

(c)

Included within employee compensation in the consolidated statements of operations.

(d)

For the three months ended December 31, 2023, $3.3 million was included within general and administrative expense and $0.6 million was included within employee compensation in the consolidated statements of operations.

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

 

 

 

Three Months Ended December 31, 2022

 

 

Envestnet Wealth Solutions

 

Envestnet Data & Analytics

 

Nonsegment

 

Total

Revenue

 

$

251,101

 

$

41,773

 

 

$

 

 

$

292,874

 

Deferred revenue fair value adjustment (a)

 

 

54

 

 

 

 

 

 

 

 

54

 

Adjusted revenue

 

$

251,155

 

$

41,773

 

 

$

 

 

$

292,928

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

166,408

 

$

 

 

$

 

 

$

166,408

 

Subscription-based

 

 

81,026

 

 

40,217

 

 

 

 

 

 

121,243

 

Total recurring revenue

 

 

247,434

 

 

40,217

 

 

 

 

 

 

287,651

 

Professional services and other revenue

 

 

3,667

 

 

1,556

 

 

 

 

 

 

5,223

 

Total revenue

 

$

251,101

 

$

41,773

 

 

$

 

 

$

292,874

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense:

 

 

 

 

 

 

 

 

Asset-based

 

$

98,207

 

$

 

 

$

 

 

$

98,207

 

Subscription-based

 

 

1,593

 

 

6,791

 

 

 

 

 

 

8,384

 

Professional services and other

 

 

588

 

 

 

 

 

 

 

 

588

 

Total direct expense

 

 

100,388

 

 

6,791

 

 

 

 

 

 

107,179

 

Employee compensation

 

 

80,796

 

 

27,034

 

 

 

13,442

 

 

 

121,272

 

General and administrative

 

 

37,693

 

 

13,787

 

 

 

7,568

 

 

 

59,048

 

Depreciation and amortization

 

 

25,511

 

 

6,398

 

 

 

 

 

 

31,909

 

Total operating expenses

 

$

244,388

 

$

54,010

 

 

$

21,010

 

 

$

319,408

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

6,713

 

$

(12,237

)

 

$

(21,010

)

 

$

(26,534

)

Add:

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

54

 

 

 

 

 

 

 

 

54

 

Depreciation and amortization

 

 

25,511

 

 

6,398

 

 

 

 

 

 

31,909

 

Non-cash compensation expense (c)

 

 

11,397

 

 

2,118

 

 

 

4,235

 

 

 

17,750

 

Restructuring charges and transaction costs (d)

 

 

4,762

 

 

1,717

 

 

 

1,395

 

 

 

7,874

 

Severance expense (c)

 

 

8,251

 

 

9,330

 

 

 

1,157

 

 

 

18,738

 

Litigation, regulatory and other governance related expenses (b)

 

 

 

 

722

 

 

 

 

 

 

722

 

Non-income tax expense adjustment (b)

 

 

930

 

 

(16

)

 

 

 

 

 

914

 

Loss attributable to non-controlling interest

 

 

663

 

 

 

 

 

 

 

 

663

 

Other

 

 

283

 

 

3

 

 

 

 

 

 

286

 

Adjusted EBITDA

 

$

58,564

 

$

8,035

 

 

$

(14,223

)

 

$

52,376

 

__________________________________________________________

(a)

Included within subscription-based revenue in the consolidated statements of operations.

(b)

Included within general and administrative expense in the consolidated statements of operations.

(c)

Included within employee compensation in the consolidated statements of operations.

(d)

For the three months ended December 31, 2022, $7.9 million was included within general and administrative expense and $0.0 million was included within employee compensation in the consolidated statements of operations.

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

 

 

 

Year Ended December 31, 2023

 

 

Envestnet Wealth Solutions

 

Envestnet Data
& Analytics

 

Nonsegment

 

Total

Revenue

 

$

1,094,704

 

 

$

150,916

 

 

$

 

 

$

1,245,620

 

Deferred revenue fair value adjustment (a)

 

 

69

 

 

 

 

 

 

 

 

 

69

 

Adjusted revenue

 

$

1,094,773

 

 

$

150,916

 

 

$

 

 

$

1,245,689

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

745,238

 

 

$

 

 

$

 

 

$

745,238

 

Subscription-based

 

 

325,398

 

 

 

139,332

 

 

 

 

 

 

464,730

 

Total recurring revenue

 

 

1,070,636

 

 

 

139,332

 

 

 

 

 

 

1,209,968

 

Professional services and other revenue

 

 

24,068

 

 

 

11,584

 

 

 

 

 

 

35,652

 

Total revenue

 

$

1,094,704

 

 

$

150,916

 

 

$

 

 

$

1,245,620

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense:

 

 

 

 

 

 

 

 

Asset-based

 

$

434,123

 

 

$

 

 

$

 

 

$

434,123

 

Subscription-based

 

 

6,851

 

 

 

23,963

 

 

 

 

 

 

30,814

 

Professional services and other

 

 

8,091

 

 

 

10

 

 

 

 

 

 

8,101

 

Total direct expense

 

 

449,065

 

 

 

23,973

 

 

 

 

 

 

473,038

 

Employee compensation

 

 

313,338

 

 

 

69,414

 

 

 

62,076

 

 

 

444,828

 

General and administrative

 

 

120,247

 

 

 

55,250

 

 

 

34,616

 

 

 

210,113

 

Depreciation and amortization

 

 

103,301

 

 

 

27,003

 

 

 

 

 

 

130,304

 

Goodwill impairment

 

 

 

 

 

191,818

 

 

 

 

 

 

191,818

 

Total operating expenses

 

$

985,951

 

 

$

367,458

 

 

$

96,692

 

 

$

1,450,101

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

108,753

 

 

$

(216,542

)

 

$

(96,692

)

 

$

(204,481

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

69

 

 

 

 

 

 

 

 

 

69

 

Depreciation and amortization

 

 

103,301

 

 

 

27,003

 

 

 

 

 

 

130,304

 

Goodwill impairment

 

 

 

 

 

191,818

 

 

 

 

 

 

191,818

 

Non-cash compensation expense (c)

 

 

44,510

 

 

 

8,193

 

 

 

18,328

 

 

 

71,031

 

Restructuring charges and transaction costs (d)

 

 

10,868

 

 

 

215

 

 

 

5,180

 

 

 

16,263

 

Severance expense (c)

 

 

17,232

 

 

 

11,813

 

 

 

6,354

 

 

 

35,399

 

Litigation, regulatory and other governance related expenses (b)

 

 

 

 

 

5,322

 

 

 

1,660

 

 

 

6,982

 

Non-income tax expense adjustment (b)

 

 

(320

)

 

 

(72

)

 

 

 

 

 

(392

)

Loss attributable to non-controlling interest

 

 

3,920

 

 

 

 

 

 

 

 

 

3,920

 

Adjusted EBITDA

 

$

288,333

 

 

$

27,750

 

 

$

(65,170

)

 

$

250,913

 

__________________________________________________________

(a)

Included within subscription-based revenue in the consolidated statements of operations.

(b)

Included within general and administrative expense in the consolidated statements of operations.

(c)

Included within employee compensation in the consolidated statements of operations.

(d)

For the year ended December 31, 2023, $13.5 million was included within general and administrative expense and $2.8 million was included within employee compensation in the consolidated statements of operations.

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

 

 

 

Year Ended December 31, 2022

 

 

Envestnet Wealth Solutions

 

Envestnet Data & Analytics

 

Nonsegment

 

Total

Revenue

 

$

1,065,244

 

$

174,540

 

 

$

 

 

$

1,239,784

 

Deferred revenue fair value adjustment (a)

 

 

216

 

 

 

 

 

 

 

 

216

 

Adjusted revenue

 

$

1,065,460

 

$

174,540

 

 

$

 

 

$

1,240,000

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

738,228

 

$

 

 

$

 

 

$

738,228

 

Subscription-based

 

 

310,217

 

 

167,627

 

 

 

 

 

 

477,844

 

Total recurring revenue

 

 

1,048,445

 

 

167,627

 

 

 

 

 

 

1,216,072

 

Professional services and other revenue

 

 

16,799

 

 

6,913

 

 

 

 

 

 

23,712

 

Total revenue

 

$

1,065,244

 

$

174,540

 

 

$

 

 

$

1,239,784

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense:

 

 

 

 

 

 

 

 

Asset-based

 

$

430,345

 

$

 

 

$

 

 

$

430,345

 

Subscription-based

 

 

6,681

 

 

25,896

 

 

 

 

 

 

32,577

 

Professional services and other

 

 

7,421

 

 

81

 

 

 

 

 

 

7,502

 

Total direct expense

 

 

444,447

 

 

25,977

 

 

 

 

 

 

470,424

 

Employee compensation

 

 

321,277

 

 

101,300

 

 

 

68,148

 

 

 

490,725

 

General and administrative

 

 

143,597

 

 

42,256

 

 

 

32,978

 

 

 

218,831

 

Depreciation and amortization

 

 

98,600

 

 

27,228

 

 

 

 

 

 

125,828

 

Total operating expenses

 

$

1,007,921

 

$

196,761

 

 

$

101,126

 

 

$

1,305,808

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

57,323

 

$

(22,221

)

 

$

(101,126

)

 

$

(66,024

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

216

 

 

 

 

 

 

 

 

216

 

Depreciation and amortization

 

 

98,600

 

 

27,228

 

 

 

 

 

 

125,828

 

Non-cash compensation expense (c)

 

 

47,891

 

 

9,891

 

 

 

22,551

 

 

 

80,333

 

Restructuring charges and transaction costs (d)

 

 

22,871

 

 

3,731

 

 

 

8,539

 

 

 

35,141

 

Severance expense (c)

 

 

13,237

 

 

10,745

 

 

 

6,135

 

 

 

30,117

 

Litigation, regulatory and other governance related expenses (b)

 

 

 

 

6,055

 

 

 

 

 

 

6,055

 

Non-income tax expense adjustment (b)

 

 

878

 

 

(76

)

 

 

 

 

 

802

 

Loss attributable to non-controlling interest

 

 

2,300

 

 

 

 

 

 

 

 

2,300

 

Other

 

 

635

 

 

5

 

 

 

 

 

 

640

 

Adjusted EBITDA

 

$

243,951

 

$

35,358

 

 

$

(63,901

)

 

$

215,408

 

__________________________________________________________

(a)

Included within subscription-based revenue in the consolidated statements of operations.

(b)

Included within general and administrative expense in the consolidated statements of operations.

(c)

Included within employee compensation in the consolidated statements of operations.

(d)

For the year ended December 31, 2022, $35.1 million was included within general and administrative expense and $0.0 million was included within employee compensation in the consolidated statements of operations.

Envestnet, Inc.

Historical Assets, Accounts and Advisors

(in millions, except accounts and advisors)

(unaudited)

 

Envestnet Wealth Solutions Segment

 

 

 

As of

 

 

December 31,

 

March 31,

 

June 30,

 

September 30,

 

December 31,

 

 

2022

 

2023

 

2023

 

2023

 

2023

 

 

(in millions, except accounts and advisors data)

Platform Assets

 

 

 

 

 

 

 

 

 

 

Assets under management ("AUM")

 

$

341,144

 

$

363,244

 

$

384,773

 

$

375,408

 

$

416,001

Assets under administration ("AUA")

 

 

367,412

 

 

379,843

 

 

394,078

 

 

398,082

 

 

430,846

Total AUM/A

 

 

708,556

 

 

743,087

 

 

778,851

 

 

773,490

 

 

846,847

Subscription

 

 

4,382,109

 

 

4,566,971

 

 

4,643,313

 

 

4,579,248

 

 

4,959,514

Total platform assets

 

$

5,090,665

 

$

5,310,058

 

$

5,422,164

 

$

5,352,738

 

$

5,806,361

Platform Accounts

 

 

 

 

 

 

 

 

 

 

AUM

 

 

1,547,009

 

 

1,571,862

 

 

1,609,677

 

 

1,614,873

 

 

1,640,879

AUA

 

 

1,135,026

 

 

1,142,166

 

 

1,144,375

 

 

1,257,094

 

 

1,254,962

Total AUM/A

 

 

2,682,035

 

 

2,714,028

 

 

2,754,052

 

 

2,871,967

 

 

2,895,841

Subscription

 

 

15,665,020

 

 

15,779,980

 

 

15,916,955

 

 

16,072,848

 

 

16,248,598

Total platform accounts

 

 

18,347,055

 

 

18,494,008

 

 

18,671,007

 

 

18,944,815

 

 

19,144,439

Advisors

 

 

 

 

 

 

 

 

 

 

AUM/A

 

 

38,025

 

 

38,611

 

 

38,809

 

 

38,078

 

 

38,697

Subscription

 

 

67,520

 

 

67,843

 

 

68,439

 

 

69,318

 

 

69,973

Total advisors

 

 

105,545

 

 

106,454

 

 

107,248

 

 

107,396

 

 

108,670

The following table summarizes the changes in AUM and AUA for the three months ended December 31, 2023:

 

 

Asset Rollforward - Three Months Ended December 31, 2023

 

 

As of

 

Gross Sales

 

Redemptions

 

Net Flows

 

Market Impact

 

As of

 

 

September 30,
2023

 

 

 

 

 

December 31,
2023

 

 

(in millions, except account data)

AUM

 

$

375,408

 

$

26,612

 

$

(19,064

)

 

$

7,548

 

$

33,045

 

$

416,001

AUA

 

 

398,082

 

 

30,342

 

 

(30,019

)

 

 

323

 

 

32,441

 

 

430,846

Total AUM/A

 

$

773,490

 

$

56,954

 

$

(49,083

)

 

$

7,871

 

$

65,486

 

$

846,847

 

Fee-Based Accounts

 

 

2,871,967

 

 

 

 

 

 

23,874

 

 

 

 

2,895,841

The above AUM/A gross sales figures include $17.7 billion in new client conversions. The Company onboarded an additional $73.1 billion in subscription conversions during the fourth quarter, bringing total conversions for the quarter to $90.8 billion.

The following table summarizes the changes in AUM and AUA for the year ended December 31, 2023:

 

 

Asset Rollforward - Year Ended December 31, 2023

 

 

As of
December 31,
2022

 

Gross Sales

 

Redemptions

 

Net Flows

 

Market Impact

 

Reclass to Subscription

 

As of
December 31,
2023

 

 

 

 

 

 

 

 

 

 

(in millions, except account data)

AUM

 

$

341,144

 

$

101,305

 

$

(71,217

)

 

$

30,088

 

$

47,360

 

$

(2,591

)

 

$

416,001

AUA

 

 

367,412

 

 

127,906

 

 

(99,468

)

 

 

28,438

 

 

48,868

 

 

(13,872

)

 

 

430,846

Total AUM/A

 

$

708,556

 

$

229,211

 

$

(170,685

)

 

$

58,526

 

$

96,228

 

$

(16,463

)

 

$

846,847

 

Fee-Based Accounts

 

 

2,682,035

 

 

 

 

 

 

312,915

 

 

 

 

(99,109

)

 

 

2,895,841

The above AUM/A gross sales figures include $72.3 billion in new client conversions. We onboarded an additional $169.7 billion in subscription conversions during 2023, bringing total conversions for the year to $242.0 billion.

Asset and account figures in the “Reclass to Subscription” columns for the three months and year ended December 31, 2023 represent enterprise customers whose billing arrangements in future periods are subscription-based, rather than asset-based. Such amounts are included in Subscription metrics at the end of the quarter in which the reclassification occurred, with 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 in the periods indicated:

 

 

As of

 

 

December 31,

 

March 31,

 

June 30,

 

September 30,

 

December 31,

 

 

2022

 

2023

 

2023

 

2023

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except number of firms data)

Number of paid end-users

 

38.8

 

37.5

 

38.0

 

42.3

 

38.3

Number of firms

 

1,286

 

1,310

 

1,339

 

1,322

 

1,324

 

Contacts

Investors
investor.relations@envestnet.com
(312) 827-3940

Media
mediarelations@envestnet.com

Contacts

Investors
investor.relations@envestnet.com
(312) 827-3940

Media
mediarelations@envestnet.com