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Envestnet Reports Second Quarter 2023 Financial Results

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, 2023.

 

 

Three months ended

 

 

 

Six months ended

 

 

Key Financial Metrics

 

June 30,

 

%

 

June 30,

 

%

(in millions, except per share data)

 

 

2023

 

 

 

2022

 

 

Change

 

 

2023

 

 

 

2022

 

 

Change

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

312.4

 

 

$

318.9

 

 

(2

)%

 

$

611.1

 

 

$

640.2

 

 

(5

)%

Net loss attributable to Envestnet, Inc.

 

$

(21.4

)

 

$

(23.3

)

 

8

%

 

$

(62.6

)

 

$

(37.1

)

 

(69

)%

Net loss attributable to Envestnet, Inc. per diluted share

 

$

(0.39

)

 

$

(0.42

)

 

7

%

 

$

(1.15

)

 

$

(0.67

)

 

(72

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenue(1)

 

$

312.5

 

 

$

318.9

 

 

(2

)%

 

$

611.2

 

 

$

640.3

 

 

(5

)%

Adjusted EBITDA(1)

 

$

57.8

 

 

$

57.1

 

 

1

%

 

$

113.2

 

 

$

112.8

 

 

%

Adjusted net income(1)

 

$

30.4

 

 

$

32.0

 

 

(5

)%

 

$

60.5

 

 

$

63.0

 

 

(4

)%

Adjusted net income per diluted share(1)

 

$

0.46

 

 

$

0.49

 

 

(6

)%

 

$

0.91

 

 

$

0.96

 

 

(5

)%

“Envestnet continues to create value for its clients and differentiate ourselves from competition by delivering the most integrated ecosystem of data, technology and solutions,” said Bill Crager, Chief Executive Officer. “We are outpacing the industry in flows, gaining share and helping drive the growth and productivity of our clients, all while executing our strategy of long-term revenue growth and margin expansion.”

Financial Results for the Second Quarter of 2023

Asset-based recurring revenue decreased 3% from the second quarter of 2022, and represented 59% of total revenue for the second quarter of 2023, compared to 60% for the second quarter of 2022. Subscription-based recurring revenue decreased 3% from the second quarter of 2022, and represented 37% of total revenue for the second quarter of 2023, compared to 37% for the second quarter of 2022. Professional services and other non-recurring revenue increased 34% from the prior year period. Total revenue decreased 2% to $312.4 million for the second quarter of 2023 from $318.9 million for the second quarter of 2022.

Total operating expenses for the second quarter of 2023 decreased 7% to $327.7 million from $350.6 million in the prior year period. Direct expense decreased to $123.5 million for the second quarter of 2023 from $126.5 million for the prior year period. Employee compensation decreased 7% to $117.1 million for the second quarter of 2023 from $125.8 million for the prior year period. Employee compensation was 37% of total revenue for the second quarter of 2023, compared to 39% for the prior year period. General and administrative expenses decreased 19% to $53.3 million for the second quarter of 2023 from $66.1 million for the prior year period. General and administrative expenses were 17% of total revenue for the second quarter of 2023, compared to 21% for the prior year period.

Loss from operations was $15.3 million for the second quarter of 2023 compared to a loss of $31.7 million for the second quarter of 2022. Net loss attributable to Envestnet, Inc. was $21.4 million for the second quarter of 2023 compared to net loss attributable to Envestnet, Inc. of $23.3 million for the second quarter of 2022. Net loss attributable to Envestnet, Inc. per diluted share was $(0.39) for the second quarter of 2023 compared to net loss attributable to Envestnet, Inc. per diluted share of $(0.42) for the second quarter of 2022.

Adjusted revenue(1) for the second quarter of 2023 decreased 2% to $312.5 million from $318.9 million for the prior year period. Adjusted EBITDA(1) for the second quarter of 2023 increased to $57.8 million from $57.1 million for the prior year period. Adjusted net income(1) decreased 5% for the second quarter of 2023 to $30.4 million from $32.0 million for the prior year period. Adjusted net income per diluted share(1) for the second quarter of 2023 decreased 6% to $0.46 from $0.49 in the second quarter of 2022.

Balance Sheet and Liquidity

As of June 30, 2023, Envestnet had $59.0 million in cash and cash equivalents and $912.5 million in outstanding debt. Debt as of June 30, 2023 results from $317.5 million in convertible notes maturing in 2025, $575.0 million in convertible notes maturing in 2027 and $20.0 million of borrowings under the revolving credit facility. On July 19, 2023, the outstanding borrowings under the revolving credit facility were repaid and the remaining available balance on the agreement was $500.0 million.

Outlook

Envestnet provided the following outlook for the third quarter and full year ending December 31, 2023. This outlook is based on the market value of assets under management or administration as of June 30, 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

 

3Q 2023

 

FY 2023

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based

 

$

192.5

 

-

 

$

194.0

 

 

 

 

 

 

Subscription-based

 

 

117.5

 

-

 

 

118.5

 

 

 

 

 

 

Total recurring revenue

 

 

310.0

 

-

 

 

312.5

 

 

 

 

 

 

Professional services and other revenue

 

 

6.0

 

-

 

 

6.5

 

 

 

 

 

 

Total revenue

 

$

316.0

 

-

 

$

319.0

 

$

1,252.0

 

-

 

$

1,259.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based direct expense

 

$

113.5

 

-

 

$

114.0

 

 

 

 

 

 

Total direct expense

 

$

120.5

 

-

 

$

121.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

(a)

 

 

 

 

 

(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

 

 

65.9

 

 

 

 

 

66.0

 

 

Net income per diluted share

 

 

 

(a)

 

 

 

 

 

(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenue(1):

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based

 

$

192.5

 

-

 

$

194.0

 

 

 

 

 

 

Subscription-based

 

 

117.5

 

-

 

 

118.5

 

 

 

 

 

 

Total recurring revenue

 

 

310.0

 

-

 

 

312.5

 

 

 

 

 

 

Professional services and other revenue

 

 

6.0

 

-

 

 

6.5

 

 

 

 

 

 

Total revenue

 

$

316.0

 

-

 

$

319.0

 

$

1,252.0

 

-

 

$

1,259.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

64.0

 

-

 

$

66.0

 

$

255.0

 

-

 

$

260.0

Adjusted net income per diluted share(1)

 

$

0.52

 

-

 

$

0.54

 

$

2.09

 

-

 

$

2.15

(a) Envestnet does not forecast net income and net income 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 second quarter 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 wellness are delivered. Our mission is to empower advisors and financial service providers with innovative technology, solutions and intelligence to make financial wellness a reality for everyone. Approximately 107,000 advisors and approximately 6,900 companies including: 16 of the 20 largest U.S. banks, 47 of the 50 largest wealth management and brokerage firms, over 500 of the largest RIAs and hundreds of FinTech companies, 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, non-cash compensation expense, restructuring charges and transaction costs, severance, litigation, regulatory and other governance related expenses, foreign currency, non-income tax expense adjustment, fair market value adjustment to investment in private company, 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, non-cash compensation expense, restructuring charges and transaction costs, severance, amortization of acquired intangibles, litigation, regulatory and other governance related expenses, foreign currency, non-income tax expense adjustment, fair market value adjustment to investment in private company, 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.

See reconciliations of Non-GAAP Financial Measures on pages 9-12 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 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 second quarter and full year of 2023, 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 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, 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; the amount of our debt and our ability to service 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 (“FinTech”) 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; 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; 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; the failure to protect our intellectual property rights; our ability to introduce new solutions and services and enhancements; 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 data security 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; regulatory compliance failures; 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; changes in the level of inflation; general economic, political and regulatory conditions; changes in trade, monetary and fiscal policies and laws; global events, natural disasters, environmental disasters, terrorist attacks and pandemics or health crises, including their impact on the economy and trading markets; social, environmental and sustainability concerns that may arise, including from our business activities; and management’s response to these factors. More information regarding these and other risks, uncertainties and factors is contained in our filings 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/. 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 3, 2023 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,

 

 

2023

 

2022

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

59,019

 

$

162,173

Fees receivable, net

 

 

123,696

 

 

101,696

Prepaid expenses and other current assets

 

 

41,906

 

 

41,363

Total current assets

 

 

224,621

 

 

305,232

Property and equipment, net

 

 

66,668

 

 

62,443

Internally developed software, net

 

 

207,235

 

 

184,558

Intangible assets, net

 

 

361,335

 

 

379,995

Goodwill

 

 

998,436

 

 

998,414

Operating lease right-of-use-assets, net

 

 

75,079

 

 

81,596

Other assets

 

 

120,531

 

 

99,927

Total assets

 

$

2,053,905

 

$

2,112,165

 

 

 

 

 

Liabilities and equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable, accrued expenses and other current liabilities

 

$

239,836

 

$

233,866

Operating lease liabilities

 

 

13,222

 

 

11,949

Deferred revenue

 

 

35,846

 

 

36,363

Current portion of debt

 

 

20,000

 

 

44,886

Total current liabilities

 

 

308,904

 

 

327,064

Debt, net of current portion

 

 

874,175

 

 

871,769

Operating lease liabilities, net of current portion

 

 

105,606

 

 

110,652

Deferred tax liabilities, net

 

 

15,815

 

 

16,196

Other liabilities

 

 

16,947

 

 

18,880

Total liabilities

 

 

1,321,447

 

 

1,344,561

 

 

 

 

 

Equity:

 

 

 

 

Total stockholders’ equity, attributable to Envestnet, Inc.

 

 

722,513

 

 

754,567

Non-controlling interest

 

 

9,945

 

 

13,037

Total liabilities and equity

 

$

2,053,905

 

$

2,112,165

 

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,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

185,762

 

 

$

191,972

 

 

$

362,694

 

 

$

394,689

 

Subscription-based

 

 

114,959

 

 

 

118,120

 

 

 

232,038

 

 

 

232,854

 

Total recurring revenue

 

 

300,721

 

 

 

310,092

 

 

 

594,732

 

 

 

627,543

 

Professional services and other revenue

 

 

11,713

 

 

 

8,760

 

 

 

16,409

 

 

 

12,672

 

Total revenue

 

 

312,434

 

 

 

318,852

 

 

 

611,141

 

 

 

640,215

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense

 

 

123,497

 

 

 

126,482

 

 

 

232,486

 

 

 

251,764

 

Employee compensation

 

 

117,097

 

 

 

125,767

 

 

 

231,312

 

 

 

252,616

 

General and administrative

 

 

53,346

 

 

 

66,144

 

 

 

106,965

 

 

 

110,479

 

Depreciation and amortization

 

 

33,806

 

 

 

32,182

 

 

 

66,747

 

 

 

63,800

 

Total operating expenses

 

 

327,746

 

 

 

350,575

 

 

 

637,510

 

 

 

678,659

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(15,312

)

 

 

(31,723

)

 

 

(26,369

)

 

 

(38,444

)

Other (expense) income, net

 

 

(7,402

)

 

 

1,622

 

 

 

(15,337

)

 

 

(4,345

)

Loss before income tax provision (benefit)

 

 

(22,714

)

 

 

(30,101

)

 

 

(41,706

)

 

 

(42,789

)

 

 

 

 

 

 

 

 

 

Income tax provision (benefit)

 

 

418

 

 

 

(5,833

)

 

 

24,187

 

 

 

(3,813

)

 

 

 

 

 

 

 

 

 

Net loss

 

 

(23,132

)

 

 

(24,268

)

 

 

(65,893

)

 

 

(38,976

)

Add: Net loss attributable to non-controlling interest

 

 

1,716

 

 

 

983

 

 

 

3,249

 

 

 

1,832

 

Net loss attributable to Envestnet, Inc.

 

$

(21,416

)

 

$

(23,285

)

 

$

(62,644

)

 

$

(37,144

)

 

 

 

 

 

 

 

 

 

Net loss attributable to Envestnet, Inc. per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.39

)

 

$

(0.42

)

 

$

(1.15

)

 

$

(0.67

)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

54,439,733

 

 

 

55,203,120

 

 

 

54,289,443

 

 

 

55,054,272

 

 

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Six Months Ended

 

 

June 30,

 

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(65,893

)

 

$

(38,976

)

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

 

 

 

 

Depreciation and amortization

 

 

66,747

 

 

 

63,800

 

Deferred income taxes

 

 

(522

)

 

 

(8,222

)

Non-cash compensation expense

 

 

40,843

 

 

 

45,318

 

Non-cash interest expense

 

 

2,251

 

 

 

3,474

 

Loss allocations from equity method investments

 

 

5,872

 

 

 

2,945

 

Dilution gain on equity method investee share issuance

 

 

(546

)

 

 

(6,934

)

Lease related impairments

 

 

2,483

 

 

 

12,961

 

Other

 

 

304

 

 

 

(448

)

Changes in operating assets and liabilities:

 

 

 

 

Fees receivable, net

 

 

(22,357

)

 

 

13,694

 

Prepaid expenses and other assets

 

 

(6,762

)

 

 

(6,359

)

Accounts payable, accrued expenses and other liabilities

 

 

17,700

 

 

 

(32,888

)

Deferred revenue

 

 

(852

)

 

 

4,277

 

Net cash provided by operating activities

 

 

39,268

 

 

 

52,642

 

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

 

(16,735

)

 

 

(9,141

)

Capitalization of internally developed software

 

 

(46,801

)

 

 

(43,045

)

Acquisitions of businesses, net of cash acquired

 

 

 

 

 

(14,472

)

Investments in private companies

 

 

(1,450

)

 

 

(8,000

)

Acquisition of proprietary technology

 

 

(12,000

)

 

 

(19,000

)

Issuance of loan receivable to private company

 

 

(20,000

)

 

 

 

Issuance of note receivable to equity method investees

 

 

 

 

 

(4,350

)

Other

 

 

319

 

 

 

 

Net cash used in investing activities

 

 

(96,667

)

 

 

(98,008

)

Cash flows from financing activities:

 

 

 

 

Proceeds from borrowings on Revolving Credit Facility

 

 

40,000

 

 

 

 

Payments related to Revolving Credit Facility

 

 

(20,000

)

 

 

(1,872

)

Payments related to Convertible Notes

 

 

(45,000

)

 

 

 

Payments on finance lease obligations

 

 

(792

)

 

 

(14,517

)

Proceeds from exercise of stock options

 

 

472

 

 

 

742

 

Payments related to tax withholdings for stock-based compensation

 

 

(13,774

)

 

 

(18,113

)

Payments related to share repurchases

 

 

(9,289

)

 

 

(9,235

)

Purchase of non-controlling units from third-party shareholders

 

 

(1,008

)

 

 

 

Payments of contingent consideration

 

 

 

 

 

(750

)

Other

 

 

3

 

 

 

4

 

Net cash used in financing activities

 

 

(49,388

)

 

 

(43,741

)

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

 

 

3,633

 

 

 

(2,057

)

Net change in cash, cash equivalents and restricted cash

 

 

(103,154

)

 

 

(91,164

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

162,173

 

 

 

429,428

 

Cash, cash equivalents and restricted cash, end of period (a)

 

$

59,019

 

 

$

338,264

 

(a)

 

The following table reconciles amounts from the condensed consolidated balance sheets to cash, cash equivalents and restricted cash reported within the condensed consolidated statements of cash flows:

 

 

June 30,

 

 

2023

 

2022

 

 

(in thousands)

Cash and cash equivalents

 

$

59,019

 

$

338,115

Restricted cash included in prepaid expenses and other current assets

 

 

 

 

149

Total cash, cash equivalents and restricted cash

 

$

59,019

 

$

338,264

 

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Total revenue

 

$

312,434

 

 

$

318,852

 

 

$

611,141

 

 

$

640,215

 

Deferred revenue fair value adjustment (a)

 

 

17

 

 

 

54

 

 

 

69

 

 

 

108

 

Adjusted revenue

 

$

312,451

 

 

$

318,906

 

 

$

611,210

 

 

$

640,323

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(23,132

)

 

$

(24,268

)

 

$

(65,893

)

 

$

(38,976

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

17

 

 

 

54

 

 

 

69

 

 

 

108

 

Interest income (b)

 

 

(1,656

)

 

 

(713

)

 

 

(3,014

)

 

 

(1,034

)

Interest expense (b)

 

 

6,531

 

 

 

4,212

 

 

 

12,851

 

 

 

9,065

 

Income tax provision (benefit)

 

 

418

 

 

 

(5,833

)

 

 

24,187

 

 

 

(3,813

)

Depreciation and amortization

 

 

33,806

 

 

 

32,182

 

 

 

66,747

 

 

 

63,800

 

Non-cash compensation expense (d)

 

 

21,390

 

 

 

23,504

 

 

 

40,843

 

 

 

45,318

 

Restructuring charges and transaction costs (e)

 

 

6,508

 

 

 

21,026

 

 

 

10,671

 

 

 

23,372

 

Severance (d)

 

 

8,234

 

 

 

7,148

 

 

 

14,422

 

 

 

10,254

 

Litigation, regulatory and other governance related expenses (c)

 

 

2,145

 

 

 

4,306

 

 

 

5,219

 

 

 

7,383

 

Foreign currency

 

 

74

 

 

 

413

 

 

 

107

 

 

 

305

 

Non-income tax expense adjustment (c)

 

 

(30

)

 

 

189

 

 

 

(198

)

 

 

213

 

Fair market value adjustment to investment in private company

 

 

67

 

 

 

 

 

 

67

 

 

 

 

Dilution gain on equity method investee share issuance (d)

 

 

(546

)

 

 

(6,934

)

 

 

(546

)

 

 

(6,934

)

Loss allocations from equity method investments (b)

 

 

2,932

 

 

 

1,400

 

 

 

5,872

 

 

 

2,945

 

Loss attributable to non-controlling interest

 

 

1,027

 

 

 

440

 

 

 

1,805

 

 

 

817

 

Adjusted EBITDA

 

$

57,785

 

 

$

57,126

 

 

$

113,209

 

 

$

112,823

 

(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, 2023 and 2022, $5.0 million and $20.9 million were included within general and administrative expense, respectively, in the condensed consolidated statements of operations. For the three months ended June 30, 2023 and 2022, $1.5 million and $0.1 million were included within employee compensation expense, respectively, in the condensed consolidated statements of operations. For the six months ended June 30, 2023 and 2022, $9.1 million and $23.5 million were included within general and administrative expense, respectively, in the condensed consolidated statements of operations. For the six months ended June 30, 2023 and 2022, $1.6 million and $(0.1) million were included within employee compensation expense, respectively, 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,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net loss

 

$

(23,132

)

 

$

(24,268

)

 

$

(65,893

)

 

$

(38,976

)

Income tax provision (benefit) (a)

 

 

418

 

 

 

(5,833

)

 

 

24,187

 

 

 

(3,813

)

Loss before income tax provision (benefit)

 

 

(22,714

)

 

 

(30,101

)

 

 

(41,706

)

 

 

(42,789

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (b)

 

 

17

 

 

 

54

 

 

 

69

 

 

 

108

 

Non-cash interest expense (d)

 

 

1,427

 

 

 

1,415

 

 

 

2,869

 

 

 

3,474

 

Cash interest - Convertible Notes (d)

 

 

4,543

 

 

 

2,480

 

 

 

9,108

 

 

 

4,960

 

Non-cash compensation expense (e)

 

 

21,390

 

 

 

23,504

 

 

 

40,843

 

 

 

45,318

 

Restructuring charges and transaction costs (g)

 

 

6,508

 

 

 

21,026

 

 

 

10,671

 

 

 

23,372

 

Severance (e)

 

 

8,234

 

 

 

7,148

 

 

 

14,422

 

 

 

10,254

 

Amortization of acquired intangibles (f)

 

 

15,720

 

 

 

17,645

 

 

 

32,660

 

 

 

35,165

 

Litigation, regulatory and other governance related expenses (c)

 

 

2,145

 

 

 

4,306

 

 

 

5,219

 

 

 

7,383

 

Foreign currency (d)

 

 

74

 

 

 

413

 

 

 

107

 

 

 

305

 

Non-income tax expense adjustment (c)

 

 

(30

)

 

 

189

 

 

 

(198

)

 

 

213

 

Fair market value adjustment to investment in private company

 

 

67

 

 

 

 

 

 

67

 

 

 

 

Dilution gain on equity method investee share issuance (d)

 

 

(546

)

 

 

(6,934

)

 

 

(546

)

 

 

(6,934

)

Loss allocations from equity method investments (d)

 

 

2,932

 

 

 

1,400

 

 

 

5,872

 

 

 

2,945

 

Loss attributable to non-controlling interest

 

 

1,027

 

 

 

440

 

 

 

1,805

 

 

 

817

 

Adjusted net income before income tax effect

 

 

40,794

 

 

 

42,985

 

 

 

81,262

 

 

 

84,591

 

Income tax effect (h)

 

 

(10,403

)

 

 

(10,961

)

 

 

(20,722

)

 

 

(21,571

)

Adjusted net income

 

$

30,391

 

 

$

32,024

 

 

$

60,540

 

 

$

63,020

 

 

 

 

 

 

 

 

 

 

Basic number of weighted-average shares outstanding

 

 

54,439,733

 

 

 

55,203,120

 

 

 

54,289,443

 

 

 

55,054,272

 

Effect of dilutive shares:

 

 

 

 

 

 

 

 

Convertible Notes

 

 

11,253,471

 

 

 

9,898,549

 

 

 

11,361,458

 

 

 

9,898,549

 

Non-vested RSUs and PSUs

 

 

316,758

 

 

 

199,853

 

 

 

445,323

 

 

 

381,397

 

Options to purchase common stock

 

 

57,902

 

 

 

129,217

 

 

 

73,271

 

 

 

142,510

 

Warrants

 

 

 

 

 

22,170

 

 

 

 

 

 

37,473

 

Diluted number of weighted-average shares outstanding

 

 

66,067,864

 

 

 

65,452,909

 

 

 

66,169,495

 

 

 

65,514,201

 

 

 

 

 

 

 

 

 

 

Adjusted net income per diluted share

 

$

0.46

 

 

$

0.49

 

 

$

0.91

 

 

$

0.96

 

(a)

 

For the three months ended June 30, 2023 and 2022, the effective tax rate computed in accordance with GAAP equaled (1.8)% and 19.4%, respectively. For the six months ended June 30, 2023 and 2022, the effective tax rate computed in accordance with GAAP equaled (58.0)% and 8.9%, 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 employee compensation expense in the condensed consolidated statements of operations.

(f)

 

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

(g)

 

For the three months ended June 30, 2023 and 2022, $5.0 million and $20.9 million were included within general and administrative expense, respectively, in the condensed consolidated statements of operations. For the three months ended June 30, 2023 and 2022, $1.5 million and $0.1 million were included within employee compensation expense, respectively, in the condensed consolidated statements of operations. For the six months ended June 30, 2023 and 2022, $9.1 million and $23.5 million were included within general and administrative expense, respectively, in the condensed consolidated statements of operations. For the six months ended June 30, 2023 and 2022, $1.6 million and $(0.1) million were included within employee compensation expense, respectively, in the condensed 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 and six months ended June 30, 2023 and 2022.

 

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information

(in thousands)

(unaudited)

 

 

 

Three Months Ended June 30, 2023

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Revenue

 

$

271,581

 

 

$

40,853

 

 

$

 

 

$

312,434

 

Deferred revenue fair value adjustment (a)

 

 

17

 

 

 

 

 

 

 

 

 

17

 

Adjusted revenue

 

$

271,598

 

 

$

40,853

 

 

$

 

 

$

312,451

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

185,762

 

 

$

 

 

$

 

 

$

185,762

 

Subscription-based

 

 

75,509

 

 

 

39,450

 

 

 

 

 

 

114,959

 

Total recurring revenue

 

 

261,271

 

 

 

39,450

 

 

 

 

 

 

300,721

 

Professional services and other revenue

 

 

10,310

 

 

 

1,403

 

 

 

 

 

 

11,713

 

Total revenue

 

$

271,581

 

 

$

40,853

 

 

$

 

 

$

312,434

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense

 

 

 

 

 

 

 

 

Asset-based

 

$

108,532

 

 

$

 

 

$

 

 

$

108,532

 

Subscription-based

 

 

1,455

 

 

 

5,478

 

 

 

 

 

 

6,933

 

Professional services and other

 

 

8,032

 

 

 

 

 

 

 

 

 

8,032

 

Total direct expense

 

 

118,019

 

 

 

5,478

 

 

 

 

 

 

123,497

 

Employee compensation

 

 

75,988

 

 

 

21,749

 

 

 

19,360

 

 

 

117,097

 

General and administrative

 

 

29,665

 

 

 

15,323

 

 

 

8,358

 

 

 

53,346

 

Depreciation and amortization

 

 

24,510

 

 

 

9,296

 

 

 

 

 

 

33,806

 

Total operating expenses

 

$

248,182

 

 

$

51,846

 

 

$

27,718

 

 

$

327,746

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

23,399

 

 

$

(10,993

)

 

$

(27,718

)

 

$

(15,312

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

17

 

 

 

 

 

 

 

 

 

17

 

Depreciation and amortization

 

 

24,510

 

 

 

9,296

 

 

 

 

 

 

33,806

 

Non-cash compensation expense (c)

 

 

12,043

 

 

 

2,727

 

 

 

6,620

 

 

 

21,390

 

Restructuring charges and transaction costs (d)

 

 

5,414

 

 

 

69

 

 

 

1,025

 

 

 

6,508

 

Severance (c)

 

 

1,854

 

 

 

3,119

 

 

 

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

 

$

68,239

 

 

$

6,423

 

 

$

(16,877

)

 

$

57,785

 

(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 (continued)

(in thousands)

(unaudited)

 

 

 

Six Months Ended June 30, 2023

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Revenue

 

$

528,241

 

 

$

82,900

 

 

$

 

 

$

611,141

 

Deferred revenue fair value adjustment (a)

 

 

69

 

 

 

 

 

 

 

 

 

69

 

Adjusted revenue

 

$

528,310

 

 

$

82,900

 

 

$

 

 

$

611,210

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

362,694

 

 

$

 

 

$

 

 

$

362,694

 

Subscription-based

 

 

151,994

 

 

 

80,044

 

 

 

 

 

 

232,038

 

Total recurring revenue

 

 

514,688

 

 

 

80,044

 

 

 

 

 

 

594,732

 

Professional services and other revenue

 

 

13,553

 

 

 

2,856

 

 

 

 

 

 

16,409

 

Total revenue

 

$

528,241

 

 

$

82,900

 

 

$

 

 

$

611,141

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense:

 

 

 

 

 

 

 

 

Asset-based

 

$

211,155

 

 

$

 

 

$

 

 

$

211,155

 

Subscription-based

 

 

2,877

 

 

 

10,418

 

 

 

 

 

 

13,295

 

Professional services and other

 

 

8,036

 

 

 

 

 

 

 

 

 

8,036

 

Total direct expense

 

 

222,068

 

 

 

10,418

 

 

 

 

 

 

232,486

 

Employee compensation

 

 

152,871

 

 

 

43,155

 

 

 

35,286

 

 

 

231,312

 

General and administrative

 

 

57,792

 

 

 

30,001

 

 

 

19,172

 

 

 

106,965

 

Depreciation and amortization

 

 

48,648

 

 

 

18,099

 

 

 

 

 

 

66,747

 

Total operating expenses

 

$

481,379

 

 

$

101,673

 

 

$

54,458

 

 

$

637,510

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

46,862

 

 

$

(18,773

)

 

$

(54,458

)

 

$

(26,369

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

69

 

 

 

 

 

 

 

 

 

69

 

Depreciation and amortization

 

 

48,648

 

 

 

18,099

 

 

 

 

 

 

66,747

 

Non-cash compensation expense (c)

 

 

23,285

 

 

 

5,389

 

 

 

12,169

 

 

 

40,843

 

Restructuring charges and transaction costs (d)

 

 

6,552

 

 

 

313

 

 

 

3,806

 

 

 

10,671

 

Severance (c)

 

 

5,430

 

 

 

5,547

 

 

 

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

 

$

132,524

 

 

$

14,038

 

 

$

(33,353

)

 

$

113,209

 

(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.

 

 

Three Months Ended June 30, 2022

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Revenue

 

$

272,000

 

 

$

46,852

 

 

$

 

 

$

318,852

 

Deferred revenue fair value adjustment (a)

 

 

54

 

 

 

 

 

 

 

 

 

54

 

Adjusted revenue

 

$

272,054

 

 

$

46,852

 

 

$

 

 

$

318,906

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

191,972

 

 

$

 

 

$

 

 

$

191,972

 

Subscription-based

 

 

73,568

 

 

 

44,552

 

 

 

 

 

 

118,120

 

Total recurring revenue

 

 

265,540

 

 

 

44,552

 

 

 

 

 

 

310,092

 

Professional services and other revenue

 

 

6,460

 

 

 

2,300

 

 

 

 

 

 

8,760

 

Total revenue

 

$

272,000

 

 

$

46,852

 

 

$

 

 

$

318,852

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense:

 

 

 

 

 

 

 

 

Asset-based

 

$

112,301

 

 

$

 

 

$

 

 

$

112,301

 

Subscription-based

 

 

1,504

 

 

 

5,737

 

 

 

 

 

 

7,241

 

Professional services and other

 

 

6,917

 

 

 

23

 

 

 

 

 

 

6,940

 

Total direct expense

 

 

120,722

 

 

 

5,760

 

 

 

 

 

 

126,482

 

Employee compensation

 

 

78,759

 

 

 

23,994

 

 

 

23,014

 

 

 

125,767

 

General and administrative

 

 

45,001

 

 

 

12,171

 

 

 

8,972

 

 

 

66,144

 

Depreciation and amortization

 

 

23,550

 

 

 

8,632

 

 

 

 

 

 

32,182

 

Total operating expenses

 

$

268,032

 

 

$

50,557

 

 

$

31,986

 

 

$

350,575

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

3,968

 

 

$

(3,705

)

 

$

(31,986

)

 

$

(31,723

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

54

 

 

 

 

 

 

 

 

54

 

Depreciation and amortization

 

 

23,550

 

 

 

8,632

 

 

 

 

 

 

32,182

 

Non-cash compensation expense (c)

 

 

13,364

 

 

 

1,852

 

 

 

8,288

 

 

 

23,504

 

Restructuring charges and transaction costs (d)

 

 

16,897

 

 

 

753

 

 

 

3,376

 

 

 

21,026

 

Severance (c)

 

 

2,813

 

 

 

(431

)

 

 

4,766

 

 

 

7,148

 

Litigation, regulatory and other governance related expenses (b)

 

 

 

 

 

4,306

 

 

 

 

 

 

4,306

 

Non-income tax expense adjustment (b)

 

 

184

 

 

 

5

 

 

 

 

 

 

189

 

Loss attributable to non-controlling interest

 

 

440

 

 

 

 

 

 

 

 

 

440

 

Adjusted EBITDA

 

$

61,270

 

 

$

11,412

 

 

$

(15,556

)

 

$

57,126

 

(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)

 

$20.9 million was included within general and administrative expense and $0.1 million was included within employee compensation expense in the condensed consolidated statements of operations.

 

 

Six Months Ended June 30, 2022

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Revenue

 

$

545,568

 

 

$

94,647

 

 

$

 

 

$

640,215

 

Deferred revenue fair value adjustment (a)

 

 

108

 

 

 

 

 

 

 

 

 

108

 

Adjusted revenue

 

$

545,676

 

 

$

94,647

 

 

$

 

 

$

640,323

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

394,689

 

 

$

 

 

$

 

 

$

394,689

 

Subscription-based

 

 

142,105

 

 

 

90,749

 

 

 

 

 

 

232,854

 

Total recurring revenue

 

 

536,794

 

 

 

90,749

 

 

 

 

 

 

627,543

 

Professional services and other revenue

 

 

8,774

 

 

 

3,898

 

 

 

 

 

 

12,672

 

Total revenue

 

$

545,568

 

 

$

94,647

 

 

$

 

 

$

640,215

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense:

 

 

 

 

 

 

 

 

Asset-based

 

$

229,729

 

 

$

 

 

$

 

 

$

229,729

 

Subscription-based

 

 

2,869

 

 

 

12,183

 

 

 

 

 

 

15,052

 

Professional services and other

 

 

6,932

 

 

 

51

 

 

 

 

 

 

6,983

 

Total direct expense

 

 

239,530

 

 

 

12,234

 

 

 

 

 

 

251,764

 

Employee compensation

 

 

157,403

 

 

 

54,160

 

 

 

41,053

 

 

 

252,616

 

General and administrative

 

 

72,361

 

 

 

20,782

 

 

 

17,336

 

 

 

110,479

 

Depreciation and amortization

 

 

47,037

 

 

 

16,763

 

 

 

 

 

 

63,800

 

Total operating expenses

 

$

516,331

 

 

$

103,939

 

 

$

58,389

 

 

$

678,659

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

29,237

 

 

$

(9,292

)

 

$

(58,389

)

 

$

(38,444

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

108

 

 

 

 

 

 

 

 

108

 

Depreciation and amortization

 

 

47,037

 

 

 

16,763

 

 

 

 

 

 

63,800

 

Non-cash compensation expense (c)

 

 

24,654

 

 

 

5,387

 

 

 

15,277

 

 

 

45,318

 

Restructuring charges and transaction costs (d)

 

 

17,181

 

 

 

750

 

 

 

5,441

 

 

 

23,372

 

Severance (c)

 

 

4,223

 

 

 

1,211

 

 

 

4,820

 

 

 

10,254

 

Litigation, regulatory and other governance related expenses (b)

 

 

 

 

 

7,383

 

 

 

 

 

 

7,383

 

Non-income tax expense adjustment (b)

 

 

291

 

 

 

(78

)

 

 

 

 

 

213

 

Loss attributable to non-controlling interest

 

 

817

 

 

 

 

 

 

 

 

 

817

 

Other

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Adjusted EBITDA

 

$

123,548

 

 

$

22,126

 

 

$

(32,851

)

 

$

112,823

 

(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)

 

$23.5 million was included within general and administrative expense and $(0.1) million was included within employee compensation expense in the condensed consolidated statements of operations.

 

Envestnet, Inc.

Key Metrics

(in millions, except accounts and advisors data)

(unaudited)

Envestnet Wealth Solutions Segment

The following table provides information regarding the amount of assets utilizing our platforms, financial advisors and investor accounts in the periods indicated:

 

 

As of

 

 

June 30,

 

September 30,

 

December 31,

 

March 31,

 

June 30,

 

 

2022

 

2022

 

2022

 

2023

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except accounts and advisors data)

Platform Assets

 

 

 

 

 

 

 

 

 

 

Assets under Management (“AUM”)

 

$

325,209

 

$

315,883

 

$

341,144

 

$

363,244

 

$

384,773

Assets under Administration (“AUA”)

 

 

352,840

 

 

350,576

 

 

367,412

 

 

379,843

 

 

394,078

Total AUM/A

 

 

678,049

 

 

666,459

 

 

708,556

 

 

743,087

 

 

778,851

Subscription

 

 

4,312,114

 

 

4,134,414

 

 

4,382,109

 

 

4,566,971

 

 

4,643,313

Total Platform Assets

 

$

4,990,163

 

$

4,800,873

 

$

5,090,665

 

$

5,310,058

 

$

5,422,164

Platform Accounts

 

 

 

 

 

 

 

 

 

 

AUM

 

 

1,491,861

 

 

1,522,968

 

 

1,547,009

 

 

1,571,862

 

 

1,609,677

AUA

 

 

1,061,484

 

 

1,135,302

 

 

1,135,026

 

 

1,142,166

 

 

1,144,375

Total AUM/A

 

 

2,553,345

 

 

2,658,270

 

 

2,682,035

 

 

2,714,028

 

 

2,754,052

Subscription

 

 

15,312,144

 

 

15,596,403

 

 

15,665,020

 

 

15,779,980

 

 

15,916,955

Total Platform Accounts

 

 

17,865,489

 

 

18,254,673

 

 

18,347,055

 

 

18,494,008

 

 

18,671,007

Advisors

 

 

 

 

 

 

 

 

 

 

AUM/A

 

 

38,394

 

 

38,417

 

 

38,025

 

 

38,611

 

 

38,809

Subscription

 

 

66,838

 

 

67,348

 

 

67,520

 

 

67,843

 

 

68,439

Total Advisors

 

 

105,232

 

 

105,765

 

 

105,545

 

 

106,454

 

 

107,248

The following table summarizes the changes in AUM and AUA for the three months ended June 30, 2023:

 

 

Asset Rollforward - Three Months Ended June 30, 2023

 

 

As of March 31,

 

Gross

 

 

 

Net

 

Market

 

Reclass to

 

As of June 30,

 

 

2023

 

Sales

 

Redemptions

 

Flows

 

Impact

 

Subscription

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except account data)

AUM

 

$

363,244

 

$

25,282

 

$

(16,630)

 

$

8,652

 

$

12,877

 

$

 

$

384,773

AUA

 

 

379,843

 

 

25,389

 

 

(24,013)

 

 

1,376

 

 

13,629

 

 

(770)

 

 

394,078

Total AUM/A

 

$

743,087

 

$

50,671

 

$

(40,643)

 

$

10,028

 

$

26,506

 

$

(770)

 

$

778,851

Fee-Based Accounts

 

 

2,714,028

 

 

 

 

 

 

44,244

 

 

 

 

(4,220)

 

 

2,754,052

The above AUM/A gross sales figures for the three months ended June 30, 2023 include $11.8 billion in new client conversions. We onboarded an additional $19.3 billion in subscription conversions during the three months ended June 30, 2023 bringing total conversions for the three months ended June 30, 2023 to $31.1 billion.

Envestnet, Inc.

Key Metrics

(in millions, except accounts and advisors data)

(unaudited)

The following table summarizes the changes in AUM and AUA for the six months ended June 30, 2023:

 

 

Asset Rollforward - Six Months Ended June 30, 2023

 

 

As of December 31,

 

Gross

 

 

 

Net

 

Market

 

Reclass to

 

As of June 30,

 

 

2022

 

Sales

 

Redemptions

 

Flows

 

Impact

 

Subscription

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except account data)

AUM

 

$

341,144

 

$

49,939

 

$

(32,307)

 

$

17,632

 

$

27,136

 

$

(1,139)

 

$

384,773

AUA

 

 

367,412

 

 

57,940

 

 

(45,560)

 

 

12,380

 

 

28,158

 

 

(13,872)

 

 

394,078

Total AUM/A

 

$

708,556

 

$

107,879

 

$

(77,867)

 

$

30,012

 

$

55,294

 

$

(15,011)

 

$

778,851

Fee-Based Accounts

 

 

2,682,035

 

 

 

 

 

 

160,493

 

 

 

 

(88,476)

 

 

2,754,052

The above AUM/A gross sales figures for the six months ended June 30, 2023 include $28.9 billion in new client conversions. We onboarded an additional $68.1 billion in subscription conversions during the six months ended June 30, 2023 bringing total conversions for the six months ended June 30, 2023 to $97.0 billion.

Asset and account figures in the “Reclass to Subscription” columns for the three and six months ended June 30, 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 amount of paid-end users and firms using the Envestnet Data & Analytics platform in the periods indicated:

 

 

As of

 

 

June 30,

 

September 30,

 

December 31,

 

March 31,

 

June 30,

 

 

2022

 

2022

 

2022

 

2023

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except number of firms data)

Number of paying users

 

37.2

 

38.1

 

38.8

 

37.5

 

38.0

Number of firms

 

1,731

 

1,815

 

1,827

 

1,851

 

1,873

 

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