Envestnet Reports Third Quarter 2018 Financial Results

Envestnet (NYSE:ENV), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for its quarter ended September 30, 2018.

           
Three months ended Nine months ended
Key Financial Metrics September 30, % September 30, %
(in millions except per share data)       2018   2017   Change   2018   2017   Change
GAAP:    
Total revenues $ 203.2 $ 175.6 16% $ 602.3 $ 500.8 20%
Net income (loss) $ 2.5 $ (1.3 ) n/m $ 4.5 $ (20.9 ) n/m
Net income (loss) per diluted share attributable to Envestnet, Inc. $ 0.06 $ (0.03 ) n/m $ 0.12 $ (0.48 ) n/m
 
Non-GAAP:
Adjusted EBITDA(1) $ 42.6 $ 34.8 22% $ 110.1 $ 90.2 22%
Adjusted net income(1) $ 25.3 $ 17.3 46% $ 62.2 $ 41.9 48%
Adjusted net income per diluted share(1) $ 0.53 $ 0.37 43% $ 1.32 $ 0.91 45%
n/m – Not meaningful
 

In the third quarter, Envestnet grew revenue 16%, adjusted EBITDA 22%, and adjusted earnings per share 43% over the prior year period, said Jud Bergman, Chairman and CEO.

Success will require embracing both deep integration and open architecture as the industry evolves. Across the wealth tech vertical, there are opportunities to build it, partner with third parties, or acquire it. Over the near term, we expect to be active in all three approaches as we offer the best of both worlds to our customers – a fully integrated wealth management solution, yet open architecture to give them choice as to how they best deliver better outcomes to their clients, concluded Mr. Bergman.

Financial Results for the Third Quarter of 2018:

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Total revenues increased 16% to $203.2 million for the third quarter of 2018 from $175.6 million for the third quarter of 2017. Revenues for FolioDynamix, which the Company acquired in January 2018, were $16.4 million for the third quarter of 2018. The Companys total revenues for the third quarter of 2018 were negatively impacted by $3.7 million due to the adoption of ASU 2014-09. Excluding the effect of these items, total revenues grew 8% for the third quarter of 2018 compared to the prior year period.

Asset-based revenues were 59% of total revenues for the third quarter of 2018, compared to 60% of total revenues for the same period in 2017, and increased 12% from the prior year period. Subscription-based revenues were 38% of total revenues for the third quarter of 2018, compared to 36% of total revenues for the same period in 2017, and increased 21% from the prior year period. Professional services and other non-recurring revenues increased 21% from the prior year period.

Total operating expenses for the third quarter of 2018 increased 17% to $199.8 million from $171.3 million in the prior year period. Cost of revenues increased 16% to $65.0 million for the third quarter of 2018 from $56.1 million for the third quarter of 2017. Compensation and benefits increased 17% to $80.4 million for the third quarter of 2018 from $68.6 million for the prior year period. Compensation and benefits were 40% of total revenues for the third quarter of 2018, compared to 39% in the prior year period. General and administration expenses increased 12% to $34.8 million for the third quarter of 2018 from $31.2 million for the prior year period. General and administrative expenses were 17% of total revenues for the third quarter of 2018, compared to 18% in the prior year period. FolioDynamix was a significant contributor to the year-over-year increase in cost of revenues, compensation and benefits, and general and administrative expenses for the third quarter of 2018. Excluding FolioDynamix, operating expenses for the third quarter of 2018 increased 5% to $179.0 million compared to the prior year period.

Income from operations was $3.4 million for the third quarter of 2018 compared to $4.3 million for the third quarter of 2017. Net income was $2.5 million for the third quarter of 2018 compared to a loss of $1.3 million for the third quarter of 2017. Net income per diluted share attributable to Envestnet, Inc. was $0.06 for the third quarter of 2018 compared to a loss of $0.03 for the third quarter of 2017.

Adjusted EBITDA(1) for the third quarter of 2018 increased 22% to $42.6 million from $34.8 million for the prior year period. Adjusted Net Income(1) increased 46% for the third quarter of 2018 to $25.3 million from $17.3 million for the prior year period. Adjusted Net Income per Diluted Share(1) for the third quarter of 2018 increased 43% to $0.53 from $0.37 in the third quarter of 2017.

Outlook

The Company provided the following outlook for the fourth quarter and full year ended December 31, 2018. This outlook is based on the market value of assets on September 30, 2018.

       
In Millions Except Adjusted EPS 4Q 2018 FY 2018
GAAP:            
Revenues:
Asset-based $ 123.5 $ 124.0
Subscription-based 78.5   79.0  
Total recurring revenues $ 202.0 $ 203.0
Professional services and other revenues 7.5       8.0  
Total revenues $ 209.5 $ 211.0 $ 812 $ 813
 
Cost of revenues $ 68.0 $ 68.5
Net income
 
Diluted shares outstanding 47.6
Net Income per diluted share
 
Non-GAAP:
Adjusted EBITDA(1) $ 46.0 $ 47.0 $ 156 $ 157
Adjusted net income per diluted share(1) $0.59 $1.91
 

The Company 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 third quarter 2018 financial results today at 5:00 p.m. ET. The live webcast can be accessed from Envestnets investor relations website at http://ir.envestnet.com/. The call can also be accessed live over the phone by dialing (800) 263-0877, or for international callers (646) 828-8143. A replay will be available two hours after the call and can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers; the conference ID is 8690281. The dial-in replay will be available for one week and the webcast replay will be available for one month following the date of the conference call.

About Envestnet

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

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

More than 92,000 advisors and more than 3,500 companies including: 15 of the 20 largest U.S. banks, 43 of the 50 largest wealth management and brokerage firms, over 500 of the largest Registered Investment Advisers, and hundreds of Internet services companies, leverage Envestnet technology and services. Envestnet solutions enhance knowledge of the client, accelerate client on-boarding, improve client digital experiences, and help drive better outcomes for enterprises, advisors, and their clients.

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

______________________________________

(1) Non-GAAP Financial Measures

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

Adjusted net income represents net income before deferred revenue fair value adjustment, accretion on contingent consideration and purchase liability, non-cash interest expense, non-cash compensation expense, restructuring charges and transaction costs, severance, amortization of acquired intangibles, litigation related expense, foreign currency, non-income tax expense adjustment, loss allocation from equity method investment and loss attributable to non-controlling interest. Reconciling items are presented gross of tax, and a normalized tax rate is applied to the total of all reconciling items to arrive at adjusted net income.

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

See reconciliation of Non-GAAP Financial Measures on pages 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 Companys Non-GAAP Financial Measures should not be viewed as a substitute for revenues, net income or net income per share determined in accordance with GAAP.

Cautionary Statement Regarding Forward-Looking Statements

The forward-looking statements made in this press release and its attachments concerning, among other things, Envestnet, Inc.s expected financial performance and outlook for the third quarter and full year of 2018, its strategic operational plans and growth strategy are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties and the Companys 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 possibility that the anticipated benefits of the Companys acquisition of FolioDynamix will not be realized to the extent or when expected, difficulty in sustaining rapid revenue growth, which may place significant demands on the Companys administrative, operational and financial resources, the concentration of nearly all of our revenues 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 fee percentages or termination of our services by our clients, our ability to identify potential acquisition candidates, complete acquisitions and successfully integrate acquired companies, the impact of market and economic conditions on revenues, our inability 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 expand our relationships with existing customers, grow the number of customers and derive revenue from new offerings such as our data analytics solutions and market research services and premium financial applications (FinApps), compliance failures, adverse judicial or regulatory proceedings against us, liabilities associated with potential, perceived or actual breaches of fiduciary duties and/or conflicts of interest, changes in laws and regulations, including tax laws and regulations, general economic conditions, political and regulatory conditions, the impact of fluctuations in market condition and interest rates on the demand for our products and services and the value of assets under management or administration, the impact of market conditions on our ability to issue debt and equity, the impact of fluctuations in interest rates on our cost of borrowing, our financial performance, the results of our investments in research and development, our data center and other infrastructure, our ability to maintain the security and integrity of our systems and facilities and to maintain the privacy of personal information, failure of our systems to work properly, our ability to realize operating efficiencies, the advantages of our solutions as compared to those of others, the failure to protect our intellectual property rights, our ability to establish and maintain intellectual property rights, our ability to retain and hire necessary employees and appropriately staff our operations, and managements response to these factors. More information regarding these and other risks, uncertainties and factors is contained in the Companys filings with the Securities and Exchange Commission (SEC) which are available on the SECs website at www.sec.gov or the Companys Investor Relations website at http://ir.envestnet.com/. You are cautioned not to unduly rely on these forward-looking statements, which speak only as of the date of this press release. All information in this press release and its attachments is as of November 7, 2018 and, unless required by law, the Company undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this press release or to report the occurrence of unanticipated events.

       
Envestnet, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
September 30, December 31,
2018 2017
Assets
Current assets:
Cash and cash equivalents $ 153,542 $ 60,115
Fees receivable, net 64,635 51,522
Prepaid expenses and other current assets 23,965   19,470
Total current assets 242,142   131,107
 
Property and equipment, net 44,713 35,909
Internally developed software, net 34,077 22,174
Intangible assets, net 318,267 222,731
Goodwill 519,923 432,955
Other non-current assets 23,893   17,176
Total assets $ 1,183,015   $ 862,052
 
Liabilities and Equity
Current liabilities:
Convertible Notes due 2019 $ 164,003 $
Accrued expenses and other liabilities 124,364 105,897
Accounts payable 20,577 11,097
Contingent consideration 719 2,115
Deferred revenue 24,423   21,246
Total current liabilities 334,086 140,355
 
Convertible Notes due 2023 292,078
Convertible Notes due 2019 158,990
Revolving credit facility 81,168
Contingent consideration 666
Deferred revenue 7,283 12,047
Deferred rent and lease incentive 17,373 15,185
Deferred tax liabilities, net 1,943 969
Other non-current liabilities 17,437   15,102
Total liabilities 670,200   424,482
 
Redeemable units in ERS 900 900
Equity:
Stockholders equity 512,054 436,272
Non-controlling interest (139 ) 398
Total liabilities and equity $ 1,183,015   $ 862,052
 
       
Envestnet, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share information)
(unaudited)
 
Three Months Ended Nine Months Ended
September 30, September 30,
2018   2017 2018   2017
Revenues:
Asset-based $ 119,097 $ 106,147 $ 358,361 $ 299,268
Subscription-based 76,194   62,963   217,668   180,675  
Total recurring revenues 195,291 169,110 576,029 479,943
Professional services and other revenues 7,865   6,504   26,254   20,874  
Total revenues 203,156   175,614   602,283   500,817  
 
Operating expenses:
Cost of revenues 64,964 56,070 195,525 161,031
Compensation and benefits 80,424 68,551 244,174 199,079
General and administration 34,810 31,153 101,628 90,178
Depreciation and amortization 19,563   15,492   58,294   46,792  
Total operating expenses 199,761   171,266   599,621   497,080  
 
Income from operations 3,395 4,348 2,662 3,737
Other expense, net (6,118 ) (3,986 ) (16,802 ) (13,838 )
Income (loss) before income tax provision (benefit) (2,723 ) 362 (14,140 ) (10,101 )
 
Income tax provision (benefit) (5,234 ) 1,682   (18,662 ) 10,824  
 
Net income (loss) 2,511 (1,320 ) 4,522 (20,925 )
Add: Net loss attributable to non-controlling interest 443     1,010    
Net income (loss) attributable to Envestnet, Inc. $ 2,954   $ (1,320 ) $ 5,532   $ (20,925 )
 
Net income (loss) per share attributable to Envestnet, Inc.:
Basic $ 0.06   $ (0.03 ) $ 0.12   $ (0.48 )
 
Diluted $ 0.06   $ (0.03 ) $ 0.12   $ (0.48 )
 
Weighted average common shares outstanding:
Basic 45,475,884   44,044,527   45,087,932   43,604,869  
 
Diluted 47,519,160   44,044,527   47,269,479   43,604,869  
 
     
Envestnet, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
Nine Months Ended
September 30,
2018   2017
OPERATING ACTIVITIES:
Net income (loss) $ 4,522 $ (20,925 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 58,294 46,792
Deferred rent and lease incentive amortization 408 709
Provision for doubtful accounts 1,228 828
Deferred income taxes (21,854 ) 6,646
Stock-based compensation expense 29,574 23,451
Non-cash interest expense 12,337 8,711
Accretion on contingent consideration and purchase liability 209 408
Payments of contingent consideration (357 )
Loss allocation from equity method investment 1,069 984
Loss on disposal of fixed assets 57 69
Changes in operating assets and liabilities, net of acquisitions:
Fees receivables, net (9,131 ) (6,286 )
Prepaid expenses and other current assets (4,739 ) (5,316 )
Other non-current assets (2,888 ) (1,784 )
Accrued expenses and other liabilities 6,710 13,289
Accounts payable 4,100 1,435
Deferred revenue 1,147 740
Other non-current liabilities 2,271   1,852  
Net cash provided by operating activities 83,314   71,246  
 
INVESTING ACTIVITIES:
Purchase of property and equipment (17,088 ) (11,432 )
Capitalization of internally developed software (17,611 ) (9,210 )
Acquisition of business (194,959 ) (1,450 )
Net cash used in investing activities (229,658 ) (22,092 )
 
FINANCING ACTIVITIES:
Proceeds from issuance of Convertible Notes due 2023 345,000
Convertible Notes due 2023 issuance costs (9,982 )
Proceeds from borrowings on revolving credit facility 195,000 35,000
Revolving credit facility issuance costs (94 )
Payments on revolving credit facility (276,168 ) (42,500 )
Payments of contingent consideration (2,193 ) (1,929 )
Payments of definite consideration (445 )
Payments of purchase consideration liabilities (235 )
Payment of Term Notes (35,862 )
Proceeds from exercise of stock options 5,199 4,468
Purchase of treasury stock for stock-based tax withholdings (17,884 ) (11,619 )
Issuance of restricted stock units 4   4  
Net cash provided by (used in) financing activities 238,976   (53,212 )
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,047 ) 170
 
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 91,585   (3,888 )
 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD 62,115 54,592
   
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (a) $ 153,700   $ 50,704  
 
(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:
September 30, December 31,
2018 2017
Current Assets:
Cash and cash equivalents $ 153,542 $ 60,115
Restricted cash included in prepaid expenses and other current assets 158   2,000  
Total cash, cash equivalents and restricted cash $ 153,700   $ 62,115  
 
       
Envestnet, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except share and per share information)
(unaudited)
 
Three Months Ended Nine Months Ended
September 30, September 30,
2018   2017 2018   2017
Total revenues $ 203,156 $ 175,614 $ 602,283 $ 500,817
Deferred revenue fair value adjustment 26   15   92   120  
Adjusted revenues $ 203,182   $ 175,629   $ 602,375   $ 500,937  
 
Net income (loss) $ 2,511 $ (1,320 ) $ 4,522 $ (20,925 )
Add (deduct):
Deferred revenue fair value adjustment 26 15 92 120
Interest income (619 ) (58 ) (1,403 ) (108 )
Interest expense 6,920 3,858 18,148 12,671
Accretion on contingent consideration and purchase liability 13 104 209 408
Income tax provision (benefit) (5,234 ) 1,682 (18,662 ) 10,824
Depreciation and amortization 19,563 15,492 58,294 46,792
Non-cash compensation expense 10,603 8,048 29,574 23,451
Restructuring charges and transaction costs 4,096 4,608 10,033 10,235
Severance 4,408 1,597 8,269 2,260
Litigation related expense 1,033
Foreign currency (431 ) (116 ) (1,002 ) 296
Non-income tax expense adjustment (23 ) 571 (124 ) 1,734
Loss allocation from equity method investment 258 282 1,069 984
Loss attributable to non-controlling interest 488   26   1,072   377  
Adjusted EBITDA $ 42,580   $ 34,789   $ 110,092   $ 90,152  
 
Net income (loss) $ 2,511 $ (1,320 ) $ 4,522 $ (20,925 )
Income tax provision (benefit) (1) (5,234 ) 1,682   (18,662 ) 10,824  
Loss before income tax provision (benefit) (2,723 ) 362 $ (14,140 ) $ (10,101 )
Add (deduct):
Deferred revenue fair value adjustment 26 15 92 120
Accretion on contingent consideration and purchase liability 13 104 209 408
Non-cash interest expense 4,435 2,931 9,335 7,784
Non-cash compensation expense 10,603 8,048 29,574 23,451
Restructuring charges and transaction costs 4,096 4,608 10,033 10,235
Severance 4,408 1,597 8,269 2,260
Amortization of acquired intangibles 13,477 10,377 40,831 31,333
Litigation related expense 1,033
Foreign currency (431 ) (116 ) (1,002 ) 296
Non-income tax expense adjustment (23 ) 571 (124 ) 1,734
Loss allocation from equity method investment 258 282 1,069 984
Loss attributable to non-controlling interest 488   26   1,072   377  
Adjusted net income before income tax effect 34,627 28,805 85,218 69,914
Income tax effect (2) (9,348 ) (11,522 ) (23,008 ) (27,966 )
Adjusted net income $ 25,279   $ 17,283   $ 62,210   $ 41,948  
 
Basic number of weighted-average shares outstanding 45,475,884 44,044,527 45,087,932 43,604,869
Effect of dilutive shares:
Options to purchase common stock 1,323,712 1,664,351 1,348,699 1,669,092
Unvested restricted stock units 719,564   736,657   832,848   637,580  
Diluted number of weighted-average shares outstanding 47,519,160   46,445,535   47,269,479   45,911,541  
 
Adjusted net income per share – diluted $ 0.53   $ 0.37   $ 1.32   $ 0.91  
 
(1) For the three months ended September 30, 2018 and 2017, the effective tax rate computed in accordance with US GAAP equaled 192.2% and 464.6%, respectively. For the nine months ended September 30, 2018 and 2017, the effective tax rate computed in accordance with US GAAP equaled 132.0% and (107.2)%, respectively.
(2) Estimated normalized effective tax rates of 27% and 40% have been used to compute adjusted net income for the three and nine months ended September 30, 2018 and 2017, respectively.
 
     
Envestnet, Inc.
Reconciliation of Non-GAAP Financial Measures
Segment Information
(in thousands)
(unaudited)
 
Three months ended September 30, 2018
Envestnet   Envestnet | Yodlee   Nonsegment   Total
Revenues $ 157,467 $ 45,689 $ $ 203,156
Deferred revenue fair value adjustment 26       26  
Adjusted revenues $ 157,493   $ 45,689   $   $ 203,182  
 
Income (loss) from operations $ 16,549 $ (1,103 ) $ (12,051 ) $ 3,395
Add:
Deferred revenue fair value adjustment 26 26
Accretion on contingent consideration and purchase liability 13 13
Depreciation and amortization 11,422 8,141 19,563
Non-cash compensation expense 5,010 3,165 2,428 10,603
Restructuring charges and transaction costs 2,198 310 1,588 4,096
Non-income tax expense adjustment (147 ) (147 )
Severance 4,381 27 4,408
Other loss 135 135
Loss attributable to non-controlling interest 488       488  
Adjusted EBITDA $ 39,940   $ 10,513   $ (7,873 ) $ 42,580  
 
     
Three Months Ended September 30, 2017
Envestnet   Envestnet | Yodlee   Nonsegment   Total
Revenues $ 135,948 $ 39,666 $ $ 175,614
Deferred revenue fair value adjustment   15     15  
Adjusted revenues $ 135,948   $ 39,681   $   $ 175,629  
 
Income (loss) from operations $ 18,955 $ (3,364 ) $ (11,243 ) $ 4,348
Add:
Deferred revenue fair value adjustment 15 15
Accretion on contingent consideration and purchase liability 104 104
Depreciation and amortization 6,414 9,078 15,492
Non-cash compensation expense 3,679 2,675 1,694 8,048
Restructuring charges and transaction costs 73 4,535 4,608
Non-income tax expense adjustment 571 571
Severance 1,519 78 1,597
Litigation related expense
Other gain (20 ) (20 )
Loss attributable to non-controlling interest 26       26  
Adjusted EBITDA $ 31,341   $ 8,482   $ (5,034 ) $ 34,789  
 
     
Nine months ended September 30, 2018
Envestnet   Envestnet | Yodlee   Nonsegment   Total
Revenues $ 470,383 $ 131,900 $ $ 602,283
Deferred revenue fair value adjustment 84   8     92  
Adjusted revenues $ 470,467   $ 131,908   $   $ 602,375  
 
Income (loss) from operations $ 48,769 $ (8,808 ) $ (37,299 ) $ 2,662
Add:
Deferred revenue fair value adjustment 84 8 92
Accretion on contingent consideration and purchase liability 209 209
Depreciation and amortization 33,921 24,373 58,294
Non-cash compensation expense 14,144 8,565 6,865 29,574
Restructuring charges and transaction costs 2,423 913 6,697 10,033
Non-income tax expense adjustment (124 ) (124 )
Severance 7,859 383 27 8,269
Other loss 11 11
Loss attributable to non-controlling interest 1,072       1,072  
Adjusted EBITDA $ 108,357   $ 25,434   $ (23,699 ) $ 110,092  
 
     
Nine Months Ended September 30, 2017
Envestnet   Envestnet | Yodlee   Nonsegment   Total
Revenues $ 386,638 $ 114,179 $ $ 500,817
Deferred revenue fair value adjustment 36   84     120
Adjusted revenues $ 386,674   $ 114,263   $   $ 500,937
 
Income (loss) from operations $ 48,277 $ (16,707 ) $ (27,833 ) $ 3,737
Add:
Deferred revenue fair value adjustment 36 84 120
Accretion on contingent consideration and purchase liability 408 408
Depreciation and amortization 19,196 27,596 46,792
Non-cash compensation expense 11,571 8,137 3,743 23,451
Restructuring charges and transaction costs 768 9,467 10,235
Non-income tax expense adjustment 1,734 1,734
Severance 1,942 302 16 2,260
Litigation related expense 1,033 1,033
Other loss 5 5
Loss attributable to non-controlling interest 377       377
Adjusted EBITDA $ 84,309   $ 20,445   $ (14,602 ) $ 90,152
 
     
Envestnet, Inc.
Historical Assets, Accounts and Advisors
(in millions, except accounts and advisors)
(unaudited)
 
As of
September 30,   December 31,   March 31,   June 30,   September 30,
2017   2017   2018   2018   2018
(in millions except accounts and advisors data)
Platform Assets
Assets under Management (AUM) $ 131,809 $ 141,518 $ 143,945 $ 148,537 $ 153,862
Assets under Administration (AUA) 293,963   308,480   353,379   360,850   388,066
Subtotal AUM/A 425,772 449,998 497,324 509,387 541,928
Subscription 1,161,893   1,253,528   2,076,382   2,167,084   2,297,593
Total Platform Assets $ 1,587,665   $ 1,703,526   $ 2,573,706   $ 2,676,471   $ 2,839,521
Platform Accounts
AUM 652,060 685,925 724,774 759,926 776,705
AUA 1,145,050   1,217,697   1,389,489   1,417,795   1,517,297
Subtotal AUM/A 1,797,110 1,903,622 2,114,263 2,177,721 2,294,002
Subscription 4,944,640   5,054,015   7,985,777   8,042,900   8,185,667
Total Platform Accounts 6,741,750   6,957,637   10,100,040   10,220,621   10,479,669
Advisors
AUM/A 40,379 40,485 44,790 44,900 47,292
Subscription 24,501   25,566   43,037   43,700   45,619
Total Advisors 64,880   66,051   87,827   88,600   92,911
 

The following table summarizes the changes in AUM and AUA for the three months ended September 30, 2018:

                 
In Millions Except Accounts 6/30/2018

Gross Sales

Redemp- tions

Net Flows

Market Impact

Reclass to Subscription

9/30/2018
 
Assets under Management (AUM) $ 148,537 $ 13,086 $ (8,587 ) $ 4,499 $ 3,920 $ (3,094 ) $ 153,862
Assets under Administration (AUA) 360,850 33,648 (18,677 ) 14,971 12,245   388,066
Total AUM/A $ 509,387 $ 46,734 $ (27,264 ) $ 19,470 $ 16,165 $ (3,094 ) $ 541,928
 
Fee-Based Accounts 2,177,721 120,183 (3,902 ) 2,294,002
 

The above AUM/A gross sales figures include $8.7 billion in new client conversions. The Company onboarded an additional $34.5 billion in subscription conversions during the three months ended September 30, 2018, bringing total conversions for the quarter to $43.2 billion.

Envestnet
Investor Relations
[email protected]
(312)
827-3940
or
Media Relations
[email protected]

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