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Envestnet Reports Third 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 nine months ended September 30, 2023.

 

Three months ended

 

 

 

Nine months ended

 

 

Key Financial Metrics

 

September 30,

 

%

 

September 30,

 

%

(in millions, except per share data)

 

2023

 

2022

 

Change

 

2023

 

2022

 

Change

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

316.8

 

$

306.7

 

 

3

%

 

$

928.0

 

 

$

946.9

 

 

(2

)%

Net income (loss) attributable to Envestnet, Inc.

 

$

7.1

 

$

(7.3

)

 

*

 

$

(55.6

)

 

$

(44.4

)

 

(25

)%

Net income (loss) attributable to Envestnet, Inc. per

diluted share

 

$

0.13

 

$

(0.13

)

 

*

 

$

(1.02

)

 

$

(0.81

)

 

(26

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenue(1)

 

$

316.8

 

$

306.7

 

 

3

%

 

$

928.1

 

 

$

947.1

 

 

(2

)%

Adjusted EBITDA(1)

 

$

67.2

 

$

53.5

 

 

26

%

 

$

180.5

 

 

$

166.3

 

 

8

%

Adjusted net income(1)

 

$

36.6

 

$

29.5

 

 

24

%

 

$

97.2

 

 

$

92.6

 

 

5

%

Adjusted net income per diluted share(1)

 

$

0.56

 

$

0.45

 

 

24

%

 

$

1.47

 

 

$

1.41

 

 

4

%

*Not meaningful

“Envestnet delivers the modern, connected technology platform to lead the industry, making us more embedded and essential to the growth of our clients,” said Bill Crager, Chief Executive Officer. “Our investment cycle is complete. We are now a structurally higher margin company than we were before, have significantly extended our competitive position and our long-term growth thesis is intact.”

Financial Results for the Third Quarter of 2023

Asset-based recurring revenue increased 9% from the third quarter of 2022, and represented 61% of total revenue for the third quarter of 2023, compared to 58% for the third quarter of 2022. Subscription-based recurring revenue decreased 7% from the third quarter of 2022, and represented 36% of total revenue for the third quarter of 2023, compared to 40% for the third quarter of 2022. Professional services and other non-recurring revenue increased 38% from the prior year period. Total revenue increased 3% to $316.8 million for the third quarter of 2023 from $306.7 million for the third quarter of 2022.

Total operating expenses for the third quarter of 2023 increased 3% to $316.2 million from $307.7 million in the prior year period. Direct expense increased to $119.5 million for the third quarter of 2023 from $110.1 million for the prior year period. Employee compensation decreased 3% to $113.3 million for the third quarter of 2023 from $116.8 million for the prior year period. Employee compensation was 36% of total revenue for the third quarter of 2023, compared to 38% for the prior year period. General and administrative expenses increased 4% to $49.1 million for the third quarter of 2023 from $47.4 million for the prior year period. General and administrative expenses remained consistent at 15% of total revenue for both the third quarter of 2023 and the prior year period.

Income from operations was $0.6 million for the third quarter of 2023 compared to a loss of $1.0 million for the third quarter of 2022. Net income attributable to Envestnet, Inc. was $7.1 million for the third quarter of 2023 compared to a net loss attributable to Envestnet, Inc. of $7.3 million for the third quarter of 2022. Net income attributable to Envestnet, Inc. per diluted share was $0.13 for the third quarter of 2023 compared to a net loss attributable to Envestnet, Inc. per diluted share of $(0.13) for the third quarter of 2022.

Adjusted revenue(1) for the third quarter of 2023 increased 3% to $316.8 million from $306.7 million for the prior year period. Adjusted EBITDA(1) for the third quarter of 2023 increased to $67.2 million from $53.5 million for the prior year period. Adjusted net income(1) increased 24% for the third quarter of 2023 to $36.6 million from $29.5 million for the prior year period. Adjusted net income per diluted share(1) for the third quarter of 2023 increased 24% to $0.56 from $0.45 in the third quarter of 2022.

Balance Sheet and Liquidity

As of September 30, 2023, Envestnet had $43.2 million in cash and cash equivalents and $892.5 million in outstanding debt. Debt as of September 30, 2023 consists 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 September 30, 2023.

Outlook

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

 

4Q 2023

 

FY 2023

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based

 

$

183.5

 

-

 

$

186.5

 

$

740.1

 

-

 

$

743.1

Subscription-based

 

 

115.5

 

-

 

 

117.0

 

 

462.5

 

-

 

 

464.0

Total recurring revenue

 

 

299.0

 

-

 

 

303.5

 

 

1,202.6

 

-

 

 

1,207.1

Professional services and other revenue

 

 

10.0

 

-

 

 

10.5

 

 

34.4

 

-

 

 

34.9

Total revenue

 

$

309.0

 

-

 

$

314.0

 

$

1,237.0

 

-

 

$

1,242.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based direct expense

 

$

109.0

 

-

 

$

110.5

 

$

433.1

 

-

 

$

434.6

Total direct expense

 

$

117.5

 

-

 

$

119.0

 

$

469.5

 

-

 

$

471.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

(a)

 

 

 

 

 

(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

 

 

66.1

 

 

 

 

 

66.0

 

 

Net income per diluted share

 

 

 

(a)

 

 

 

 

 

(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenue(1):

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based

 

$

183.5

 

-

 

$

186.5

 

$

740.1

 

-

 

$

743.1

Subscription-based

 

 

115.5

 

-

 

 

117.0

 

 

462.6

 

-

 

 

464.1

Total recurring revenue

 

 

299.0

 

-

 

 

303.5

 

 

1,202.7

 

-

 

 

1,207.2

Professional services and other revenue

 

 

10.0

 

-

 

 

10.5

 

 

34.4

 

-

 

 

34.9

Total revenue

 

$

309.0

 

-

 

$

314.0

 

$

1,237.1

 

-

 

$

1,242.1

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

64.5

 

-

 

$

68.5

 

$

245.0

 

-

 

$

249.0

Adjusted net income per diluted share(1)

 

$

0.51

 

-

 

$

0.54

 

$

1.98

 

-

 

$

2.01

(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 third 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, 48 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 expense, 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 expense, 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.

For further information see reconciliations of Non-GAAP Financial Measures on pages 9-14 of this press release, and the section entitled "Non-GAAP Financial Measures" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) which are available on the SEC’s website at 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 fourth 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 our actual results could differ materially from the results expressed or implied by such forward-looking statements. Furthermore, reported results should not be considered as an indication of future performance. The potential risks, uncertainties and other factors that could cause actual results to differ from those expressed by the forward-looking statements in this press release include, but are not limited to, the 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 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 November 8, 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)

 

 

 

September 30,

 

December 31,

 

 

2023

 

2022

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

43,211

 

$

162,173

Fees receivable, net

 

 

110,643

 

 

101,696

Prepaid expenses and other current assets

 

 

49,299

 

 

41,363

Total current assets

 

 

203,153

 

 

305,232

Property and equipment, net

 

 

65,785

 

 

62,443

Internally developed software, net

 

 

217,411

 

 

184,558

Intangible assets, net

 

 

346,211

 

 

379,995

Goodwill

 

 

998,381

 

 

998,414

Operating lease right-of-use assets, net

 

 

72,929

 

 

81,596

Other assets

 

 

127,019

 

 

99,927

Total assets

 

$

2,030,889

 

$

2,112,165

 

 

 

 

 

Liabilities and equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable, accrued expenses and other current liabilities

 

$

224,385

 

$

233,866

Operating lease liabilities

 

 

13,297

 

 

11,949

Deferred revenue

 

 

32,563

 

 

36,363

Current portion of debt

 

 

 

 

44,886

Total current liabilities

 

 

270,245

 

 

327,064

Debt

 

 

875,390

 

 

871,769

Operating lease liabilities, net of current portion

 

 

102,717

 

 

110,652

Deferred tax liabilities, net

 

 

14,598

 

 

16,196

Other liabilities

 

 

16,138

 

 

18,880

Total liabilities

 

 

1,279,088

 

 

1,344,561

 

 

 

 

 

Equity:

 

 

 

 

Total stockholders’ equity, attributable to Envestnet, Inc.

 

 

743,796

 

 

754,567

Non-controlling interest

 

 

8,005

 

 

13,037

Total liabilities and equity

 

$

2,030,889

 

$

2,112,165

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,

 

 

2023

 

2022

 

2023

 

2022

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

193,901

 

 

$

177,131

 

 

$

556,595

 

 

$

571,820

 

Subscription-based

 

 

114,939

 

 

 

123,747

 

 

 

346,977

 

 

 

356,601

 

Total recurring revenue

 

 

308,840

 

 

 

300,878

 

 

 

903,572

 

 

 

928,421

 

Professional services and other revenue

 

 

8,007

 

 

 

5,817

 

 

 

24,416

 

 

 

18,489

 

Total revenue

 

 

316,847

 

 

 

306,695

 

 

 

927,988

 

 

 

946,910

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense

 

 

119,538

 

 

 

110,108

 

 

 

352,024

 

 

 

361,872

 

Employee compensation

 

 

113,334

 

 

 

116,837

 

 

 

344,646

 

 

 

369,453

 

General and administrative

 

 

49,063

 

 

 

47,388

 

 

 

156,028

 

 

 

157,867

 

Depreciation and amortization

 

 

34,311

 

 

 

33,408

 

 

 

101,058

 

 

 

97,208

 

Total operating expenses

 

 

316,246

 

 

 

307,741

 

 

 

953,756

 

 

 

986,400

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

601

 

 

 

(1,046

)

 

 

(25,768

)

 

 

(39,490

)

Other expense, net

 

 

(4,369

)

 

 

(5,346

)

 

 

(19,706

)

 

 

(9,691

)

Loss before income tax provision (benefit)

 

 

(3,768

)

 

 

(6,392

)

 

 

(45,474

)

 

 

(49,181

)

 

 

 

 

 

 

 

 

 

Income tax provision (benefit)

 

 

(8,824

)

 

 

2,271

 

 

 

15,363

 

 

 

(1,542

)

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

5,056

 

 

 

(8,663

)

 

 

(60,837

)

 

 

(47,639

)

Add: Net loss attributable to non-controlling interest

 

 

2,035

 

 

 

1,373

 

 

 

5,284

 

 

 

3,205

 

Net income (loss) attributable to Envestnet, Inc.

 

$

7,091

 

 

$

(7,290

)

 

$

(55,553

)

 

$

(44,434

)

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Envestnet, Inc. per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.13

 

 

$

(0.13

)

 

$

(1.02

)

 

$

(0.81

)

Diluted

 

$

0.13

 

 

$

(0.13

)

 

$

(1.02

)

 

$

(0.81

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

54,562,270

 

 

 

55,226,777

 

 

 

54,380,231

 

 

 

55,109,387

 

Diluted

 

 

54,970,616

 

 

 

55,226,777

 

 

 

54,380,231

 

 

 

55,109,387

 

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Nine Months Ended

 

 

September 30,

 

 

2023

 

2022

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(60,837

)

 

$

(47,639

)

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

 

 

 

 

Depreciation and amortization

 

 

101,058

 

 

 

97,208

 

Deferred income taxes

 

 

(1,458

)

 

 

(4,380

)

Release of uncertain tax positions

 

 

 

 

 

(3,095

)

Non-cash compensation expense

 

 

58,141

 

 

 

62,583

 

Non-cash interest expense

 

 

6,822

 

 

 

5,436

 

Loss allocations from equity method investments

 

 

8,240

 

 

 

5,332

 

Fair market value adjustment to investment in private company

 

 

(2,804

)

 

 

 

Dilution gain on equity method investee share issuance

 

 

(546

)

 

 

(6,934

)

Lease related impairments

 

 

2,483

 

 

 

14,050

 

Loss on property and equipment disposals - office closures

 

 

 

 

 

3,710

 

Other

 

 

1,155

 

 

 

(149

)

Changes in operating assets and liabilities:

 

 

 

 

Fees receivable, net

 

 

(9,621

)

 

 

1,546

 

Prepaid expenses and other assets

 

 

(17,534

)

 

 

(12,524

)

Accounts payable, accrued expenses and other liabilities

 

 

(1,848

)

 

 

(26,580

)

Deferred revenue

 

 

(3,974

)

 

 

(2,329

)

Net cash provided by operating activities

 

 

79,277

 

 

 

86,235

 

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

 

(18,275

)

 

 

(13,114

)

Capitalization of internally developed software

 

 

(71,117

)

 

 

(67,755

)

Acquisitions of businesses, net of cash acquired

 

 

 

 

 

(104,185

)

Investments in private companies

 

 

(4,175

)

 

 

(16,351

)

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

 

 

 

 

 

(6,350

)

Other

 

 

400

 

 

 

 

Net cash used in investing activities

 

 

(125,167

)

 

 

(226,755

)

Cash flows from financing activities:

 

 

 

 

Proceeds from borrowings on Revolving Credit Facility

 

 

55,000

 

 

 

 

Payments related to Revolving Credit Facility

 

 

(55,000

)

 

 

(1,872

)

Payments related to Convertible Notes

 

 

(45,000

)

 

 

 

Payments on finance lease obligations

 

 

(5,511

)

 

 

(14,544

)

Proceeds from exercise of stock options

 

 

839

 

 

 

2,559

 

Payments related to tax withholdings for stock-based compensation

 

 

(17,004

)

 

 

(20,613

)

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

 

 

4

 

 

 

5

 

Net cash used in financing activities

 

 

(76,969

)

 

 

(44,450

)

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

 

 

3,897

 

 

 

(3,128

)

Net change in cash, cash equivalents and restricted cash

 

 

(118,962

)

 

 

(188,098

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

162,173

 

 

 

429,428

 

Cash, cash equivalents and restricted cash, end of period

 

$

43,211

 

 

$

241,330

 

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2023

 

2022

 

2023

 

2022

Total revenue

 

$

316,847

 

 

$

306,695

 

 

$

927,988

 

 

$

946,910

 

Deferred revenue fair value adjustment (a)

 

 

 

 

 

54

 

 

 

69

 

 

 

162

 

Adjusted revenue

 

$

316,847

 

 

$

306,749

 

 

$

928,057

 

 

$

947,072

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

5,056

 

 

$

(8,663

)

 

$

(60,837

)

 

$

(47,639

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

 

 

 

54

 

 

 

69

 

 

 

162

 

Interest income (b)

 

 

(1,553

)

 

 

(1,239

)

 

 

(4,567

)

 

 

(2,273

)

Interest expense (b)

 

 

6,202

 

 

 

4,242

 

 

 

19,053

 

 

 

13,307

 

Income tax provision (benefit)

 

 

(8,824

)

 

 

2,271

 

 

 

15,363

 

 

 

(1,542

)

Depreciation and amortization

 

 

34,311

 

 

 

33,408

 

 

 

101,058

 

 

 

97,208

 

Non-cash compensation expense (d)

 

 

17,298

 

 

 

17,265

 

 

 

58,141

 

 

 

62,583

 

Restructuring charges and transaction costs (e)

 

 

1,695

 

 

 

3,895

 

 

 

12,366

 

 

 

27,267

 

Severance expense (d)

 

 

11,482

 

 

 

1,125

 

 

 

25,904

 

 

 

11,379

 

Litigation, regulatory and other governance related expenses (c)

 

 

604

 

 

 

(2,050

)

 

 

5,823

 

 

 

5,333

 

Foreign currency (b)

 

 

223

 

 

 

308

 

 

 

330

 

 

 

613

 

Non-income tax expense adjustment (c)

 

 

(26

)

 

 

(325

)

 

 

(224

)

 

 

(112

)

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

 

 

(2,871

)

 

 

 

 

 

(2,804

)

 

 

 

Dilution gain on equity method investee share issuance (b)

 

 

 

 

 

 

 

 

(546

)

 

 

(6,934

)

Loss allocations from equity method investments (b)

 

 

2,368

 

 

 

2,387

 

 

 

8,240

 

 

 

5,332

 

Loss attributable to non-controlling interest

 

 

1,277

 

 

 

820

 

 

 

3,082

 

 

 

1,637

 

Adjusted EBITDA

 

$

67,242

 

 

$

53,498

 

 

$

180,451

 

 

$

166,321

 

  1. Included within subscription-based revenue in the condensed consolidated statements of operations.
  2. Included within other expense, net in the condensed consolidated statements of operations.
  3. Included within general and administrative expense in the condensed consolidated statements of operations.
  4. Included within employee compensation expense in the condensed consolidated statements of operations.
  5. For the three months ended September 30, 2023 and 2022, $1.2 million and $4.1 million were included within general and administrative expense, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2023 and 2022, $0.5 million and $0.2 million were included within employee compensation expense, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2023 and 2022, $0.0 million and $(0.4) million were included within other expense, net, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2023 and 2022, $10.2 million and $27.5 million were included within general and administrative expense, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2023 and 2022, $2.2 million and $0.2 million were included within employee compensation expense, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2023 and 2022, $0.0 million and $(0.4) million were included within other expense, net, 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

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2023

 

2022

 

2023

 

2022

Net income (loss)

 

$

5,056

 

 

$

(8,663

)

 

$

(60,837

)

 

$

(47,639

)

Income tax provision (benefit) (a)

 

 

(8,824

)

 

 

2,271

 

 

 

15,363

 

 

 

(1,542

)

Loss before income tax provision (benefit)

 

 

(3,768

)

 

 

(6,392

)

 

 

(45,474

)

 

 

(49,181

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (b)

 

 

 

 

 

54

 

 

 

69

 

 

 

162

 

Non-cash interest expense (d)

 

 

1,389

 

 

 

1,443

 

 

 

4,258

 

 

 

4,917

 

Cash interest - Convertible Notes (d)

 

 

4,368

 

 

 

2,479

 

 

 

13,476

 

 

 

7,439

 

Non-cash compensation expense (e)

 

 

17,298

 

 

 

17,265

 

 

 

58,141

 

 

 

62,583

 

Restructuring charges and transaction costs (g)

 

 

1,695

 

 

 

3,895

 

 

 

12,366

 

 

 

27,267

 

Severance expense (e)

 

 

11,482

 

 

 

1,125

 

 

 

25,904

 

 

 

11,379

 

Amortization of acquired intangibles (f)

 

 

15,124

 

 

 

18,649

 

 

 

47,784

 

 

 

53,814

 

Litigation, regulatory and other governance related expenses (c)

 

 

604

 

 

 

(2,050

)

 

 

5,823

 

 

 

5,333

 

Foreign currency (d)

 

 

223

 

 

 

308

 

 

 

330

 

 

 

613

 

Non-income tax expense adjustment (c)

 

 

(26

)

 

 

(325

)

 

 

(224

)

 

 

(112

)

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

 

 

(2,871

)

 

 

 

 

 

(2,804

)

 

 

 

Dilution gain on equity method investee share issuance (d)

 

 

 

 

 

 

 

 

(546

)

 

 

(6,934

)

Loss allocations from equity method investments (d)

 

 

2,368

 

 

 

2,387

 

 

 

8,240

 

 

 

5,332

 

Loss attributable to non-controlling interest

 

 

1,277

 

 

 

820

 

 

 

3,082

 

 

 

1,637

 

Adjusted net income before income tax effect

 

 

49,163

 

 

 

39,658

 

 

 

130,425

 

 

 

124,249

 

Income tax effect (h)

 

 

(12,536

)

 

 

(10,112

)

 

 

(33,258

)

 

 

(31,683

)

Adjusted net income

 

$

36,627

 

 

$

29,546

 

 

$

97,167

 

 

$

92,566

 

 

 

 

 

 

 

 

 

 

Basic number of weighted-average shares outstanding

 

 

54,562,270

 

 

 

55,226,777

 

 

 

54,380,231

 

 

 

55,109,387

 

Effect of dilutive shares:

 

 

 

 

 

 

 

 

Convertible Notes

 

 

10,811,884

 

 

 

9,898,549

 

 

 

11,176,254

 

 

 

9,898,549

 

Non-vested RSUs and PSUs

 

 

361,982

 

 

 

208,367

 

 

 

438,520

 

 

 

378,061

 

Options to purchase common stock

 

 

46,364

 

 

 

74,559

 

 

 

64,507

 

 

 

123,267

 

Diluted number of weighted-average shares outstanding

 

 

65,782,500

 

 

 

65,408,252

 

 

 

66,059,512

 

 

 

65,509,264

 

 

 

 

 

 

 

 

 

 

Adjusted net income per diluted share

 

$

0.56

 

 

$

0.45

 

 

$

1.47

 

 

$

1.41

 

  1. For the three months ended September 30, 2023 and 2022, the effective tax rate computed in accordance with GAAP equaled 234.2% and (35.5)%, respectively. For the nine months ended September 30, 2023 and 2022, the effective tax rate computed in accordance with GAAP equaled (33.8)% and 3.1%, respectively.
  2. Included within subscription-based revenue in the condensed consolidated statements of operations.
  3. Included within general and administrative expense in the condensed consolidated statements of operations.
  4. Included within other expense, net in the condensed consolidated statements of operations.
  5. Included within employee compensation expense in the condensed consolidated statements of operations.
  6. Included within depreciation and amortization expense in the condensed consolidated statements of operations.
  7. For the three months ended September 30, 2023 and 2022, $1.2 million and $4.1 million were included within general and administrative expense, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2023 and 2022, $0.5 million and $0.2 million were included within employee compensation expense, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2023 and 2022, $0.0 million and $(0.4) million were included within other expense, net, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2023 and 2022, $10.2 million and $27.5 million were included within general and administrative expense, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2023 and 2022, $2.2 million and $0.2 million were included within employee compensation expense, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2023 and 2022, $0.0 million and $(0.4) million were included within other expense, net, respectively, in the condensed consolidated statements of operations.
  8. An estimated normalized tax rate of 25.5% has been used to compute adjusted net income for the three and nine months ended September 30, 2023 and 2022.

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information

(in thousands)

(unaudited)

 

 

 

Three Months Ended September 30, 2023

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Revenue

 

$

275,027

 

 

$

41,820

 

 

$

 

 

$

316,847

 

Deferred revenue fair value adjustment (a)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenue

 

$

275,027

 

 

$

41,820

 

 

$

 

 

$

316,847

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

193,901

 

 

$

 

 

$

 

 

$

193,901

 

Subscription-based

 

 

76,813

 

 

 

38,126

 

 

 

 

 

 

114,939

 

Total recurring revenue

 

 

270,714

 

 

 

38,126

 

 

 

 

 

 

308,840

 

Professional services and other revenue

 

 

4,313

 

 

 

3,694

 

 

 

 

 

 

8,007

 

Total revenue

 

$

275,027

 

 

$

41,820

 

 

$

 

 

$

316,847

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense

 

 

 

 

 

 

 

 

Asset-based

 

$

112,938

 

 

$

 

 

$

 

 

$

112,938

 

Subscription-based

 

 

1,451

 

 

 

5,523

 

 

 

 

 

 

6,974

 

Professional services and other

 

 

(384

)

 

 

10

 

 

 

 

 

 

(374

)

Total direct expense

 

 

114,005

 

 

 

5,533

 

 

 

 

 

 

119,538

 

Employee compensation

 

 

76,449

 

 

 

22,819

 

 

 

14,066

 

 

 

113,334

 

General and administrative

 

 

28,646

 

 

 

12,807

 

 

 

7,610

 

 

 

49,063

 

Depreciation and amortization

 

 

24,535

 

 

 

9,776

 

 

 

 

 

 

34,311

 

Total operating expenses

 

$

243,635

 

 

$

50,935

 

 

$

21,676

 

 

$

316,246

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

31,392

 

 

$

(9,115

)

 

$

(21,676

)

 

$

601

 

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

24,535

 

 

 

9,776

 

 

 

 

 

 

34,311

 

Non-cash compensation expense (c)

 

 

10,682

 

 

 

2,448

 

 

 

4,168

 

 

 

17,298

 

Restructuring charges and transaction costs (d)

 

 

1,432

 

 

 

(98

)

 

 

361

 

 

 

1,695

 

Severance expense (c)

 

 

4,501

 

 

 

6,302

 

 

 

679

 

 

 

11,482

 

Litigation, regulatory and other governance

related expenses (b)

 

 

 

 

 

629

 

 

 

(25

)

 

 

604

 

Non-income tax expense adjustment (b)

 

 

(26

)

 

 

 

 

 

 

 

 

(26

)

Loss attributable to non-controlling interest

 

 

1,277

 

 

 

 

 

 

 

 

 

1,277

 

Adjusted EBITDA

 

$

73,793

 

 

$

9,942

 

 

$

(16,493

)

 

$

67,242

 

  1. Included within subscription-based revenue in the condensed consolidated statements of operations.
  2. Included within general and administrative expense in the condensed consolidated statements of operations.
  3. Included within employee compensation expense in the condensed consolidated statements of operations.
  4. $1.2 million was included within general and administrative expense and $0.5 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)

 

 

 

Nine Months Ended September 30, 2023

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Revenue

 

$

803,268

 

 

$

124,720

 

 

$

 

 

$

927,988

 

Deferred revenue fair value adjustment (a)

 

 

69

 

 

 

 

 

 

 

 

 

69

 

Adjusted revenue

 

$

803,337

 

 

$

124,720

 

 

$

 

 

$

928,057

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

556,595

 

 

$

 

 

$

 

 

$

556,595

 

Subscription-based

 

 

228,807

 

 

 

118,170

 

 

 

 

 

 

346,977

 

Total recurring revenue

 

 

785,402

 

 

 

118,170

 

 

 

 

 

 

903,572

 

Professional services and other revenue

 

 

17,866

 

 

 

6,550

 

 

 

 

 

 

24,416

 

Total revenue

 

$

803,268

 

 

$

124,720

 

 

$

 

 

$

927,988

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense:

 

 

 

 

 

 

 

 

Asset-based

 

$

324,093

 

 

$

 

 

$

 

 

$

324,093

 

Subscription-based

 

 

4,328

 

 

 

15,941

 

 

 

 

 

 

20,269

 

Professional services and other

 

 

7,652

 

 

 

10

 

 

 

 

 

 

7,662

 

Total direct expense

 

 

336,073

 

 

 

15,951

 

 

 

 

 

 

352,024

 

Employee compensation

 

 

229,320

 

 

 

65,974

 

 

 

49,352

 

 

 

344,646

 

General and administrative

 

 

86,438

 

 

 

42,808

 

 

 

26,782

 

 

 

156,028

 

Depreciation and amortization

 

 

73,183

 

 

 

27,875

 

 

 

 

 

 

101,058

 

Total operating expenses

 

$

725,014

 

 

$

152,608

 

 

$

76,134

 

 

$

953,756

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

78,254

 

 

$

(27,888

)

 

$

(76,134

)

 

$

(25,768

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

69

 

 

 

 

 

 

 

 

 

69

 

Depreciation and amortization

 

 

73,183

 

 

 

27,875

 

 

 

 

 

 

101,058

 

Non-cash compensation expense (c)

 

 

33,967

 

 

 

7,837

 

 

 

16,337

 

 

 

58,141

 

Restructuring charges and transaction costs (d)

 

 

7,984

 

 

 

215

 

 

 

4,167

 

 

 

12,366

 

Severance expense (c)

 

 

9,931

 

 

 

11,849

 

 

 

4,124

 

 

 

25,904

 

Litigation, regulatory and other governance

related expenses (b)

 

 

 

 

 

4,163

 

 

 

1,660

 

 

 

5,823

 

Non-income tax expense adjustment (b)

 

 

(153

)

 

 

(71

)

 

 

 

 

 

(224

)

Loss attributable to non-controlling interest

 

 

3,082

 

 

 

 

 

 

 

 

 

3,082

 

Adjusted EBITDA

 

$

206,317

 

 

$

23,980

 

 

$

(49,846

)

 

$

180,451

 

  1. Included within subscription-based revenue in the condensed consolidated statements of operations.
  2. Included within general and administrative expense in the condensed consolidated statements of operations.
  3. Included within employee compensation expense in the condensed consolidated statements of operations.
  4. $10.2 million was included within general and administrative expense and $2.2 million was included within employee compensation expense in the condensed consolidated statements of operations.

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

 

 

 

Three months ended September 30, 2022

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Revenue

 

$

257,335

 

 

$

49,360

 

 

$

 

 

$

306,695

 

Deferred revenue fair value adjustment (a)

 

 

54

 

 

 

 

 

 

 

 

 

54

 

Adjusted revenue

 

$

257,389

 

 

$

49,360

 

 

$

 

 

$

306,749

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

177,131

 

 

$

 

 

$

 

 

$

177,131

 

Subscription-based

 

 

75,975

 

 

 

47,772

 

 

 

 

 

 

123,747

 

Total recurring revenue

 

 

253,106

 

 

 

47,772

 

 

 

 

 

 

300,878

 

Professional services and other revenue

 

 

4,229

 

 

 

1,588

 

 

 

 

 

 

5,817

 

Total revenue

 

$

257,335

 

 

$

49,360

 

 

$

 

 

$

306,695

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense:

 

 

 

 

 

 

 

 

Asset-based

 

$

102,409

 

 

$

 

 

$

 

 

$

102,409

 

Subscription-based

 

 

1,308

 

 

 

6,460

 

 

 

 

 

 

7,768

 

Professional services and other

 

 

(99

)

 

 

30

 

 

 

 

 

 

(69

)

Total direct expense

 

 

103,618

 

 

 

6,490

 

 

 

 

 

 

110,108

 

Employee compensation

 

 

77,010

 

 

 

26,174

 

 

 

13,653

 

 

 

116,837

 

General and administrative

 

 

31,463

 

 

 

7,851

 

 

 

8,074

 

 

 

47,388

 

Depreciation and amortization

 

 

24,637

 

 

 

8,771

 

 

 

 

 

 

33,408

 

Total operating expenses

 

$

236,728

 

 

$

49,286

 

 

$

21,727

 

 

$

307,741

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

20,607

 

 

$

74

 

 

$

(21,727

)

 

$

(1,046

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

54

 

 

 

 

 

 

 

 

 

54

 

Depreciation and amortization

 

 

24,637

 

 

 

8,771

 

 

 

 

 

 

33,408

 

Non-cash compensation expense (c)

 

 

11,235

 

 

 

2,991

 

 

 

3,039

 

 

 

17,265

 

Restructuring charges and transaction costs (d)

 

 

928

 

 

 

1,264

 

 

 

1,703

 

 

 

3,895

 

Severance expense (c)

 

 

686

 

 

 

281

 

 

 

158

 

 

 

1,125

 

Litigation, regulatory and other governance related expenses (b)

 

 

 

 

 

(2,050

)

 

 

 

 

 

(2,050

)

Non-income tax expense adjustment (b)

 

 

(343

)

 

 

18

 

 

 

 

 

 

(325

)

Loss attributable to non-controlling interest

 

 

820

 

 

 

 

 

 

 

 

 

820

 

Other (e)

 

 

352

 

 

 

 

 

 

 

 

 

352

 

Adjusted EBITDA

 

$

58,976

 

 

$

11,349

 

 

$

(16,827

)

 

$

53,498

 

  1. Included within subscription-based revenue in the condensed consolidated statements of operations.
  2. Included within general and administrative expense in the condensed consolidated statements of operations.
  3. Included within employee compensation expense in the condensed consolidated statements of operations.
  4. $4.1 million was included within general and administrative expense, $0.2 million was included within employee compensation expense and $(0.4) million was included in other expense, net, in the condensed consolidated statements of operations.
  5. Included in other expense, net, in the condensed consolidated statements of operations.

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

 

 

 

Nine months ended September 30, 2022

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Revenue

 

$

802,903

 

 

$

144,007

 

 

$

 

 

$

946,910

 

Deferred revenue fair value adjustment (a)

 

 

162

 

 

 

 

 

 

 

 

 

162

 

Adjusted revenue

 

$

803,065

 

 

$

144,007

 

 

$

 

 

$

947,072

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based

 

$

571,820

 

 

$

 

 

$

 

 

$

571,820

 

Subscription-based

 

 

218,080

 

 

 

138,521

 

 

 

 

 

 

356,601

 

Total recurring revenue

 

 

789,900

 

 

 

138,521

 

 

 

 

 

 

928,421

 

Professional services and other revenue

 

 

13,003

 

 

 

5,486

 

 

 

 

 

 

18,489

 

Total revenue

 

$

802,903

 

 

$

144,007

 

 

$

 

 

$

946,910

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Direct expense:

 

 

 

 

 

 

 

 

Asset-based

 

$

332,138

 

 

$

 

 

$

 

 

$

332,138

 

Subscription-based

 

 

4,177

 

 

 

18,643

 

 

 

 

 

 

22,820

 

Professional services and other

 

 

6,833

 

 

 

81

 

 

 

 

 

 

6,914

 

Total direct expense

 

 

343,148

 

 

 

18,724

 

 

 

 

 

 

361,872

 

Employee compensation

 

 

234,413

 

 

 

80,334

 

 

 

54,706

 

 

 

369,453

 

General and administrative

 

 

103,824

 

 

 

28,633

 

 

 

25,410

 

 

 

157,867

 

Depreciation and amortization

 

 

71,674

 

 

 

25,534

 

 

 

 

 

 

97,208

 

Total operating expenses

 

$

753,059

 

 

$

153,225

 

 

$

80,116

 

 

$

986,400

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

49,844

 

 

$

(9,218

)

 

$

(80,116

)

 

$

(39,490

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

162

 

 

 

 

 

 

 

 

 

162

 

Depreciation and amortization

 

 

71,674

 

 

 

25,534

 

 

 

 

 

 

97,208

 

Non-cash compensation expense (c)

 

 

35,889

 

 

 

8,378

 

 

 

18,316

 

 

 

62,583

 

Restructuring charges and transaction costs (d)

 

 

18,109

 

 

 

2,014

 

 

 

7,144

 

 

 

27,267

 

Severance expense (c)

 

 

4,909

 

 

 

1,492

 

 

 

4,978

 

 

 

11,379

 

Litigation, regulatory and other governance

related expenses (b)

 

 

 

 

 

5,333

 

 

 

 

 

 

5,333

 

Non-income tax expense adjustment (b)

 

 

(52

)

 

 

(60

)

 

 

 

 

 

(112

)

Loss attributable to non-controlling interest

 

 

1,637

 

 

 

 

 

 

 

 

 

1,637

 

Other (e)

 

 

352

 

 

 

2

 

 

 

 

 

 

354

 

Adjusted EBITDA

 

$

182,524

 

 

$

33,475

 

 

$

(49,678

)

 

$

166,321

 

  1. Included within subscription-based revenue in the condensed consolidated statements of operations.
  2. Included within general and administrative expense in the condensed consolidated statements of operations.
  3. Included within employee compensation expense in the condensed consolidated statements of operations.
  4. $27.5 million was included within general and administrative expense, $0.2 million was included within employee compensation expense and $(0.4) million was included in other expense, net, in the condensed consolidated statements of operations.
  5. Included in other expense, net, 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

 

 

September 30,

 

December 31,

 

March 31,

 

June 30,

 

September 30,

 

 

2022

 

2022

 

2023

 

2023

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except accounts and advisors data)

Platform Assets

 

 

 

 

 

 

 

 

 

 

Assets under Management (“AUM”)

 

$

315,883

 

$

341,144

 

$

363,244

 

$

384,773

 

$

375,408

Assets under Administration (“AUA”)

 

 

350,576

 

 

367,412

 

 

379,843

 

 

394,078

 

 

398,082

Total AUM/A

 

 

666,459

 

 

708,556

 

 

743,087

 

 

778,851

 

 

773,490

Subscription

 

 

4,134,414

 

 

4,382,109

 

 

4,566,971

 

 

4,643,313

 

 

4,579,248

Total Platform Assets

 

$

4,800,873

 

$

5,090,665

 

$

5,310,058

 

$

5,422,164

 

$

5,352,738

Platform Accounts

 

 

 

 

 

 

 

 

 

 

AUM

 

 

1,522,968

 

 

1,547,009

 

 

1,571,862

 

 

1,609,677

 

 

1,614,873

AUA

 

 

1,135,302

 

 

1,135,026

 

 

1,142,166

 

 

1,144,375

 

 

1,257,094

Total AUM/A

 

 

2,658,270

 

 

2,682,035

 

 

2,714,028

 

 

2,754,052

 

 

2,871,967

Subscription

 

 

15,596,403

 

 

15,665,020

 

 

15,779,980

 

 

15,916,955

 

 

16,072,848

Total Platform Accounts

 

 

18,254,673

 

 

18,347,055

 

 

18,494,008

 

 

18,671,007

 

 

18,944,815

Advisors

 

 

 

 

 

 

 

 

 

 

AUM/A

 

 

38,417

 

 

38,025

 

 

38,611

 

 

38,809

 

 

38,078

Subscription

 

 

67,348

 

 

67,520

 

 

67,843

 

 

68,439

 

 

69,318

Total Advisors

 

 

105,765

 

 

105,545

 

 

106,454

 

 

107,248

 

 

107,396

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

 

 

Asset Rollforward - Three Months Ended September 30, 2023

 

 

As of June 30,

 

Gross

 

 

 

Net

 

Market

 

Reclass to

 

As of September 30,

 

 

2023

 

Sales

 

Redemptions

 

Flows

 

Impact

 

Subscription

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except account data)

AUM

 

$

384,773

 

$

24,754

 

$

(19,846

)

 

$

4,908

 

$

(12,821

)

 

$

(1,452

)

 

$

375,408

AUA

 

 

394,078

 

 

39,624

 

 

(23,889

)

 

 

15,735

 

 

(11,731

)

 

 

 

 

 

398,082

Total AUM/A

 

$

778,851

 

$

64,378

 

$

(43,735

)

 

$

20,643

 

$

(24,552

)

 

$

(1,452

)

 

$

773,490

Fee-Based

Accounts

 

 

2,754,052

 

 

 

 

 

 

128,548

 

 

 

 

(10,633

)

 

 

2,871,967

The above AUM/A gross sales figures for the three months ended September 30, 2023 include $25.8 billion in new client conversions. We onboarded an additional $28.5 billion in subscription conversions during the three months ended September 30, 2023 bringing total conversions for the three months ended September 30, 2023 to $54.3 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 nine months ended September 30, 2023:

 

 

Asset Rollforward - Nine Months Ended September 30, 2023

 

 

As of December 31,

 

Gross

 

 

 

Net

 

Market

 

Reclass to

 

As of September 30,

 

 

2022

 

Sales

 

Redemptions

 

Flows

 

Impact

 

Subscription

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except account data)

AUM

 

$

341,144

 

$

74,693

 

$

(52,153

)

 

$

22,540

 

$

14,315

 

$

(2,591

)

 

$

375,408

AUA

 

 

367,412

 

 

97,564

 

 

(69,449

)

 

 

28,115

 

 

16,427

 

 

(13,872

)

 

 

398,082

Total AUM/A

 

$

708,556

 

$

172,257

 

$

(121,602

)

 

$

50,655

 

$

30,742

 

$

(16,463

)

 

$

773,490

Fee-Based

Accounts

 

 

2,682,035

 

 

 

 

 

 

289,041

 

 

 

 

(99,109

)

 

 

2,871,967

The above AUM/A gross sales figures for the nine months ended September 30, 2023 include $54.6 billion in new client conversions. We onboarded an additional $96.6 billion in subscription conversions during the nine months ended September 30, 2023 bringing total conversions for the nine months ended September 30, 2023 to $151.2 billion.

Asset and account figures in the “Reclass to Subscription” columns for the three and nine months ended September 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

 

 

September 30,

 

December 31,

 

March 31,

 

June 30,

 

September 30

 

 

2022

 

2022

 

2023

 

2023

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except number of firms data)

Number of paying users

 

38.1

 

38.8

 

37.5

 

38.0

 

42.3

Number of firms

 

1,815

 

1,827

 

1,851

 

1,873

 

1,855

 

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