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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230803241196/en/

The Envestnet Stock at the time of publication of the news with a raise of 0,00 % to 55,25EUR on Lang & Schwarz stock exchange (03. August 2023, 22:18 Uhr).