DocumentExhibit 99.1
Envestnet Reports Fourth Quarter 2022 Financial Results
Berwyn, PA — February 23, 2023 — Envestnet (NYSE: ENV), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for its quarter and year ended December 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | | Year Ended | | |
| Key Financial Metrics | | December 31, | | % | | December 31, | | % |
| (in millions, except per share data) | | 2022 | | 2021 | | Change | | 2022 | | 2021 | | Change |
| GAAP: | | | | | | | | | | | | |
| Total revenues | | $ | 292.9 | | | $ | 319.6 | | | (8)% | | $ | 1,239.8 | | | $ | 1,186.5 | | | 4% |
| Net income (loss) | | $ | (37.8) | | | $ | (5.3) | | | n/m | | $ | (85.5) | | | $ | 12.7 | | | n/m |
| Net income (loss) per diluted share attributable to Envestnet, Inc. | | $ | (0.85) | | | $ | (0.09) | | | n/m | | $ | (1.59) | | | $ | 0.24 | | | n/m |
| | | | | | | | | | | | |
| Non-GAAP: | | | | | | | | | | | | |
Adjusted revenues(1) | | $ | 292.9 | | | $ | 319.7 | | | (8)% | | $ | 1,240.0 | | | $ | 1,186.8 | | | 4% |
Adjusted EBITDA(1) | | $ | 53.8 | | | $ | 56.2 | | | (4)% | | $ | 220.1 | | | $ | 261.7 | | | (16)% |
Adjusted net income(1) | | $ | 29.9 | | | $ | 32.7 | | | (9)% | | $ | 122.5 | | | $ | 158.0 | | | (22)% |
Adjusted net income per diluted share(1) | | $ | 0.45 | | | $ | 0.50 | | | (10)% | | $ | 1.86 | | | $ | 2.42 | | | (23)% |
__________________________________________________________
(1)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.
n/m - not meaningful
“Envestnet finished the year on a strong note and has turned the corner. The company delivered solid financial results, including margin expansion beginning in the fourth quarter despite the challenging environment,” said Bill Crager, Chief Executive Officer.
“We’ve invested in the business delivering new connected capabilities powered by our data, and have created operating leverage positioning Envestnet to drive both sustainable long term revenue growth and increased profitability,” remarked Mr. Crager.
Financial Results for the Fourth Quarter of 2022 Compared to the Fourth Quarter of 2021:
Total revenues decreased 8% to $292.9 million for the fourth quarter of 2022 from $319.6 million for the fourth quarter of 2021. Asset-based recurring revenues decreased 15% from the prior year period, and represented 57% of total revenues for the fourth quarter of 2022, compared to 61% of total revenues for the same period in 2021. Subscription-based recurring revenues increased 3% from the prior year period, and represented 41% of total revenues for the fourth quarter of 2022, compared to 37% of total revenues for the same period in 2021. Professional services and other non-recurring revenues decreased 7% from the prior year period.
Total operating expenses for the fourth quarter of 2022 decreased to $319.4 million compared to $321.0 million in the prior year period. Cost of revenues decreased 12% to $106.6 million for the fourth quarter of 2022 from $120.5 million for the fourth quarter of 2021. Compensation and benefits increased 4% to $121.3 million for the fourth quarter of 2022 from $116.7 million for the prior year period. Compensation and benefits were 41% of total
revenues for the fourth quarter of 2022, compared to 37% for the prior year period. General and administration expenses increased 7% to $58.2 million for the fourth quarter of 2022 from $54.2 million for the prior year period. General and administration expenses were 20% of total revenues for the fourth quarter of 2022, compared to 17% in the prior year period.
Loss from operations was $26.5 million for the fourth quarter of 2022 compared to loss from operations of $1.3 million for the fourth quarter of 2021. Net loss attributable to Envestnet, Inc. was $36.5 million, or $0.85 per diluted share, for the fourth quarter of 2022 compared to net loss of $5.1 million, or $0.09 per diluted share, for the fourth quarter of 2021.
Adjusted revenues(1) for the fourth quarter of 2022 decreased 8% to $292.9 million from $319.6 million for the prior year period. Adjusted EBITDA(1) for the fourth quarter of 2022 decreased 4% to $53.8 million from $56.2 million for the prior year period. Adjusted Net Income(1) for the fourth quarter of 2022 decreased 8% to $29.9 million from $32.7 million for the prior year period. Adjusted Net Income per Diluted Share(1) for the fourth quarter of 2022 was $0.45, compared to $0.50 in the fourth quarter of 2021.
Financial Results for the Full Year of 2022 Compared to the Full Year of 2021:
Total revenues increased 4% to $1.2 billion for the year ended December 31, 2022 from $1.2 billion for the year ended December 31, 2021. Asset-based recurring revenues increased 4% from the prior year period, and represented 60% of total revenues for the years ended December 31, 2022 and 2021. Subscription-based revenues increased 5% from the prior year period, and represented 39% of total revenues for the year ended December 31, 2022 compared to 38% of total revenues for the same period in 2021. Professional services and other non-recurring revenues increased 2% from the prior year period.
Total operating expenses for the year ended December 31, 2022 increased 14% to $1.3 billion from $1.1 billion in the prior year period. Cost of revenues increased 11% to $468.5 million for the year ended December 31, 2022 from $423.7 million for the year ended December 31, 2021. Compensation and benefits increased 13% to $490.7 million for the year ended December 31, 2022 from $432.8 million for the prior year period. Compensation and benefits were 40% of total revenues for the year ended December 31, 2022, compared to 36% in the prior year period. General and administration expenses increased 26% to $216.1 million for the year ended December 31, 2022 from $171.7 million for the prior year period. General and administration expenses were 17% of total revenues for the year ended December 31, 2022, compared to 14% in the prior year period.
Loss from operations was $66.0 million for the year ended December 31, 2022 compared to income from operations of $40.5 million for the year ended December 31, 2021. Net loss attributable to Envestnet, Inc. was $80.9 million, or $1.59 per diluted share, for the year ended December 31, 2022 compared to net income of $13.3 million, or $0.24 per diluted share, for the year ended December 31, 2021.
Adjusted revenues(1) for the year ended December 31, 2022 increased 4% to $1.24 billion from $1.19 billion for the prior year period. Adjusted EBITDA(1) for the year ended December 31, 2022 decreased 16% to $220.1 million from $261.7 million for the prior year period. Adjusted Net Income(1) decreased 22% for the year ended December 31, 2022 to $122.5 million from $158.0 million for the prior year period. Adjusted Net Income per Diluted Share(1) for the year ended December 31, 2022 decreased 23% to $1.86 from $2.42 in the year ended December 31, 2021.
Outlook
Envestnet provided the following outlook for the first quarter ending March 31, 2023 and full year ending December 31, 2023. This outlook is based on the market value of assets under management or administration on December 31, 2022. We caution that we cannot predict the market value of these assets on any future date. See “Cautionary Statement Regarding Forward-Looking Statements.”
Highlights:
•Envestnet reported full-year adjusted revenues of $1.2 billion, a 4% year-over-year increase from 2021.
•Adjusted EBITDA decreased by 16% in 2022 to $220.1 million and Adjusted Net Income per Diluted Share was $1.86.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| In Millions Except Adjusted EPS | | 1Q 2023 | | FY 2023 |
| GAAP: | | | | | | | | | | | | |
| Revenues: | | | | | | | | | | | | |
| Asset-based | | $176.5 | | - | | $178.4 | | | | | | |
| Subscription-based | | $117.5 | | - | | $118.0 | | | | | | |
| Total recurring revenues | | $294.0 | | - | | $296.4 | | | | | | |
| Professional services and other revenues | | $5.0 | | - | | $5.6 | | | | | | |
| Total revenues | | $299.0 | | - | | $302.0 | | $1,239.8 | | - | | $1,259.8 |
| | | | | | | | | | | | |
| Asset-based cost of revenues | | $103.0 | | | | $103.5 | | | | | | |
| Total cost of revenues | | $110.2 | | - | | $110.7 | | | | | | |
| | | | | | | | | | | | |
| Net income | | (a) | | - | | (a) | | (a) | | - | | (a) |
| | | | | | | | | | | | |
| Diluted shares outstanding | | | | 66.5 | | | | | | 66.3 | | |
| Net income per diluted share | | (a) | | - | | (a) | | (a) | | - | | (a) |
| | | | | | | | | | | | |
| Non-GAAP: | | | | | | | | | | | | |
Adjusted revenues(1): | | | | | | | | | | | | |
| Asset-based | | $176.5 | | - | | $178.4 | | | | | | |
| Subscription-based | | $117.5 | | - | | $118.0 | | | | | | |
| Total recurring revenues | | $294.0 | | - | | $296.4 | | | | | | |
| Professional services and other revenues | | $5.0 | | - | | $5.6 | | | | | | |
| Total revenues | | $299.0 | | - | | $302.0 | | $1,240.0 | | - | | $1,260.0 |
| | | | | | | | | | | | |
Adjusted EBITDA(1) | | $53.0 | | - | | $55.0 | | $242.0 | | - | | $252.0 |
Adjusted net income per diluted share(1) | | | | $0.45 | | | | $1.95 | | - | | $2.05 |
| | | | | | | | | | | | |
__________________________________________________________
(1) 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 fourth quarter 2022 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 106,000 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 revenues” 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 revenues 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, accretion on contingent consideration and purchase liability, fair market value adjustment on contingent consideration liability, fair market value adjustment on investment in private company, litigation and regulatory related expenses, foreign currency, gain on settlement of liability, gain on insurance reimbursement, dilution gain on equity method investee share issuance, non-income tax expense adjustment, loss allocations from equity method investments and (income) loss attributable to non-controlling interest.
“Adjusted net income” represents net income before deferred revenue fair value adjustment, non-cash interest expense, cash interest on our Convertible Notes (subsequent to the adoption of ASU 2020-06 on January 1, 2021), non-cash compensation expense, restructuring charges and transaction costs, severance, accretion on contingent consideration and purchase liability, fair market value adjustment to contingent consideration liability, fair market value adjustment to investment in private company, amortization of acquired intangibles, litigation and regulatory related expenses, foreign currency, gain on settlement of liability, gain on insurance reimbursement, non-income tax expense adjustment, dilution gain on equity method investee share issuance, loss allocations from equity method investments and (income) loss attributable to non-controlling interest. Reconciling items are presented gross of tax, and a normalized tax rate is applied to the total of all reconciling items to arrive at adjusted net income. The normalized tax rate is based solely on the estimated blended statutory income tax rates in the jurisdictions in which we operate. We monitor the normalized tax rate based on events or trends that could materially impact the rate, including tax legislation changes and changes in the geographic mix of our operations.
“Adjusted net income per diluted share” represents adjusted net income attributable to common stockholders divided by the diluted number of weighted-average shares outstanding. Beginning January 1, 2021, the dilutive effect of our Convertible Notes are calculated using the if-converted method in accordance with the adoption of ASU 2020-06 (See “Note 2—Summary of Significant Accounting Policies”). As a result, 9.9 million potential shares to be issued in connection with our Convertible Notes are assumed to be dilutive for purposes of the adjusted net income per share calculation beginning January 1, 2021.
See reconciliations of Non-GAAP Financial Measures on pages 11-17 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 revenues, net income (loss) or net income (loss) per share determined in accordance with GAAP.
Cautionary Statement Regarding Forward-Looking Statements
The forward-looking statements made in this press release and its attachments concerning, among other things, Envestnet, Inc.’s expected financial performance and outlook for the first quarter and full year of 2022, 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 revenues from the delivery of our solutions and services to clients in the financial services industry; our reliance on a limited number of clients for a material portion of our revenue; the renegotiation of 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 February 23, 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.
Consolidated Balance Sheets
(in thousands)
(unaudited)
| | | | | | | | | | | | | | |
| | December 31, | | December 31, |
| | 2022 | | 2021 |
| Assets | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 162,173 | | | $ | 429,279 | |
| Fees receivable, net | | 101,696 | | | 95,291 | |
| Prepaid expenses and other current assets | | 41,363 | | | 42,706 | |
| Total current assets | | 305,232 | | | 567,276 | |
| | | | |
| Property and equipment, net | | 62,443 | | | 50,215 | |
| Internally developed software, net | | 184,558 | | | 133,659 | |
| Intangible assets, net | | 379,995 | | | 400,396 | |
| Goodwill | | 998,414 | | | 925,154 | |
| Operating lease right-of-use assets, net | | 81,596 | | | 90,714 | |
| Other non-current assets | | 99,927 | | | 73,768 | |
| Total assets | | $ | 2,112,165 | | | $ | 2,241,182 | |
| | | | |
| Liabilities and Equity | | | | |
| Current liabilities: | | | | |
| Accrued expenses and other liabilities | | $ | 216,532 | | | $ | 225,159 | |
| Accounts payable | | 17,334 | | | 19,092 | |
| Operating lease liabilities | | 11,949 | | | 10,999 | |
| | | | |
| Deferred revenue | | 36,363 | | | 33,473 | |
| Current portion of long-term debt | | 44,886 | | | — | |
| Total current liabilities | | 327,064 | | | 288,723 | |
| | | | |
| Long-term debt | | 871,769 | | | 848,862 | |
| | | | |
| | | | |
| | | | |
| Non-current operating lease liabilities | | 110,652 | | | 105,920 | |
| Deferred tax liabilities, net | | 16,196 | | | 21,021 | |
| Other non-current liabilities | | 18,880 | | | 17,114 | |
| Total liabilities | | 1,344,561 | | | 1,281,640 | |
| | | | |
| Equity: | | | | |
| Total stockholders’ equity | | 754,567 | | | 957,089 | |
| Non-controlling interest | | 13,037 | | | 2,453 | |
| Total liabilities and equity | | $ | 2,112,165 | | | $ | 2,241,182 | |
Envestnet, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share information)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Year Ended |
| | December 31, | | December 31, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| Revenues: | | | | | | | | |
| Asset-based | | $ | 166,408 | | | $ | 195,918 | | | $ | 738,228 | | | $ | 709,376 | |
| Subscription-based | | 121,243 | | | 118,084 | | | 477,844 | | | 453,989 | |
| Total recurring revenues | | 287,651 | | | 314,002 | | | 1,216,072 | | | 1,163,365 | |
| Professional services and other revenues | | 5,223 | | | 5,619 | | | 23,712 | | | 23,152 | |
| Total revenues | | 292,874 | | | 319,621 | | | 1,239,784 | | | 1,186,517 | |
| | | | | | | | |
| Operating expenses: | | | | | | | | |
| Cost of revenues | | 106,588 | | | 120,524 | | | 468,460 | | | 423,723 | |
| Compensation and benefits | | 121,272 | | | 116,728 | | | 490,725 | | | 432,829 | |
| General and administration | | 58,208 | | | 54,194 | | | 216,075 | | | 171,657 | |
| Depreciation and amortization | | 33,340 | | | 29,515 | | | 130,548 | | | 117,767 | |
| Total operating expenses | | 319,408 | | | 320,961 | | | 1,305,808 | | | 1,145,976 | |
| | | | | | | | |
| Income (loss) from operations | | (26,534) | | | (1,340) | | | (66,024) | | | 40,541 | |
| Other expense, net | | (2,704) | | | (5,377) | | | (12,395) | | | (20,180) | |
| Income (loss) before income tax provision (benefit) | | (29,238) | | | (6,717) | | | (78,419) | | | 20,361 | |
| | | | | | | | |
| Income tax provision (benefit) | | 8,603 | | | (1,407) | | | 7,061 | | | 7,667 | |
| | | | | | | | |
| Net income (loss) | | (37,841) | | | (5,310) | | | (85,480) | | | 12,694 | |
| Add: Net (income) loss attributable to non-controlling interest | | 1,336 | | | 201 | | | 4,541 | | | 602 | |
| Net income (loss) attributable to Envestnet, Inc. | | $ | (36,505) | | | $ | (5,109) | | | $ | (80,939) | | | $ | 13,296 | |
| | | | | | | | |
| Net income (loss) per share attributable to Envestnet, Inc.: | | | | | | | | |
| Basic | | $ | (0.66) | | | $ | (0.09) | | | $ | (1.47) | | | $ | 0.24 | |
| | | | | | | | |
| Diluted* | | $ | (0.85) | | | $ | (0.09) | | | $ | (1.59) | | | $ | 0.24 | |
| | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | |
| Basic | | 55,119,075 | | | 54,678,195 | | | 55,199,482 | | | 54,470,975 | |
| | | | | | | | |
| Diluted | | 56,076,261 | | | 54,678,195 | | | 56,842,125 | | | 55,384,096 | |
__________________________________________________________
*Net loss per share for 2022 periods were diluted primarily due to the inclusion of interest and gain on settlement of repurchased convertible notes due 2025 in net loss attributable to Envestnet, Inc. in accordance with the if-converted method.
Envestnet, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | |
| | Year Ended | | |
| | December 31, | | |
| | 2022 | | 2021 | | |
| OPERATING ACTIVITIES: | | | | | | |
| Net income (loss) | | $ | (85,480) | | | $ | 12,694 | | | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | |
| Depreciation and amortization | | 130,548 | | | 117,767 | | | |
| | | | | | |
| Provision for doubtful accounts | | 511 | | | 1,598 | | | |
| Deferred income taxes | | (3,490) | | | (320) | | | |
| | | | | | |
| Non-cash compensation expense | | 80,333 | | | 68,020 | | | |
| Non-cash interest expense | | 7,445 | | | 5,799 | | | |
| Accretion on contingent consideration and purchase liability | | — | | | 730 | | | |
| Loss on extinguishment of Convertible Notes due 2023 | | 13,421 | | | — | | | |
| | | | | | |
| Gain on extinguishment of Convertible Notes due 2025 | | (15,089) | | | — | | | |
| | | | | | |
| Payments of contingent consideration | | — | | | (2,360) | | | |
| Fair market value adjustment to contingent consideration liability | | — | | | (1,067) | | | |
| | | | | | |
| Gain on settlement of liability | | — | | | (1,206) | | | |
| | | | | | |
| Loss allocations from equity method investments | | 8,874 | | | 7,093 | | | |
| Gain on equity method investments | | (9,517) | | | — | | | |
| Loss on property and equipment disposals | | 5,097 | | | — | | | |
| Lease related impairments, including right-of-use assets | | 15,750 | | | 1,537 | | | |
| Other | | 355 | | | (293) | | | |
| Changes in operating assets and liabilities, net of acquisitions: | | | | | | |
| Fees receivable, net | | (5,031) | | | (16,731) | | | |
| Prepaid expenses and other current assets | | 2,864 | | | 399 | | | |
| Other non-current assets | | (4,992) | | | 2,741 | | | |
| Accrued expenses and other liabilities | | (24,711) | | | 53,265 | | | |
| Accounts payable | | (3,724) | | | 1,290 | | | |
| Deferred revenue | | (305) | | | (2,080) | | | |
| Other non-current liabilities | | 4,178 | | | 1,701 | | | |
| Net cash provided by operating activities | | 117,037 | | | 250,577 | | | |
| | | | | | |
| INVESTING ACTIVITIES: | | | | | | |
| Purchases of property and equipment | | (16,172) | | | (23,731) | | | |
| Capitalization of internally developed software | | (89,153) | | | (65,170) | | | |
| Investments in private companies | | (16,351) | | | (25,926) | | | |
| Acquisition of proprietary technology | | (15,000) | | | (25,517) | | | |
| Acquisitions of businesses, net of cash acquired | | (104,100) | | | (32,794) | | | |
| | | | | | |
| Advance for technology solutions | | (4,000) | | | (3,000) | | | |
| Issuance of notes receivable to equity method investees | | (6,350) | | | — | | | |
| | | | | | |
| Net cash used in investing activities | | (251,126) | | | (176,138) | | | |
-continued-
Envestnet, Inc.
Consolidated Statements of Cash Flows (continued)
(in thousands)
(unaudited)
| | | | | | | | | | | | | | |
| | Year Ended |
| | December 31, |
| | 2022 | | 2021 |
| FINANCING ACTIVITIES: | | | | |
| Proceeds from issuance of Convertible Notes due 2027 | | 575,000 | | | — | |
| Convertible Notes due 2027 issuance costs | | (16,323) | | | — | |
| Repurchase of Convertible Notes due 2023 | | (312,422) | | | — | |
| | | | |
| Repurchase of Convertible Notes due 2025 | | (181,772) | | | — | |
| | | | |
| | | | |
| | | | |
| | | | |
| Capital contributions - non-controlling shareholders | | 16,037 | | | 3,201 | |
| | | | |
| Payments of contingent consideration | | (743) | | | (9,276) | |
| Purchase of capped calls | | (79,585) | | | — | |
| Proceeds from exercise of stock options | | 2,620 | | | 2,090 | |
| Taxes paid in lieu of shares issued for stock-based compensation | | (23,516) | | | (20,529) | |
| Share repurchases | | (85,750) | | | (4,001) | |
| Finance lease payments | | (18,682) | | | — | |
| Other | | (1,866) | | | (655) | |
| Net cash used in financing activities | | (127,002) | | | (29,170) | |
| | | | |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | | (6,164) | | | (555) | |
| | | | |
| INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | | (267,255) | | | 44,714 | |
| | | | |
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD | | 429,428 | | | 384,714 | |
| | | | |
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | | $ | 162,173 | | | $ | 429,428 | |
The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Consolidated Balance Sheets:
| | | | | | | | | | | | | | |
| | December 31, |
| | 2022 | | 2021 |
| Cash and cash equivalents | | $ | 162,173 | | | $ | 429,279 | |
| Restricted cash included in prepaid expenses and other current assets | | — | | | 149 | |
| | | | |
| Total cash, cash equivalents and restricted cash | | $ | 162,173 | | | $ | 429,428 | |
Envestnet, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Year Ended |
| | December 31, | | December 31, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| Total revenues | | $ | 292,874 | | | $ | 319,621 | | | $ | 1,239,784 | | | $ | 1,186,517 | |
Deferred revenue fair value adjustment (a) | | 54 | | | 57 | | | 216 | | | 284 | |
| Adjusted revenues | | $ | 292,928 | | | $ | 319,678 | | | $ | 1,240,000 | | | $ | 1,186,801 | |
| | | | | | | | |
| Net income (loss) | | $ | (37,841) | | | $ | (5,310) | | | $ | (85,480) | | | $ | 12,694 | |
| Add (deduct): | | | | | | | | |
Deferred revenue fair value adjustment (a) | | 54 | | | 57 | | | 216 | | | 284 | |
Interest income (b) | | (1,911) | | | (258) | | | (4,184) | | | (827) | |
Interest expense (b) | | 3,536 | | | 4,249 | | | 16,843 | | | 16,931 | |
| Income tax provision (benefit) | | 8,603 | | | (1,407) | | | 7,061 | | | 7,667 | |
| Depreciation and amortization | | 33,340 | | | 29,515 | | | 130,548 | | | 117,767 | |
Non-cash compensation expense (d) | | 17,750 | | | 17,713 | | | 80,333 | | | 68,020 | |
Restructuring charges and transaction costs (e) | | 7,874 | | | 7,275 | | | 35,141 | | | 18,490 | |
Severance (d) | | 18,738 | | | 849 | | | 30,117 | | | 11,347 | |
Accretion on contingent consideration and purchase liability (c) | | — | | | 74 | | | — | | | 730 | |
Fair market value adjustment to contingent consideration liability (c) | | — | | | — | | | — | | | (1,067) | |
Fair market value adjustment on investment in private company (b) | | (400) | | | — | | | (400) | | | (758) | |
Litigation and regulatory related expenses (c) | | 722 | | | 2,432 | | | 6,055 | | | 7,591 | |
Foreign currency (b) | | 806 | | | (117) | | | 1,419 | | | (7) | |
| | | | | | | | |
Gain on settlement of liability (b) | | — | | | — | | | — | | | (1,206) | |
Gain on insurance reimbursement (b) | | — | | | — | | | — | | | (968) | |
Dilution gain on equity method investee share issuance (b) | | (2,583) | | | — | | | (9,517) | | | — | |
Non-income tax expense adjustment (c) | | 914 | | | (245) | | | 802 | | | (1,347) | |
Loss allocations from equity method investments (b) | | 3,542 | | | 1,540 | | | 8,874 | | | 7,093 | |
| (Income) loss attributable to non-controlling interest | | 663 | | | (150) | | | 2,300 | | | (704) | |
| Adjusted EBITDA | | $ | 53,807 | | | $ | 56,217 | | | $ | 220,128 | | | $ | 261,730 | |
__________________________________________________________
(a)Included within subscription-based revenues in the consolidated statements of operations.
(b)Included within other expense, net in the consolidated statements of operations.
(c)Included within general and administration expenses in the consolidated statements of operations.
(d)Included within compensation and benefits in the consolidated statements of operations.
(e)For the three months ended December 31, 2022 and 2021, $7.9 million and $1.7 million, respectively, were included within general and administration expenses in the consolidated statements of operations. For the three months ended December 31, 2022 and 2021, $0 and $5.6 million, respectively, were included within compensation and benefits in the consolidated statements of operations. For the year ended December 31, 2022 and 2021, $35.1 million and $7.7 million, respectively, were included within general and administration expenses in the consolidated statements of operations. For the year ended December 31, 2022 and 2021, $0 and $10.7 million, respectively, were included within compensation and benefits in the consolidated statements of operations. .
Envestnet, Inc.
Reconciliation of Non-GAAP Financial Measures (continued)
(in thousands, except share and per share information)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Year Ended |
| | December 31, | | December 31, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| Net income (loss) | | $ | (37,841) | | | $ | (5,310) | | | $ | (85,480) | | | $ | 12,694 | |
Income tax provision (benefit) (a) | | 8,603 | | | (1,407) | | | 7,061 | | | 7,667 | |
| Income (loss) before income tax provision (benefit) | | (29,238) | | | (6,717) | | | (78,419) | | | 20,361 | |
| Add (deduct): | | | | | | | | |
Deferred revenue fair value adjustment (b) | | 54 | | | 57 | | | 216 | | | 284 | |
Non-cash interest expense (c) | | (239) | | | 1,450 | | | 4,678 | | | 5,745 | |
Cash interest - Convertible Notes (c) | | 3,458 | | | 2,480 | | | 10,897 | | | 9,919 | |
Non-cash compensation expense (f) | | 17,750 | | | 17,713 | | | 80,333 | | | 68,020 | |
Restructuring charges and transaction costs (e) | | 7,874 | | | 7,275 | | | 35,141 | | | 18,490 | |
Severance (f) | | 18,738 | | | 849 | | | 30,117 | | | 11,347 | |
Accretion on contingent consideration and purchase liability (d) | | — | | | 74 | | | — | | | 730 | |
Fair market value adjustment to contingent consideration liability (d) | | — | | | — | | | — | | | (1,067) | |
Fair market value adjustment to investment in private company (c) | | (400) | | | — | | | (400) | | | (758) | |
Amortization of acquired intangibles (g) | | 18,087 | | | 17,217 | | | 71,901 | | | 68,587 | |
Litigation and regulatory related expenses (d) | | 722 | | | 2,432 | | | 6,055 | | | 7,591 | |
Foreign currency (c) | | 806 | | | (117) | | | 1,419 | | | (7) | |
| | | | | | | | |
Gain on settlement of liability (c) | | — | | | — | | | — | | | (1,206) | |
Gain on insurance reimbursement (c) | | — | | | — | | | — | | | (968) | |
Non-income tax expense adjustment (d) | | 914 | | | (245) | | | 802 | | | (1,347) | |
Dilution gain on equity method investee share issuance (c) | | (2,583) | | | — | | | (9,517) | | | — | |
Loss allocations from equity method investments (c) | | 3,542 | | | 1,540 | | | 8,874 | | | 7,093 | |
| (Income) loss attributable to non-controlling interest | | 663 | | | (150) | | | 2,300 | | | (704) | |
| Adjusted net income before income tax effect | | 40,148 | | | 43,858 | | | 164,397 | | | 212,110 | |
Income tax effect (h) | | (10,238) | | | (11,184) | | | (41,921) | | | (54,088) | |
| Adjusted net income | | $ | 29,910 | | | $ | 32,674 | | | $ | 122,476 | | | $ | 158,022 | |
| | | | | | | | |
| Basic number of weighted-average shares outstanding | | 55,119,075 | | | 54,678,195 | | | 55,199,482 | | | 54,470,975 | |
| Effect of dilutive shares: | | | | | | | | |
| Options to purchase common stock | | 70,947 | | | 201,300 | | | 111,327 | | | 206,022 | |
| Unvested restricted stock units | | 265,187 | | | 665,222 | | | 390,270 | | | 633,384 | |
| Convertible Notes | | 10,667,509 | | | 9,898,549 | | | 10,092,369 | | | 9,898,549 | |
| Warrants | | — | | | 93,947 | | | — | | | 73,715 | |
| Diluted number of weighted-average shares outstanding | | 66,122,718 | | | 65,537,213 | | | 65,793,448 | | | 65,282,645 | |
| | | | | | | | |
| Adjusted net income per share - diluted | | $ | 0.45 | | | $ | 0.50 | | | $ | 1.86 | | | $ | 2.42 | |
__________________________________________________________
(a)For the three months ended December 31, 2022 and 2021, the effective tax rate computed in accordance with GAAP equaled (29.4)% and 20.9%, respectively. For the years ended December 31, 2022 and 2021, the effective tax rate computed in accordance with GAAP equaled (9.0)% and 37.7%, respectively.
(b)Included within subscription-based revenues in the consolidated statements of operations.
(c)Included within other expense, net in the consolidated statements of operations.
(d)Included within general and administration expenses in the consolidated statements of operations.
(e)For the three months ended December 31, 2022 and 2021, $7.9 million and $1.7 million, respectively, were included within general and administration expenses in the consolidated statements of operations. For the three months ended December 31, 2022 and 2021, $0 and $5.6 million, respectively, were included within compensation and benefits in the consolidated statements of operations. For the years ended December 31, 2022 and 2021, $35.1 million and $7.7 million, respectively, were included within general and
administration expenses in the consolidated statements of operations. For the years ended December 31, 2022 and 2021, $0 and $10.7 million, respectively, were included within compensation and benefits in the consolidated statements of operations.
(f)Included within compensation and benefits in the consolidated statements of operations.
(g)Included within depreciation and amortization in the consolidated statements of operations.
(h)An estimated normalized effective tax rate of 25.5% has been used to compute adjusted net income for the three months and year ended December 31, 2022 and 2021.
Envestnet, Inc.
Reconciliation of Non-GAAP Financial Measures
Segment Information
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended December 31, 2022 |
| | Envestnet Wealth Solutions | | Envestnet Data & Analytics | | Nonsegment | | Total |
| Revenues | | $ | 246,890 | | | $ | 45,984 | | | $ | — | | | $ | 292,874 | |
Deferred revenue fair value adjustment (a) | | 54 | | | — | | | — | | | 54 | |
| Adjusted revenues | | $ | 246,944 | | | $ | 45,984 | | | $ | — | | | $ | 292,928 | |
| | | | | | | | |
| Revenues: | | | | | | | | |
| Asset-based | | $ | 166,408 | | | $ | — | | | $ | — | | | $ | 166,408 | |
| Subscription-based | | 76,917 | | | 44,326 | | | — | | | 121,243 | |
| Total recurring revenues | | 243,325 | | | 44,326 | | | — | | | 287,651 | |
| Professional services and other revenues | | 3,565 | | | 1,658 | | | — | | | 5,223 | |
| Total revenues | | 246,890 | | | 45,984 | | | — | | | 292,874 | |
| | | | | | | | |
| Operating expenses: | | | | | | | | |
| Cost of revenues: | | | | | | | | |
| Asset-based | | 98,207 | | | — | | | — | | | 98,207 | |
| Subscription-based | | 1,528 | | | 6,265 | | | — | | | 7,793 | |
| Professional services and other | | 588 | | | — | | | — | | | 588 | |
| Total cost of revenues | | 100,323 | | | 6,265 | | | — | | | 106,588 | |
| Compensation and benefits | | 78,497 | | | 29,333 | | | 13,442 | | | 121,272 | |
| General and administration | | 36,958 | | | 13,682 | | | 7,568 | | | 58,208 | |
| Depreciation and amortization | | 24,984 | | | 8,356 | | | — | | | 33,340 | |
| Total operating expenses | | $ | 240,762 | | | $ | 57,636 | | | $ | 21,010 | | | $ | 319,408 | |
| | | | | | | | |
| Income (loss) from operations | | $ | 6,128 | | | $ | (11,652) | | | $ | (21,010) | | | $ | (26,534) | |
| Add: | | | | | | | | |
Deferred revenue fair value adjustment (a) | | 54 | | | — | | | — | | | 54 | |
| Depreciation and amortization | | 24,984 | | | 8,356 | | | — | | | 33,340 | |
Non-cash compensation expense (c) | | 11,154 | | | 2,361 | | | 4,235 | | | 17,750 | |
Restructuring charges and transaction costs (d) | | 4,759 | | | 1,720 | | | 1,395 | | | 7,874 | |
Severance (c) | | 7,506 | | | 10,075 | | | 1,157 | | | 18,738 | |
| | | | | | | | |
| | | | | | | | |
Litigation and regulatory related expenses (b) | | — | | | 722 | | | — | | | 722 | |
Non-income tax expense adjustment (b) | | 930 | | | (16) | | | — | | | 914 | |
| Loss attributable to non-controlling interest | | 663 | | | — | | | — | | | 663 | |
| Other | | 283 | | | 3 | | | — | | | 286 | |
| Adjusted EBITDA | | $ | 56,461 | | | $ | 11,569 | | | $ | (14,223) | | | $ | 53,807 | |
__________________________________________________________
(a)Included within subscription-based revenues in the consolidated statements of operations.
(b)Included within general and administration expenses in the consolidated statements of operations.
(c)Included within compensation and benefits in the consolidated statements of operations.
(d)For the three months ended December 31, 2022, $7.9 million was included within general and administration expenses and $0 was included within compensation and benefits in the consolidated statements of operations.
Envestnet, Inc.
Reconciliation of Non-GAAP Financial Measures
Segment Information (continued)
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended December 31, 2021 |
| | Envestnet Wealth Solutions | | Envestnet Data & Analytics | | Nonsegment | | Total |
| Revenues | | $ | 269,725 | | | $ | 49,896 | | | $ | — | | | $ | 319,621 | |
Deferred revenue fair value adjustment (a) | | 57 | | | — | | | — | | | 57 | |
| Adjusted revenues | | $ | 269,782 | | | $ | 49,896 | | | $ | — | | | $ | 319,678 | |
| | | | | | | | |
| Revenues: | | | | | | | | |
| Asset-based | | $ | 195,918 | | | $ | — | | | $ | — | | | $ | 195,918 | |
| Subscription-based | | 70,057 | | | 48,027 | | | — | | | 118,084 | |
| Total recurring revenues | | 265,975 | | | 48,027 | | | — | | | 314,002 | |
| Professional services and other revenues | | 3,750 | | | 1,869 | | | — | | | 5,619 | |
| Total revenues | | 269,725 | | | 49,896 | | | — | | | 319,621 | |
| | | | | | | | |
| Operating expenses: | | | | | | | | |
| Cost of revenues: | | | | | | | | |
| Asset-based | | 111,888 | | | — | | | — | | | 111,888 | |
| Subscription-based | | 1,376 | | | 7,083 | | | — | | | 8,459 | |
| Professional services and other | | 162 | | | 15 | | | — | | | 177 | |
| Total cost of revenues | | 113,426 | | | 7,098 | | | — | | | 120,524 | |
| Compensation and benefits | | 73,593 | | | 27,651 | | | 15,484 | | | 116,728 | |
| General and administration | | 36,307 | | | 10,285 | | | 7,602 | | | 54,194 | |
| Depreciation and amortization | | 22,790 | | | 6,725 | | | — | | | 29,515 | |
| Total operating expenses | | $ | 246,116 | | | $ | 51,759 | | | $ | 23,086 | | | $ | 320,961 | |
| | | | | | | | |
| Income (loss) from operations | | $ | 23,609 | | | $ | (1,863) | | | $ | (23,086) | | | $ | (1,340) | |
| Add: | | | | | | | | |
Deferred revenue fair value adjustment (a) | | 57 | | | — | | | — | | | 57 | |
| Depreciation and amortization | | 22,790 | | | 6,725 | | | — | | | 29,515 | |
Non-cash compensation expense (c) | | 9,707 | | | 2,943 | | | 5,063 | | | 17,713 | |
Restructuring charges and transaction costs (d) | | 5,746 | | | 123 | | | 1,406 | | | 7,275 | |
Severance (c) | | 480 | | | 382 | | | (13) | | | 849 | |
Accretion on contingent consideration and purchase liability (b) | | 60 | | | 14 | | | — | | | 74 | |
| | | | | | | | |
Litigation and regulatory related expenses (b) | | — | | | 2,432 | | | — | | | 2,432 | |
Non-income tax expense adjustment (b) | | (172) | | | (73) | | | — | | | (245) | |
| Income attributable to non-controlling interest | | (150) | | | — | | | — | | | (150) | |
| Other | | 37 | | | — | | | — | | | 37 | |
| Adjusted EBITDA | | $ | 62,164 | | | $ | 10,683 | | | $ | (16,630) | | | $ | 56,217 | |
__________________________________________________________
(a)Included within subscription-based revenues in the consolidated statements of operations.
(b)Included within general and administration expenses in the consolidated statements of operations.
(c)Included within compensation and benefits in the consolidated statements of operations.
(d)For the three months ended December 31, 2021, $1.7 million was included within general and administration expenses and $5.6 million was included within compensation and benefits in the consolidated statements of operations.
Envestnet, Inc.
Reconciliation of Non-GAAP Financial Measures
Segment Information (continued)
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, 2022 |
| | Envestnet Wealth Solutions | | Envestnet Data & Analytics | | Nonsegment | | Total |
| Revenues | | $ | 1,049,793 | | | $ | 189,991 | | | $ | — | | | $ | 1,239,784 | |
Deferred revenue fair value adjustment (a) | | 216 | | | — | | | — | | | 216 | |
| Adjusted revenues | | $ | 1,050,009 | | | $ | 189,991 | | | $ | — | | | $ | 1,240,000 | |
| | | | | | | | |
| Revenues: | | | | | | | | |
| Asset-based | | $ | 738,228 | | | $ | — | | | $ | — | | | $ | 738,228 | |
| Subscription-based | | 294,997 | | | 182,847 | | | — | | | 477,844 | |
| Total recurring revenues | | 1,033,225 | | | 182,847 | | | — | | | 1,216,072 | |
| Professional services and other revenues | | 16,568 | | | 7,144 | | | — | | | 23,712 | |
| Total revenues | | 1,049,793 | | | 189,991 | | | — | | | 1,239,784 | |
| | | | | | | | |
| Operating expenses: | | | | | | | | |
| Cost of revenues: | | | | | | | | |
| Asset-based | | 430,345 | | | — | | | — | | | 430,345 | |
| Subscription-based | | 5,705 | | | 24,908 | | | — | | | 30,613 | |
| Professional services and other | | 7,421 | | | 81 | | | — | | | 7,502 | |
| Total cost of revenues | | 443,471 | | | 24,989 | | | — | | | 468,460 | |
| Compensation and benefits | | 312,910 | | | 109,667 | | | 68,148 | | | 490,725 | |
| General and administration | | 140,782 | | | 42,315 | | | 32,978 | | | 216,075 | |
| Depreciation and amortization | | 96,658 | | | 33,890 | | | — | | | 130,548 | |
| Total operating expenses | | $ | 993,821 | | | $ | 210,861 | | | $ | 101,126 | | | $ | 1,305,808 | |
| | | | | | | | |
| Income (loss) from operations | | $ | 55,972 | | | $ | (20,870) | | | $ | (101,126) | | | $ | (66,024) | |
| Add (deduct): | | | | | | | | |
Deferred revenue fair value adjustment (a) | | 216 | | | — | | | — | | | 216 | |
| Depreciation and amortization | | 96,658 | | | 33,890 | | | — | | | 130,548 | |
Non-cash compensation expense (c) | | 47,043 | | | 10,739 | | | 22,551 | | | 80,333 | |
Restructuring charges and transaction costs (d) | | 22,868 | | | 3,734 | | | 8,539 | | | 35,141 | |
Severance (c) | | 12,415 | | | 11,567 | | | 6,135 | | | 30,117 | |
| | | | | | | | |
| | | | | | | | |
Litigation and regulatory related expenses (b) | | — | | | 6,055 | | | — | | | 6,055 | |
Non-income tax expense adjustment (b) | | 878 | | | (76) | | | — | | | 802 | |
| Loss attributable to non-controlling interest | | 2,300 | | | — | | | — | | | 2,300 | |
| Other | | 635 | | | 5 | | | — | | | 640 | |
| Adjusted EBITDA | | $ | 238,985 | | | $ | 45,044 | | | $ | (63,901) | | | $ | 220,128 | |
__________________________________________________________
(a)Included within subscription-based revenues in the consolidated statements of operations.
(b)Included within general and administration expenses in the consolidated statements of operations.
(c)Included within compensation and benefits in the consolidated statements of operations.
(d)For the year ended December 31, 2022, $35.1 million was included within general and administration expenses in the consolidated statements of operations.
Envestnet, Inc.
Reconciliation of Non-GAAP Financial Measures
Segment Information (continued)
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, 2021 |
| | Envestnet Wealth Solutions | | Envestnet Data & Analytics | | Nonsegment | | Total |
| Revenues | | $ | 991,166 | | | $ | 195,351 | | | $ | — | | | $ | 1,186,517 | |
Deferred revenue fair value adjustment (a) | | 284 | | | — | | | — | | | 284 | |
| Adjusted revenues | | $ | 991,450 | | | $ | 195,351 | | | $ | — | | | $ | 1,186,801 | |
| | | | | | | | |
| Revenues: | | | | | | | | |
| Asset-based | | $ | 709,376 | | | $ | — | | | $ | — | | | $ | 709,376 | |
| Subscription-based | | 267,720 | | | 186,269 | | | — | | | 453,989 | |
| Total recurring revenues | | 977,096 | | | 186,269 | | | — | | | 1,163,365 | |
| Professional services and other revenues | | 14,070 | | | 9,082 | | | — | | | 23,152 | |
| Total revenues | | $ | 991,166 | | | 195,351 | | | — | | | 1,186,517 | |
| | | | | | | | |
| Operating expenses: | | | | | | | | |
| Cost of revenues: | | | | | | | | |
| Asset-based | | 393,717 | | | — | | | — | | | 393,717 | |
| Subscription-based | | 5,154 | | | 24,291 | | | — | | | 29,445 | |
| Professional services and other | | 442 | | | 119 | | | — | | | 561 | |
| Total cost of revenues | | 399,313 | | | 24,410 | | | — | | | 423,723 | |
| Compensation and benefits | | 269,153 | | | 105,416 | | | 58,260 | | | 432,829 | |
| General and administration | | 107,976 | | | 35,798 | | | 27,883 | | | 171,657 | |
| Depreciation and amortization | | 90,073 | | | 27,694 | | | — | | | 117,767 | |
| Total operating expenses | | $ | 866,515 | | | $ | 193,318 | | | $ | 86,143 | | | $ | 1,145,976 | |
| | | | | | | | |
| Income (loss) from operations | | $ | 124,651 | | | $ | 2,033 | | | $ | (86,143) | | | $ | 40,541 | |
| Add (deduct): | | | | | | | | |
Deferred revenue fair value adjustment (a) | | 284 | | | — | | | — | | | 284 | |
Accretion on contingent consideration and purchase liability (b) | | 632 | | | 98 | | | — | | | 730 | |
| Depreciation and amortization | | 90,073 | | | 27,694 | | | — | | | 117,767 | |
Non-cash compensation expense (c) | | 36,787 | | | 12,634 | | | 18,599 | | | 68,020 | |
Restructuring charges and transaction costs (d) | | 13,795 | | | 242 | | | 4,453 | | | 18,490 | |
Non-income tax expense adjustment (b) | | (1,507) | | | 160 | | | — | | | (1,347) | |
Severance (c) | | 4,614 | | | 4,016 | | | 2,717 | | | 11,347 | |
Fair market value adjustment to contingent consideration liability (b) | | — | | | (1,067) | | | — | | | (1,067) | |
Litigation and regulatory related expenses (b) | | — | | | 7,591 | | | — | | | 7,591 | |
| Income attributable to non-controlling interest | | (704) | | | — | | | — | | | (704) | |
| Other | | 78 | | | — | | | — | | | 78 | |
| Adjusted EBITDA | | $ | 268,703 | | | $ | 53,401 | | | $ | (60,374) | | | $ | 261,730 | |
__________________________________________________________
(a)Included within subscription-based revenues in the consolidated statements of operations.
(b)Included within general and administration expenses in the consolidated statements of operations.
(c)Included within compensation and benefits in the consolidated statements of operations.
(d)For the year ended December 31, 2021, $7.7 million was included within general and administration expenses and $10.7 million was included within compensation and benefits in the consolidated statements of operations.
Envestnet, Inc.
Historical Assets, Accounts and Advisors
(in millions, except accounts and advisors)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of |
| | December 31, | | March 31, | | June 30, | | September 30, | | December 31, |
| | 2021 | | 2022(1) | | 2022 | | 2022 | | 2022 |
| | (in millions, except accounts and advisors data) |
| Platform Assets | | | | | | | | | | |
| Assets Under Management (AUM) | | $ | 362,038 | | | $ | 361,251 | | | $ | 325,209 | | | $ | 315,883 | | | $ | 341,144 | |
| Assets Under Administration (AUA) | | 456,316 | | | 432,141 | | | 352,840 | | | 350,576 | | | 367,412 | |
| Total AUM/A | | 818,354 | | | 793,392 | | | 678,049 | | | 666,459 | | | 708,556 | |
| Subscription | | 4,901,662 | | | 4,736,537 | | | 4,312,114 | | | 4,134,414 | | | 4,382,109 | |
| Total Platform Assets | | $ | 5,720,016 | | | $ | 5,529,929 | | | $ | 4,990,163 | | | $ | 4,800,873 | | | $ | 5,090,665 | |
| Platform Accounts | | | | | | | | | | |
| AUM | | 1,345,274 | | | 1,459,093 | | | 1,491,861 | | | 1,522,968 | | | 1,547,009 | |
| AUA | | 1,217,076 | | | 1,186,180 | | | 1,061,484 | | | 1,135,302 | | | 1,135,026 | |
| Total AUM/A | | 2,562,350 | | | 2,645,273 | | | 2,553,345 | | | 2,658,270 | | | 2,682,035 | |
| Subscription | | 14,986,531 | | | 15,151,569 | | | 15,312,144 | | | 15,596,403 | | | 15,665,020 | |
| Total Platform Accounts | | 17,548,881 | | | 17,796,842 | | | 17,865,489 | | | 18,254,673 | | | 18,347,055 | |
| Advisors | | | | | | | | | | |
| AUM/A | | 39,735 | | | 39,800 | | | 38,394 | | | 38,417 | | | 38,025 | |
| Subscription | | 68,808 | | | 67,168 | | | 66,838 | | | 67,348 | | | 67,520 | |
| Total Advisors | | 108,543 | | | 106,968 | | | 105,232 | | | 105,765 | | | 105,545 | |
_________________________________________________________
(1) Certain assets and accounts have been reclassified from AUA to AUM to better reflect the nature of the services provided to certain customers.
The following table summarizes the changes in AUM and AUA for the three months ended December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of | | Gross | | | | Net | | Market | | Reclass to | | As of |
| | 9/30/2022 | | Sales | | Redemptions | | Flows | | Impact | | Subscription | | 12/31/2022 |
| | (in millions, except account data) | | | |
| AUM | | $ | 315,883 | | | $ | 21,658 | | | $ | (17,281) | | | $ | 4,377 | | | $ | 20,963 | | | $ | (79) | | | $ | 341,144 | |
| AUA | | 350,576 | | | 26,865 | | | (27,456) | | | (591) | | | 18,077 | | | (650) | | | 367,412 | |
| Total AUM/A | | $ | 666,459 | | | $ | 48,523 | | | $ | (44,737) | | | $ | 3,786 | | | $ | 39,040 | | | $ | (729) | | | $ | 708,556 | |
| | | | | | | | | | | | | | |
| Fee-Based Accounts | | 2,658,270 | | | | | | | 26,756 | | | | | (2,991) | | | 2,682,035 | |
The above AUM/A gross sales figures include $11.0 billion in new client conversions. The Company onboarded an additional $37.8 billion in subscription conversions during the fourth quarter, bringing total conversions for the quarter to $48.8 billion.
The following table summarizes the changes in AUM and AUA for the year ended December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of 12/31/2021 | | Gross Sales | | | | | | | | Reclass to Subscription(1) | | Reclassification(1) | | |
| | | | Redemptions | | Net Flows | | Market Impact | | | | As of 12/31/2022 |
| | (in millions except account data) |
| AUM | | $ | 362,038 | | | $ | 100,098 | | | $ | (68,181) | | | $ | 31,917 | | | $ | (60,948) | | | $ | (584) | | | $ | 8,721 | | | $ | 341,144 | |
| AUA | | 456,316 | | | 120,409 | | | (95,016) | | | 25,393 | | | (73,849) | | | (31,727) | | | (8,721) | | | 367,412 | |
| Total AUM/A | | $ | 818,354 | | | $ | 220,507 | | | $ | (163,197) | | | $ | 57,310 | | | $ | (134,797) | | | $ | (32,311) | | | $ | — | | | $ | 708,556 | |
| | | | | | | | | | | | | | | | |
| Fee-Based Accounts | | 2,562,350 | | | | | | | 243,320 | | | | | (123,635) | | | — | | | 2,682,035 | |
__________________________________________________________
(1) Certain assets and accounts have been reclassified from AUA to AUM to better reflect the nature of the services provided to certain customers.
The above AUM/A gross sales figures include $52.9 billion in new client conversions. We onboarded an additional $132.3 billion in subscription conversions during 2022, bringing total conversions for the year to $185.2 billion.
Asset and account figures in the “Reclass to Subscription” columns for the three months and year ended December 31, 2022 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.
