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,
2021.
Three Months Ended
Year Ended
Key Financial Metrics
December 31,
%
December 31,
%
(in millions, except per share
data)
2021
2020
Change
2021
2020
Change
GAAP:
Total revenues
$
319.6
$
263.8
21
%
$
1,186.5
$
998.2
19
%
Net income (loss)
$
(5.3
)
$
7.7
n/m
$
12.7
$
(2.6
)
n/m
Net income (loss) per diluted share
attributable to Envestnet, Inc.
$
(0.09
)
$
0.13
n/m
$
0.24
$
(0.06
)
n/m
Non-GAAP:
Adjusted revenues(1)
$
319.7
$
263.9
21
%
$
1,186.8
$
998.9
19
%
Adjusted EBITDA(1)
$
56.2
$
65.0
(14
)%
$
261.7
$
242.9
8
%
Adjusted net income(1)
$
32.7
$
38.3
(15
)%
$
158.0
$
141.5
12
%
Adjusted net income per diluted
share(1)
$
0.50
$
0.69
(28
)%
$
2.42
$
2.57
(6
)%
n/m - not meaningful
“Envestnet delivered strong financial results during the fourth
quarter and full year of 2021, building significant momentum for
the year ahead,” said Bill Crager, Chief Executive Officer.
“Envestnet continues to invest and innovate the capabilities
that enable our clients to help more and more people achieve a
connected, intelligent financial life. We are executing on our
roadmap and focused on driving accelerated financial results for
shareholders,” remarked Mr. Crager.
Financial Results for the Fourth Quarter of 2021 Compared to
the Fourth Quarter of 2020:
Total revenues increased 21% to $319.6 million for the fourth
quarter of 2021 from $263.8 million for the fourth quarter of 2020.
Asset-based recurring revenues increased 34% from the prior year
period, and represented 61% of total revenues for the fourth
quarter of 2021, compared to 55% of total revenues for the same
period in 2020. Subscription-based recurring revenues increased 8%
from the prior year period, and represented 37% of total revenues
for the fourth quarter of 2021, compared to 41% of total revenues
for the same period in 2020. Professional services and other
non-recurring revenues decreased 35% from the prior year
period.
Total operating expenses for the fourth quarter of 2021
increased 27% to $321.0 million from $252.4 million in the prior
year period. Cost of revenues increased 44% to $120.5 million for
the fourth quarter of 2021 from $83.6 million for the fourth
quarter of 2020. Compensation and benefits increased 18% to $116.7
million for the fourth quarter of 2021 from $98.5 million for the
prior year period. Compensation and benefits were 37% of total
revenues for the fourth quarter of 2021, consistent with the fourth
quarter of 2020. General and administration expenses increased 30%
to $54.2 million for the fourth quarter of 2021 from $41.7 million
for the prior year period. General and administration expenses were
17% of total revenues for the fourth quarter of 2021, compared to
16% in the prior year period.
Loss from operations was $1.3 million for the fourth quarter of
2021 compared to income from operations of $11.4 million for the
fourth quarter of 2020. Net loss attributable to Envestnet, Inc.
was $5.1 million, or $0.09 per diluted share, for the fourth
quarter of 2021 compared to net income of $7.2 million, or $0.13
per diluted share, for the fourth quarter of 2020.
Adjusted revenues(1) for the fourth quarter of 2021 increased
21% to $319.7 million from $263.9 million for the prior year
period. Adjusted EBITDA(1) for the fourth quarter of 2021 decreased
14% to $56.2 million from $65.0 million for the prior year period.
Adjusted Net Income(1) for the fourth quarter of 2021 decreased 15%
to $32.7 million from $38.3 million for the prior year period.
Adjusted Net Income per Diluted Share(1) for the fourth quarter of
2021 was $0.50, compared to $0.69 in the fourth quarter of
2020.
Financial Results for the Full Year of 2021 Compared to the
Full Year of 2020:
Total revenues increased 19% to $1.2 billion for the year ended
December 31, 2021 from $998.2 million for the year ended December
31, 2020. Asset-based recurring revenues increased 31% from the
prior year period, and represented 60% of total revenues for the
year ended December 31, 2021 compared to 54% for the year ended
December 31, 2020. Subscription-based revenues increased 6% from
the prior year period, and represented 38% of total revenues for
the year ended December 31, 2021 compared to 43% of total revenues
for the same period in 2020. Professional services and other
non-recurring revenues decreased 25% from the prior year
period.
Total operating expenses for the year ended December 31, 2021
increased 17% to $1.1 billion from $978.8 million in the prior year
period. Cost of revenues increased 39% to $423.7 million for the
year ended December 31, 2021 from $305.9 million for the year ended
December 31, 2020. Compensation and benefits increased 8% to $432.8
million for the year ended December 31, 2021 from $399.0 million
for the prior year period. Compensation and benefits were 36% of
total revenues for the year ended December 31, 2021, compared to
40% in the prior year period. General and administration expenses
increased 7% to $171.7 million for the year ended December 31, 2021
from $160.2 million for the prior year period. General and
administration expenses were 14% of total revenues for the year
ended December 31, 2021, compared to 16% in the prior year
period.
Income from operations was $40.5 million for the year ended
December 31, 2021 compared to income from operations of $19.4
million for the year ended December 31, 2020. Net income
attributable to Envestnet, Inc. was $13.3 million, or $0.24 per
diluted share, for the year ended December 31, 2021 compared to net
loss of $3.1 million, or $0.06 per diluted share, for the year
ended December 31, 2020.
Adjusted revenues(1) for the year ended December 31, 2021
increased 19% to $1.2 billion from $998.9 million for the prior
year period. Adjusted EBITDA(1) for the year ended December 31,
2021 increased 8% to $261.7 million from $242.9 million for the
prior year period. Adjusted Net Income(1) increased 12% for the
year ended December 31, 2021 to $158.0 million from $141.5 million
for the prior year period. Adjusted Net Income per Diluted Share(1)
for the year ended December 31, 2021 decreased 6% to $2.42 from
$2.57 in the year ended December 31, 2020.
Outlook
Envestnet provided the following outlook for the first quarter
ending March 31, 2022 and full year ending December 31, 2022. This
outlook is based on the market value of assets on December 31,
2021. We caution that we cannot predict the market value of our
assets on any future date. See “Cautionary Statement Regarding
Forward-Looking Statements.”
Highlights:
- Envestnet reported full-year adjusted revenues of $1.2 billion,
a 19% year-over-year increase from 2020.
- Adjusted EBITDA rose by 8% in 2021 to $261.7 million and
Adjusted Net Income per Diluted Share was $2.42.
In Millions Except Adjusted EPS
1Q 2022
FY 2022
GAAP:
Revenues:
Asset-based
$204.5
-
$206.0
Subscription-based
$114.0
-
$115.0
Total recurring revenues
$318.5
-
$321.0
Professional services and other
revenues
$3.5
-
$4.0
Total revenues
$322.0
-
$325.0
$1,360.0
-
$1,385.0
Asset-based cost of revenues
$116.0
-
$117.0
Total cost of revenues
$124.5
-
$125.5
Net income
(a)
-
(a)
(a)
-
(a)
Diluted shares outstanding
65.9
66.5
Net Income per diluted share
(a)
-
(a)
(a)
-
(a)
Non-GAAP:
Adjusted revenues(1):
Asset-based
$204.5
-
$206.0
Subscription-based
$114.0
-
$115.0
Total recurring revenues
$318.5
-
$321.0
Professional services and other
revenues
$3.5
-
$4.0
Total revenues
$322.0
-
$325.0
$1,360.0
-
$1,385.0
Adjusted EBITDA(1)
$52.5
-
$54.5
$270.0
-
$280.0
Adjusted net income per diluted
share(1)
$0.44
$0.45
$2.30
-
$2.40
(a) The Company does not forecast net income and net income per
diluted share due to the unpredictable nature of various items
adjusted for non-GAAP disclosure purposes, including the periodic
GAAP income tax provision.
Conference Call
Envestnet will host a conference call to discuss fourth quarter
2021 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. Over 108,000 advisors and more than 6,000
companies including: 18 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. Under GAAP, we
record 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 does 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,
accretion on contingent consideration and purchase liability,
income tax provision (benefit), depreciation and amortization,
non-cash compensation expense, restructuring charges and
transaction costs, severance, 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, non-income tax expense adjustment, gain
on acquisition of equity method investment, gain on sale of
interest in private company, income or 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, accretion on contingent
consideration and purchase liability, 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,
amortization of acquired intangibles and fair value adjustment to
property and equipment, net, fair market value adjustment on
contingent consideration liability, fair market value adjustment to
investment in private company, litigation and regulatory related
expenses, foreign currency, gain on settlement of liability, gain
on insurance reimbursement, non-income tax expense adjustment, gain
on acquisition of equity method investment, gain on sale of
interest in private company, income or 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 Part I, “Note 2—Basis of Presentation”). As a
result, 9.9 million potential shares to be issued in connection
with our Convertible Notes are considered to be dilutive for
purposes of the adjusted net income per share calculation beginning
January 1, 2021.
See reconciliation 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 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, a pandemic or health crisis, including the COVID-19
pandemic, and its impact on financial institutions, the global
economy or capital markets, as well as our products, clients,
vendors and employees, and our results of operations, the full
extent of which may be unknown; 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 condition 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; general economic conditions, political and regulatory
conditions; global events, natural disasters, environmental
disasters, terrorist attacks and pandemics, including their impact
on the economy and trading markets; 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 24, 2022 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)
December 31,
December 31,
2021
2020
Assets
Current assets:
Cash and cash equivalents
$
429,279
$
384,565
Fees receivable, net
95,291
80,064
Prepaid expenses and other current
assets
42,706
40,570
Total current assets
567,276
505,199
Property and equipment, net
50,215
47,969
Internally developed software, net
133,659
96,501
Intangible assets, net
400,396
435,041
Goodwill
925,154
906,773
Operating lease right-of-use assets,
net
90,714
105,249
Other non-current assets
73,768
47,558
Total assets
$
2,241,182
$
2,144,290
Liabilities and Equity
Current liabilities:
Accrued expenses and other liabilities
$
224,416
$
158,548
Accounts payable
19,092
18,003
Operating lease liabilities
10,999
13,649
Contingent consideration
743
11,251
Deferred revenue
33,473
34,918
Total current liabilities
288,723
236,369
Long-term debt
848,862
756,503
Non-current operating lease
liabilities
105,920
112,182
Deferred tax liabilities, net
21,021
34,740
Other non-current liabilities
17,114
28,678
Total liabilities
1,281,640
1,168,472
Equity:
Total stockholders’ equity
957,089
976,337
Non-controlling interest
2,453
(519
)
Total liabilities and equity
$
2,241,182
$
2,144,290
Envestnet, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except share
and per share information)
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2021
2020
2021
2020
Revenues:
Asset-based
$
195,918
$
146,146
$
709,376
$
540,947
Subscription-based
118,084
109,080
453,989
426,507
Total recurring revenues
314,002
255,226
1,163,365
967,454
Professional services and other
revenues
5,619
8,593
23,152
30,776
Total revenues
319,621
263,819
1,186,517
998,230
Operating expenses:
Cost of revenues
120,524
83,602
423,723
305,929
Compensation and benefits
116,728
98,547
432,829
398,970
General and administration
54,194
41,692
171,657
160,229
Depreciation and amortization
29,515
28,584
117,767
113,661
Total operating expenses
320,961
252,425
1,145,976
978,789
Income (loss) from operations
(1,340
)
11,394
40,541
19,441
Other expense, net
(5,377
)
(8,940
)
(20,180
)
(27,486
)
Income (loss) before income tax provision
(benefit)
(6,717
)
2,454
20,361
(8,045
)
Income tax provision (benefit)
(1,407
)
(5,240
)
7,667
(5,401
)
Net income (loss)
(5,310
)
7,694
12,694
(2,644
)
Add: Net (income) loss attributable to
non-controlling interest
201
(454
)
602
(466
)
Net income (loss) attributable to
Envestnet, Inc.
$
(5,109
)
$
7,240
$
13,296
$
(3,110
)
Net income (loss) per share attributable
to Envestnet, Inc.:
Basic
$
(0.09
)
$
0.13
$
0.24
$
(0.06
)
Diluted
$
(0.09
)
$
0.13
$
0.24
$
(0.06
)
Weighted average common shares
outstanding:
Basic
54,678,195
53,960,769
54,470,975
53,589,232
Diluted
54,678,195
55,733,419
55,384,096
53,589,232
Envestnet, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Year Ended
December 31,
2021
2020
OPERATING ACTIVITIES:
Net income (loss)
$
12,694
$
(2,644
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
117,767
113,661
Provision for doubtful accounts
1,598
2,817
Deferred income taxes
(320
)
(1,884
)
Release of uncertain tax positions
—
(7,101
)
Non-cash compensation expense
68,020
59,637
Non-cash interest expense
5,799
18,515
Accretion on contingent consideration and
purchase liability
730
1,688
Payments of contingent consideration
(2,360
)
—
Fair market value adjustment to contingent
consideration liability
(1,067
)
(3,105
)
Fair market value adjustment to investment
in private company
(758
)
—
Gain on settlement of liability
(1,206
)
—
Gain on acquisition of equity method
investment
—
(4,230
)
Loss allocation from equity method
investments
7,093
5,399
Impairment of right of use assets
1,537
2,661
Other
465
(729
)
Changes in operating assets and
liabilities, net of acquisitions:
Fees receivable, net
(16,731
)
(15,055
)
Prepaid expenses and other current
assets
399
(9,666
)
Other non-current assets
2,741
(1,963
)
Accrued expenses and other liabilities
53,265
22,109
Accounts payable
1,290
(187
)
Deferred revenue
(2,080
)
(4,125
)
Other non-current liabilities
1,701
(5,962
)
Net cash provided by operating
activities
250,577
169,836
INVESTING ACTIVITIES:
Purchases of property and equipment
(23,731
)
(12,088
)
Capitalization of internally developed
software
(65,170
)
(54,908
)
Investments in private companies
(25,926
)
(15,640
)
Acquisitions of businesses, net of cash
acquired
(32,794
)
(20,257
)
Acquisition of proprietary technology
(25,517
)
—
Advance for technology solutions
(3,000
)
—
Other
—
2,897
Net cash used in investing activities
(176,138
)
(99,996
)
Envestnet, Inc.
Condensed Consolidated
Statements of Cash Flows (continued)
(in thousands)
(unaudited)
Year Ended
December 31,
2021
2020
FINANCING ACTIVITIES:
Proceeds from issuance of Convertible
Notes due 2025
—
517,500
Convertible Notes due 2025 issuance
costs
—
(14,540
)
Proceeds from borrowings on revolving
credit facility
—
45,000
Payments on revolving credit facility
—
(305,000
)
Capital contribution - non-controlling
interest
3,201
606
Payments of deferred consideration on
prior acquisitions
—
(1,879
)
Payments of contingent consideration
(9,276
)
—
Proceeds from exercise of stock
options
2,090
10,760
Taxes paid in lieu of shares issued for
stock-based compensation
(20,529
)
(19,501
)
Share repurchases
(4,001
)
—
Other
(655
)
4
Net cash provided by (used in) financing
activities
(29,170
)
232,950
EFFECT OF EXCHANGE RATE CHANGES ON
CASH
(555
)
(831
)
INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
44,714
301,959
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, BEGINNING OF PERIOD
384,714
82,755
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH, END OF PERIOD
$
429,428
$
384,714
The following table provides a reconciliation of cash, cash
equivalents and restricted cash to amounts reported within the
Consolidated Balance Sheets:
December 31,
2021
2020
Cash and cash equivalents
$
429,279
$
384,565
Restricted cash included in prepaid
expenses and other current assets
149
—
Restricted cash included in other
non-current assets
—
149
Total cash, cash equivalents and
restricted cash
$
429,428
$
384,714
Envestnet, Inc.
Reconciliation of Non-GAAP
Financial Measures
(in thousands)
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2021
2020
2021
2020
Total revenues
$
319,621
$
263,819
$
1,186,517
$
998,230
Deferred revenue fair value adjustment
(a)
57
85
284
692
Adjusted revenues
$
319,678
$
263,904
$
1,186,801
$
998,922
Net income (loss)
$
(5,310
)
$
7,694
$
12,694
$
(2,644
)
Add (deduct):
Deferred revenue fair value adjustment
(a)
57
85
284
692
Interest income (b)
(258
)
(262
)
(827
)
(1,112
)
Interest expense (b)
4,249
9,597
16,931
31,504
Income tax provision (benefit)
(1,407
)
(5,240
)
7,667
(5,401
)
Depreciation and amortization
29,515
28,584
117,767
113,661
Non-cash compensation expense (d)
17,713
13,916
68,020
57,113
Restructuring charges and transaction
costs (e)
7,275
4,922
18,490
19,383
Severance (f)
849
6,544
11,347
25,110
Accretion on contingent consideration and
purchase
liability (c)
74
380
730
1,688
Fair market value adjustment on contingent
consideration liability (c)
—
(1,049
)
(1,067
)
(3,105
)
Fair market value adjustment to investment
in private company (b)
—
—
(758
)
—
Non-recurring litigation and regulatory
related expenses (c)
2,432
1,796
7,591
7,825
Foreign currency (b)
(117
)
184
(7
)
116
Non-recurring gains (b)
—
(1,647
)
—
(5,877
)
Gain on settlement of liability (b)
—
—
(1,206
)
—
Gain on insurance reimbursement (b)
—
—
(968
)
—
Non-income tax expense adjustment (c)
(245
)
(920
)
(1,347
)
421
Loss allocations from equity method
investments (b)
1,540
1,119
7,093
5,399
Income attributable to non-controlling
interest
(150
)
(727
)
(704
)
(1,830
)
Adjusted EBITDA
$
56,217
$
64,976
$
261,730
$
242,943
(a)
For the three months ended
December 31, 2021 and 2020, $57 and $85, respectively, were
included within subscription-based revenues in the condensed
consolidated statements of operations. For the years ended December
31, 2021 and 2020, $284 and $690, respectively, were included
within subscription-based revenues in the condensed consolidated
statements of operations. The remaining amounts for all periods
were included within professional services and other revenues 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
administration expenses in the condensed consolidated statements of
operations.
(d)
For the three months and year
ended December 31, 2021, the entire amount was included in
compensation and benefits in the condensed consolidated statements
of operations. For the three months ended December 31, 2020, the
entire amount was included in compensation and benefits in the
condensed consolidated statements of operations. For the year ended
December 31, 2020, $59,637 was included in compensation and
benefits and a fair value adjustment of $(2,524) was included in
other expense, net in the condensed consolidated statements of
operations.
(e)
For the three months ended
December 31, 2021 and 2020, $1,711 and $4,121, respectively, were
included within general and administration expenses in the
condensed consolidated statements of operations. For the three
months ended December 31, 2021 and 2020, $5,564 and $833,
respectively, were included within compensation and benefits in the
condensed consolidated statements of operations. For the year ended
December 31, 2021 and 2020, $7,748 and $15,606, respectively, were
included within general and administration expenses in the
condensed consolidated statements of operations. For the year ended
December 31, 2021 and 2020, $10,742 and $3,597, respectively, were
included within compensation and benefits in the condensed
consolidated statements of operations. The remaining amounts for
the 2020 periods were included within other expense, net in the
condensed consolidated statements of operations.
(f)
Included within compensation and
benefits in the condensed 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,
2021
2020
2021
2020
Net income (loss)
$
(5,310
)
$
7,694
$
12,694
$
(2,644
)
Income tax provision (benefit) (a)
(1,407
)
(5,240
)
7,667
(5,401
)
Loss before income tax provision
(benefit)
(6,717
)
2,454
20,361
(8,045
)
Add (deduct):
Deferred revenue fair value adjustment
(b)
57
85
284
692
Non-cash interest expense (c)
1,450
6,798
5,745
17,480
Cash interest - Convertible Notes (c)
2,480
—
9,919
—
Non-cash compensation expense (f)
17,713
13,916
68,020
57,113
Restructuring charges and transaction
costs (e)
7,275
4,922
18,490
19,383
Severance (g)
849
6,544
11,347
25,110
Accretion on contingent consideration and
purchase
liability (d)
74
380
730
1,688
Fair market value adjustment on contingent
consideration liability (d)
—
(1,049
)
(1,067
)
(3,105
)
Fair market value adjustment to investment
in private company (c)
—
—
(758
)
—
Amortization of acquired intangibles
(h)
17,217
17,545
68,587
73,559
Non-recurring litigation and regulatory
related expenses (d)
2,432
1,796
7,591
7,825
Foreign currency (c)
(117
)
184
(7
)
116
Non-recurring gains (c)
—
(1,647
)
—
(5,877
)
Gain on settlement of liability (c)
—
—
(1,206
)
—
Gain on insurance reimbursement (c)
—
—
(968
)
—
Non-income tax expense adjustment (d)
(245
)
(920
)
(1,347
)
421
Loss allocations from equity method
investments (c)
1,540
1,119
7,093
5,399
Income attributable to non-controlling
interest
(150
)
(727
)
(704
)
(1,830
)
Adjusted net income before income tax
effect
43,858
51,400
212,110
189,929
Income tax effect (i)
(11,184
)
(13,107
)
(54,088
)
(48,432
)
Adjusted net income
$
32,674
$
38,293
$
158,022
$
141,497
Basic number of weighted-average shares
outstanding
54,678,195
53,960,769
54,470,975
53,589,232
Effect of dilutive shares:
Options to purchase common stock
201,300
290,366
206,022
416,593
Unvested restricted stock units
665,222
622,702
633,384
592,033
Convertible Notes
9,898,549
769,593
9,898,549
414,398
Warrants
93,947
89,989
73,715
58,459
Diluted number of weighted-average shares
outstanding
65,537,213
55,733,419
65,282,645
55,070,715
Adjusted net income per share -
diluted
$
0.50
$
0.69
$
2.42
$
2.57
(a)
For the three months ended
December 31, 2021 and 2020, the effective tax rate computed in
accordance with GAAP equaled 20.9% and (213.5)%, respectively. For
the year ended December 31, 2021 and 2020, the effective tax rate
computed in accordance with GAAP equaled 37.7% and 67.1%,
respectively.
(b)
For the three months ended
December 31, 2021 and 2020, $57 and $85, respectively, were
included within subscription-based revenues, in the condensed
consolidated statements of operations. For the year ended December
31, 2021 and 2020, $284 and $690, respectively, were included
within subscription-based revenues in the condensed consolidated
statements of operations. The remaining amounts for all periods
were included within professional services and other revenues in
the condensed consolidated statements of operations.
(c)
Included within other expense,
net in the condensed consolidated statements of operations.
(d)
Included within general and
administration expenses in the condensed consolidated statements of
operations.
(e)
For the three months ended
December 31, 2021 and 2020, $1,711 and $4,121, respectively, were
included within general and administration expenses in the
condensed consolidated statements of operations. For the three
months ended December 31, 2021 and 2020, $5,564 and $833,
respectively, were included within compensation and benefits in the
condensed consolidated statements of operations. For the year ended
December 31, 2021 and 2020, $7,748 and $15,606, respectively, were
included within general and administration expenses in the
condensed consolidated statements of operations. For the year ended
December 31, 2021 and 2020, $10,742 and $3,597, respectively, were
included within compensation and benefits in the condensed
consolidated statements of operations. The remaining amounts for
the 2020 periods were included within other expense, net in the
condensed consolidated statements of operations.
(f)
For the three months and year
ended December 31, 2021, the entire amount was included in
compensation and benefits in the condensed consolidated statements
of operations. For the three months ended December 31, 2020, the
entire amount was included in compensation and benefits in the
condensed consolidated statements of operations. For the year ended
December 31, 2020, $59,637 was included in compensation and
benefits and a fair value adjustment of $(2,524) was included in
other expense, net in the condensed consolidated statements of
operations.
(g)
Included within compensation and
benefits in the condensed consolidated statements of
operations.
(h)
Included within depreciation and
amortization in the condensed consolidated statements of
operations.
(i)
An estimated normalized effective
tax rate of 25.5% have been used to compute adjusted net income for
the three months and year ended December 31, 2021 and 2020.
Envestnet, Inc.
Reconciliation of Non-GAAP
Financial Measures
Segment Information
(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
Fair market value adjustment on contingent
consideration liability (b)
—
—
—
—
Non-recurring 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 condensed consolidated
statements of operations.
(b)
Included within general and
administration expenses in the condensed consolidated statements of
operations.
(c)
Included within compensation and
benefits in the condensed consolidated statements of
operations.
(d)
$1,711 included within general
and administration expenses and $5,564 included within compensation
and benefits in the condensed consolidated statements of
operations.
Envestnet, Inc.
Reconciliation of Non-GAAP
Financial Measures
Segment Information
(continued)
(in thousands)
(unaudited)
Three Months Ended December
31, 2020
Envestnet
Wealth
Solutions
Envestnet Data
& Analytics
Nonsegment
Total
Revenues
$
215,691
$
48,128
$
—
$
263,819
Deferred revenue fair value adjustment
(a)
85
—
—
85
Adjusted revenues
$
215,776
$
48,128
$
—
$
263,904
Revenues:
Asset-based
$
146,146
$
—
$
—
$
146,146
Subscription-based
64,294
44,786
—
109,080
Total recurring revenues
210,440
44,786
—
255,226
Professional services and other
revenues
5,251
3,342
—
8,593
Total revenues
215,691
48,128
—
263,819
Operating expenses:
Cost of revenues:
Asset-based
76,969
—
—
76,969
Subscription-based
1,162
5,398
—
6,560
Professional services and other
28
45
—
73
Total cost of revenues
78,159
5,443
—
83,602
Compensation and benefits
62,792
27,981
7,774
98,547
General and administration
23,322
10,106
8,264
41,692
Depreciation and amortization
20,807
7,777
—
28,584
Total operating expenses
$
185,080
$
51,307
$
16,038
$
252,425
Income (loss) from operations
$
30,611
$
(3,179
)
$
(16,038
)
$
11,394
Add:
Deferred revenue fair value adjustment
(a)
85
—
—
85
Depreciation and amortization
20,807
7,777
—
28,584
Non-cash compensation expense (c)
8,360
3,267
2,289
13,916
Restructuring charges and transaction
costs (d)
1,014
1,815
2,093
4,922
Severance (c)
4,024
2,041
479
6,544
Accretion on contingent consideration and
purchase liability (b)
343
37
—
380
Fair market value adjustment on contingent
consideration liability (b)
—
(1,049
)
—
(1,049
)
Non-recurring litigation and regulatory
related expenses (b)
—
1,796
—
1,796
Non-income tax expense adjustment (b)
(1,018
)
98
—
(920
)
Income attributable to non-controlling
interest
(727
)
—
—
(727
)
Other
46
5
—
51
Adjusted EBITDA
$
63,545
$
12,608
$
(11,177
)
$
64,976
(a)
Included within
subscription-based revenues in the condensed consolidated
statements of operations.
(b)
Included within general and
administration expenses in the condensed consolidated statements of
operations.
(c)
Included within compensation and
benefits in the condensed consolidated statements of
operations.
(d)
$4,121 included within general
and administration expenses, $833 included within compensation and
benefits and $(32) included within other expense, net in the
condensed 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
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
Severance (c)
4,614
4,016
2,717
11,347
Accretion on contingent consideration and
purchase liability (b)
632
98
—
730
Fair market value adjustment on contingent
consideration liability (b)
—
(1,067
)
—
(1,067
)
Non-recurring litigation and regulatory
related expenses (b)
—
7,591
—
7,591
Non-income tax expense adjustment (b)
(1,507
)
160
—
(1,347
)
Loss 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 condensed consolidated
statements of operations.
(b)
Included within general and
administration expenses in the condensed consolidated statements of
operations.
(c)
Included within compensation and
benefits in the condensed consolidated statements of
operations.
(d)
$7,748 included within general
and administration expenses and $10,742 included within
compensation and benefits in the condensed consolidated statements
of operations.
Envestnet, Inc.
Reconciliation of Non-GAAP
Financial Measures
Segment Information
(continued)
(in thousands)
(unaudited)
Year Ended December 31,
2020
Envestnet
Wealth
Solutions
Envestnet Data
& Analytics
Nonsegment
Total
Revenues
$
806,090
$
192,140
$
—
$
998,230
Deferred revenue fair value adjustment
(a)
692
—
—
692
Adjusted revenues
$
806,782
$
192,140
$
—
$
998,922
Revenues:
Asset-based
$
540,947
$
—
$
—
$
540,947
Subscription-based
248,810
177,697
—
426,507
Total recurring revenues
789,757
177,697
—
967,454
Professional services and other
revenues
16,333
14,443
—
30,776
Total revenues
806,090
192,140
—
998,230
Operating expenses:
Cost of revenues:
Asset-based
278,569
—
—
278,569
Subscription-based
4,853
22,081
—
26,934
Professional services and other
75
351
—
426
Total cost of revenues
283,497
22,432
—
305,929
Compensation and benefits
257,698
110,436
30,836
398,970
General and administration
92,680
36,268
31,281
160,229
Depreciation and amortization
80,714
32,947
—
113,661
Total operating expenses
$
714,589
$
202,083
$
62,117
$
978,789
Income (loss) from operations
$
91,501
$
(9,943
)
$
(62,117
)
$
19,441
Add (deduct):
Deferred revenue fair value adjustment
(a)
692
—
—
692
Accretion on contingent consideration and
purchase liability (b)
1,430
258
—
1,688
Depreciation and amortization
80,714
32,947
—
113,661
Non-cash compensation expense (c)
35,797
14,932
8,908
59,637
Restructuring charges and transaction
costs (d)
6,878
2,304
10,201
19,383
Non-income tax expense adjustment (b)
514
(93
)
—
421
Severance (c)
18,617
4,628
1,865
25,110
Fair market value adjustment on contingent
consideration liability (b)
—
(3,105
)
—
(3,105
)
Non-recurring litigation and regulatory
related expenses (b)
—
7,825
—
7,825
Loss attributable to non-controlling
interest
(1,830
)
—
—
(1,830
)
Other
15
5
—
20
Adjusted EBITDA
$
234,328
$
49,758
$
(41,143
)
$
242,943
(a)
$690 included within
subscription-based revenues and $2 included within professional
services and other revenues in the condensed consolidated
statements of operations.
(b)
Included within general and
administration expenses in the condensed consolidated statements of
operations.
(c)
Included within compensation and
benefits in the condensed consolidated statements of
operations.
(d)
$15,606 included within general
and administration expenses, $3,597 included within compensation
and benefits and $180 included within other expense, net in the
condensed 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,
2020
2021
2021
2021
2021
(in millions, except accounts
and advisors data)
Platform Assets
Assets under Management ("AUM")
$
263,043
$
286,039
$
315,422
$
327,279
$
362,038
Assets under Administration ("AUA")
405,365
408,858
426,416
431,040
456,316
Total AUM/A
668,408
694,897
741,838
758,319
818,354
Subscription
3,892,814
4,132,917
4,447,733
4,670,827
4,901,662
Total Platform Assets
$
4,561,222
$
4,827,814
$
5,189,571
$
5,429,146
$
5,720,016
Platform Accounts
AUM
1,073,122
1,138,183
1,209,761
1,276,066
1,345,274
AUA
1,276,975
1,192,668
1,163,991
1,193,069
1,217,076
Total AUM/A
2,350,097
2,330,851
2,373,752
2,469,135
2,562,350
Subscription
11,079,048
11,453,434
11,712,573
14,810,664
14,986,531
Total Platform Accounts
13,429,145
13,784,285
14,086,325
17,279,799
17,548,881
Advisors
AUM/A
41,206
41,177
41,259
41,696
39,735
Subscription
65,104
65,724
66,597
66,489
68,808
Total Advisors
106,310
106,901
107,856
108,185
108,543
The following table summarizes the changes in AUM and AUA for
the three months ended December 31, 2021:
As of
Gross
Net
Market
Reclass to
As of
9/30/2021
Sales
Redemptions
Flows
Impact
Subscription
12/31/2021
(in millions, except account
data)
AUM
$
327,279
$
34,114
$
(14,315
)
$
19,799
$
14,960
$
—
$
362,038
AUA
431,040
30,877
(23,305
)
7,572
18,587
(883
)
456,316
Total AUM/A
$
758,319
$
64,991
$
(37,620
)
$
27,371
$
33,547
$
(883
)
$
818,354
Fee-Based Accounts
2,469,135
95,120
(1,905
)
2,562,350
The above AUM/A gross sales figures include $11.2 billion in new
client conversions. We onboarded an additional $45.6 billion in
subscription conversions during the fourth quarter, bringing total
conversions for the quarter to $56.8 billion.
The following table summarizes the changes in AUM and AUA for
the year ended December 31, 2021:
As of
Gross
Net
Market
Reclass to
As of
12/31/2020
Sales
Redemptions
Flows
Impact
Subscription
12/31/2021
(in millions, except account
data)
AUM
$
263,043
$
117,066
$
(52,668
)
$
64,398
$
34,597
$
—
$
362,038
AUA
405,365
116,675
(92,299
)
24,376
40,787
(14,212
)
456,316
Total AUM/A
$
668,408
$
233,741
$
(144,967
)
$
88,774
$
75,384
$
(14,212
)
$
818,354
Fee-Based Accounts
2,350,097
322,138
(109,885
)
2,562,350
The above AUM/A gross sales figures include $34.9 billion in new
client conversions. We onboarded an additional $312.4 billion in
subscription conversions during 2021, bringing total conversions
for the year to $347.3 billion.
Asset and account figures in the “Reclass to Subscription”
column for the three months and year ended December 31, 2021
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220224006044/en/
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