Envestnet Reports Second Quarter 2024 Financial Results
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Three months ended |
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Six months ended |
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Key Financial Metrics |
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% |
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% |
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(in millions, except per share data) |
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2024 |
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|
2023 |
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Change |
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2024 |
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|
2023 |
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|
Change |
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GAAP: |
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|
|
|
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|
|
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|
||||||||||
Total revenue |
|
$ |
348.3 |
|
|
$ |
312.4 |
|
|
11 |
% |
|
$ |
673.2 |
|
|
$ |
611.1 |
|
|
10 |
% |
Net loss attributable to |
|
$ |
(79.2 |
) |
|
$ |
(21.4 |
) |
|
|
* |
|
$ |
(76.7 |
) |
|
$ |
(62.6 |
) |
|
(22 |
)% |
Net loss attributable to |
|
$ |
(1.44 |
) |
|
$ |
(0.39 |
) |
|
* |
|
$ |
(1.39 |
) |
|
$ |
(1.15 |
) |
|
(21 |
)% |
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|
|
|
|
|
|
|
|
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Non-GAAP: |
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|
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Adjusted EBITDA(1) |
|
$ |
77.8 |
|
|
$ |
56.0 |
|
|
39 |
% |
|
$ |
148.2 |
|
|
$ |
110.0 |
|
|
35 |
% |
Adjusted net income(1) |
|
$ |
36.4 |
|
|
$ |
30.4 |
|
|
20 |
% |
|
$ |
75.8 |
|
|
$ |
60.5 |
|
|
25 |
% |
Adjusted net income per diluted share(1) |
|
$ |
0.55 |
|
|
$ |
0.46 |
|
|
20 |
% |
|
$ |
1.14 |
|
|
$ |
0.91 |
|
|
25 |
% |
Free cash flow(1) |
|
$ |
67.0 |
|
|
$ |
36.7 |
|
|
83 |
% |
|
$ |
47.1 |
|
|
$ |
(25.1 |
) |
|
* |
__________________________________________________
*Not meaningful
Financial Results for the Second Quarter 2024 Compared to the Second Quarter 2023
Total revenue increased 11% to
Total operating expenses increased 29% to
Loss from operations was
Adjusted EBITDA(1) increased 39% to
Balance Sheet and Liquidity
As of
Segment Reporting
On
Correction of Immaterial Errors
In
During the fourth quarter of 2023, the Company identified that the arrangement with a third-party for the use of cloud hosted virtual servers which was previously accounted for as a finance lease transaction and included as a component of property and equipment, net in the condensed consolidated balance sheets should have been recognized as a prepayment included within prepaid expenses and other current assets and other assets in the condensed consolidated balance sheets. The Company concluded that the classification of these transactions was immaterial in prior period financial statements and that amendment of previously filed reports was not required. However, the Company corrected this immaterial error in the prior periods reported within this press release.
Conference Call
About
For more information on
__________________________________________________
(1) Non-GAAP Financial Measures
“Adjusted EBITDA” represents net income (loss) before deferred revenue fair value adjustment, interest income, interest expense, income tax provision (benefit), depreciation and amortization, goodwill impairment, gain on deconsolidation, non‑cash compensation expense, restructuring charges and transaction costs, severance expense, litigation, regulatory and other governance related expenses, foreign currency, non-income tax expense adjustment, fair market value adjustments to investments in private companies, (gain) loss from equity method investments and loss attributable to non‑controlling interest.
“Adjusted net income” represents net income (loss) before income tax provision (benefit), gain (loss) from equity method investments, deferred revenue fair value adjustment, non‑cash interest expense, cash interest on our Convertible Notes, amortization of acquired intangibles, goodwill impairment, gain on deconsolidation, non‑cash compensation expense, restructuring charges and transaction costs, severance expense, litigation, regulatory and other governance related expenses, foreign currency, non-income tax expense adjustment, fair market value adjustments to investments in private companies and loss attributable to non‑controlling interest. Reconciling items are presented gross of tax, and a normalized tax rate is applied to the total of all reconciling items to arrive at adjusted net income. The normalized tax rate is based solely on the estimated blended statutory income tax rates in the jurisdictions in which we operate. We monitor the normalized tax rate based on events or trends that could materially impact the rate, including tax legislation changes and changes in the geographic mix of our operations.
“Adjusted net income per diluted share” represents adjusted net income attributable to common stockholders divided by the diluted number of weighted average shares outstanding. For purposes of the adjusted net income per share calculation, we assume all potential shares to be issued in connection with our convertible notes are dilutive.
"Free cash flow" represents net cash provided by (used in) operating activities less purchases of property and equipment and capitalization of internally developed software.
For further information see reconciliations of Non-GAAP Financial Measures on pages 9-15 of this press release, and the section entitled "Non-GAAP Financial Measures" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the
Cautionary Statement Regarding Forward-Looking Statements
The forward-looking statements made in this press release and its attachments concerning 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. In addition, any statements that refer to our pending merger with affiliates of vehicles managed or advised by
Condensed Consolidated Balance Sheets (in thousands) (unaudited) |
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2024 |
|
2023 |
||
Assets |
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|
|
|
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Current assets: |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
121,967 |
|
$ |
91,378 |
Fees receivable, net |
|
|
129,252 |
|
|
120,958 |
Prepaid expenses and other current assets |
|
|
57,899 |
|
|
51,472 |
Total current assets |
|
|
309,118 |
|
|
263,808 |
Property and equipment, net |
|
|
45,641 |
|
|
48,223 |
Internally developed software, net |
|
|
205,090 |
|
|
224,713 |
Intangible assets, net |
|
|
311,868 |
|
|
338,068 |
|
|
|
690,885 |
|
|
806,563 |
Operating lease right-of-use assets, net |
|
|
65,257 |
|
|
69,154 |
Investments in unconsolidated entities |
|
|
96,755 |
|
|
56,292 |
Other assets |
|
|
70,358 |
|
|
70,431 |
Total assets |
|
$ |
1,794,972 |
|
$ |
1,877,252 |
|
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|
|
|
||
Liabilities and equity |
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Current liabilities: |
|
|
|
|
||
Accounts payable, accrued expenses and other current liabilities |
|
$ |
225,508 |
|
$ |
241,424 |
Operating lease liabilities |
|
|
12,149 |
|
|
12,909 |
Deferred revenue |
|
|
34,567 |
|
|
38,201 |
Current portion of debt |
|
|
— |
|
|
314,532 |
Total current liabilities |
|
|
272,224 |
|
|
607,066 |
Debt, net of current portion |
|
|
879,079 |
|
|
562,080 |
Operating lease liabilities, net of current portion |
|
|
95,294 |
|
|
100,830 |
Deferred tax liabilities, net |
|
|
15,208 |
|
|
16,568 |
Other liabilities |
|
|
16,820 |
|
|
16,202 |
Total liabilities |
|
|
1,278,625 |
|
|
1,302,746 |
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|
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Equity: |
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|
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||
Total stockholders’ equity attributable to |
|
|
516,347 |
|
|
568,191 |
Non-controlling interest |
|
|
— |
|
|
6,315 |
Total liabilities and equity |
|
$ |
1,794,972 |
|
$ |
1,877,252 |
Condensed Consolidated Statements of Operations (in thousands, except share and per share information) (unaudited) |
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Three Months Ended |
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Six Months Ended |
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2024 |
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|
2023 |
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|
2024 |
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|
|
2023 |
|
Revenue: |
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|
|
|
|
|
|
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Asset-based |
|
$ |
219,485 |
|
|
$ |
185,762 |
|
|
$ |
422,101 |
|
|
$ |
362,694 |
|
Subscription-based |
|
|
117,988 |
|
|
|
114,959 |
|
|
|
235,450 |
|
|
|
232,038 |
|
Total recurring revenue |
|
|
337,473 |
|
|
|
300,721 |
|
|
|
657,551 |
|
|
|
594,732 |
|
Professional services and other revenue |
|
|
10,800 |
|
|
|
11,713 |
|
|
|
15,672 |
|
|
|
16,409 |
|
Total revenue |
|
|
348,273 |
|
|
|
312,434 |
|
|
|
673,223 |
|
|
|
611,141 |
|
|
|
|
|
|
|
|
|
|
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Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
Direct expense |
|
|
144,351 |
|
|
|
124,209 |
|
|
|
270,984 |
|
|
|
233,888 |
|
Employee compensation |
|
|
104,066 |
|
|
|
117,097 |
|
|
|
207,718 |
|
|
|
231,312 |
|
General and administrative |
|
|
52,924 |
|
|
|
54,375 |
|
|
|
104,989 |
|
|
|
108,725 |
|
Depreciation and amortization |
|
|
45,733 |
|
|
|
32,065 |
|
|
|
79,625 |
|
|
|
63,585 |
|
|
|
|
96,269 |
|
|
|
— |
|
|
|
96,269 |
|
|
|
— |
|
Gain on deconsolidation |
|
|
(19,523 |
) |
|
|
— |
|
|
|
(19,523 |
) |
|
|
— |
|
Total operating expenses |
|
|
423,820 |
|
|
|
327,746 |
|
|
|
740,062 |
|
|
|
637,510 |
|
|
|
|
|
|
|
|
|
|
||||||||
Loss from operations |
|
|
(75,547 |
) |
|
|
(15,312 |
) |
|
|
(66,839 |
) |
|
|
(26,369 |
) |
Other expense, net |
|
|
(4,788 |
) |
|
|
(5,016 |
) |
|
|
(9,169 |
) |
|
|
(10,011 |
) |
Loss before income tax provision (benefit) and equity method investments |
|
|
(80,335 |
) |
|
|
(20,328 |
) |
|
|
(76,008 |
) |
|
|
(36,380 |
) |
Income tax provision (benefit) |
|
|
(652 |
) |
|
|
418 |
|
|
|
853 |
|
|
|
24,187 |
|
Gain (loss) from equity method investments |
|
|
482 |
|
|
|
(2,386 |
) |
|
|
(1,801 |
) |
|
|
(5,326 |
) |
Net loss |
|
|
(79,201 |
) |
|
|
(23,132 |
) |
|
|
(78,662 |
) |
|
|
(65,893 |
) |
Add: Net loss attributable to non-controlling interest |
|
|
— |
|
|
|
1,716 |
|
|
|
1,974 |
|
|
|
3,249 |
|
Net loss attributable to |
|
$ |
(79,201 |
) |
|
$ |
(21,416 |
) |
|
$ |
(76,688 |
) |
|
$ |
(62,644 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to |
|
|
|
|
|
|
|
|
||||||||
Basic and diluted |
|
$ |
(1.44 |
) |
|
$ |
(0.39 |
) |
|
$ |
(1.39 |
) |
|
$ |
(1.15 |
) |
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic and diluted |
|
|
55,143,013 |
|
|
|
54,439,733 |
|
|
|
55,013,544 |
|
|
|
54,289,443 |
|
Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) |
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|
|
Six Months Ended |
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|
|
|
||||||
|
|
|
2024 |
|
|
|
2023 |
|
Cash flows from operating activities: |
|
|
|
|
||||
Net loss |
|
$ |
(78,662 |
) |
|
$ |
(65,893 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
79,625 |
|
|
|
63,585 |
|
Non-cash compensation expense |
|
|
36,720 |
|
|
|
40,843 |
|
Non-cash interest expense |
|
|
2,817 |
|
|
|
2,251 |
|
Non-cash goodwill impairment |
|
|
96,269 |
|
|
|
— |
|
Non-cash gain on deconsolidation |
|
|
(19,523 |
) |
|
|
— |
|
Loss from equity method investments |
|
|
1,801 |
|
|
|
5,326 |
|
Lease related impairments |
|
|
— |
|
|
|
2,483 |
|
Other |
|
|
2,120 |
|
|
|
(218 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
||||
Fees receivable, net |
|
|
(12,813 |
) |
|
|
(22,357 |
) |
Prepaid expenses and other assets |
|
|
(5,745 |
) |
|
|
(6,762 |
) |
Accounts payable, accrued expenses and other liabilities |
|
|
(14,049 |
) |
|
|
20,070 |
|
Deferred revenue |
|
|
2,494 |
|
|
|
(852 |
) |
Net cash provided by operating activities |
|
|
91,054 |
|
|
|
38,476 |
|
Cash flows from investing activities: |
|
|
|
|
||||
Purchases of property and equipment |
|
|
(5,172 |
) |
|
|
(16,735 |
) |
Capitalization of internally developed software |
|
|
(38,751 |
) |
|
|
(46,801 |
) |
Deconsolidation of non-controlling interest |
|
|
(11,073 |
) |
|
|
— |
|
Investments in private companies |
|
|
(3,055 |
) |
|
|
(1,450 |
) |
Acquisition of proprietary technology |
|
|
(3,000 |
) |
|
|
(12,000 |
) |
Issuance of loan receivable to private company |
|
|
— |
|
|
|
(20,000 |
) |
Other |
|
|
— |
|
|
|
319 |
|
Net cash used in investing activities |
|
|
(61,051 |
) |
|
|
(96,667 |
) |
Cash flows from financing activities: |
|
|
|
|
||||
Proceeds from borrowings on Revolving Credit Facility |
|
|
— |
|
|
|
40,000 |
|
Payments related to Revolving Credit Facility |
|
|
— |
|
|
|
(20,000 |
) |
Payments related to Convertible Notes |
|
|
— |
|
|
|
(45,000 |
) |
Proceeds from exercise of stock options |
|
|
724 |
|
|
|
472 |
|
Payments related to tax withholdings for stock-based compensation |
|
|
(12,155 |
) |
|
|
(13,774 |
) |
Payments related to share repurchases |
|
|
— |
|
|
|
(9,289 |
) |
Proceeds from capital contributions received by non-controlling interest |
|
|
12,012 |
|
|
|
— |
|
Purchase of non-controlling units from third-party shareholders |
|
|
— |
|
|
|
(1,008 |
) |
Other |
|
|
3 |
|
|
|
3 |
|
Net cash provided by (used in) financing activities |
|
|
584 |
|
|
|
(48,596 |
) |
Effect of exchange rate on changes on cash and cash equivalents |
|
|
2 |
|
|
|
3,633 |
|
Net change in cash and cash equivalents |
|
|
30,589 |
|
|
|
(103,154 |
) |
Cash and cash equivalents, beginning of period |
|
|
91,378 |
|
|
|
162,173 |
|
Cash and cash equivalents, end of period |
|
$ |
121,967 |
|
|
$ |
59,019 |
|
Reconciliation of Non-GAAP Financial Measures (in thousands) (unaudited) |
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|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
||||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net loss |
|
$ |
(79,201 |
) |
|
$ |
(23,132 |
) |
|
$ |
(78,662 |
) |
|
$ |
(65,893 |
) |
Add (deduct): |
|
|
|
|
|
|
|
|
||||||||
Deferred revenue fair value adjustment (a) |
|
|
— |
|
|
|
17 |
|
|
|
— |
|
|
|
69 |
|
Interest income (b) |
|
|
(2,588 |
) |
|
|
(1,656 |
) |
|
|
(4,571 |
) |
|
|
(3,014 |
) |
Interest expense (b) |
|
|
6,097 |
|
|
|
6,531 |
|
|
|
12,186 |
|
|
|
12,851 |
|
Income tax provision (benefit) |
|
|
(652 |
) |
|
|
418 |
|
|
|
853 |
|
|
|
24,187 |
|
Depreciation and amortization |
|
|
45,733 |
|
|
|
32,065 |
|
|
|
79,625 |
|
|
|
63,585 |
|
|
|
|
96,269 |
|
|
|
— |
|
|
|
96,269 |
|
|
|
— |
|
Gain on deconsolidation |
|
|
(19,523 |
) |
|
|
— |
|
|
|
(19,523 |
) |
|
|
— |
|
Non-cash compensation expense (d) |
|
|
17,822 |
|
|
|
21,390 |
|
|
|
36,720 |
|
|
|
40,843 |
|
Restructuring charges and transaction costs (e) |
|
|
8,405 |
|
|
|
6,508 |
|
|
|
10,461 |
|
|
|
10,671 |
|
Severance expense (d) |
|
|
669 |
|
|
|
8,234 |
|
|
|
4,094 |
|
|
|
14,422 |
|
Litigation, regulatory and other governance related expenses (c) |
|
|
4,020 |
|
|
|
2,145 |
|
|
|
6,308 |
|
|
|
5,219 |
|
Foreign currency (b) |
|
|
(229 |
) |
|
|
74 |
|
|
|
46 |
|
|
|
107 |
|
Non-income tax expense adjustment (c) |
|
|
(39 |
) |
|
|
(30 |
) |
|
|
(88 |
) |
|
|
(198 |
) |
Fair market value adjustments to investments in private companies (b) |
|
|
1,508 |
|
|
|
67 |
|
|
|
1,508 |
|
|
|
67 |
|
(Gain) loss from equity method investments |
|
|
(482 |
) |
|
|
2,386 |
|
|
|
1,801 |
|
|
|
5,326 |
|
Loss attributable to non-controlling interest |
|
|
— |
|
|
|
1,027 |
|
|
|
1,160 |
|
|
|
1,805 |
|
Adjusted EBITDA |
|
$ |
77,809 |
|
|
$ |
56,044 |
|
|
$ |
148,187 |
|
|
$ |
110,047 |
|
__________________________________________________________
(a) |
Included within subscription-based revenue in the condensed consolidated statements of operations. |
(b) |
Included within other expense, net in the condensed consolidated statements of operations. |
(c) |
Included within general and administrative expense in the condensed consolidated statements of operations. |
(d) |
Included within employee compensation expense in the condensed consolidated statements of operations. |
(e) |
For the three months ended |
Reconciliation of Non-GAAP Financial Measures (in thousands, except share and per share information) (unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
||||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net loss |
|
$ |
(79,201 |
) |
|
$ |
(23,132 |
) |
|
$ |
(78,662 |
) |
|
$ |
(65,893 |
) |
Income tax provision (benefit) (a) |
|
|
(652 |
) |
|
|
418 |
|
|
|
853 |
|
|
|
24,187 |
|
Gain (loss) from equity method investments |
|
|
482 |
|
|
|
(2,386 |
) |
|
|
(1,801 |
) |
|
|
(5,326 |
) |
Loss before income tax provision (benefit) and equity method investments |
|
|
(80,335 |
) |
|
|
(20,328 |
) |
|
|
(76,008 |
) |
|
|
(36,380 |
) |
Add (deduct): |
|
|
|
|
|
|
|
|
||||||||
Deferred revenue fair value adjustment (b) |
|
|
— |
|
|
|
17 |
|
|
|
— |
|
|
|
69 |
|
Non-cash interest expense (d) |
|
|
1,412 |
|
|
|
1,427 |
|
|
|
2,817 |
|
|
|
2,869 |
|
Cash interest - Convertible Notes (d) |
|
|
4,369 |
|
|
|
4,543 |
|
|
|
8,738 |
|
|
|
9,108 |
|
Amortization of acquired intangibles (e) |
|
|
14,457 |
|
|
|
15,720 |
|
|
|
29,199 |
|
|
|
32,660 |
|
|
|
|
96,269 |
|
|
|
— |
|
|
|
96,269 |
|
|
|
— |
|
Gain on deconsolidation |
|
|
(19,523 |
) |
|
|
— |
|
|
|
(19,523 |
) |
|
|
— |
|
Non-cash compensation expense (f) |
|
|
17,822 |
|
|
|
21,390 |
|
|
|
36,720 |
|
|
|
40,843 |
|
Restructuring charges and transaction costs (g) |
|
|
8,405 |
|
|
|
6,508 |
|
|
|
10,461 |
|
|
|
10,671 |
|
Severance expense (f) |
|
|
669 |
|
|
|
8,234 |
|
|
|
4,094 |
|
|
|
14,422 |
|
Litigation, regulatory and other governance related expenses (c) |
|
|
4,020 |
|
|
|
2,145 |
|
|
|
6,308 |
|
|
|
5,219 |
|
Foreign currency (d) |
|
|
(229 |
) |
|
|
74 |
|
|
|
46 |
|
|
|
107 |
|
Non-income tax expense adjustment (c) |
|
|
(39 |
) |
|
|
(30 |
) |
|
|
(88 |
) |
|
|
(198 |
) |
Fair market value adjustments to investments in private companies (d) |
|
|
1,508 |
|
|
|
67 |
|
|
|
1,508 |
|
|
|
67 |
|
Loss attributable to non-controlling interest |
|
|
— |
|
|
|
1,027 |
|
|
|
1,160 |
|
|
|
1,805 |
|
Adjusted net income before income tax effect |
|
|
48,805 |
|
|
|
40,794 |
|
|
|
101,701 |
|
|
|
81,262 |
|
Income tax effect (h) |
|
|
(12,445 |
) |
|
|
(10,403 |
) |
|
|
(25,934 |
) |
|
|
(20,722 |
) |
Adjusted net income |
|
$ |
36,360 |
|
|
$ |
30,391 |
|
|
$ |
75,767 |
|
|
$ |
60,540 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic number of weighted average shares outstanding |
|
|
55,143,013 |
|
|
|
54,439,733 |
|
|
|
55,013,544 |
|
|
|
54,289,443 |
|
Effect of dilutive shares: |
|
|
|
|
|
|
|
|
||||||||
Convertible Notes |
|
|
10,811,884 |
|
|
|
11,253,471 |
|
|
|
10,811,884 |
|
|
|
11,361,458 |
|
Non-vested RSUs and PSUs |
|
|
590,918 |
|
|
|
316,758 |
|
|
|
527,360 |
|
|
|
445,323 |
|
Options to purchase common stock |
|
|
49,692 |
|
|
|
57,902 |
|
|
|
38,996 |
|
|
|
73,271 |
|
Diluted number of weighted average shares outstanding |
|
|
66,595,507 |
|
|
|
66,067,864 |
|
|
|
66,391,784 |
|
|
|
66,169,495 |
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted net income per diluted share |
|
$ |
0.55 |
|
|
$ |
0.46 |
|
|
$ |
1.14 |
|
|
$ |
0.91 |
|
__________________________________________________________
(a) |
For the three months ended |
(b) |
Included within subscription-based revenue in the condensed consolidated statements of operations. |
(c) |
Included within general and administrative expense in the condensed consolidated statements of operations. |
(d) |
Included within other expense, net in the condensed consolidated statements of operations. |
(e) |
Included within depreciation and amortization expense in the condensed consolidated statements of operations. |
(f) |
Included within employee compensation expense in the condensed consolidated statements of operations. |
(g) |
For the three months ended |
(h) |
An estimated normalized tax rate of 25.5% has been used to compute adjusted net income for the three and six months ended |
Reconciliation of Non-GAAP Financial Measures (in thousands) (unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
||||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net cash provided by operating activities |
|
$ |
89,110 |
|
|
$ |
72,149 |
|
|
$ |
91,054 |
|
|
$ |
38,476 |
|
Less: Purchases of property and equipment |
|
|
(3,272 |
) |
|
|
(12,333 |
) |
|
|
(5,172 |
) |
|
|
(16,735 |
) |
Less: Capitalization of internally developed software |
|
|
(18,798 |
) |
|
|
(23,137 |
) |
|
|
(38,751 |
) |
|
|
(46,801 |
) |
Free cash flow |
|
$ |
67,040 |
|
|
$ |
36,679 |
|
|
$ |
47,131 |
|
|
$ |
(25,060 |
) |
Reconciliation of Non-GAAP Financial Measures Segment Information (in thousands) (unaudited) |
||||||||||||||||
|
|
Three Months Ended |
||||||||||||||
|
|
Envestnet Wealth Solutions |
|
Envestnet Data & Analytics |
|
Nonsegment |
|
Total |
||||||||
Revenue: |
|
|
|
|
|
|
|
|
||||||||
Asset-based |
|
$ |
219,485 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
219,485 |
|
Subscription-based |
|
|
84,734 |
|
|
|
33,254 |
|
|
|
— |
|
|
|
117,988 |
|
Total recurring revenue |
|
|
304,219 |
|
|
|
33,254 |
|
|
|
— |
|
|
|
337,473 |
|
Professional services and other revenue |
|
|
7,889 |
|
|
|
2,911 |
|
|
|
— |
|
|
|
10,800 |
|
Total revenue |
|
|
312,108 |
|
|
|
36,165 |
|
|
|
— |
|
|
|
348,273 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
Direct expense |
|
|
|
|
|
|
|
|
||||||||
Asset-based |
|
|
130,116 |
|
|
|
— |
|
|
|
— |
|
|
|
130,116 |
|
Subscription-based |
|
|
1,474 |
|
|
|
7,174 |
|
|
|
— |
|
|
|
8,648 |
|
Professional services and other |
|
|
5,587 |
|
|
|
— |
|
|
|
— |
|
|
|
5,587 |
|
Total direct expense |
|
|
137,177 |
|
|
|
7,174 |
|
|
|
— |
|
|
|
144,351 |
|
Employee compensation |
|
|
77,210 |
|
|
|
11,872 |
|
|
|
14,984 |
|
|
|
104,066 |
|
General and administrative |
|
|
25,698 |
|
|
|
15,270 |
|
|
|
11,956 |
|
|
|
52,924 |
|
Depreciation and amortization |
|
|
38,375 |
|
|
|
7,358 |
|
|
|
— |
|
|
|
45,733 |
|
|
|
|
— |
|
|
|
96,269 |
|
|
|
— |
|
|
|
96,269 |
|
Gain on deconsolidation |
|
|
(19,523 |
) |
|
|
— |
|
|
|
— |
|
|
|
(19,523 |
) |
Total operating expenses |
|
|
258,937 |
|
|
|
137,943 |
|
|
|
26,940 |
|
|
|
423,820 |
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from operations |
|
|
53,171 |
|
|
|
(101,778 |
) |
|
|
(26,940 |
) |
|
|
(75,547 |
) |
Add (deduct): |
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
|
38,375 |
|
|
|
7,358 |
|
|
|
— |
|
|
|
45,733 |
|
|
|
|
— |
|
|
|
96,269 |
|
|
|
— |
|
|
|
96,269 |
|
Gain on deconsolidation |
|
|
(19,523 |
) |
|
|
— |
|
|
|
— |
|
|
|
(19,523 |
) |
Non-cash compensation expense (b) |
|
|
11,360 |
|
|
|
1,904 |
|
|
|
4,558 |
|
|
|
17,822 |
|
Restructuring charges and transaction costs (c) |
|
|
2,063 |
|
|
|
60 |
|
|
|
6,282 |
|
|
|
8,405 |
|
Severance expense (b) |
|
|
632 |
|
|
|
— |
|
|
|
37 |
|
|
|
669 |
|
Litigation, regulatory and other governance related expenses (a) |
|
|
— |
|
|
|
4,020 |
|
|
|
— |
|
|
|
4,020 |
|
Non-income tax expense adjustment (a) |
|
|
(39 |
) |
|
|
— |
|
|
|
— |
|
|
|
(39 |
) |
Adjusted EBITDA |
|
$ |
86,039 |
|
|
$ |
7,833 |
|
|
$ |
(16,063 |
) |
|
$ |
77,809 |
|
__________________________________________________________
(a) |
Included within general and administrative expense in the condensed consolidated statements of operations. |
(b) |
Included within employee compensation expense in the condensed consolidated statements of operations. |
(c) |
|
Reconciliation of Non-GAAP Financial Measures Segment Information (in thousands) (unaudited) |
||||||||||||||||
|
|
Six Months Ended |
||||||||||||||
|
|
Envestnet Wealth Solutions |
|
Envestnet Data & Analytics |
|
Nonsegment |
|
Total |
||||||||
Revenue: |
|
|
|
|
|
|
|
|
||||||||
Asset-based |
|
$ |
422,101 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
422,101 |
|
Subscription-based |
|
|
168,902 |
|
|
|
66,548 |
|
|
|
— |
|
|
|
235,450 |
|
Total recurring revenue |
|
|
591,003 |
|
|
|
66,548 |
|
|
|
— |
|
|
|
657,551 |
|
Professional services and other revenue |
|
|
10,915 |
|
|
|
4,757 |
|
|
|
— |
|
|
|
15,672 |
|
Total revenue |
|
|
601,918 |
|
|
|
71,305 |
|
|
|
— |
|
|
|
673,223 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
Direct expense: |
|
|
|
|
|
|
|
|
||||||||
Asset-based |
|
|
248,519 |
|
|
|
— |
|
|
|
— |
|
|
|
248,519 |
|
Subscription-based |
|
|
2,905 |
|
|
|
13,973 |
|
|
|
— |
|
|
|
16,878 |
|
Professional services and other |
|
|
5,587 |
|
|
|
— |
|
|
|
— |
|
|
|
5,587 |
|
Total direct expense |
|
|
257,011 |
|
|
|
13,973 |
|
|
|
— |
|
|
|
270,984 |
|
Employee compensation |
|
|
152,406 |
|
|
|
23,564 |
|
|
|
31,748 |
|
|
|
207,718 |
|
General and administrative |
|
|
54,730 |
|
|
|
30,584 |
|
|
|
19,675 |
|
|
|
104,989 |
|
Depreciation and amortization |
|
|
65,193 |
|
|
|
14,432 |
|
|
|
— |
|
|
|
79,625 |
|
|
|
|
— |
|
|
|
96,269 |
|
|
|
— |
|
|
|
96,269 |
|
Gain on deconsolidation |
|
|
(19,523 |
) |
|
|
— |
|
|
|
— |
|
|
|
(19,523 |
) |
Total operating expenses |
|
|
509,817 |
|
|
|
178,822 |
|
|
|
51,423 |
|
|
|
740,062 |
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from operations |
|
|
92,101 |
|
|
|
(107,517 |
) |
|
|
(51,423 |
) |
|
|
(66,839 |
) |
Add (deduct): |
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
|
65,193 |
|
|
|
14,432 |
|
|
|
— |
|
|
|
79,625 |
|
|
|
|
— |
|
|
|
96,269 |
|
|
|
— |
|
|
|
96,269 |
|
Gain on deconsolidation |
|
|
(19,523 |
) |
|
|
— |
|
|
|
— |
|
|
|
(19,523 |
) |
Non-cash compensation expense (b) |
|
|
22,747 |
|
|
|
3,768 |
|
|
|
10,205 |
|
|
|
36,720 |
|
Restructuring charges and transaction costs (c) |
|
|
2,106 |
|
|
|
739 |
|
|
|
7,616 |
|
|
|
10,461 |
|
Severance expense (b) |
|
|
2,436 |
|
|
|
13 |
|
|
|
1,645 |
|
|
|
4,094 |
|
Litigation, regulatory and other governance related expenses (a) |
|
|
— |
|
|
|
6,308 |
|
|
|
— |
|
|
|
6,308 |
|
Non-income tax expense adjustment (a) |
|
|
(88 |
) |
|
|
— |
|
|
|
— |
|
|
|
(88 |
) |
Loss attributable to non-controlling interest |
|
|
1,160 |
|
|
|
— |
|
|
|
— |
|
|
|
1,160 |
|
Adjusted EBITDA |
|
$ |
166,132 |
|
|
$ |
14,012 |
|
|
$ |
(31,957 |
) |
|
$ |
148,187 |
|
__________________________________________________________
(a) |
Included within general and administrative expense in the condensed consolidated statements of operations. |
(b) |
Included within employee compensation expense in the condensed consolidated statements of operations. |
(c) |
|
Reconciliation of Non-GAAP Financial Measures Segment Information (continued) (in thousands) (unaudited) |
||||||||||||||||
|
|
Three months ended |
||||||||||||||
|
|
Envestnet Wealth Solutions |
|
Envestnet Data & Analytics |
|
Nonsegment |
|
Total |
||||||||
Revenue: |
|
|
|
|
|
|
|
|
||||||||
Asset-based |
|
$ |
185,762 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
185,762 |
|
Subscription-based |
|
|
79,744 |
|
|
|
35,215 |
|
|
|
— |
|
|
|
114,959 |
|
Total recurring revenue |
|
|
265,506 |
|
|
|
35,215 |
|
|
|
— |
|
|
|
300,721 |
|
Professional services and other revenue |
|
|
10,318 |
|
|
|
1,395 |
|
|
|
— |
|
|
|
11,713 |
|
Total revenue |
|
|
275,824 |
|
|
|
36,610 |
|
|
|
— |
|
|
|
312,434 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
Direct expense: |
|
|
|
|
|
|
|
|
||||||||
Asset-based |
|
|
108,532 |
|
|
|
— |
|
|
|
— |
|
|
|
108,532 |
|
Subscription-based |
|
|
1,857 |
|
|
|
5,788 |
|
|
|
— |
|
|
|
7,645 |
|
Professional services and other |
|
|
8,032 |
|
|
|
— |
|
|
|
— |
|
|
|
8,032 |
|
Total direct expense |
|
|
118,421 |
|
|
|
5,788 |
|
|
|
— |
|
|
|
124,209 |
|
Employee compensation |
|
|
77,898 |
|
|
|
19,839 |
|
|
|
19,360 |
|
|
|
117,097 |
|
General and administrative |
|
|
31,225 |
|
|
|
14,792 |
|
|
|
8,358 |
|
|
|
54,375 |
|
Depreciation and amortization |
|
|
25,575 |
|
|
|
6,490 |
|
|
|
— |
|
|
|
32,065 |
|
Total operating expenses |
|
|
253,119 |
|
|
|
46,909 |
|
|
|
27,718 |
|
|
|
327,746 |
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from operations |
|
|
22,705 |
|
|
|
(10,299 |
) |
|
|
(27,718 |
) |
|
|
(15,312 |
) |
Add (deduct): |
|
|
|
|
|
|
|
|
||||||||
Deferred revenue fair value adjustment (a) |
|
|
17 |
|
|
|
— |
|
|
|
— |
|
|
|
17 |
|
Depreciation and amortization |
|
|
25,575 |
|
|
|
6,490 |
|
|
|
— |
|
|
|
32,065 |
|
Non-cash compensation expense (c) |
|
|
12,325 |
|
|
|
2,445 |
|
|
|
6,620 |
|
|
|
21,390 |
|
Restructuring charges and transaction costs (d) |
|
|
5,414 |
|
|
|
69 |
|
|
|
1,025 |
|
|
|
6,508 |
|
Severance expense (c) |
|
|
1,853 |
|
|
|
3,120 |
|
|
|
3,261 |
|
|
|
8,234 |
|
Litigation, regulatory and other governance related expenses (b) |
|
|
— |
|
|
|
2,210 |
|
|
|
(65 |
) |
|
|
2,145 |
|
Non-income tax expense adjustment (b) |
|
|
(25 |
) |
|
|
(5 |
) |
|
|
— |
|
|
|
(30 |
) |
Loss attributable to non-controlling interest |
|
|
1,027 |
|
|
|
— |
|
|
|
— |
|
|
|
1,027 |
|
Adjusted EBITDA |
|
$ |
68,891 |
|
|
$ |
4,030 |
|
|
$ |
(16,877 |
) |
|
$ |
56,044 |
|
__________________________________________________________
(a) |
Included within subscription-based revenue in the condensed consolidated statements of operations. |
(b) |
Included within general and administrative expense in the condensed consolidated statements of operations. |
(c) |
Included within employee compensation expense in the condensed consolidated statements of operations. |
(d) |
|
Reconciliation of Non-GAAP Financial Measures Segment Information (in thousands) (unaudited) |
||||||||||||||||
|
|
Six months ended |
||||||||||||||
|
|
Envestnet Wealth Solutions |
|
Envestnet Data & Analytics |
|
Nonsegment |
|
Total |
||||||||
Revenue: |
|
|
|
|
|
|
|
|
||||||||
Asset-based |
|
$ |
362,694 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
362,694 |
|
Subscription-based |
|
|
160,214 |
|
|
|
71,824 |
|
|
|
— |
|
|
|
232,038 |
|
Total recurring revenue |
|
|
522,908 |
|
|
|
71,824 |
|
|
|
— |
|
|
|
594,732 |
|
Professional services and other revenue |
|
|
13,565 |
|
|
|
2,844 |
|
|
|
— |
|
|
|
16,409 |
|
Total revenue |
|
|
536,473 |
|
|
|
74,668 |
|
|
|
— |
|
|
|
611,141 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
Direct expense: |
|
|
|
|
|
|
|
|
||||||||
Asset-based |
|
|
211,155 |
|
|
|
— |
|
|
|
— |
|
|
|
211,155 |
|
Subscription-based |
|
|
3,635 |
|
|
|
11,062 |
|
|
|
— |
|
|
|
14,697 |
|
Professional services and other |
|
|
8,036 |
|
|
|
— |
|
|
|
— |
|
|
|
8,036 |
|
Total direct expense |
|
|
222,826 |
|
|
|
11,062 |
|
|
|
— |
|
|
|
233,888 |
|
Employee compensation |
|
|
156,945 |
|
|
|
39,081 |
|
|
|
35,286 |
|
|
|
231,312 |
|
General and administrative |
|
|
60,332 |
|
|
|
29,221 |
|
|
|
19,172 |
|
|
|
108,725 |
|
Depreciation and amortization |
|
|
51,067 |
|
|
|
12,518 |
|
|
|
— |
|
|
|
63,585 |
|
Total operating expenses |
|
|
491,170 |
|
|
|
91,882 |
|
|
|
54,458 |
|
|
|
637,510 |
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from operations |
|
|
45,303 |
|
|
|
(17,214 |
) |
|
|
(54,458 |
) |
|
|
(26,369 |
) |
Add (deduct): |
|
|
|
|
|
|
|
|
||||||||
Deferred revenue fair value adjustment (a) |
|
|
69 |
|
|
|
— |
|
|
|
— |
|
|
|
69 |
|
Depreciation and amortization |
|
|
51,067 |
|
|
|
12,518 |
|
|
|
— |
|
|
|
63,585 |
|
Non-cash compensation expense (c) |
|
|
23,792 |
|
|
|
4,882 |
|
|
|
12,169 |
|
|
|
40,843 |
|
Restructuring charges and transaction costs (d) |
|
|
6,553 |
|
|
|
312 |
|
|
|
3,806 |
|
|
|
10,671 |
|
Severance expense (c) |
|
|
5,652 |
|
|
|
5,325 |
|
|
|
3,445 |
|
|
|
14,422 |
|
Litigation, regulatory and other governance related expenses (b) |
|
|
— |
|
|
|
3,534 |
|
|
|
1,685 |
|
|
|
5,219 |
|
Non-income tax expense adjustment (b) |
|
|
(127 |
) |
|
|
(71 |
) |
|
|
— |
|
|
|
(198 |
) |
Loss attributable to non-controlling interest |
|
|
1,805 |
|
|
|
— |
|
|
|
— |
|
|
|
1,805 |
|
Adjusted EBITDA |
|
$ |
134,114 |
|
|
$ |
9,286 |
|
|
$ |
(33,353 |
) |
|
$ |
110,047 |
|
__________________________________________________________
(a) |
Included within subscription-based revenue in the condensed consolidated statements of operations. |
(b) |
Included within general and administrative expense in the condensed consolidated statements of operations. |
(c) |
Included within employee compensation expense in the condensed consolidated statements of operations. |
(d) |
|
Key Metrics
(in millions, except accounts, advisors and firms data)
(unaudited)
Envestnet Wealth Solutions Segment
The following table provides information regarding the amount of assets and number of accounts and advisors supported by the Envestnet Wealth Solutions platform:
|
|
As of |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
2023 |
|
2023 |
|
2023 |
|
2024 |
|
2024 |
|||||
Platform Assets |
|
|
|
|
|
|
|
|
|
|
|||||
Assets under Management (“AUM”) |
|
$ |
384,773 |
|
$ |
375,408 |
|
$ |
416,001 |
|
$ |
452,464 |
|
$ |
471,978 |
Assets under Administration (“AUA”) |
|
|
394,078 |
|
|
398,082 |
|
|
430,846 |
|
|
471,401 |
|
|
471,479 |
Total AUM/A |
|
|
778,851 |
|
|
773,490 |
|
|
846,847 |
|
|
923,865 |
|
|
943,457 |
Subscription |
|
|
4,643,313 |
|
|
4,579,248 |
|
|
4,959,514 |
|
|
5,158,180 |
|
|
5,327,939 |
Total Platform Assets |
|
$ |
5,422,164 |
|
$ |
5,352,738 |
|
$ |
5,806,361 |
|
$ |
6,082,045 |
|
$ |
6,271,396 |
Platform Accounts |
|
|
|
|
|
|
|
|
|
|
|||||
AUM |
|
|
1,609,677 |
|
|
1,614,873 |
|
|
1,640,879 |
|
|
1,688,044 |
|
|
1,752,768 |
AUA |
|
|
1,144,375 |
|
|
1,257,094 |
|
|
1,254,962 |
|
|
1,315,442 |
|
|
1,325,370 |
Total AUM/A |
|
|
2,754,052 |
|
|
2,871,967 |
|
|
2,895,841 |
|
|
3,003,486 |
|
|
3,078,138 |
Subscription |
|
|
15,916,955 |
|
|
16,072,848 |
|
|
16,248,598 |
|
|
16,641,631 |
|
|
16,364,088 |
Total Platform Accounts |
|
|
18,671,007 |
|
|
18,944,815 |
|
|
19,144,439 |
|
|
19,645,117 |
|
|
19,442,226 |
Advisors |
|
|
|
|
|
|
|
|
|
|
|||||
AUM/A |
|
|
38,809 |
|
|
38,078 |
|
|
38,697 |
|
|
38,814 |
|
|
38,484 |
Subscription |
|
|
68,439 |
|
|
69,318 |
|
|
69,973 |
|
|
70,262 |
|
|
71,568 |
|
|
|
107,248 |
|
|
107,396 |
|
|
108,670 |
|
|
109,076 |
|
|
110,052 |
The following tables summarize the changes in the amount of AUM/A assets and number of AUM/A accounts:
|
|
Asset Rollforward - Three Months Ended |
||||||||||||||||||||||
|
|
As of
|
|
Gross |
|
|
|
Net |
|
Market |
|
|
|
As of |
||||||||||
|
|
2024 |
|
Sales |
|
Redemptions |
|
Flows |
|
Impact |
|
Reclassifications |
|
2024 |
||||||||||
|
|
(in millions, except account data) |
||||||||||||||||||||||
AUM |
|
$ |
452,464 |
|
$ |
32,468 |
|
$ |
(18,900 |
) |
|
$ |
13,568 |
|
|
$ |
4,186 |
|
$ |
1,760 |
|
|
$ |
471,978 |
AUA |
|
|
471,401 |
|
|
32,847 |
|
|
(35,790 |
) |
|
|
(2,943 |
) |
|
|
6,032 |
|
|
(3,011 |
) |
|
|
471,479 |
Total AUM/A |
|
$ |
923,865 |
|
$ |
65,315 |
|
$ |
(54,690 |
) |
|
$ |
10,625 |
|
|
$ |
10,218 |
|
$ |
(1,251 |
) |
|
$ |
943,457 |
Fee-Based Accounts |
|
|
3,003,486 |
|
|
|
|
|
|
82,230 |
|
|
|
|
|
(7,578 |
) |
|
|
3,078,138 |
The above AUM/A gross sales figures for the three months ended
|
|
Asset Rollforward - Six Months Ended |
|||||||||||||||||||||
|
|
As of
|
|
Gross |
|
|
|
Net |
|
Market |
|
|
|
As of |
|||||||||
|
|
2023 |
|
Sales |
|
Redemptions |
|
Flows |
|
Impact |
|
Reclassifications |
|
2024 |
|||||||||
|
|
(in millions, except account data) |
|||||||||||||||||||||
AUM |
|
$ |
416,001 |
|
$ |
64,595 |
|
$ |
(38,501 |
) |
|
$ |
26,094 |
|
$ |
26,880 |
|
$ |
3,003 |
|
|
$ |
471,978 |
AUA |
|
|
430,846 |
|
|
78,443 |
|
|
(61,192 |
) |
|
|
17,251 |
|
|
28,715 |
|
|
(5,333 |
) |
|
|
471,479 |
Total AUM/A |
|
$ |
846,847 |
|
$ |
143,038 |
|
$ |
(99,693 |
) |
|
$ |
43,345 |
|
$ |
55,595 |
|
$ |
(2,330 |
) |
|
$ |
943,457 |
Fee-Based Accounts |
|
|
2,895,841 |
|
|
|
|
|
|
194,863 |
|
|
|
|
(12,566 |
) |
|
|
3,078,138 |
The above AUM/A gross sales figures for the six months ended
Asset and account figures in the “Reclassifications” column for the three and six months ended
Envestnet Data & Analytics Segment
The following table provides information regarding the number of paid end-users and firms using the Envestnet Data & Analytics platform:
|
|
As of |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2023 |
|
2023 |
|
2024 |
|
2024 |
Number of paid end-users |
|
38.0 |
|
42.3 |
|
38.3 |
|
43.8 |
|
44.3 |
Number of firms |
|
1,339 |
|
1,322 |
|
1,324 |
|
1,323 |
|
1,182 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240808530787/en/
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