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Envestnet Reports Fourth Quarter 2020 Financial Results

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Envestnet Sees Large Opportunity to Enable The Intelligent Financial LifeTM

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, 2020.

 

 

Three Months Ended

 

 

 

Year Ended

 

 

Key Financial Metrics

 

December 31,

 

%

 

December 31,

 

%

(in millions except per share data)

 

2020

 

2019

 

Change

 

2020

 

 

2019

 

 

Change

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

263.8

 

 

$

239.9

 

 

10

%

 

$

998.2

 

 

 

$

900.1

 

 

 

11

%

Net income (loss)

 

$

7.7

 

 

$

3.4

 

 

126

%

 

$

(2.6

)

 

 

$

(17.2

)

 

 

(85

)%

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

 

$

0.13

 

 

$

0.07

 

 

86

%

 

$

(0.06

)

 

 

$

(0.33

)

 

 

(82

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenues(1)

 

$

263.9

 

 

$

242.5

 

 

9

%

 

$

998.9

 

 

 

$

909.4

 

 

 

10

%

Adjusted EBITDA(1)

 

$

65.0

 

 

$

61.5

 

 

6

%

 

$

242.9

 

 

 

$

193.3

 

 

 

26

%

Adjusted net income(1)

 

$

38.3

 

 

$

37.1

 

 

3

%

 

$

141.5

 

 

 

$

113.4

 

 

 

25

%

Adjusted net income per diluted share(1)

 

$

0.69

 

 

$

0.69

 

 

0

%

 

$

2.57

 

 

 

$

2.15

 

 

 

20

%

"Fourth quarter results were strong, with revenue, adjusted EBITDA and adjusted earnings per share exceeding our expectations," said Bill Crager, Chief Executive Officer.

"We enter 2021 with an expanded strategic purpose, and a bold investment plan to capture the sizable opportunity before us, as we work to make financial wellness a reality for everyone." concluded Mr. Crager.

Financial Results for the Fourth Quarter of 2020 Compared to the Fourth Quarter of 2019:

Total revenues increased 10% to $263.8 million for the fourth quarter of 2020 from $239.9 million for the fourth quarter of 2019. Asset-based recurring revenues increased 14% from the prior year period, and represented 55% of total revenues for the fourth quarter of 2020, compared to 54% of total revenues for the same period in 2019. Subscription-based recurring revenues increased 6% from the prior year period, and represented 41% of total revenues for the fourth quarter of 2020, compared to 43% of total revenues for the same period in 2019. Professional services and other non-recurring revenues increased 3% from the prior year period.

Total operating expenses for the fourth quarter of 2020 increased 11% to $252.4 million from $226.9 million in the prior year period. Cost of revenues increased 14% to $83.6 million for the fourth quarter of 2020 from $73.2 million for the fourth quarter of 2019. Compensation and benefits increased 1% to $98.5 million for the fourth quarter of 2020 from $98.0 million for the prior year period. Compensation and benefits were 37% of total revenues for the fourth quarter of 2020, compared to 41% in the prior year period. General and administration expenses increased 51% to $41.7 million for the fourth quarter of 2020 from $27.6 million for the prior year period. General and administration expenses were 16% of total revenues for the fourth quarter of 2020, compared to 12% in the prior year period.

Income from operations was $11.4 million for the fourth quarter of 2020 compared to income from operations of $13.0 million for the fourth quarter of 2019. Net income attributable to Envestnet, Inc. was $7.2 million, or $0.13 per diluted share, for the fourth quarter of 2020 compared to net income of $3.6 million, or $0.07 per diluted share, for the fourth quarter of 2019.

Adjusted revenues(1) for the fourth quarter of 2020 increased 9% to $263.9 million from $242.5 million for the prior year period. Adjusted EBITDA(1) for the fourth quarter of 2020 increased 6% to $65.0 million from $61.5 million for the prior year period. Adjusted Net Income(1) for the fourth quarter of 2020 increased 3% to $38.3 million from $37.1 million for the prior year period. Adjusted Net Income per Diluted Share(1) for the fourth quarter of 2020 was $0.69, consistent with the fourth quarter of 2019.

Financial Results for the Full Year of 2020 Compared to the Full Year of 2019:

Total revenues increased 11% to $998.2 million for the year ended December 31, 2020 from $900.1 million for the year ended December 31, 2019. Asset-based recurring revenues increased 12% from the prior year period, and represented 54% of total revenues for the year ended December 31, 2020 consistent with the fourth quarter of 2019. Subscription-based revenues increased 13% from the prior year period, and represented 43% of total revenues for the year ended December 31, 2020 compared to 42% of total revenues for the same period in 2019. Professional services and other non-recurring revenues decreased 17% from the prior year period.

Total operating expenses for the year ended December 31, 2020 increased 7% to $978.8 million from $916.2 million in the prior year period. Cost of revenues increased 10% to $305.9 million for the year ended December 31, 2020 from $278.8 million for the year ended December 31, 2019. Compensation and benefits increased 4% to $399.0 million for the year ended December 31, 2020 from $383.6 million for the prior year period. Compensation and benefits were 40% of total revenues for the year ended December 31, 2020, compared to 43% in the prior year period. General and administration expenses increased 5% to $160.2 million for the year ended December 31, 2020 from $152.6 million for the prior year period. General and administration expenses were 16% of total revenues for the year ended December 31, 2020, compared to 17% in the prior year period.

Income from operations was $19.4 million for the year ended December 31, 2020 compared to loss from operations of $16.1 million for the year ended December 31, 2019. Net loss attributable to Envestnet, Inc. was $3.1 million, or $0.06 per diluted share, for the year ended December 31, 2020 compared to net loss of $16.8 million, or $0.33 per diluted share, for the year ended December 31, 2019.

Adjusted revenues(1) for the year ended December 31, 2020 increased 10% to $998.9 million from $909.4 million for the prior year period. Adjusted EBITDA(1) for the year ended December 31, 2020 increased 26% to $242.9 million from $193.3 million for the prior year period. Adjusted Net Income(1) increased 25% for the year ended December 31, 2020 to $141.5 million from $113.4 million for the prior year period. Adjusted Net Income per Diluted Share(1) for the year ended December 31, 2020 increased 20% to $2.57 from $2.15 in the year ended December 31, 2019.

Outlook

Envestnet provided the following outlook for the first quarter ending March 31, 2021 and full year ending December 31, 2021. This outlook is based on the market value of assets on December 31, 2020. 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 to surpass $1 billion in revenue for the first time, expecting to grow 10.5% to 12% compared to 2020.
  • Accelerated investments in Financial Wellness ecosystem to drive higher long-term growth, resulting in expected Adjusted EBITDA to be slightly down from 2020.
  • Adjusted earnings per share negatively impacted by $0.20 in 2021 due to early adoption of new convertible debt accounting standard.

In Millions Except Adjusted EPS

 

1Q 2021

 

FY 2021

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based

 

$

158.5

 

 

-

 

$

159.5

 

 

 

 

 

 

Subscription-based

 

$

106.5

 

 

-

 

$

107.5

 

 

 

 

 

 

Total recurring revenues

 

$

265.0

 

 

-

 

$

267.0

 

 

 

 

 

 

Professional services and other revenues

 

$

5.0

 

 

-

 

$

6.0

 

 

 

 

 

 

Total revenues

 

$

270.0

 

 

-

 

$

273.0

 

$

1,104.7

 

-

 

$

1,119.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based cost of revenues

 

$

85.0

 

 

-

 

$

85.5

 

 

 

 

 

 

Total cost of revenues

 

$

91.5

 

 

-

 

$

92.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

(a)

 

 

-

 

(a)

 

(a)

 

-

 

(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

 

 

 

65.4

 

 

 

 

 

65.9

 

 

Net Income per diluted share

 

(a)

 

 

-

 

(a)

 

(a)

 

-

 

(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenues(1):

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based

 

$

158.5

 

 

-

 

$

159.5

 

 

 

 

 

 

Subscription-based

 

$

106.5

 

 

-

 

$

107.5

 

 

 

 

 

 

Total recurring revenues

 

$

265.0

 

 

-

 

$

267.0

 

 

 

 

 

 

Professional services and other revenues

 

$

5.0

 

 

-

 

$

6.0

 

 

 

 

 

 

Total revenues

 

$

270.0

 

 

-

 

$

273.0

 

$

1,105.0

 

-

 

$

1,120.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

63.0

 

 

-

 

$

65.0

 

$

225.0

 

-

 

$

235.0

Adjusted net income per diluted share(1)

 

 

 

$

0.61

 

 

 

$

1.95

 

-

 

$

2.08

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 2020 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://ir.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 106,000 advisors and more than 5,100 companies including: 17 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 are not meant as a substitute for revenues 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, litigation and regulatory related expenses, foreign currency, non-income tax expense adjustment, non-recurring gains, loss allocation 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, non‑cash compensation expense, restructuring charges and transaction costs, severance, fair market value adjustment on contingent consideration liability, amortization of acquired intangibles, litigation and regulatory related expenses, foreign currency, non-income tax expense adjustment, non-recurring gains, loss allocation 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 share" represents adjusted net income attributable to common stockholders divided by the diluted number of weighted‑average shares outstanding.

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 2021, 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 the global economy and 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 internet services 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://ir.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 25, 2021 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,

 

 

2020

 

 

2019

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

384,565

 

 

 

$

82,505

 

 

Fees receivable, net

 

80,064

 

 

 

67,815

 

 

Prepaid expenses and other current assets

 

40,570

 

 

 

32,183

 

 

Total current assets

 

505,199

 

 

 

182,503

 

 

 

 

 

 

 

Property and equipment, net

 

47,969

 

 

 

53,756

 

 

Internally developed software, net

 

96,501

 

 

 

60,263

 

 

Intangible assets, net

 

435,041

 

 

 

505,589

 

 

Goodwill

 

906,773

 

 

 

879,850

 

 

Operating lease right-of-use assets, net

 

105,249

 

 

 

82,796

 

 

Other non-current assets

 

47,558

 

 

 

37,127

 

 

Total assets

 

$

2,144,290

 

 

 

$

1,801,884

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accrued expenses and other liabilities

 

$

158,548

 

 

 

$

137,944

 

 

Accounts payable

 

18,003

 

 

 

17,277

 

 

Operating lease liabilities

 

13,649

 

 

 

13,816

 

 

Contingent consideration

 

11,251

 

 

 

 

 

Deferred revenue

 

34,918

 

 

 

34,753

 

 

Total current liabilities

 

236,369

 

 

 

203,790

 

 

 

 

 

 

 

Convertible Notes

 

756,503

 

 

 

305,513

 

 

Revolving credit facility

 

 

 

 

260,000

 

 

Contingent consideration

 

1,308

 

 

 

9,045

 

 

Deferred revenue

 

1,813

 

 

 

5,754

 

 

Non-current operating lease liabilities

 

112,182

 

 

 

88,365

 

 

Deferred tax liabilities, net

 

34,740

 

 

 

29,481

 

 

Other non-current liabilities

 

25,557

 

 

 

32,360

 

 

Total liabilities

 

1,168,472

 

 

 

934,308

 

 

 

 

 

 

 

Equity:

 

 

 

 

Total stockholders' equity

 

976,337

 

 

 

869,094

 

 

Non-controlling interest

 

(519

)

 

 

(1,518

)

 

Total liabilities and equity

 

$

2,144,290

 

 

 

$

1,801,884

 

 

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,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

Asset-based

 

$

146,146

 

 

 

$

128,717

 

 

 

$

540,947

 

 

 

$

484,312

 

 

Subscription-based

 

109,080

 

 

 

102,885

 

 

 

426,507

 

 

 

378,813

 

 

Total recurring revenues

 

255,226

 

 

 

231,602

 

 

 

967,454

 

 

 

863,125

 

 

Professional services and other revenues

 

8,593

 

 

 

8,334

 

 

 

30,776

 

 

 

37,002

 

 

Total revenues

 

263,819

 

 

 

239,936

 

 

 

998,230

 

 

 

900,127

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenues

 

83,602

 

 

 

73,216

 

 

 

305,929

 

 

 

278,811

 

 

Compensation and benefits

 

98,547

 

 

 

97,964

 

 

 

398,970

 

 

 

383,554

 

 

General and administration

 

41,692

 

 

 

27,603

 

 

 

160,229

 

 

 

152,564

 

 

Depreciation and amortization

 

28,584

 

 

 

28,104

 

 

 

113,661

 

 

 

101,271

 

 

Total operating expenses

 

252,425

 

 

 

226,887

 

 

 

978,789

 

 

 

916,200

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

11,394

 

 

 

13,049

 

 

 

19,441

 

 

 

(16,073

)

 

Other expense, net

 

(8,940

)

 

 

(8,934

)

 

 

(27,486

)

 

 

(32,022

)

 

Income (loss) before income tax provision (benefit)

 

2,454

 

 

 

4,115

 

 

 

(8,045

)

 

 

(48,095

)

 

 

 

 

 

 

 

 

 

 

Income tax provision (benefit)

 

(5,240

)

 

 

698

 

 

 

(5,401

)

 

 

(30,893

)

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

7,694

 

 

 

3,417

 

 

 

(2,644

)

 

 

(17,202

)

 

Add: Net (income) loss attributable to non-controlling interest

 

(454

)

 

 

173

 

 

 

(466

)

 

 

420

 

 

Net income (loss) attributable to Envestnet, Inc.

 

$

7,240

 

 

 

$

3,590

 

 

 

$

(3,110

)

 

 

$

(16,782

)

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Basic

 

$

0.13

 

 

 

$

0.07

 

 

 

$

(0.06

)

 

 

$

(0.33

)

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.13

 

 

 

$

0.07

 

 

 

$

(0.06

)

 

 

$

(0.33

)

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

53,960,769

 

 

 

52,574,128

 

 

 

53,589,232

 

 

 

50,937,919

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

55,733,419

 

 

 

54,034,972

 

 

 

53,589,232

 

 

 

50,937,919

 

 

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Year Ended

 

 

December 31,

 

 

2020

 

 

2019

 

OPERATING ACTIVITIES:

 

 

 

 

Net loss

 

$

(2,644

)

 

 

$

(17,202

)

 

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

 

 

 

 

Depreciation and amortization

 

113,661

 

 

 

101,271

 

 

Deferred rent and lease incentive amortization

 

 

 

 

 

 

Provision for doubtful accounts

 

2,817

 

 

 

2,855

 

 

Deferred income taxes

 

(1,884

)

 

 

(39,630

)

 

Release of uncertain tax positions

 

(7,101

)

 

 

 

 

Non-cash compensation expense

 

59,637

 

 

 

60,444

 

 

Non-cash interest expense

 

18,515

 

 

 

19,246

 

 

Accretion on contingent consideration and purchase liability

 

1,688

 

 

 

1,772

 

 

Payments of contingent consideration

 

 

 

 

(578

)

 

Fair market value adjustment to contingent consideration liability

 

(3,105

)

 

 

(8,126

)

 

Gain on acquisition of equity method investment

 

(4,230

)

 

 

 

 

Loss allocation from equity method investments

 

5,399

 

 

 

2,361

 

 

Gain on life insurance proceeds

 

 

 

 

(5,000

)

 

Impairment of right of use assets

 

2,661

 

 

 

 

 

Other

 

(729

)

 

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

Fees receivable, net

 

(15,055

)

 

 

1,139

 

 

Prepaid expenses and other current assets

 

(9,666

)

 

 

(6,440

)

 

Other non-current assets

 

(1,963

)

 

 

(5,234

)

 

Accrued expenses and other liabilities

 

22,109

 

 

 

(811

)

 

Accounts payable

 

(187

)

 

 

(2,863

)

 

Deferred revenue

 

(4,125

)

 

 

727

 

 

Other non-current liabilities

 

(5,962

)

 

 

4,795

 

 

Net cash provided by operating activities

 

169,836

 

 

 

108,726

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

Purchases of property and equipment

 

(12,088

)

 

 

(19,847

)

 

Capitalization of internally developed software

 

(54,908

)

 

 

(34,096

)

 

Investments in private companies

 

(15,640

)

 

 

(5,250

)

 

Acquisitions of businesses, net of cash acquired

 

(20,257

)

 

 

(320,915

)

 

Proceeds from life insurance policy

 

 

 

 

5,000

 

 

Other

 

2,897

 

 

 

(600

)

 

Net cash used in investing activities

 

(99,996

)

 

 

(375,708

)

 

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)

 

 

Year Ended

 

 

December 31,

 

 

2020

 

 

2019

 

FINANCING ACTIVITIES:

 

 

 

 

Proceeds from issuance of Convertible Notes due 2025

 

517,500

 

 

 

 

 

Convertible Notes due 2025 issuance costs

 

(14,540

)

 

 

 

 

Payment of Convertible Notes due 2019

 

 

 

 

(184,751

)

 

Proceeds from borrowings on revolving credit facility

 

45,000

 

 

 

345,000

 

 

Payments on revolving credit facility

 

(305,000

)

 

 

(85,000

)

 

Revolving credit facility issuance costs

 

 

 

 

(2,103

)

 

Capital contribution - non-controlling interest

 

606

 

 

 

 

 

Payments of deferred consideration on prior acquisitions

 

(1,879

)

 

 

 

 

Payments of contingent consideration

 

 

 

 

(171

)

 

Proceeds from exercise of stock options

 

10,760

 

 

 

10,592

 

 

Taxes paid in lieu of shares issued for stock-based compensation

 

(19,501

)

 

 

(23,107

)

 

Issuance of restricted stock units

 

4

 

 

 

5

 

 

Net cash provided by financing activities

 

232,950

 

 

 

60,465

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

(831

)

 

 

(399

)

 

 

 

 

 

 

INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

301,959

 

 

 

(206,916

)

 

 

 

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD

 

82,755

 

 

 

289,671

 

 

 

 

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

384,714

 

 

 

$

82,755

 

 

The following table reconciles cash, cash equivalents and restricted cash from the consolidated balance sheets to amounts reported in the consolidated statements of cash flows:

 

 

December 31,

 

 

2020

 

2019

Cash and cash equivalents

 

$

384,565

 

 

$

82,505

 

Restricted cash included in prepaid expenses and other current assets

 

 

 

82

 

Restricted cash included in other non-current assets

 

149

 

 

168

 

Total cash, cash equivalents and restricted cash

 

$

384,714

 

 

$

82,755

 

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands)

(unaudited)

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Total revenues

 

$

263,819

 

 

 

$

239,936

 

 

 

$

998,230

 

 

 

$

900,127

 

 

Deferred revenue fair value adjustment (a)

 

85

 

 

 

2,601

 

 

 

692

 

 

 

9,271

 

 

Adjusted revenues

 

$

263,904

 

 

 

$

242,537

 

 

 

$

998,922

 

 

 

$

909,398

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

7,694

 

 

 

$

3,417

 

 

 

$

(2,644

)

 

 

$

(17,202

)

 

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

85

 

 

 

2,601

 

 

 

692

 

 

 

9,271

 

 

Interest income (b)

 

(262

)

 

 

(488

)

 

 

(1,112

)

 

 

(3,347

)

 

Interest expense (b)

 

9,597

 

 

 

8,175

 

 

 

31,504

 

 

 

32,520

 

 

Accretion on contingent consideration and purchase

liability (c)

 

380

 

 

 

532

 

 

 

1,688

 

 

 

1,772

 

 

Income tax provision (benefit)

 

(5,240

)

 

 

698

 

 

 

(5,401

)

 

 

(30,893

)

 

Depreciation and amortization

 

28,584

 

 

 

28,104

 

 

 

113,661

 

 

 

101,271

 

 

Non-cash compensation expense (d)

 

13,916

 

 

 

17,203

 

 

 

57,113

 

 

 

60,444

 

 

Restructuring charges and transaction costs (e)

 

4,922

 

 

 

1,833

 

 

 

19,383

 

 

 

26,558

 

 

Severance (f)

 

6,544

 

 

 

7,220

 

 

 

25,110

 

 

 

15,367

 

 

Fair market value adjustment on contingent consideration liability (c)

 

(1,049

)

 

 

(8,126

)

 

 

(3,105

)

 

 

(8,126

)

 

Non-recurring litigation and regulatory related expenses (c)

 

1,796

 

 

 

814

 

 

 

7,825

 

 

 

2,879

 

 

Foreign currency (b)

 

184

 

 

 

(280

)

 

 

116

 

 

 

(72

)

 

Non-income tax expense adjustment (c)

 

(920

)

 

 

(1,106

)

 

 

421

 

 

 

374

 

 

Non-recurring gains (b)

 

(1,647

)

 

 

 

 

 

(5,877

)

 

 

 

 

Loss allocation from equity method investments (b)

 

1,119

 

 

 

854

 

 

 

5,399

 

 

 

2,361

 

 

(Income) loss attributable to non-controlling interest

 

(727

)

 

 

79

 

 

 

(1,830

)

 

 

110

 

 

Adjusted EBITDA

 

$

64,976

 

 

 

$

61,530

 

 

 

$

242,943

 

 

 

$

193,287

 

 

(a) For the three months ended December 31, 2020 and 2019, $85 and $2,599, respectively, were included within subscription-based revenues in the condensed consolidated statements of operations. For the years ended December 31, 2020 and 2019, $690 and $9,263, 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 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. For the three months and year ended December 31, 2019, the entire amount was included in compensation and benefits in the condensed consolidated statements of operations.

(e) For the three months ended December 31, 2020 and 2019, $4,121 and $(1,334), respectively, were included within general and administration expenses in the condensed consolidated statements of operations. For the three months ended December 31, 2020 and 2019, $833 and $689, respectively, were included within compensation and benefits in the condensed consolidated statements of operations. For the year ended December 31, 2020 and 2019, $15,606 and $14,415, respectively, were included within general and administration expenses in the condensed consolidated statements of operations. For the year ended December 31, 2020 and 2019, $3,597 and $11,343, 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,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income (loss)

 

$

7,694

 

 

 

$

3,417

 

 

 

$

(2,644

)

 

 

$

(17,202

)

 

Income tax provision (benefit) (a)

 

(5,240

)

 

 

698

 

 

 

(5,401

)

 

 

(30,893

)

 

Loss before income tax provision (benefit)

 

2,454

 

 

 

4,115

 

 

 

(8,045

)

 

 

(48,095

)

 

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (b)

 

85

 

 

 

2,601

 

 

 

692

 

 

 

9,271

 

 

Accretion on contingent consideration and purchase

liability (d)

 

380

 

 

 

532

 

 

 

1,688

 

 

 

1,772

 

 

Non-cash interest expense (c)

 

6,798

 

 

 

4,475

 

 

 

17,480

 

 

 

18,743

 

 

Non-cash compensation expense (f)

 

13,916

 

 

 

17,203

 

 

 

57,113

 

 

 

60,444

 

 

Restructuring charges and transaction costs (e)

 

4,922

 

 

 

1,833

 

 

 

19,383

 

 

 

26,558

 

 

Severance (g)

 

6,544

 

 

 

7,220

 

 

 

25,110

 

 

 

15,367

 

 

Amortization of acquired intangibles and fair value adjustment to property and equipment, net (h)

 

17,545

 

 

 

19,629

 

 

 

73,559

 

 

 

70,677

 

 

Fair market value adjustment on contingent consideration liability (d)

 

(1,049

)

 

 

(8,126

)

 

 

(3,105

)

 

 

(8,126

)

 

Non-recurring litigation and regulatory related expenses (d)

 

1,796

 

 

 

814

 

 

 

7,825

 

 

 

2,879

 

 

Foreign currency (c)

 

184

 

 

 

(280

)

 

 

116

 

 

 

(72

)

 

Non-income tax expense adjustment (d)

 

(920

)

 

 

(1,106

)

 

 

421

 

 

 

374

 

 

Non-recurring gains (c)

 

(1,647

)

 

 

 

 

 

(5,877

)

 

 

 

 

Loss allocation from equity method investments (c)

 

1,119

 

 

 

854

 

 

 

5,399

 

 

 

2,361

 

 

(Income) loss attributable to non-controlling interest

 

(727

)

 

 

79

 

 

 

(1,830

)

 

 

110

 

 

Adjusted net income before income tax effect

 

51,400

 

 

 

49,843

 

 

 

189,929

 

 

 

152,263

 

 

Income tax effect (i)

 

(13,107

)

 

 

(12,710

)

 

 

(48,432

)

 

 

(38,827

)

 

Adjusted net income

 

$

38,293

 

 

 

$

37,133

 

 

 

$

141,497

 

 

 

$

113,436

 

 

 

 

 

 

 

 

 

 

 

Basic number of weighted-average shares outstanding

 

53,960,769

 

 

 

52,574,128

 

 

 

53,589,232

 

 

 

50,937,919

 

 

Effect of dilutive shares:

 

 

 

 

 

 

 

 

Options to purchase common stock

 

290,366

 

 

 

784,361

 

 

 

416,593

 

 

 

1,015,164

 

 

Unvested restricted stock units

 

622,702

 

 

 

591,657

 

 

 

592,033

 

 

 

691,740

 

 

Convertible Notes

 

769,593

 

 

 

84,826

 

 

 

414,398

 

 

 

33,388

 

 

Warrants

 

89,989

 

 

 

951

 

 

 

58,459

 

 

 

 

 

Diluted number of weighted-average shares outstanding

 

55,733,419

 

 

 

54,035,923

 

 

 

55,070,715

 

 

 

52,678,211

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income per share - diluted

 

$

0.69

 

 

 

$

0.69

 

 

 

$

2.57

 

 

 

$

2.15

 

 

(a) For the three months ended December 31, 2020 and 2019, the effective tax rate computed in accordance with GAAP equaled (213.5)% and 17.0%, respectively. For the year ended December 31, 2020 and 2019, the effective tax rate computed in accordance with GAAP equaled 67.1% and 64.2%, respectively.

(b) For the three months ended December 31, 2020 and 2019, $85 and $2,599, respectively, were included within subscription-based revenues, in the condensed consolidated statements of operations. For the year ended December 31, 2020 and 2019, $690 and $9,263, 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, 2020 and 2019, $4,121 and $345, respectively, were included within general and administration expenses in the condensed consolidated statements of operations. For the three months ended December 31, 2020 and 2019, $833 and $689, respectively, were included within compensation and benefits in the condensed consolidated statements of operations. For the year ended December 31, 2020 and 2019, $15,606 and $14,416, respectively, were included within general and administration expenses in the condensed consolidated statements of operations. For the year ended December 31, 2020 and 2019, $3,597 and $11,343, 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 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 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. For the three months and year ended December 31, 2019, the entire amount was included in compensation and benefits 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, 2020 and 2019.

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

Segment Information

(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

 

 

Accretion on contingent consideration and purchase liability (b)

 

343

 

 

 

37

 

 

 

 

 

 

380

 

 

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

 

 

Non-income tax expense adjustment (b)

 

(1,018

)

 

 

98

 

 

 

 

 

 

(920

)

 

Severance (c)

 

4,024

 

 

 

2,041

 

 

 

479

 

 

 

6,544

 

 

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

 

 

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)

 

 

Three Months Ended December 31, 2019

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Revenues

 

$

191,639

 

 

$

48,297

 

 

$

 

 

$

239,936

 

Deferred revenue fair value adjustment (a)

 

2,601

 

 

 

 

 

 

2,601

 

Adjusted revenues

 

$

194,240

 

 

$

48,297

 

 

$

 

 

$

242,537

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Asset-based

 

$

128,717

 

 

$

 

 

$

 

 

$

128,717

 

Subscription-based

 

59,149

 

 

43,736

 

 

 

 

102,885

 

Total recurring revenues

 

187,866

 

 

43,736

 

 

 

 

231,602

 

Professional services and other revenues

 

3,773

 

 

4,561

 

 

 

 

8,334

 

Total revenues

 

191,639

 

 

48,297

 

 

 

 

239,936

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

Asset-based

 

65,439

 

 

 

 

 

 

65,439

 

Subscription-based

 

1,361

 

 

5,891

 

 

 

 

7,252

 

Professional services and other

 

451

 

 

74

 

 

 

 

525

 

Total cost of revenues

 

67,251

 

 

5,965

 

 

 

 

73,216

 

Compensation and benefits

 

61,960

 

 

26,149

 

 

9,855

 

 

97,964

 

General and administration

 

21,995

 

 

9,030

 

 

(3,422)

 

 

27,603

 

Depreciation and amortization

 

19,689

 

 

8,415

 

 

 

 

28,104

 

Total operating expenses

 

$

170,895

 

 

$

49,559

 

 

$

6,433

 

 

$

226,887

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

20,744

 

 

$

(1,262)

 

 

$

(6,433)

 

 

$

13,049

 

Add:

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

2,601

 

 

 

 

 

 

2,601

 

Accretion on contingent consideration and purchase liability (b)

 

532

 

 

 

 

 

 

532

 

Depreciation and amortization

 

19,689

 

 

8,415

 

 

 

 

28,104

 

Non-cash compensation expense (c)

 

10,382

 

 

3,164

 

 

3,657

 

 

17,203

 

Restructuring charges and transaction costs (d)

 

702

 

 

(758)

 

 

1,090

 

 

1,034

 

Non-income tax expense adjustment (b)

 

(907)

 

 

(199)

 

 

 

 

(1,106)

 

Severance (c)

 

4,071

 

 

1,498

 

 

1,651

 

 

7,220

 

Fair market value adjustment on contingent consideration liability (b)

 

 

 

 

 

(8,126)

 

 

(8,126)

 

Non-recurring litigation and regulatory related expenses (b)

 

 

 

814

 

 

 

 

814

 

Loss attributable to non-controlling interest

 

79

 

 

 

 

 

 

79

 

Other

 

128

 

 

 

 

(2)

 

 

126

 

Adjusted EBITDA

 

$

58,021

 

 

$

11,672

 

 

$

(8,163)

 

 

$

61,530

 

(a) $2,599 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) $345 included within general and administration expenses and $689 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) 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.

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

 

 

Year Ended December 31, 2019

 

 

Envestnet

Wealth Solutions

 

Envestnet Data

& Analytics

 

Nonsegment

 

Total

Revenues

 

$

709,458

 

 

$

190,669

 

 

$

 

 

$

900,127

 

Deferred revenue fair value adjustment (a)

 

9,271

 

 

 

 

 

 

9,271

 

Adjusted revenues

 

$

718,729

 

 

$

190,669

 

 

$

 

 

$

909,398

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Asset-based

 

$

484,312

 

 

$

 

 

$

 

 

$

484,312

 

Subscription-based

 

207,606

 

 

171,207

 

 

 

 

378,813

 

Total recurring revenues

 

691,918

 

 

171,207

 

 

 

 

863,125

 

Professional services and other revenues

 

17,540

 

 

19,462

 

 

 

 

37,002

 

Total revenues

 

709,458

 

 

190,669

 

 

 

 

900,127

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

Asset-based

 

243,913

 

 

 

 

 

 

243,913

 

Subscription-based

 

5,732

 

 

23,172

 

 

 

 

28,904

 

Professional services and other

 

5,463

 

 

531

 

 

 

 

5,994

 

Total cost of revenues

 

255,108

 

 

23,703

 

 

 

 

278,811

 

Compensation and benefits

 

227,570

 

 

118,062

 

 

37,922

 

 

383,554

 

General and administration

 

93,321

 

 

38,641

 

 

20,602

 

 

152,564

 

Depreciation and amortization

 

65,746

 

 

35,525

 

 

 

 

101,271

 

Total operating expenses

 

$

641,745

 

 

$

215,931

 

 

$

58,524

 

 

$

916,200

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

67,713

 

 

$

(25,262)

 

 

$

(58,524)

 

 

$

(16,073)

 

Add:

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

9,271

 

 

 

 

 

 

9,271

 

Accretion on contingent consideration and purchase liability (b)

 

1,772

 

 

 

 

 

 

1,772

 

Depreciation and amortization

 

65,746

 

 

35,525

 

 

 

 

101,271

 

Non-cash compensation expense (c)

 

33,968

 

 

14,963

 

 

11,513

 

 

60,444

 

Restructuring charges and transaction costs (d)

 

2,491

 

 

635