Business Wire | May 6, 2021 04:07PM EDT

Envestnet Reports First Quarter 2021 Financial Results

May 06, 2021

CHICAGO--(BUSINESS WIRE)--May 06, 2021--Envestnet (NYSE: ENV), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for the three months ended March 31, 2021.

Three months ended

Key Financial Metrics March 31, %

(in millions except per share data) 2021 2020 Change

GAAP:

Total revenues $ 275.1 $ 246.5 12%

Net income (loss) $ 14.9 $ (7.2) n/m

Net income (loss) per diluted share attributable $ 0.27 $ (0.14) n/mto Envestnet, Inc.



Non-GAAP:

Adjusted revenues^(1) $ 275.2 $ 247.0 11%

Adjusted EBITDA^(1) $ 68.3 $ 54.6 25%

Adjusted net income^(1) $ 41.9 $ 31.2 34%

Adjusted net income per diluted share^(1) $ 0.64 $ 0.57 12%

n/m - not meaningful

"During the first quarter Envestnet again delivered strong financial results, exceeding our revenue, adjusted EBITDA and adjusted EPS expectations," said Bill Crager, Chief Executive Officer.

"We are executing on our accelerated investment plan to achieve faster growth, gain unique competitive advantage and fuse our capabilities to become the ecosystem that powers the intelligent financial life," concluded Mr. Crager.

Financial Results for the First Quarter of 2021

Asset-based recurring revenues increased 18% from the first quarter of 2020, and represented 58% of total revenues for the first quarter of 2021 compared to 55% for the first quarter 2020. Subscription-based recurring revenues increased 5% from the first quarter of 2020, and represented 40% of total revenues for the first quarter of 2021, compared to 42% for the first quarter of 2020. Professional services and other non-recurring revenues decreased 18% from the prior year period. Total revenues increased 12% to $275.1 million for the first quarter of 2021 from $246.5 million for the first quarter of 2020.

Total operating expenses for the first quarter of 2021 increased 2% to $258.3 million from $254.2 million in the prior year period. Cost of revenues increased 24% to $92.9 million for the first quarter of 2021 from $74.9 million for the prior year period. Compensation and benefits decreased 9% to $100.7 million for the first quarter of 2021 from $110.4 million for the prior year period. Compensation and benefits were 37% of total revenues for the first quarter of 2021, compared to 45% in the prior year period. General and administration expenses decreased 12% to $36.3 million for the first quarter of 2021 from $41.1 million for the prior year period. General and administrative expenses were 13% of total revenues for the first quarter of 2021, compared to 17% in the prior year period.

Income from operations was $16.8 million for the first quarter of 2021 compared to loss from of $7.6 million for the first quarter of 2020. Net income was $14.9 million for the first quarter of 2021 compared to net loss of $7.2 million for the first quarter of 2020. Net income per diluted share attributable to Envestnet, Inc. was $0.27 for the first quarter of 2021 compared to net loss per diluted share attributable to Envestnet, Inc. of $0.14 for the first quarter of 2020.

Adjusted revenues(1) for the first quarter of 2021 increased 11% to $275.2 million from $247.0 million for the prior year period. Adjusted EBITDA(1) for the first quarter of 2021 increased 25% to $68.3 million from $54.6 million for the prior year period. Adjusted net income(1) increased 34% for the first quarter of 2021 to $41.9 million from $31.2 million for the prior year period. Adjusted net income per diluted share(1) for the first quarter of 2021 increased 12% to $0.64 from $0.57 in the first quarter of 2020.

Balance Sheet and Liquidity

As of March 31, 2021, the Company had $372.0 million in cash and cash equivalents and $862.5 million in outstanding debt. The outstanding debt as of March 31, 2021 included $345 million in convertible notes maturing in 2023 and $517.5 million in convertible notes maturing in 2025. The Company's $500 million revolving credit facility was undrawn as of March 31, 2021.

Outlook

The Company provided the following outlook for the second quarter ending June 30, 2021 and full year ending December 31, 2021. This outlook is based on the market value of assets on March 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."

In Millions Except 2Q 2021 FY 2021Adjusted EPS

GAAP:

Revenues:

Asset-based $ 166.5 - $ 168.0

Subscription-based 110.0 - 111.0

Total recurring $ 276.5 - $ 279.0 revenues

Professionalservices and other 4.5 - 5.0 revenues

Total revenues $ 281.0 - $ 284.0 $ 1,137.7 - $ 1,147.7



Asset-based cost $ 91.5 - $ 92.0 - of revenues

Total cost of $ 99.0 - $ 99.5 revenues



Net income (a) - (a) (a) - (a)



Diluted shares 65.7 65.6 outstanding

Net income per (a) - (a) (a) - (a)diluted share



Non-GAAP:

Adjusted revenues ^(1):

Asset-based $ 166.5 - $ 168.0

Subscription-based 110.0 - 111.0

Total recurring $ 276.5 - $ 279.0 revenues

Professionalservices and other 4.5 - 5.0 revenues

Total revenues $ 281.0 - $ 284.0 $ 1,138.0 - $ 1,148.0



Adjusted EBITDA^ $ 60.0 - $ 62.0 $ 230.0 - $ 236.0 (1)

Adjusted netincome per diluted $ 0.53 - $ 0.55 $ 2.03 - $ 2.10 share^(1)

(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 first 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://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 5,200 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 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, litigation and regulatory related expenses, foreign currency, non-income tax expense adjustment, gain on acquisition of equity method investment, 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, 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, fair market value adjustment on contingent consideration liability, amortization of acquired intangibles, litigation and regulatory related expenses, foreign currency, non-income tax expense adjustment, gain on acquisition of equity method investment, 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 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. 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 reconciliations of Non-GAAP Financial Measures on pages 9-12 of this press release. Reconciliations are not provided for guidance on such measures as the Company is unable to predict the amounts to be adjusted, such as the GAAP tax provision. The Company's Non-GAAP Financial Measures should not be viewed as a substitute for revenues, net income or net income per share determined in accordance with GAAP.

Cautionary Statement Regarding Forward-Looking Statements

The forward-looking statements made in this press release and its attachments concerning, among other things, Envestnet, Inc.'s expected financial performance and outlook for the second quarter and full year of 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 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 is currently unknown; changes and volatility in financial and capital markets, which could result in changes in demand for our products or services or in the value of assets on which we earn revenue; the possibility that the anticipated benefits of any of our acquisitions will not be realized to the extent or when expected, difficulty in sustaining rapid revenue growth, which may place significant demands on our administrative, operational and financial resources, the concentration of nearly all 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 revenues, the renegotiation of fee percentages or termination of our services by our clients, our ability to identify potential acquisition candidates, complete acquisitions and successfully integrate acquired companies, the impact of market and economic conditions on revenues, our inability to successfully execute the conversion of clients' assets from their technology platform to our technology platforms in a timely and accurate manner, our ability to expand our relationships with existing customers, grow the number of customers and derive revenue from new offerings such as our data analytics solutions and market research services and premium financial applications, compliance failures, adverse judicial or regulatory proceedings against us, liabilities associated with potential, perceived or actual breaches of fiduciary duties and/or conflicts of interest, changes in laws and regulations, including tax laws and regulations, general economic conditions, political and regulatory conditions, 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, the impact of market conditions on our ability to issue debt and equity, the impact of fluctuations in interest rates on our cost of borrowing, our financial performance, the results of our investments in research and development, our data center and other infrastructure, our ability to maintain the security and integrity of our systems and facilities and to maintain the privacy of personal information, failure of our systems to work properly, our ability to realize operating efficiencies, the advantages of our solutions as compared to those of others, the failure to protect our intellectual property rights, our ability to establish and maintain intellectual property rights, our ability to retain and hire necessary employees and appropriately staff our operations 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 May 6, 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)

March 31, December 31,

2021 2020

Assets

Current assets:

Cash and cash equivalents $ 371,977 $ 384,565

Fees receivable, net 79,293 80,064

Prepaid expenses and other current assets 37,751 40,570

Total current assets 489,021 505,199



Property and equipment, net 51,077 47,969

Internally developed software, net 105,288 96,501

Intangible assets, net 443,023 435,041

Goodwill 906,756 906,773

Operating lease right-of-use-assets, net 99,231 105,249

Other non-current assets 48,592 47,558

Total assets $ 2,142,988 $ 2,144,290



Liabilities and Equity

Current liabilities:

Accrued expenses and other liabilities $ 136,417 $ 158,548

Accounts payable 24,567 18,003

Operating lease liabilities 13,270 13,649

Contingent consideration 11,746 11,251

Deferred revenue 42,921 34,918

Total current liabilities 228,921 236,369



Long-term debt 845,195 756,503

Non-current operating lease liabilities 109,458 112,182

Deferred tax liabilities, net 23,042 34,740

Other non-current liabilities 22,643 28,678

Total liabilities 1,229,259 1,168,472



Equity:

Total stockholders' equity 914,141 976,337

Non-controlling interest (412) (519)

Total liabilities and equity $ 2,142,988 $ 2,144,290

Envestnet, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share information)

(unaudited)

Three Months Ended

March 31,

2021

2020

Revenues:

Asset-based

$

159,375

$

134,811

Subscription-based

109,829

104,551

Total recurring revenues

269,204

239,362

Professional services and other revenues

5,901

7,177

Total revenues

275,105

246,539

Operating expenses:

Cost of revenues

92,869

74,933

Compensation and benefits

100,714

110,430

General and administration

36,315

41,110

Depreciation and amortization

28,392

27,683

Total operating expenses

258,290

254,156

Income (loss) from operations

16,815

(7,617)

Other expense, net

(7,468)

(1,537)

Income (loss) before income tax benefit

9,347

(9,154)

Income tax benefit

(5,588)

(1,964)

Net income (loss)

14,935

(7,190)

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

11

(146)

Net income (loss) attributable to Envestnet, Inc.

$

14,946

$

(7,336)

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

Basic

$

0.28

$

(0.14)

Diluted

$

0.27

$

(0.14)

Weighted average common shares outstanding:

Basic

54,208,469

53,016,511

Diluted

59,917,648

53,016,511

Envestnet, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share information)

(unaudited)

Three Months Ended

March 31,

2021 2020

Revenues:

Asset-based $ 159,375 $ 134,811

Subscription-based 109,829 104,551

Total recurring revenues 269,204 239,362

Professional services and other revenues 5,901 7,177

Total revenues 275,105 246,539



Operating expenses:

Cost of revenues 92,869 74,933

Compensation and benefits 100,714 110,430

General and administration 36,315 41,110

Depreciation and amortization 28,392 27,683

Total operating expenses 258,290 254,156



Income (loss) from operations 16,815 (7,617)

Other expense, net (7,468) (1,537)

Income (loss) before income tax benefit 9,347 (9,154)



Income tax benefit (5,588) (1,964)



Net income (loss) 14,935 (7,190)

Add: Net (income) loss attributable to 11 (146) non-controlling interest

Net income (loss) attributable to Envestnet, Inc. $ 14,946 $ (7,336)



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

Basic $ 0.28 $ (0.14)



Diluted $ 0.27 $ (0.14)



Weighted average common shares outstanding:

Basic 54,208,469 53,016,511



Diluted 59,917,648 53,016,511

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended

March 31,

2021

2020

OPERATING ACTIVITIES:

Net income (loss)

$

14,935

$

(7,190)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

28,392

27,683

Provision for doubtful accounts

298

1,026

Deferred income taxes

(3,581)

(1,587)

Non-cash compensation expense

14,137

15,985

Non-cash interest expense

2,015

4,463

Accretion on contingent consideration and purchase liability

388

599

Fair market value adjustment to contingent consideration liability

(140)

-

Gain on acquisition of equity method investment

-

(4,230)

Loss allocation from equity method investments

3,288

2,030

Other

165

-

Changes in operating assets and liabilities, net of acquisitions:

Fees receivables, net

473

(14,333)

Prepaid expenses and other current assets

1,756

(6,793)

Other non-current assets

3,093

641

Accrued expenses and other liabilities

(28,668)

(11,554)

Accounts payable

6,444

(3,205)

Deferred revenue

7,882

5,598

Other non-current liabilities

(1,068)

(145)

Net cash provided by operating activities

49,809

8,988

INVESTING ACTIVITIES:

Purchases of property and equipment

(7,062)

(2,160)

Capitalization of internally developed software

(15,058)

(11,572)

Investments in private companies

(2,538)

(11,700)

Acquisition of proprietary technology

(25,517)

-

Acquisitions of businesses, net of cash acquired

-

(20,257)

Net cash used in investing activities

(50,175)

(45,689)

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended

March 31,

2021 2020

OPERATING ACTIVITIES:

Net income (loss) $ 14,935 $ (7,190)

Adjustments to reconcile net income (loss) to netcash provided by operating activities:

Depreciation and amortization 28,392 27,683

Provision for doubtful accounts 298 1,026

Deferred income taxes (3,581) (1,587)

Non-cash compensation expense 14,137 15,985

Non-cash interest expense 2,015 4,463

Accretion on contingent consideration and purchase 388 599 liability

Fair market value adjustment to contingent (140) - consideration liability

Gain on acquisition of equity method investment - (4,230)

Loss allocation from equity method investments 3,288 2,030

Other 165 -

Changes in operating assets and liabilities, net of acquisitions:

Fees receivables, net 473 (14,333)

Prepaid expenses and other current assets 1,756 (6,793)

Other non-current assets 3,093 641

Accrued expenses and other liabilities (28,668) (11,554)

Accounts payable 6,444 (3,205)

Deferred revenue 7,882 5,598

Other non-current liabilities (1,068) (145)

Net cash provided by operating activities 49,809 8,988



INVESTING ACTIVITIES:

Purchases of property and equipment (7,062) (2,160)

Capitalization of internally developed software (15,058) (11,572)

Investments in private companies (2,538) (11,700)

Acquisition of proprietary technology (25,517) -

Acquisitions of businesses, net of cash acquired - (20,257)

Net cash used in investing activities (50,175) (45,689)

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)

Nine Months Ended

September 30,

2021

2020

FINANCING ACTIVITIES:

Proceeds from borrowings on revolving credit facility

-

45,000

Payments on revolving credit facility

-

(15,000)

Payments of contingent consideration

(1,000)

-

Proceeds from exercise of stock options

522

3,408

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

(9,541)

(9,199)

Share repurchase

(1,672)

-

Other

(479)

2

Net cash (used in) provided by financing activities

(12,170)

24,211

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(52)

(1,496)

DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

(12,588)

(13,986)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD

384,714

82,755

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (a)

$

372,126

$

68,769

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets:

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)

Nine Months Ended

September 30,

2021 2020

FINANCING ACTIVITIES:

Proceeds from borrowings on revolving credit facility - 45,000

Payments on revolving credit facility - (15,000)

Payments of contingent consideration (1,000) -

Proceeds from exercise of stock options 522 3,408

Taxes paid in lieu of shares issued for stock-based (9,541) (9,199) compensation

Share repurchase (1,672) -

Other (479) 2

Net cash (used in) provided by financing activities (12,170) 24,211



EFFECT OF EXCHANGE RATE CHANGES ON CASH (52) (1,496)



DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED (12,588) (13,986) CASH



CASH, CASH EQUIVALENTS AND RESTRICTED CASH, 384,714 82,755 BEGINNING OF PERIOD



CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF $ 372,126 $ 68,769 PERIOD (a)

(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Condensed Consolidated Balance Sheets:

March 31, March 31,

2021 2020

Cash and cash equivalents $ 371,977 $ 68,601

Restricted cash included in other non-current assets 149 168

Total cash, cash equivalents and restricted cash $ 372,126 $ 68,769

Reconciliation of Non-GAAP Financial Measures

(in thousands)

(unaudited)

Three Months Ended

March 31,

2021

2020

Total revenues

$

275,105

$

246,539

Deferred revenue fair value adjustment (a)

80

439

Adjusted revenues

$

275,185

$

246,978

Net income (loss)

$

14,935

$

(7,190)

Add (deduct):

Deferred revenue fair value adjustment (a)

80

439

Interest income (b)

(170)

(391)

Interest expense (b)

4,215

7,134

Accretion on contingent consideration and purchase liability (c)

388

599

Income tax benefit

(5,588)

(1,964)

Depreciation and amortization

28,392

27,683

Non-cash compensation expense (d)

14,137

13,470

Restructuring charges and transaction costs (c)

2,784

2,820

Severance (e)

4,914

13,982

Fair market value adjustment on contingent consideration liability (c)

(140)

-

Non-recurring litigation and regulatory related expenses (c)

1,709

703

Foreign currency (b)

151

(494)

Non-income tax expense adjustment (c)

(566)

188

Non-recurring gain (b)

-

(4,230)

Loss allocation from equity method investments (b)

3,288

2,030

Income attributable to non-controlling interest

(265)

(201)

Adjusted EBITDA

$

68,264

$

54,578

Reconciliation of Non-GAAP Financial Measures

(in thousands)

(unaudited)

Three Months Ended

March 31,

2021 2020

Total revenues $ 275,105 $ 246,539

Deferred revenue fair value adjustment ^(a) 80 439

Adjusted revenues $ 275,185 $ 246,978



Net income (loss) $ 14,935 $ (7,190)

Add (deduct):

Deferred revenue fair value adjustment ^(a) 80 439

Interest income ^(b) (170) (391)

Interest expense ^(b) 4,215 7,134

Accretion on contingent consideration and purchase 388 599 liability ^(c)

Income tax benefit (5,588) (1,964)

Depreciation and amortization 28,392 27,683

Non-cash compensation expense ^(d) 14,137 13,470

Restructuring charges and transaction costs ^(c) 2,784 2,820

Severance ^(e) 4,914 13,982

Fair market value adjustment on contingent (140) - consideration liability ^(c)

Non-recurring litigation and regulatory related 1,709 703 expenses ^(c)

Foreign currency ^(b) 151 (494)

Non-income tax expense adjustment ^(c) (566) 188

Non-recurring gain ^(b) - (4,230)

Loss allocation from equity method investments ^(b) 3,288 2,030

Income attributable to non-controlling interest (265) (201)

Adjusted EBITDA $ 68,264 $ 54,578

(a)Included within subscription-based 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 administrative expenses in the condensed consolidated statements of operations.(d)For the three months ended March 31, 2021, the entire amount was included in compensation and benefits in the condensed consolidated statements of operations. For the three months ended March 31, 2020, $15,994 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)Included within compensation and benefits in the condensed consolidated statements of operations.(a) Included within subscription-based 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 administrative expenses in the condensed consolidated statements of operations. For the three months ended March 31, 2021, the entire amount was included in compensation and benefits in the condensed consolidated statements of(d) operations. For the three months ended March 31, 2020, $15,994 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) Included within compensation and benefits in the condensed consolidated statements of operations.Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands, except share and per share information)

(unaudited)

Three Months Ended

March 31,

2021

2020

Net income (loss)

$

14,935

$

(7,190)

Income tax provision benefit (a)

(5,588)

(1,964)

Income (loss) before income tax benefit

9,347

(9,154)

Add (deduct):

Deferred revenue fair value adjustment (b)

80

439

Accretion on contingent consideration and purchase

liability (c)

388

599

Non-cash interest expense (d)

1,423

2,962

Cash interest - Convertible Notes (d)

2,480

-

Non-cash compensation expense (e)

14,137

13,470

Restructuring charges and transaction costs (c)

2,784

2,820

Severance (f)

4,914

13,982

Fair market value adjustment on contingent consideration liability (c)

(140)

-

Amortization of acquired intangibles (g)

16,478

18,758

Non-recurring litigation and regulatory related expenses (c)

1,709

703

Foreign currency (d)

151

(494)

Non-income tax expense adjustment (c)

(566)

188

Non-recurring gain (d)

-

(4,230)

Loss allocation from equity method investments (d)

3,288

2,030

Income attributable to non-controlling interest

(265)

(201)

Adjusted net income before income tax effect

56,208

41,872

Income tax effect (h)

(14,333)

(10,670)

Adjusted net income

$

41,875

$

31,202

Basic number of weighted-average shares outstanding

54,208,469

53,016,511

Effect of dilutive shares:

Options to purchase common stock

222,387

664,796

Unvested restricted stock units

562,612

600,567

Convertible notes

9,898,549

235,182

Warrants

76,142

42,551

Diluted number of weighted-average shares outstanding

64,968,159

54,559,607

Adjusted net income per share - diluted

$

0.64

$

0.57

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands, except share and per share information)

(unaudited)

Three Months Ended

March 31,

2021 2020

Net income (loss) $ 14,935 $ (7,190)

Income tax provision benefit ^(a) (5,588) (1,964)

Income (loss) before income tax benefit 9,347 (9,154)

Add (deduct):

Deferred revenue fair value adjustment ^(b) 80 439

Accretion on contingent consideration and purchase 388 599 liability ^(c)

Non-cash interest expense ^(d) 1,423 2,962

Cash interest - Convertible Notes ^(d) 2,480 -

Non-cash compensation expense ^(e) 14,137 13,470

Restructuring charges and transaction costs ^(c) 2,784 2,820

Severance ^(f) 4,914 13,982

Fair market value adjustment on contingent (140) - consideration liability ^(c)

Amortization of acquired intangibles ^(g) 16,478 18,758

Non-recurring litigation and regulatory related 1,709 703 expenses ^(c)

Foreign currency ^(d) 151 (494)

Non-income tax expense adjustment ^(c) (566) 188

Non-recurring gain ^(d) - (4,230)

Loss allocation from equity method investments ^ 3,288 2,030 (d)

Income attributable to non-controlling interest (265) (201)

Adjusted net income before income tax effect 56,208 41,872

Income tax effect ^(h) (14,333) (10,670)

Adjusted net income $ 41,875 $ 31,202



Basic number of weighted-average shares 54,208,469 53,016,511 outstanding

Effect of dilutive shares:

Options to purchase common stock 222,387 664,796

Unvested restricted stock units 562,612 600,567

Convertible notes 9,898,549 235,182

Warrants 76,142 42,551

Diluted number of weighted-average shares 64,968,159 54,559,607 outstanding



Adjusted net income per share - diluted $ 0.64 $ 0.57

(a)For the three months ended March 31, 2021 and 2020, the effective tax rate computed in accordance with GAAP equaled (59.8)% and 21.5%, respectively.(b)Included within subscription-based revenues in the condensed consolidated statements of operations.(c)Included within general and administrative expenses in the condensed consolidated statements of operations.(d)Included within other expense, net in the condensed consolidated statements of operations.(e)For the three months ended March 31, 2021, the entire amount was included in compensation and benefits in the condensed consolidated statements of operations. For the three months ended March 31, 2020, $15,994 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.(f)Included within compensation and benefits in the condensed consolidated statements of operations.(g)Included within depreciation and amortization in the condensed consolidated statements of operations.(h)An estimated normalized effective tax rate of 25.5% have been used to compute adjusted net income for the three months ended March 31, 2021 and 2020. For the three months ended March 31, 2021 and 2020, the effective tax(a) rate computed in accordance with GAAP equaled (59.8)% and 21.5%, respectively.(b) Included within subscription-based revenues in the condensed consolidated statements of operations.(c) Included within general and administrative expenses in the condensed consolidated statements of operations.(d) Included within other expense, net in the condensed consolidated statements of operations. For the three months ended March 31, 2021, the entire amount was included in compensation and benefits in the condensed consolidated statements of(e) operations. For the three months ended March 31, 2020, $15,994 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.(f) Included within compensation and benefits in the condensed consolidated statements of operations.(g) Included within depreciation and amortization in the condensed consolidated statements of operations. An estimated normalized effective tax rate of 25.5% have been used to(h) compute adjusted net income for the three months ended March 31, 2021 and 2020.Reconciliation of Non-GAAP Financial Measures

Segment Information

(in thousands)

(unaudited)

Three months ended March 31, 2021

Envestnet Wealth Solutions

Envestnet Data & Analytics

Nonsegment

Total

Total Revenues

$

226,410

$

48,695

$

-

$

275,105

Deferred revenue fair value adjustment (a)

80

-

-

80

Adjusted revenues

$

226,490

$

48,695

$

-

$

275,185

Revenues:

Asset-based

$

159,375

$

-

$

-

$

159,375

Subscription-based

64,012

45,817

-

109,829

Total recurring revenues

223,387

45,817

-

269,204

Professional services and other revenues

3,023

2,878

-

5,901

Total revenues

226,410

48,695

-

275,105

Operating expenses:

Cost of revenues:

Asset-based

86,190

-

-

86,190

Subscription-based

1,213

5,391

-

6,604

Professional services and other

29

46

-

75

Total cost of revenues

87,432

5,437

-

92,869

Compensation and benefits

62,854

26,289

11,571

100,714

General and administration

20,699

8,516

7,100

36,315

Depreciation and amortization

21,228

7,164

-

28,392

Total operating expenses

$

192,213

$

47,406

$

18,671

$

258,290

Income (loss) from operations

$

34,197

$

1,289

$

(18,671)

$

16,815

Add:

Deferred revenue fair value adjustment (a)

80

-

-

80

Accretion on contingent consideration and purchase liability (b)

342

46

-

388

Depreciation and amortization

21,228

7,164

-

28,392

Non-cash compensation expense (c)

7,829

2,841

3,467

14,137

Restructuring charges and transaction costs (b)

1,365

147

1,272

2,784

Non-income tax expense adjustment (b)

(535)

(31)

-

(566)

Severance (c)

3,087

1,720

107

4,914

Fair market value adjustment on contingent consideration liability (b)

-

(140)

-

(140)

Non-recurring litigation and regulatory related expenses (b)

-

1,709

-

1,709

Income attributable to non-controlling interest

(265)

-

-

(265)

Other

16

-

-

16

Adjusted EBITDA

$

67,344

$

14,745

$

(13,825)

$

68,264

Reconciliation of Non-GAAP Financial Measures

Segment Information

(in thousands)

(unaudited)

Three months ended March 31, 2021

Envestnet Envestnet Wealth Data Nonsegment Total Solutions & Analytics

Total Revenues $ 226,410 $ 48,695 $ - $ 275,105

Deferred revenue fair 80 - - 80 value adjustment ^(a)

Adjusted revenues $ 226,490 $ 48,695 $ - $ 275,185



Revenues:

Asset-based $ 159,375 $ - $ - $ 159,375

Subscription-based 64,012 45,817 - 109,829

Total recurring 223,387 45,817 - 269,204 revenues

Professional services 3,023 2,878 - 5,901 and other revenues

Total revenues 226,410 48,695 - 275,105



Operating expenses:

Cost of revenues:

Asset-based 86,190 - - 86,190

Subscription-based 1,213 5,391 - 6,604

Professional services 29 46 - 75 and other

Total cost of revenues 87,432 5,437 - 92,869

Compensation and 62,854 26,289 11,571 100,714 benefits

General and 20,699 8,516 7,100 36,315 administration

Depreciation and 21,228 7,164 - 28,392 amortization

Total operating $ 192,213 $ 47,406 $ 18,671 $ 258,290 expenses



Income (loss) from $ 34,197 $ 1,289 $ (18,671) $ 16,815 operations

Add:

Deferred revenue fair 80 - - 80 value adjustment ^(a)

Accretion on contingentconsideration and 342 46 - 388 purchase liability ^(b)

Depreciation and 21,228 7,164 - 28,392 amortization

Non-cash compensation 7,829 2,841 3,467 14,137 expense ^(c)

Restructuring chargesand transaction costs ^ 1,365 147 1,272 2,784 (b)

Non-income tax expense (535) (31) - (566) adjustment ^(b)

Severance ^(c) 3,087 1,720 107 4,914

Fair market valueadjustment oncontingent - (140) - (140) consideration liability^ (b)

Non-recurringlitigation and - 1,709 - 1,709 regulatory relatedexpenses ^(b)

Income attributable tonon-controlling (265) - - (265) interest

Other 16 - - 16

Adjusted EBITDA $ 67,344 $ 14,745 $ (13,825) $ 68,264

(a)Included within subscription-based revenues in the condensed consolidated statements of operations.(b)Included within general and administrative expenses in the condensed consolidated statements of operations.(c)Included within compensation and benefits in the condensed consolidated statements of operations.(a) Included within subscription-based revenues in the condensed consolidated statements of operations.(b) Included within general and administrative expenses in the condensed consolidated statements of operations.(c) Included within compensation and benefits in the condensed consolidated statements of operations.Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

Three Months Ended March 31, 2020

Envestnet Wealth Solutions

Envestnet Data & Analytics

Nonsegment

Total

Revenues

$

198,420

$

48,119

$

-

$

246,539

Deferred revenue fair value adjustment (a)

439

-

-

439

Adjusted revenues

$

198,859

$

48,119

$

-

$

246,978

Revenues:

Asset-based

$

134,811

$

-

$

-

$

134,811

Subscription-based

60,323

44,228

-

104,551

Total recurring revenues

195,134

44,228

-

239,362

Professional services and other revenues

3,286

3,891

-

7,177

Total revenues

198,420

48,119

-

246,539

Operating expenses:

Cost of revenues:

Asset-based

68,592

-

-

68,592

Subscription-based

1,192

5,085

-

6,277

Professional services and other

8

56

-

64

Total cost of revenues

69,792

5,141

-

74,933

Compensation and benefits

72,588

30,113

7,729

110,430

General and administration

25,280

9,187

6,643

41,110

Depreciation and amortization

19,420

8,263

-

27,683

Total operating expenses

$

187,080

$

52,704

$

14,372

$

254,156

Income (loss) from operations

$

11,340

$

(4,585)

$

(14,372)

$

(7,617)

Add:

Deferred revenue fair value adjustment (a)

439

-

-

439

Accretion on contingent consideration and purchase liability (b)

373

226

-

599

Depreciation and amortization

19,420

8,263

-

27,683

Non-cash compensation expense (c)

9,697

4,226

2,071

15,994

Restructuring charges and transaction costs (b)

1,189

185

1,446

2,820

Non-income tax expense adjustment (b)

250

(62)

-

188

Severance (c)

11,002

1,660

1,320

13,982

Non-recurring litigation and regulator related expenses (b)

-

703

-

703

Loss attributable to non-controlling interest

(201)

-

-

(201)

Other

(12)

-

-

(12)

Adjusted EBITDA

$

53,497

$

10,616

$

(9,535)

$

54,578

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

Three Months Ended March 31, 2020

Envestnet Envestnet Wealth Data Nonsegment Total Solutions & Analytics

Revenues $ 198,420 $ 48,119 $ - $ 246,539

Deferred revenue fair 439 - - 439 value adjustment ^(a)

Adjusted revenues $ 198,859 $ 48,119 $ - $ 246,978



Revenues:

Asset-based $ 134,811 $ - $ - $ 134,811

Subscription-based 60,323 44,228 - 104,551

Total recurring 195,134 44,228 - 239,362 revenues

Professional services 3,286 3,891 - 7,177 and other revenues

Total revenues 198,420 48,119 - 246,539



Operating expenses:

Cost of revenues:

Asset-based 68,592 - - 68,592

Subscription-based 1,192 5,085 - 6,277

Professional services 8 56 - 64 and other

Total cost of revenues 69,792 5,141 - 74,933

Compensation and 72,588 30,113 7,729 110,430 benefits

General and 25,280 9,187 6,643 41,110 administration

Depreciation and 19,420 8,263 - 27,683 amortization

Total operating $ 187,080 $ 52,704 $ 14,372 $ 254,156 expenses



Income (loss) from $ 11,340 $ (4,585) $ (14,372) $ (7,617) operations

Add:

Deferred revenue fair 439 - - 439 value adjustment ^(a)

Accretion oncontingentconsideration and 373 226 - 599 purchase liability ^(b)

Depreciation and 19,420 8,263 - 27,683 amortization

Non-cash compensation 9,697 4,226 2,071 15,994 expense ^(c)

Restructuring chargesand transaction costs 1,189 185 1,446 2,820 ^(b)

Non-income tax expense 250 (62) - 188 adjustment ^(b)

Severance ^(c) 11,002 1,660 1,320 13,982

Non-recurringlitigation and - 703 - 703 regulator relatedexpenses ^(b)

Loss attributable tonon-controlling (201) - - (201) interest

Other (12) - - (12)

Adjusted EBITDA $ 53,497 $ 10,616 $ (9,535) $ 54,578

(a)Included within subscription-based revenues in the condensed consolidated statements of operations.(b)Included within general and administrative expenses in the condensed consolidated statements of operations.(c)Included within compensation and benefits in the condensed consolidated statements of operations.(a) Included within subscription-based revenues in the condensed consolidated statements of operations.(b) Included within general and administrative expenses in the condensed consolidated statements of operations.(c) Included within compensation and benefits in the condensed consolidated statements of operations.Envestnet, Inc.

Historical Assets, Accounts and Advisors

(in millions, except accounts and advisors)

(unaudited)

As of

March 31,

June 30,

September 30,

December 31,

March 31,

2020

2020

2020

2020

2021

(in millions, except accounts and advisors data)

Platform Assets

Assets under Management ("AUM")

$

185,065

$

215,994

$

228,905

$

263,043

$

286,039

Assets under Administration ("AUA")

312,472

344,957

375,860

405,365

408,858

Total AUM/A

497,537

560,951

604,765

668,408

694,897

Subscription

2,875,394

3,247,400

3,498,353

3,892,814

4,132,917

Total Platform Assets

$

3,372,931

$

3,808,351

$

4,103,118

$

4,561,222

$

4,827,814

Platform Accounts

AUM

970,896

1,007,386

1,018,817

1,073,122

1,138,183

AUA

1,254,856

1,252,247

1,318,730

1,276,975

1,192,668

Total AUM/A

2,225,752

2,259,633

2,337,547

2,350,097

2,330,851

Subscription

10,090,172

10,003,156

10,639,399

11,079,048

11,453,434

Total Platform Accounts

12,315,924

12,262,789

12,976,946

13,429,145

13,784,285

Advisors

AUM/A

40,971

41,206

41,450

41,206

41,177

Subscription

62,077

62,404

63,862

65,104

65,724

Total Advisors

103,048

103,610

105,312

106,310

106,901

The following table summarizes the changes in AUM and AUA for the three months ended March 31, 2021:

Envestnet, Inc.

Historical Assets, Accounts and Advisors

(in millions, except accounts and advisors)

(unaudited)

As of

March 31, June 30, September 30, December 31, March 31,

2020 2020 2020 2020 2021

(in millions, except accounts and advisors data)

Platform Assets

Assets underManagement $ 185,065 $ 215,994 $ 228,905 $ 263,043 $ 286,039 ("AUM")

Assets underAdministration 312,472 344,957 375,860 405,365 408,858 ("AUA")

Total AUM/A 497,537 560,951 604,765 668,408 694,897

Subscription 2,875,394 3,247,400 3,498,353 3,892,814 4,132,917

Total Platform $ 3,372,931 $ 3,808,351 $ 4,103,118 $ 4,561,222 $ 4,827,814 Assets

Platform Accounts

AUM 970,896 1,007,386 1,018,817 1,073,122 1,138,183

AUA 1,254,856 1,252,247 1,318,730 1,276,975 1,192,668

Total AUM/A 2,225,752 2,259,633 2,337,547 2,350,097 2,330,851

Subscription 10,090,172 10,003,156 10,639,399 11,079,048 11,453,434

Total Platform 12,315,924 12,262,789 12,976,946 13,429,145 13,784,285 Accounts

Advisors

AUM/A 40,971 41,206 41,450 41,206 41,177

Subscription 62,077 62,404 63,862 65,104 65,724

Total Advisors 103,048 103,610 105,312 106,310 106,901

The following table summarizes the changes in AUM and AUA for the three months ended March 31, 2021:

12/31/2020 Gross Redemptions Net Market Reclass to 3/31/2021 Sales Flows Impact Subscription

(in millions, except account data)

AUM $ 263,043 $ 28,324 $ (13,351) $ 14,973 $ 8,023 $ - $ 286,039

AUA 405,365 30,639 (23,033) 7,606 9,216 (13,329) 408,858

Total AUM/A $ 668,408 $ 58,963 $ (36,384) $ 22,579 $ 17,239 $ (13,329) $ 694,897



Fee-Based 2,350,097 88,734 (107,980) 2,330,851 Accounts

The above AUM/A gross sales figures include $8.3 billion in new client conversions. The Company onboarded an additional $34.5 billion in subscription conversions during the three months ended March 31, 2021, bringing total conversions for the quarter to $42.8 billion.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210506006122/en/

CONTACT: Investor Relations investor.relations@envestnet.com (312) 827-3940 Media Relations mediarelations@envestnet.com