Business Wire | Nov 8, 2021 04:07PM EST

Envestnet Reports Third Quarter 2021 Financial Results

Nov. 08, 2021

CHICAGO--(BUSINESS WIRE)--Nov. 08, 2021--Envestnet (NYSE: ENV), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for the three and nine months ended September 30, 2021.

Three months ended Nine months ended

Key Financial September 30, % September 30, %Metrics

(in millionsexcept per 2021 2020 Change 2021 2020 Changeshare data)

GAAP:

Total $ 303.1 $ 252.6 20 % $ 866.9 $ 734.4 18 %revenues

Net income $ 11.4 $ 2.3 n/m $ 18.0 $ (10.3 ) n/m (loss)

Net income(loss) perdiluted share $ 0.21 $ 0.03 n/m $ 0.33 $ (0.19 ) n/m attributableto Envestnet,Inc.



Non-GAAP:

Adjusted $ 303.1 $ 252.7 20 % $ 867.1 $ 735.0 18 %revenues^(1)

Adjusted $ 66.2 $ 67.6 (2 )% $ 205.5 $ 178.0 15 %EBITDA^(1)

Adjusted net $ 39.9 $ 40.2 (1 )% $ 125.3 $ 103.2 21 %income^(1)

Adjusted netincome per $ 0.61 $ 0.72 (15 )% $ 1.92 $ 1.88 2 %diluted share^(1)

n/m - notmeaningful

"During the third quarter and first nine months of 2021, Envestnet delivered strong financial results," said Bill Crager, Chief Executive Officer.

"Our commitment to our vision and strategy continues and we are executing in all areas of our business. Our team is leaned into our mission and the work we are doing to establish Envestnet as the ecosystem that connects data, technology, and solutions to enable The Intelligent Financial Life," concluded Mr. Crager.

Financial Results for the Third Quarter of 2021

Asset-based recurring revenues increased 34% from the third quarter of 2020, and represented 61% of total revenues for the third quarter of 2021 compared to 55% for the third quarter of 2020. Subscription-based recurring revenues increased 5% from the third quarter of 2020, and represented 37% of total revenues for the third quarter of 2021, compared to 43% for the third quarter of 2020. Professional services and other non-recurring revenues decreased 21% from the prior year period. Total revenues increased 20% to $303.1 million for the third quarter of 2021 from $252.6 million for the third quarter of 2020.

Total operating expenses for the third quarter of 2021 increased 20% to $288.9 million from $240.9 million in the prior year period. Cost of revenues increased 40% to $109.8 million for the third quarter of 2021 from $78.5 million for the prior year period. Compensation and benefits increased 16% to $109.8 million for the third quarter of 2021 from $94.4 million for the prior year period. Compensation and benefits were 36% of total revenues for the third quarter of 2021, compared to 37% for the prior year period. General and administration expenses increased 1% to $39.4 million for the third quarter of 2021 from $39.0 million for the prior year period. General and administration expenses were 13% of total revenues for the third quarter of 2021, compared to 15% for the prior year period.

Income from operations was $14.1 million for the third quarter of 2021 compared to $11.7 million for the third quarter of 2020. Net income was $11.4 million for the third quarter of 2021 compared to net income of $2.3 million for the third quarter of 2020. Net income per diluted share attributable to Envestnet, Inc. was $0.21 for the third quarter of 2021 compared to net income per diluted share attributable to Envestnet, Inc. of $0.03 for the third quarter of 2020.

Adjusted revenues(1) for the third quarter of 2021 increased 20% to $303.1 million from $252.7 million for the prior year period. Adjusted EBITDA(1) for the third quarter of 2021 decreased 2% to $66.2 million from $67.6 million for the prior year period. Adjusted net income(1) decreased 1% for the third quarter of 2021 to $39.9 million from $40.2 million for the prior year period. Adjusted net income per diluted share(1) for the third quarter of 2021 decreased 15% to $0.61 from $0.72 in the third quarter of 2020.

Balance Sheet and Liquidity

As of September 30, 2021, Envestnet had $393.8 million in cash and cash equivalents and $862.5 million in outstanding debt. The outstanding debt as of September 30, 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 September 30, 2021.

Outlook

Envestnet provided the following outlook for the fourth quarter and full year ending December 31, 2021. This outlook is based on the market value of assets as of September 30, 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 4Q 2021 FY 2021Adjusted EPS

GAAP:

Revenues:

Asset-based $ 188.5 - $ 189.5

Subscription-based 116.5 - 117.0

Total recurring $ 305.0 - $ 306.5 revenues

Professionalservices and other 5.0 - 5.5 revenues

Total revenues $ 310.0 - $ 312.0 $ 1,177.0 - $ 1,179.0



Asset-based cost $ 105.5 - $ 106.0 of revenues

Total cost of $ 113.6 - $ 114.1 revenues



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



Diluted shares 65.3 65.2 outstanding

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



Non-GAAP:

Adjusted revenues ^(1):

Asset-based $ 188.5 - $ 189.5

Subscription-based 116.5 - 117.0

Total recurring $ 305.0 - $ 306.5 revenues

Professionalservices and other 5.0 - 5.5 revenues

Total revenues $ 310.0 - $ 312.0 $ 1,177.0 - $ 1,179.0



Adjusted EBITDA^ $ 54.0 - $ 55.0 $ 259.5 - $ 260.5 (1)

Adjusted netincome per diluted $0.49 $2.41 share^(1)

(a) Envestnet does not forecast net income and net income per diluted share due to the unpredictable nature of various items adjusted for non-GAAP disclosure purposes, including the periodic GAAP income tax provision.

Conference Call

Envestnet will host a conference call to discuss third quarter 2021 financial results today at 5:00 p.m. ET. The live webcast and accompanying presentation can be accessed from Envestnet's investor relations website at http://investor.envestnet.com/. A replay of the webcast will be available on the investor relations website following the call.

About Envestnet

Envestnet, Inc. (NYSE: ENV) is transforming the way financial advice and wellness are delivered. Our mission is to empower advisors and financial service providers with innovative technology, solutions and intelligence to make financial wellness a reality for everyone. Approximately 108,000 advisors and more than 6,000 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, non-recurring litigation and regulatory related expenses, foreign currency, non-income tax expense adjustment, non-recurring gain, gain on settlement of liability, gain on insurance reimbursement, fair market value adjustment to investment in private company, loss allocation from equity method investments and income 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, non-recurring litigation and regulatory related expenses, foreign currency, non-income tax expense adjustment, non-recurring gain, gain on settlement of liability, gain on insurance reimbursement, fair market value adjustment to investment in private company, loss allocation from equity method investments and income 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 9-15 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 fourth 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://investor.envestnet.com/. You are cautioned not to unduly rely on these forward-looking statements, which speak only as of the date of this press release. All information in this press release and its attachments is as of November 8, 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.

(a) Envestnet does not forecast net income and net income per diluted share dueto the unpredictable nature of various items adjusted for non-GAAP disclosurepurposes, including the periodic GAAP income tax provision.

Conference Call

Envestnet will host a conference call to discuss third quarter 2021 financial results today at 5:00 p.m. ET. The live webcast and accompanying presentation can be accessed from Envestnet's investor relations website at http://investor.envestnet.com/. A replay of the webcast will be available on the investor relations website following the call.

About Envestnet

Envestnet, Inc. (NYSE: ENV) is transforming the way financial advice and wellness are delivered. Our mission is to empower advisors and financial service providers with innovative technology, solutions and intelligence to make financial wellness a reality for everyone. Approximately 108,000 advisors and more than 6,000 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, non-recurring litigation and regulatory related expenses, foreign currency, non-income tax expense adjustment, non-recurring gain, gain on settlement of liability, gain on insurance reimbursement, fair market value adjustment to investment in private company, loss allocation from equity method investments and income 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, non-recurring litigation and regulatory related expenses, foreign currency, non-income tax expense adjustment, non-recurring gain, gain on settlement of liability, gain on insurance reimbursement, fair market value adjustment to investment in private company, loss allocation from equity method investments and income 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 9-15 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 fourth 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://investor.envestnet.com/. You are cautioned not to unduly rely on these forward-looking statements, which speak only as of the date of this press release. All information in this press release and its attachments is as of November 8, 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)

September 30, December 31,

2021 2020

Assets

Current assets:

Cash and cash equivalents $ 393,799 $ 384,565

Fees receivable, net 116,137 80,064

Prepaid expenses and other current assets 39,585 40,570

Total current assets 549,521 505,199



Property and equipment, net 48,158 47,969

Internally developed software, net 125,590 96,501

Intangible assets, net 417,644 435,041

Goodwill 924,504 906,773

Operating lease right-of-use-assets, net 93,204 105,249

Other non-current assets 58,724 47,558

Total assets $ 2,217,345 $ 2,144,290



Liabilities and Equity

Current liabilities:

Accrued expenses and other liabilities $ 200,206 $ 158,548

Accounts payable 21,763 18,003

Operating lease liabilities 12,021 13,649

Contingent consideration 806 11,251

Deferred revenue 34,609 34,918

Total current liabilities 269,405 236,369



Long-term debt 847,633 756,503

Non-current operating lease liabilities 107,852 112,182

Deferred tax liabilities, net 27,754 34,740

Other non-current liabilities 17,626 28,678

Total liabilities 1,270,270 1,168,472



Equity:

Total stockholders' equity 944,435 976,337

Non-controlling interest 2,640 (519 )

Total liabilities and equity $ 2,217,345 $ 2,144,290

Envestnet, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share information)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Revenues:

Asset-based

$

184,008

$

137,744

$

513,458

$

394,801

Subscription-based

113,572

107,897

335,905

317,427

Total recurring revenues

297,580

245,641

849,363

712,228

Professional services and other revenues

5,473

6,918

17,533

22,183

Total revenues

303,053

252,559

866,896

734,411

Operating expenses:

Cost of revenues

109,836

78,545

303,199

222,327

Compensation and benefits

109,839

94,428

316,101

300,423

General and administration

39,393

38,979

117,463

118,537

Depreciation and amortization

29,850

28,951

88,252

85,077

Total operating expenses

288,918

240,903

825,015

726,364

Income from operations

14,135

11,656

41,881

8,047

Other expense, net

(3,551

)

(8,836

)

(14,803

)

(18,546

)

Income (loss) before income tax provision (benefit)

10,584

2,820

27,078

(10,499

)

Income tax provision (benefit)

(854

)

497

9,074

(161

)

Net income (loss)

11,438

2,323

18,004

(10,338

)

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

302

(413

)

401

(12

)

Net income (loss) attributable to Envestnet, Inc.

$

11,740

$

1,910

$

18,405

$

(10,350

)

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

Basic

$

0.22

$

0.04

$

0.34

$

(0.19

)

Diluted

$

0.21

$

0.03

$

0.33

$

(0.19

)

Weighted average common shares outstanding:

Basic

54,547,858

53,800,048

54,400,247

53,464,101

Diluted

55,388,627

55,558,983

55,287,972

53,464,101

Envestnet, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share information)

(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Revenues:

Asset-based $ 184,008 $ 137,744 $ 513,458 $ 394,801

Subscription-based 113,572 107,897 335,905 317,427

Total recurring 297,580 245,641 849,363 712,228 revenues

Professionalservices and other 5,473 6,918 17,533 22,183 revenues

Total revenues 303,053 252,559 866,896 734,411



Operating expenses:

Cost of revenues 109,836 78,545 303,199 222,327

Compensation and 109,839 94,428 316,101 300,423 benefits

General and 39,393 38,979 117,463 118,537 administration

Depreciation and 29,850 28,951 88,252 85,077 amortization

Total operating 288,918 240,903 825,015 726,364 expenses



Income from 14,135 11,656 41,881 8,047 operations

Other expense, net (3,551 ) (8,836 ) (14,803 ) (18,546 )

Income (loss)before income tax 10,584 2,820 27,078 (10,499 )provision (benefit)



Income tax (854 ) 497 9,074 (161 )provision (benefit)



Net income (loss) 11,438 2,323 18,004 (10,338 )

Add: Net (income)loss attributable 302 (413 ) 401 (12 )to non-controllinginterest

Net income (loss)attributable to $ 11,740 $ 1,910 $ 18,405 $ (10,350 )Envestnet, Inc.



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

Basic $ 0.22 $ 0.04 $ 0.34 $ (0.19 )



Diluted $ 0.21 $ 0.03 $ 0.33 $ (0.19 )



Weighted averagecommon shares outstanding:

Basic 54,547,858 53,800,048 54,400,247 53,464,101



Diluted 55,388,627 55,558,983 55,287,972 53,464,101

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Nine Months Ended

September 30,

2021

2020

OPERATING ACTIVITIES:

Net income (loss)

$

18,004

$

(10,338

)

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

Depreciation and amortization

88,252

85,077

Provision for doubtful accounts

2,051

2,323

Deferred income taxes

7,078

79

Non-cash compensation expense

50,307

45,721

Non-cash interest expense

4,889

12,255

Accretion on contingent consideration and purchase liability

656

1,308

Payments of contingent consideration

(2,360

)

-

Fair market value adjustment to contingent consideration liability

(1,067

)

(2,056

)

Fair market value adjustment to investment in private company

(758

)

-

Gain on settlement of liability

(1,206

)

-

Gain on acquisition of equity method investment

-

(4,230

)

Loss allocation from equity method investments

5,553

4,280

Impairment of right of use assets

1,537

1,426

Other

249

556

Changes in operating assets and liabilities, net of acquisitions:

Fees receivables, net

(38,030

)

(10,825

)

Prepaid expenses and other current assets

569

(11,139

)

Other non-current assets

4,854

(1,807

)

Accrued expenses and other liabilities

26,637

3,393

Accounts payable

4,122

12,084

Deferred revenue

(1,065

)

1,488

Other non-current liabilities

(298

)

2,084

Net cash provided by operating activities

169,974

131,679

INVESTING ACTIVITIES:

Purchases of property and equipment

(15,779

)

(8,824

)

Capitalization of internally developed software

(49,024

)

(40,257

)

Investments in private companies

(8,926

)

(13,875

)

Acquisition of proprietary technology

(25,517

)

-

Acquisitions of businesses, net of cash acquired

(32,794

)

(20,257

)

Advance for technology solutions

(3,000

)

-

Net cash used in investing activities

(135,040

)

(83,213

)

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Nine Months Ended

September 30,

2021 2020

OPERATING ACTIVITIES:

Net income (loss) $ 18,004 $ (10,338 )

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

Depreciation and amortization 88,252 85,077

Provision for doubtful accounts 2,051 2,323

Deferred income taxes 7,078 79

Non-cash compensation expense 50,307 45,721

Non-cash interest expense 4,889 12,255

Accretion on contingent consideration and purchase 656 1,308 liability

Payments of contingent consideration (2,360 ) -

Fair market value adjustment to contingent (1,067 ) (2,056 )consideration liability

Fair market value adjustment to investment in (758 ) - private company

Gain on settlement of liability (1,206 ) -

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

Loss allocation from equity method investments 5,553 4,280

Impairment of right of use assets 1,537 1,426

Other 249 556

Changes in operating assets and liabilities, net of acquisitions:

Fees receivables, net (38,030 ) (10,825 )

Prepaid expenses and other current assets 569 (11,139 )

Other non-current assets 4,854 (1,807 )

Accrued expenses and other liabilities 26,637 3,393

Accounts payable 4,122 12,084

Deferred revenue (1,065 ) 1,488

Other non-current liabilities (298 ) 2,084

Net cash provided by operating activities 169,974 131,679



INVESTING ACTIVITIES:

Purchases of property and equipment (15,779 ) (8,824 )

Capitalization of internally developed software (49,024 ) (40,257 )

Investments in private companies (8,926 ) (13,875 )

Acquisition of proprietary technology (25,517 ) -

Acquisitions of businesses, net of cash acquired (32,794 ) (20,257 )

Advance for technology solutions (3,000 ) -

Net cash used in investing activities (135,040 ) (83,213 )

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)

Nine Months Ended

September 30,

2021

2020

FINANCING ACTIVITIES:

Proceeds from issuance of Convertible Notes due 2025

-

517,500

Convertible Notes due 2025 issuance costs

-

(14,540

)

Proceeds from borrowings on revolving credit facility

-

45,000

Payments on revolving credit facility

-

(305,000

)

Capital contributions - non-controlling shareholders

3,201

-

Payments of deferred consideration on prior acquisitions

-

(1,879

)

Payments of contingent consideration

(9,200

)

-

Proceeds from exercise of stock options

920

8,053

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

(17,314

)

(16,283

)

Share repurchases

(2,097

)

-

Other

(666

)

3

Net cash provided by (used in) financing activities

(25,156

)

232,854

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(544

)

(1,009

)

INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

9,234

280,311

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD

384,714

82,755

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

$

393,948

$

363,066

(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 issuance of Convertible Notes due 2025 - 517,500

Convertible Notes due 2025 issuance costs - (14,540 )

Proceeds from borrowings on revolving credit - 45,000 facility

Payments on revolving credit facility - (305,000 )

Capital contributions - non-controlling shareholders 3,201 -

Payments of deferred consideration on prior - (1,879 )acquisitions

Payments of contingent consideration (9,200 ) -

Proceeds from exercise of stock options 920 8,053

Taxes paid in lieu of shares issued for stock-based (17,314 ) (16,283 )compensation

Share repurchases (2,097 ) -

Other (666 ) 3

Net cash provided by (used in) financing activities (25,156 ) 232,854



EFFECT OF EXCHANGE RATE CHANGES ON CASH (544 ) (1,009 )



INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED 9,234 280,311 CASH



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



CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF $ 393,948 $ 363,066 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:

September September 30, 30,

2021 2020

Cash and cash equivalents $ 393,799 $ 362,918

Restricted cash included in prepaid expenses and 149 - other current assets

Restricted cash included in other non-current assets - 148

Total cash, cash equivalents and restricted cash $ 393,948 $ 363,066

Reconciliation of Non-GAAP Financial Measures

(in thousands)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Total revenues

$

303,053

$

252,559

$

866,896

$

734,411

Deferred revenue fair value adjustment (a)

67

91

227

607

Adjusted revenues

$

303,120

$

252,650

$

867,123

$

735,018

Net income (loss)

$

11,438

$

2,323

$

18,004

$

(10,338

)

Add (deduct):

Deferred revenue fair value adjustment (a)

67

91

227

607

Interest income (b)

(202

)

(262

)

(569

)

(850

)

Interest expense (b)

4,242

8,139

12,682

21,907

Income tax provision (benefit)

(854

)

497

9,074

(161

)

Depreciation and amortization

29,850

28,951

88,252

85,077

Non-cash compensation expense (d)

18,885

15,852

50,307

43,197

Restructuring charges and transaction costs (f)

3,403

4,993

11,215

14,461

Severance (e)

207

2,715

10,498

18,566

Accretion on contingent consideration and purchase

liability (c)

81

398

656

1,308

Fair market value adjustment on contingent consideration liability (c)

(927

)

(74

)

(1,067

)

(2,056

)

Fair market value adjustment to investment in private company (b)

-

-

(758

)

-

Non-recurring litigation and regulatory related expenses (c)

1,512

1,809

5,159

6,029

Foreign currency (b)

97

(37

)

110

(68

)

Non-recurring gain (b)

-

-

-

(4,230

)

Gain on settlement of liability (b)

(1,206

)

-

(1,206

)

-

Gain on insurance reimbursement (b)

(968

)

-

(968

)

-

Non-income tax expense adjustment (c)

(831

)

1,795

(1,102

)

1,341

Loss allocation from equity method investments (b)

1,508

994

5,553

4,280

Income attributable to non-controlling interest

(114

)

(603

)

(554

)

(1,103

)

Adjusted EBITDA

$

66,188

$

67,581

$

205,513

$

177,967

Reconciliation of Non-GAAP Financial Measures

(in thousands)

(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Total revenues $ 303,053 $ 252,559 $ 866,896 $ 734,411

Deferred revenue fair 67 91 227 607 value adjustment ^(a)

Adjusted revenues $ 303,120 $ 252,650 $ 867,123 $ 735,018



Net income (loss) $ 11,438 $ 2,323 $ 18,004 $ (10,338 )

Add (deduct):

Deferred revenue fair 67 91 227 607 value adjustment ^(a)

Interest income ^(b) (202 ) (262 ) (569 ) (850 )

Interest expense ^(b) 4,242 8,139 12,682 21,907

Income tax provision (854 ) 497 9,074 (161 )(benefit)

Depreciation and 29,850 28,951 88,252 85,077 amortization

Non-cash compensation 18,885 15,852 50,307 43,197 expense ^(d)

Restructuring chargesand transaction costs ^ 3,403 4,993 11,215 14,461 (f)

Severance ^(e) 207 2,715 10,498 18,566

Accretion on contingentconsideration andpurchase 81 398 656 1,308

liability ^(c)

Fair market valueadjustment oncontingent (927 ) (74 ) (1,067 ) (2,056 )consideration liability^(c)

Fair market valueadjustment to - - (758 ) - investment in privatecompany ^(b)

Non-recurringlitigation and 1,512 1,809 5,159 6,029 regulatory relatedexpenses ^(c)

Foreign currency ^(b) 97 (37 ) 110 (68 )

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

Gain on settlement of (1,206 ) - (1,206 ) - liability ^(b)

Gain on insurance (968 ) - (968 ) - reimbursement ^(b)

Non-income tax expense (831 ) 1,795 (1,102 ) 1,341 adjustment ^(c)

Loss allocation fromequity method 1,508 994 5,553 4,280 investments ^(b)

Income attributable tonon-controlling (114 ) (603 ) (554 ) (1,103 )interest

Adjusted EBITDA $ 66,188 $ 67,581 $ 205,513 $ 177,967

(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 administration expenses in the condensed consolidated statements of operations.

(d)

All of 2021 included in compensation and benefits in the condensed consolidated statements of operations. For the three months ended September 30, 2020, $15,852 was included in compensation and benefits in the condensed consolidated statements of operations. For the nine months ended September 30, 2020, $45,721 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.

(f)

For the three months ended September 30, 2021 and 2020, $1,548 and $3,992 were included within general and administration expenses, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2021 and 2020, $1,855 and $969 were included within compensation and benefits, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2021 and 2020, $0 and $32 were included within other expense, net, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, $6,037 and $11,485 were included within general and administration expenses, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, $5,178 and $2,764 were included within compensation and benefits, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, $0 and $212 were included within other expense, net, respectively, 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 administration expenses in the condensed consolidated statements of operations.

All of 2021 included in compensation and benefits in the condensed consolidated statements of operations. For the three months ended September(d) 30, 2020, $15,852 was included in compensation and benefits in the condensed consolidated statements of operations. For the nine months ended September 30, 2020, $45,721 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.

For the three months ended September 30, 2021 and 2020, $1,548 and $3,992 were included within general and administration expenses, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2021 and 2020, $1,855 and $969 were included within compensation and benefits, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2021 and 2020, $0 and $32 were included within other expense, net, respectively, in(f) the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, $6,037 and $11,485 were included within general and administration expenses, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, $5,178 and $2,764 were included within compensation and benefits, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, $0 and $212 were included within other expense, net, respectively, 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

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Net income (loss)

$

11,438

$

2,323

$

18,004

$

(10,338

)

Income tax provision (benefit) (a)

(854

)

497

9,074

(161

)

Income (loss) before income tax provision (benefit)

10,584

2,820

27,078

(10,499

)

Add (deduct):

Deferred revenue fair value adjustment (b)

67

91

227

607

Non-cash interest expense (d)

1,443

4,738

4,295

10,682

Cash interest - Convertible Notes (d)

2,479

-

7,439

-

Non-cash compensation expense (e)

18,885

15,852

50,307

43,197

Restructuring charges and transaction costs (h)

3,403

4,993

11,215

14,461

Severance (f)

207

2,715

10,498

18,566

Accretion on contingent consideration and purchase

liability (c)

81

398

656

1,308

Fair market value adjustment on contingent consideration liability (c)

(927

)

(74

)

(1,067

)

(2,056

)

Fair market value adjustment to investment in private company (d)

-

-

(758

)

-

Amortization of acquired intangibles (g)

17,390

18,510

51,370

56,014

Non-recurring litigation and regulatory related expenses (c)

1,512

1,809

5,159

6,029

Foreign currency (d)

97

(37

)

110

(68

)

Non-recurring gain (d)

-

-

-

(4,230

)

Gain on settlement of liability (d)

(1,206

)

-

(1,206

)

-

Gain on insurance reimbursement (d)

(968

)

-

(968

)

-

Non-income tax expense adjustment (c)

(831

)

1,795

(1,102

)

1,341

Loss allocation from equity method investments (d)

1,508

994

5,553

4,280

Income attributable to non-controlling interest

(114

)

(603

)

(554

)

(1,103

)

Adjusted net income before income tax effect

53,610

54,001

168,252

138,529

Income tax effect (i)

(13,670

)

(13,772

)

(42,904

)

(35,325

)

Adjusted net income

$

39,940

$

40,229

$

125,348

$

103,204

Basic number of weighted-average shares outstanding

54,547,858

53,800,048

54,400,247

53,464,101

Effect of dilutive shares:

Options to purchase common stock

201,103

331,728

207,281

458,232

Unvested restricted stock units

570,515

610,442

614,005

548,858

Convertible notes

9,898,549

730,267

9,898,549

280,375

Warrants

69,151

86,498

66,439

46,562

Diluted number of weighted-average shares outstanding

65,287,176

55,558,983

65,186,521

54,798,128

Adjusted net income per share - diluted

$

0.61

$

0.72

$

1.92

$

1.88

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands, except share and per share information)

(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Net income (loss) $ 11,438 $ 2,323 $ 18,004 $ (10,338 )

Income taxprovision (benefit) (854 ) 497 9,074 (161 )^(a)

Income (loss)before income tax 10,584 2,820 27,078 (10,499 )provision (benefit)

Add (deduct):

Deferred revenuefair value 67 91 227 607 adjustment ^(b)

Non-cash interest 1,443 4,738 4,295 10,682 expense ^(d)

Cash interest -Convertible Notes ^ 2,479 - 7,439 - (d)

Non-cashcompensation 18,885 15,852 50,307 43,197 expense ^(e)

Restructuringcharges and 3,403 4,993 11,215 14,461 transaction costs ^(h)

Severance ^(f) 207 2,715 10,498 18,566

Accretion oncontingentconsideration and 81 398 656 1,308 purchase

liability ^(c)

Fair market valueadjustment oncontingent (927 ) (74 ) (1,067 ) (2,056 )considerationliability ^(c)

Fair market valueadjustment toinvestment in - - (758 ) - private company ^(d)

Amortization ofacquired 17,390 18,510 51,370 56,014 intangibles ^(g)

Non-recurringlitigation and 1,512 1,809 5,159 6,029 regulatory relatedexpenses ^(c)

Foreign currency ^ 97 (37 ) 110 (68 )(d)

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

Gain on settlement (1,206 ) - (1,206 ) - of liability ^(d)

Gain on insurance (968 ) - (968 ) - reimbursement ^(d)

Non-income taxexpense adjustment (831 ) 1,795 (1,102 ) 1,341 ^(c)

Loss allocationfrom equity method 1,508 994 5,553 4,280 investments ^(d)

Income attributableto non-controlling (114 ) (603 ) (554 ) (1,103 )interest

Adjusted net incomebefore income tax 53,610 54,001 168,252 138,529 effect

Income tax effect ^ (13,670 ) (13,772 ) (42,904 ) (35,325 )(i)

Adjusted net income $ 39,940 $ 40,229 $ 125,348 $ 103,204



Basic number ofweighted-average 54,547,858 53,800,048 54,400,247 53,464,101 shares outstanding

Effect of dilutive shares:

Options to purchase 201,103 331,728 207,281 458,232 common stock

Unvested restricted 570,515 610,442 614,005 548,858 stock units

Convertible notes 9,898,549 730,267 9,898,549 280,375

Warrants 69,151 86,498 66,439 46,562

Diluted number ofweighted-average 65,287,176 55,558,983 65,186,521 54,798,128 shares outstanding



Adjusted net income $ 0.61 $ 0.72 $ 1.92 $ 1.88 per share - diluted

(a)

For the three months ended September 30, 2021 and 2020, the effective tax rate computed in accordance with GAAP equaled (8.1)% and 17.6%, respectively. For the nine months ended September 30, 2021 and 2020, the effective tax rate computed in accordance with GAAP equaled 33.5% and 1.5%, respectively.

(b)

Included within subscription-based revenues in the condensed consolidated statements of operations.

(c)

Included within general and administration expenses in the condensed consolidated statements of operations.

(d)

Included within other expense, net in the condensed consolidated statements of operations.

(e)

All of 2021 included in compensation and benefits in the condensed consolidated statements of operations. For the three months ended September 30, 2020, $15,852 was included in compensation and benefits in the condensed consolidated statements of operations. For the nine months ended September 30, 2020, $45,721 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)

For the three months ended September 30, 2021 and 2020, $1,548 and $3,992 were included within general and administration expenses, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2021 and 2020, $1,855 and $969 were included within compensation and benefits, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2021 and 2020, $0 and $32 were included within other expense, net, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, $6,037 and $11,485 were included within general and administration expenses, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, $5,178 and $2,764 were included within compensation and benefits, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, $0 and $212 were included within other expense, net, respectively, 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 and nine months ended September 30, 2021 and 2020.

For the three months ended September 30, 2021 and 2020, the effective tax(a) rate computed in accordance with GAAP equaled (8.1)% and 17.6%, respectively. For the nine months ended September 30, 2021 and 2020, the effective tax rate computed in accordance with GAAP equaled 33.5% and 1.5%, respectively.

(b) Included within subscription-based revenues in the condensed consolidated statements of operations.

(c) Included within general and administration expenses in the condensed consolidated statements of operations.

(d) Included within other expense, net in the condensed consolidated statements of operations.

All of 2021 included in compensation and benefits in the condensed consolidated statements of operations. For the three months ended September(e) 30, 2020, $15,852 was included in compensation and benefits in the condensed consolidated statements of operations. For the nine months ended September 30, 2020, $45,721 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.

For the three months ended September 30, 2021 and 2020, $1,548 and $3,992 were included within general and administration expenses, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2021 and 2020, $1,855 and $969 were included within compensation and benefits, respectively, in the condensed consolidated statements of operations. For the three months ended September 30, 2021 and 2020, $0 and $32 were included within other expense, net, respectively, in(h) the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, $6,037 and $11,485 were included within general and administration expenses, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, $5,178 and $2,764 were included within compensation and benefits, respectively, in the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, $0 and $212 were included within other expense, net, respectively, 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 and nine months ended September 30, 2021 and 2020.

Reconciliation of Non-GAAP Financial Measures

Segment Information

(in thousands)

(unaudited)

Three months ended September 30, 2021

Envestnet

Wealth Solutions

Envestnet Data

& Analytics

Nonsegment

Total

Total Revenues

$

254,734

$

48,319

$

-

$

303,053

Deferred revenue fair value adjustment (a)

67

-

-

67

Adjusted revenues

$

254,801

$

48,319

$

-

$

303,120

Revenues:

Asset-based

$

184,008

$

-

$

-

$

184,008

Subscription-based

66,988

46,584

-

113,572

Total recurring revenues

250,996

46,584

-

297,580

Professional services and other revenues

3,738

1,735

-

5,473

Total revenues

254,734

48,319

-

303,053

Operating expenses:

Cost of revenues:

Asset-based

102,298

-

-

102,298

Subscription-based

1,271

6,084

-

7,355

Professional services and other

173

10

-

183

Total cost of revenues

103,742

6,094

-

109,836

Compensation and benefits

67,592

26,468

15,779

109,839

General and administration

26,086

7,570

5,737

39,393

Depreciation and amortization

22,928

6,922

-

29,850

Total operating expenses

$

220,348

$

47,054

$

21,516

$

288,918

Income (loss) from operations

$

34,386

$

1,265

$

(21,516

)

$

14,135

Add:

Deferred revenue fair value adjustment (a)

67

-

-

67

Depreciation and amortization

22,928

6,922

-

29,850

Non-cash compensation expense (c)

9,661

3,667

5,557

18,885

Restructuring charges and transaction costs (d)

2,863

(55

)

595

3,403

Severance (c)

(49

)

227

29

207

Accretion on contingent consideration and purchase liability (b)

62

19

-

81

Fair market value adjustment on contingent consideration liability (b)

-

(927

)

-

(927

)

Non-recurring litigation and regulatory related expenses (b)

-

1,512

-

1,512

Non-income tax expense adjustment (b)

(905

)

74

-

(831

)

Income attributable to non-controlling interest

(114

)

-

-

(114

)

Other

(63

)

(9

)

(8

)

(80

)

Adjusted EBITDA

$

68,836

$

12,695

$

(15,343

)

$

66,188

Reconciliation of Non-GAAP Financial Measures

Segment Information

(in thousands)

(unaudited)

Three months ended September 30, 2021

Envestnet Envestnet Data Wealth Nonsegment Total Solutions & Analytics

Total Revenues $ 254,734 $ 48,319 $ - $ 303,053

Deferred revenue fair 67 - - 67 value adjustment ^(a)

Adjusted revenues $ 254,801 $ 48,319 $ - $ 303,120



Revenues:

Asset-based $ 184,008 $ - $ - $ 184,008

Subscription-based 66,988 46,584 - 113,572

Total recurring revenues 250,996 46,584 - 297,580

Professional services 3,738 1,735 - 5,473 and other revenues

Total revenues 254,734 48,319 - 303,053



Operating expenses:

Cost of revenues:

Asset-based 102,298 - - 102,298

Subscription-based 1,271 6,084 - 7,355

Professional services 173 10 - 183 and other

Total cost of revenues 103,742 6,094 - 109,836

Compensation and 67,592 26,468 15,779 109,839 benefits

General and 26,086 7,570 5,737 39,393 administration

Depreciation and 22,928 6,922 - 29,850 amortization

Total operating expenses $ 220,348 $ 47,054 $ 21,516 $ 288,918



Income (loss) from $ 34,386 $ 1,265 $ (21,516 ) $ 14,135 operations

Add:

Deferred revenue fair 67 - - 67 value adjustment ^(a)

Depreciation and 22,928 6,922 - 29,850 amortization

Non-cash compensation 9,661 3,667 5,557 18,885 expense ^(c)

Restructuring chargesand transaction costs ^ 2,863 (55 ) 595 3,403 (d)

Severance ^(c) (49 ) 227 29 207

Accretion on contingentconsideration and 62 19 - 81 purchase liability ^(b)

Fair market valueadjustment on contingent - (927 ) - (927 )consideration liability^(b)

Non-recurring litigationand regulatory related - 1,512 - 1,512 expenses ^(b)

Non-income tax expense (905 ) 74 - (831 )adjustment ^(b)

Income attributable to (114 ) - - (114 )non-controlling interest

Other (63 ) (9 ) (8 ) (80 )

Adjusted EBITDA $ 68,836 $ 12,695 $ (15,343 ) $ 66,188

(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)

For the three months ended September 30, 2021, $1,548 was included within general and administration expenses and $1,855 was 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 administration expenses in the condensed consolidated statements of operations.

(c) Included within compensation and benefits in the condensed consolidated statements of operations.

For the three months ended September 30, 2021, $1,548 was included within(d) general and administration expenses and $1,855 was included within compensation and benefits in the condensed consolidated statements of operations.

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

Nine months ended September 30, 2021

Envestnet

Wealth Solutions

Envestnet Data

& Analytics

Nonsegment

Total

Total Revenues

$

721,441

$

145,455

$

-

$

866,896

Deferred revenue fair value adjustment (a)

227

-

-

227

Adjusted revenues

$

721,668

$

145,455

$

-

$

867,123

Revenues:

Asset-based

$

513,458

$

-

$

-

$

513,458

Subscription-based

197,663

138,242

-

335,905

Total recurring revenues

711,121

138,242

-

849,363

Professional services and other revenues

10,320

7,213

-

17,533

Total revenues

721,441

145,455

-

866,896

Operating expenses:

Cost of revenues:

Asset-based

281,829

-

-

281,829

Subscription-based

3,778

17,208

-

20,986

Professional services and other

280

104

-

384

Total cost of revenues

285,887

17,312

-

303,199

Compensation and benefits

195,560

77,765

42,776

316,101

General and administration

71,669

25,513

20,281

117,463

Depreciation and amortization

67,283

20,969

-

88,252

Total operating expenses

$

620,399

$

141,559

$

63,057

$

825,015

Income (loss) from operations

$

101,042

$

3,896

$

(63,057

)

$

41,881

Add:

Deferred revenue fair value adjustment (a)

227

-

-

227

Depreciation and amortization

67,283

20,969

-

88,252

Non-cash compensation expense (c)

27,080

9,691

13,536

50,307

Restructuring charges and transaction costs (d)

8,049

119

3,047

11,215

Severance (c)

4,134

3,634

2,730

10,498

Accretion on contingent consideration and purchase liability (b)

572

84

-

656

Fair market value adjustment on contingent consideration liability (b)

-

(1,067

)

-

(1,067

)

Non-recurring litigation and regulatory related expenses (b)

-

5,159

-

5,159

Non-income tax expense adjustment (b)

(1,335

)

233

-

(1,102

)

Income attributable to non-controlling interest

(554

)

-

-

(554

)

Other

41

-

-

41

Adjusted EBITDA

$

206,539

$

42,718

$

(43,744

)

$

205,513

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

Nine months ended September 30, 2021

Envestnet Envestnet Data Nonsegment Total Wealth Solutions & Analytics

Total Revenues $ 721,441 $ 145,455 $ - $ 866,896

Deferred revenue fair 227 - - 227 value adjustment ^(a)

Adjusted revenues $ 721,668 $ 145,455 $ - $ 867,123



Revenues:

Asset-based $ 513,458 $ - $ - $ 513,458

Subscription-based 197,663 138,242 - 335,905

Total recurring 711,121 138,242 - 849,363 revenues

Professional services 10,320 7,213 - 17,533 and other revenues

Total revenues 721,441 145,455 - 866,896



Operating expenses:

Cost of revenues:

Asset-based 281,829 - - 281,829

Subscription-based 3,778 17,208 - 20,986

Professional services 280 104 - 384 and other

Total cost of revenues 285,887 17,312 - 303,199

Compensation and 195,560 77,765 42,776 316,101 benefits

General and 71,669 25,513 20,281 117,463 administration

Depreciation and 67,283 20,969 - 88,252 amortization

Total operating $ 620,399 $ 141,559 $ 63,057 $ 825,015 expenses



Income (loss) from $ 101,042 $ 3,896 $ (63,057 ) $ 41,881 operations

Add:

Deferred revenue fair 227 - - 227 value adjustment ^(a)

Depreciation and 67,283 20,969 - 88,252 amortization

Non-cash compensation 27,080 9,691 13,536 50,307 expense ^(c)

Restructuring chargesand transaction costs ^ 8,049 119 3,047 11,215 (d)

Severance ^(c) 4,134 3,634 2,730 10,498

Accretion on contingentconsideration and 572 84 - 656 purchase liability ^(b)

Fair market valueadjustment oncontingent - (1,067 ) - (1,067 )consideration liability^ (b)

Non-recurringlitigation and - 5,159 - 5,159 regulatory relatedexpenses ^(b)

Non-income tax expense (1,335 ) 233 - (1,102 )adjustment ^(b)

Income attributable tonon-controlling (554 ) - - (554 )interest

Other 41 - - 41

Adjusted EBITDA $ 206,539 $ 42,718 $ (43,744 ) $ 205,513

(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)

For the nine months ended September 30, 2021, $6,037 was included within general and administration expenses and $5,178 was 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 administration expenses in the condensed consolidated statements of operations.

(c) Included within compensation and benefits in the condensed consolidated statements of operations.

For the nine months ended September 30, 2021, $6,037 was included within(d) general and administration expenses and $5,178 was 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 September 30, 2020

Envestnet

Wealth Solutions

Envestnet Data

& Analytics

Nonsegment

Total

Revenues

$

204,294

$

48,265

$

-

$

252,559

Deferred revenue fair value adjustment (a)

91

-

-

91

Adjusted revenues

$

204,385

$

48,265

$

-

$

252,650

Revenues:

Asset-based

$

137,744

$

-

$

-

$

137,744

Subscription-based

62,783

45,114

-

107,897

Total recurring revenues

200,527

45,114

-

245,641

Professional services and other revenues

3,767

3,151

-

6,918

Total revenues

204,294

48,265

-

252,559

Operating expenses:

Cost of revenues:

Asset-based

71,133

-

-

71,133

Subscription-based

1,272

6,019

-

7,291

Professional services and other

30

91

-

121

Total cost of revenues

72,435

6,110

-

78,545

Compensation and benefits

59,522

26,540

8,366

94,428

General and administration

22,248

8,308

8,423

38,979

Depreciation and amortization

20,406

8,545

-

28,951

Total operating expenses

$

174,611

$

49,503

$

16,789

$

240,903

Income (loss) from operations

$

29,683

$

(1,238

)

$

(16,789

)

$

11,656

Add:

Deferred revenue fair value adjustment (a)

91

-

-

91

Depreciation and amortization

20,406

8,545

-

28,951

Non-cash compensation expense (c)

8,685

4,458

2,709

15,852

Restructuring charges and transaction costs (d)

944

33

4,016

4,993

Severance (c)

2,154

495

66

2,715

Accretion on contingent consideration and purchase liability (b)

341

57

-

398

Fair market value adjustment on contingent consideration liability (b)

-

(74

)

-

(74

)

Non-recurring litigation and regulatory related expenses (b)

-

1,809

-

1,809

Non-income tax expense adjustment (b)

1,860

(65

)

-

1,795

Income attributable to non-controlling interest

(603

)

-

-

(603

)

Other

(2

)

-

-

(2

)

Adjusted EBITDA

$

63,559

$

14,020

$

(9,998

)

$

67,581

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

Three months ended September 30, 2020

Envestnet Envestnet Data Wealth Nonsegment Total Solutions & Analytics

Revenues $ 204,294 $ 48,265 $ - $ 252,559

Deferred revenue fair 91 - - 91 value adjustment ^(a)

Adjusted revenues $ 204,385 $ 48,265 $ - $ 252,650



Revenues:

Asset-based $ 137,744 $ - $ - $ 137,744

Subscription-based 62,783 45,114 - 107,897

Total recurring revenues 200,527 45,114 - 245,641

Professional services 3,767 3,151 - 6,918 and other revenues

Total revenues 204,294 48,265 - 252,559



Operating expenses:

Cost of revenues:

Asset-based 71,133 - - 71,133

Subscription-based 1,272 6,019 - 7,291

Professional services 30 91 - 121 and other

Total cost of revenues 72,435 6,110 - 78,545

Compensation and 59,522 26,540 8,366 94,428 benefits

General and 22,248 8,308 8,423 38,979 administration

Depreciation and 20,406 8,545 - 28,951 amortization

Total operating expenses $ 174,611 $ 49,503 $ 16,789 $ 240,903



Income (loss) from $ 29,683 $ (1,238 ) $ (16,789 ) $ 11,656 operations

Add:

Deferred revenue fair 91 - - 91 value adjustment ^(a)

Depreciation and 20,406 8,545 - 28,951 amortization

Non-cash compensation 8,685 4,458 2,709 15,852 expense ^(c)

Restructuring chargesand transaction costs ^ 944 33 4,016 4,993 (d)

Severance ^(c) 2,154 495 66 2,715

Accretion on contingentconsideration and 341 57 - 398 purchase liability ^(b)

Fair market valueadjustment on contingent - (74 ) - (74 )consideration liability^(b)

Non-recurring litigationand regulatory related - 1,809 - 1,809 expenses ^(b)

Non-income tax expense 1,860 (65 ) - 1,795 adjustment ^(b)

Income attributable to (603 ) - - (603 )non-controlling interest

Other (2 ) - - (2 )

Adjusted EBITDA $ 63,559 $ 14,020 $ (9,998 ) $ 67,581

(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)

For the three months ended September 30, 2020, $3,992 was included within general and administration expenses, $969 was included within compensation and benefits and $32 was included within other expense, net, 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 administration expenses in the condensed consolidated statements of operations.

(c) Included within compensation and benefits in the condensed consolidated statements of operations.

For the three months ended September 30, 2020, $3,992 was included within(d) general and administration expenses, $969 was included within compensation and benefits and $32 was included within other expense, net, in the condensed consolidated statements of operations.

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

Nine Months Ended September 30, 2020

Envestnet

Wealth Solutions

Envestnet Data

& Analytics

Nonsegment

Total

Revenues

$

590,399

$

144,012

$

-

$

734,411

Deferred revenue fair value adjustment (a)

607

-

-

607

Adjusted revenues

$

591,006

$

144,012

$

-

$

735,018

Revenues:

Asset-based

$

394,801

$

-

$

-

$

394,801

Subscription-based

184,516

132,911

-

317,427

Total recurring revenues

579,317

132,911

-

712,228

Professional services and other revenues

11,082

11,101

-

22,183

Total revenues

590,399

144,012

-

734,411

Operating expenses:

Cost of revenues:

Asset-based

201,600

-

-

201,600

Subscription-based

3,691

16,684

-

20,375

Professional services and other

47

305

-

352

Total cost of revenues

205,338

16,989

-

222,327

Compensation and benefits

194,906

82,455

23,062

300,423

General and administration

69,358

26,162

23,017

118,537

Depreciation and amortization

59,907

25,170

-

85,077

Total operating expenses

$

529,509

$

150,776

$

46,079

$

726,364

Income (loss) from operations

$

60,890

$

(6,764

)

$

(46,079

)

$

8,047

Add:

Deferred revenue fair value adjustment (a)

607

-

-

607

Depreciation and amortization

59,907

25,170

-

85,077

Non-cash compensation expense (c)

27,437

11,665

6,619

45,721

Restructuring charges and transaction costs (d)

5,864

489

8,108

14,461

Severance (c)

14,593

2,587

1,386

18,566

Accretion on contingent consideration and purchase liability (b)

1,087

221

-

1,308

Fair market value adjustment on contingent consideration liability (b)

-

(2,056

)

-

(2,056

)

Non-recurring litigation and regulatory related expenses (b)

-

6,029

-

6,029

Non-income tax expense adjustment (b)

1,532

(191

)

-

1,341

Income attributable to non-controlling interest

(1,103

)

-

-

(1,103

)

Other

(31

)

-

-

(31

)

Adjusted EBITDA

$

170,783

$

37,150

$

(29,966

)

$

177,967

Reconciliation of Non-GAAP Financial Measures

Segment Information (continued)

(in thousands)

(unaudited)

Nine Months Ended September 30, 2020

Envestnet Envestnet Data Nonsegment Total Wealth Solutions & Analytics

Revenues $ 590,399 $ 144,012 $ - $ 734,411

Deferred revenue fair 607 - - 607 value adjustment ^(a)

Adjusted revenues $ 591,006 $ 144,012 $ - $ 735,018



Revenues:

Asset-based $ 394,801 $ - $ - $ 394,801

Subscription-based 184,516 132,911 - 317,427

Total recurring 579,317 132,911 - 712,228 revenues

Professional services 11,082 11,101 - 22,183 and other revenues

Total revenues 590,399 144,012 - 734,411



Operating expenses:

Cost of revenues:

Asset-based 201,600 - - 201,600

Subscription-based 3,691 16,684 - 20,375

Professional services 47 305 - 352 and other

Total cost of revenues 205,338 16,989 - 222,327

Compensation and 194,906 82,455 23,062 300,423 benefits

General and 69,358 26,162 23,017 118,537 administration

Depreciation and 59,907 25,170 - 85,077 amortization

Total operating $ 529,509 $ 150,776 $ 46,079 $ 726,364 expenses



Income (loss) from $ 60,890 $ (6,764 ) $ (46,079 ) $ 8,047 operations

Add:

Deferred revenue fair 607 - - 607 value adjustment ^(a)

Depreciation and 59,907 25,170 - 85,077 amortization

Non-cash compensation 27,437 11,665 6,619 45,721 expense ^(c)

Restructuring chargesand transaction costs ^ 5,864 489 8,108 14,461 (d)

Severance ^(c) 14,593 2,587 1,386 18,566

Accretion on contingentconsideration and 1,087 221 - 1,308 purchase liability ^(b)

Fair market valueadjustment oncontingent - (2,056 ) - (2,056 )consideration liability^(b)

Non-recurringlitigation and - 6,029 - 6,029 regulatory relatedexpenses ^(b)

Non-income tax expense 1,532 (191 ) - 1,341 adjustment ^(b)

Income attributable tonon-controlling (1,103 ) - - (1,103 )interest

Other (31 ) - - (31 )

Adjusted EBITDA $ 170,783 $ 37,150 $ (29,966 ) $ 177,967

(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)

For the nine months ended September 30, 2020, $11,485 was included within general and administration expenses, $2,764 was included within compensation and benefits and $212 was included within other expense, net, 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 administration expenses in the condensed consolidated statements of operations.

(c) Included within compensation and benefits in the condensed consolidated statements of operations.

For the nine months ended September 30, 2020, $11,485 was included within(d) general and administration expenses, $2,764 was included within compensation and benefits and $212 was included within other expense, net, in the condensed consolidated statements of operations.

Envestnet, Inc.

Historical Assets, Accounts and Advisors

(in millions, except accounts and advisors)

(unaudited)

As of

September 30,

December 31,

March 31,

June 30,

September 30,

2020

2020

2021

2021

2021

(in millions, except accounts and advisors data)

Platform Assets

Assets under Management ("AUM")

$

228,905

$

263,043

$

286,039

$

315,422

$

327,279

Assets under Administration ("AUA")

375,860

405,365

408,858

426,416

431,040

Total AUM/A

604,765

668,408

694,897

741,838

758,319

Subscription

3,498,353

3,892,814

4,132,917

4,447,733

4,670,827

Total Platform Assets

$

4,103,118

$

4,561,222

$

4,827,814

$

5,189,571

$

5,429,146

Platform Accounts

AUM

1,018,817

1,073,122

1,138,183

1,209,761

1,276,066

AUA

1,318,730

1,276,975

1,192,668

1,163,991

1,193,069

Total AUM/A

2,337,547

2,350,097

2,330,851

2,373,752

2,469,135

Subscription

10,639,399

11,079,048

11,453,434

11,712,573

14,810,664

Total Platform Accounts

12,976,946

13,429,145

13,784,285

14,086,325

17,279,799

Advisors

AUM/A

41,450

41,206

41,177

41,259

41,696

Subscription

63,862

65,104

65,724

66,597

66,489

Total Advisors

105,312

106,310

106,901

107,856

108,185

The following table summarizes the changes in AUM and AUA for the three months ended September 30, 2021:

Envestnet, Inc.

Historical Assets, Accounts and Advisors

(in millions, except accounts and advisors)

(unaudited)

As of

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

2020 2020 2021 2021 2021

(in millions, except accounts and advisors data)

Platform Assets

Assets underManagement $ 228,905 $ 263,043 $ 286,039 $ 315,422 $ 327,279 ("AUM")

Assets underAdministration 375,860 405,365 408,858 426,416 431,040 ("AUA")

Total AUM/A 604,765 668,408 694,897 741,838 758,319

Subscription 3,498,353 3,892,814 4,132,917 4,447,733 4,670,827

Total Platform $ 4,103,118 $ 4,561,222 $ 4,827,814 $ 5,189,571 $ 5,429,146 Assets

Platform Accounts

AUM 1,018,817 1,073,122 1,138,183 1,209,761 1,276,066

AUA 1,318,730 1,276,975 1,192,668 1,163,991 1,193,069

Total AUM/A 2,337,547 2,350,097 2,330,851 2,373,752 2,469,135

Subscription 10,639,399 11,079,048 11,453,434 11,712,573 14,810,664

Total Platform 12,976,946 13,429,145 13,784,285 14,086,325 17,279,799 Accounts

Advisors

AUM/A 41,450 41,206 41,177 41,259 41,696

Subscription 63,862 65,104 65,724 66,597 66,489

Total Advisors 105,312 106,310 106,901 107,856 108,185

The following table summarizes the changes in AUM and AUA for the three months ended September 30, 2021:

Gross Net Market 6/30/2021 Redemptions Impact 9/30/2021 Sales Flows

(in millions, except account data)

AUM $ 315,422 $ 27,197 $ (12,703 ) $ 14,494 $ (2,637 ) $ 327,279

AUA 426,416 32,375 (22,274 ) 10,101 (5,477 ) 431,040

Total AUM/A $ 741,838 $ 59,572 $ (34,977 ) $ 24,595 $ (8,114 ) $ 758,319



Fee-Based 2,373,752 95,383 2,469,135 Accounts

The above AUM/A gross sales figures include $6.1 billion in new client conversions. The Company onboarded an additional $149.5 billion in subscription conversions during the three months ended September 30, 2021, bringing total conversions for the quarter to $155.6 billion.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211108006056/en/

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

CONTACT: Media Relations mediarelations@envestnet.com