Business Wire | Aug 6, 2020 04:05PM EDT

Envestnet Reports Second Quarter 2020 Financial Results

Aug. 06, 2020

CHICAGO--(BUSINESS WIRE)--Aug. 06, 2020--Envestnet (NYSE: ENV), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for the three and six months ended June 30, 2020.

Three months ended Six months ended

KeyFinancial June 30, % June 30, %Metrics

(in millionsexcept per 2020 2019 Change 2020 2019 Changeshare data)

GAAP:

Total $ 235.3 $ 224.4 5% $ 481.9 $ 424.1 14%revenues

Net income $ (5.5) $ 0.6 n/m $ (12.7) $ (17.7) (28)%(loss)

Net income(loss) perdilutedshare $ (0.09) $ 0.02 n/m $ (0.23) $ (0.35) (34)%attributabletoEnvestnet,Inc.



Non-GAAP:

Adjusted $ 235.4 $ 227.9 3% $ 482.4 $ 427.5 13%revenues^(1)

Adjusted net $ 173.5 $ 167.6 4% $ 351.9 $ 313.4 12%revenues^(1)

Adjusted $ 55.8 $ 43.2 29% $ 110.4 $ 77.2 43%EBITDA^(1)

Adjusted net $ 31.8 $ 24.5 30% $ 63.0 $ 43.9 44%income^(1)

Adjusted netincome per $ 0.59 $ 0.46 28% $ 1.16 $ 0.85 36%dilutedshare^(1)

n/m - not meaningful

"Envestnet continues to execute, delivering strong second quarter results, supporting our clients during these challenging times, and focusing on our strategic roadmap," said Bill Crager, Chief Executive Officer.

"We are on our way to establishing the ecosystem that can make financial wellness a reality for everyone. A new standard for personal financial services is emerging, and we are helping to drive it," concluded Mr. Crager.

Financial Results for the Second Quarter of 2020

Asset-based recurring revenues increased 2% from the second quarter of 2019, and represented 52% of total revenues for the second quarter of 2020 compared to 53% for the second quarter 2019. Subscription-based recurring revenues increased 14% from the second quarter of 2019, and represented 45% of total revenues for the second quarter of 2020 compared to 41% for the second quarter 2019. Professional services and other non-recurring revenues decreased 33% from the prior year period. Total revenues increased 5% to $235.3 million for the second quarter of 2020 from $224.4 million for the second quarter of 2019.

Total operating expenses for the second quarter of 2020 decreased 5% to $231.3 million from $244.7 million in the prior year period. Cost of revenues decreased 4% to $68.8 million for the second quarter of 2020 from $72.1 million for the prior year period. Compensation and benefits decreased 7% to $95.6 million for the second quarter of 2020 from $103.3 million for the prior year period. Compensation and benefits were 41% of total revenues for the second quarter of 2020, compared to 46% in the prior year period. General and administration expenses decreased 9% to $38.4 million for the second quarter of 2020 from $42.4 million for the prior year period. General and administrative expenses were 16% of total revenues for the second quarter of 2020, compared to 19% in the prior year period.

Income from operations was $4.0 million for the second quarter of 2020 compared to loss of $20.3 million for the second quarter of 2019. Net loss was $5.5 million for the second quarter of 2020 compared to net income of $0.6 million for the second quarter of 2019. Net loss per diluted share attributable to Envestnet, Inc. was $0.09 for the second quarter of 2020 compared to net income per diluted share attributable to Envestnet, Inc. of $0.02 for the second quarter of 2019.

Adjusted revenues(1) for the second quarter of 2020 increased 3% to $235.4 million from $227.9 million for the prior year period. Adjusted net revenues(1) for the second quarter of 2020 increased 4% to $173.5 million from $167.6 million for the prior year period. Adjusted EBITDA(1) for the second quarter of 2020 increased 29% to $55.8 million from $43.2 million for the prior year period. Adjusted net income(1) increased 30% for the second quarter of 2020 to $31.8 million from $24.5 million for the prior year period. Adjusted net income per diluted share(1) for the second quarter of 2020 increased 28% to $0.59 for the second quarter of 2020 from $0.46 in the second quarter of 2019.

Balance Sheet and Liquidity

As of June 30, 2020, the Company had $92.2 million in cash and cash equivalents and $620.0 million in outstanding debt. The outstanding debt as of June 30, 2020 included $275.0 million in borrowings under the Company's $500.0 million revolving credit facility and $345.0 million in convertible notes maturing in 2023.

Outlook

The Company provided the following outlook for the third quarter ending September 30, 2020 and full year ending December 31, 2020. This outlook is based on the market value of assets on September 30, 2020. We caution that we cannot predict the market value of our assets on any future date and, in particular, in light of recent market volatility. See "Cautionary Statement Regarding Forward-Looking Statements."

In Millions Except 3Q 2020 FY 2020Adjusted EPS

GAAP:

Revenues:

Asset-based $ 134.0 - $ 134.5

Subscription-based 104.5 - 105.0

Total recurring $ 238.5 - $ 239.5 revenues

Professionalservices and other 6.0 - 6.5 revenues

Total revenues $ 244.5 - $ 246.0 $ 976.3 - $ 979.3



Asset-based cost $ 69.5 - $ 70.0 $ 271.5 - $ 272.5 of revenues

Total cost of $ 77.0 - $ 77.5 revenues



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



Diluted shares 55.0 55.0 outstanding

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



Non-GAAP:

Adjusted revenues ^(1):

Asset-based $ 134.0 - $ 134.5

Subscription-based 104.5 - 105.0

Total recurring $ 238.5 - $ 239.5 revenues

Professionalservices and other 6.0 - 6.5 revenues

Total revenues $ 244.5 - $ 246.0 $ 977.0 - $ 980.0



Adjusted net $ 174.5 - $ 176.5 $ 704.5 - $ 708.5 revenues ^(1)



Adjusted EBITDA^ $ 56.0 - $ 57.0 $ 221.0 - $ 223.0 (1)

Adjusted netincome per diluted $ 0.59 $ 2.28 - $ 2.31 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 second quarter 2020 financial results today at 5:00 p.m. ET. The live webcast and accompanying presentation can be accessed from Envestnet's investor relations website at http://ir.envestnet.com/. A replay of the webcast will be available on the investor relations website following the call.

About Envestnet

Envestnet, Inc. (NYSE: ENV) is transforming the way financial advice and wellness are delivered. Our mission is to empower advisors and financial service providers with innovative technology, solutions, and intelligence to make financial wellness a reality for everyone. Over 103,000 advisors and more than 4,900 companies including: 16 of the 20 largest U.S. banks, 46 of the 50 largest wealth management and brokerage firms, over 500 of the largest RIAs and hundreds of FinTech companies, leverage the Envestnet platform to grow their business and client relationships.

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 net revenues" represents adjusted revenues less asset-based cost of revenues. Under GAAP, we are required to recognize as revenue certain fees paid to investment managers and other third parties needed for implementation of investment solutions included in our assets under management. Those fees also are required to be recorded as cost of revenues. This non-GAAP metric presents adjusted revenues without such fees included, as they have no impact on our profitability.

Adjusted revenues and Adjusted net revenues have limitations as financial measures, should be considered as supplemental in nature and are not meant as a substitute for revenue prepared in accordance with GAAP.

"Adjusted EBITDA" represents net income 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, 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.

See reconciliation of Non-GAAP Financial Measures on pages 9-14 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 third quarter and full year of 2020, 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 the 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 August 6, 2020 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)

June 30, December 31,

2020 2019

Assets

Current assets:

Cash and cash equivalents $ 92,244 $ 82,505

Fees receivable, net 74,871 67,815

Prepaid expenses and other current assets 38,665 32,183

Total current assets 205,780 182,503



Property and equipment, net 49,752 53,756

Internally developed software, net 78,024 60,263

Intangible assets, net 471,091 505,589

Goodwill 906,499 879,850

Operating lease right-of-use-assets, net 73,537 82,796

Other non-current assets 46,722 37,127

Total assets $ 1,831,405 $ 1,801,884



Liabilities and Equity

Current liabilities:

Accrued expenses and other liabilities $ 134,763 $ 137,944

Accounts payable 16,132 17,277

Operating lease liabilities 13,926 13,816

Contingent consideration 1,603 -

Deferred revenue 42,861 34,753

Total current liabilities 209,285 203,790



Convertible Notes due 2023 311,031 305,513

Revolving credit facility 275,000 260,000

Contingent consideration 11,422 9,045

Deferred revenue 5,231 5,754

Non-current operating lease liabilities 81,600 88,365

Deferred tax liabilities, net 27,106 29,481

Other non-current liabilities 36,993 32,360

Total liabilities 957,668 934,308



Equity:

Total stockholders' equity 875,795 869,094

Non-controlling interest (2,058) (1,518)

Total liabilities and equity $ 1,831,405 $ 1,801,884



Envestnet, Inc.Condensed Consolidated Statements of Operations(in thousands, except share and per share information)(unaudited)

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Revenues:

Asset-based $ 122,246 $ 120,070 $ 257,057 $ 229,004

Subscription-based 104,979 92,258 209,530 175,345

Total recurring 227,225 212,328 466,587 404,349 revenues

Professionalservices and other 8,088 12,117 15,265 19,762 revenues

Total revenues 235,313 224,445 481,852 424,111



Operating expenses:

Cost of revenues 68,849 72,080 143,782 133,725

Compensation and 95,565 103,286 205,995 190,003 benefits

General and 38,448 42,421 79,558 82,945 administration

Depreciation and 28,443 26,915 56,126 46,432 amortization

Total operating 231,305 244,702 485,461 453,105 expenses



Income (loss) from 4,008 (20,257) (3,609) (28,994) operations

Other expense, net (8,173) (7,512) (9,710) (13,275)

Loss before incometax provision (4,165) (27,769) (13,319) (42,269) (benefit)



Income tax 1,306 (28,382) (658) (24,614) provision (benefit)



Net income (loss) (5,471) 613 (12,661) (17,655)

Add: Net lossattributable to 547 280 401 363 non-controllinginterest

Net income (loss)attributable to $ (4,924) $ 893 $ (12,260) $ (17,292) Envestnet, Inc.



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

Basic $ (0.09) $ 0.02 $ (0.23) $ (0.35)



Diluted $ (0.09) $ 0.02 $ (0.23) $ (0.35)



Weighted averagecommon shares outstanding:

Basic 53,562,850 50,870,296 53,288,741 49,526,774



Diluted 53,562,850 52,982,688 53,288,741 49,526,774



Envestnet, Inc.Condensed Consolidated Statements of Cash Flows(in thousands)(unaudited)

Six Months Ended

June 30,

2020 2019

OPERATING ACTIVITIES:

Net loss $ (12,661) $ (17,655)

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

Depreciation and amortization 56,126 46,432

Provision for doubtful accounts 1,515 713

Deferred income taxes (1,598) (28,991)

Non-cash compensation expense 29,869 27,852

Non-cash interest expense 5,907 9,896

Accretion on contingent consideration and 910 742 purchase liability

Payments of contingent consideration - (578)

Fair market value adjustment to contingent (1,982) - consideration liability

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

Loss allocation from equity method investment 3,286 550

Impairment of right of use assets 1,426 -

Other 556 -

Changes in operating assets and liabilities, net of acquisitions:

Fees receivables, net (8,560) (536)

Prepaid expenses and other current assets (7,756) (15,507)

Other non-current assets (353) (3,241)

Accrued expenses and other liabilities (4,484) (19,060)

Accounts payable (2,130) (4,768)

Deferred revenue 7,236 3,940

Other non-current liabilities 1,946 2,602

Net cash provided by operating activities 65,023 2,391



INVESTING ACTIVITIES:

Purchases of property and equipment (4,329) (8,815)

Capitalization of internally developed software (25,703) (15,583)

Investments in private companies (12,625) (2,000)

Acquisitions of businesses, net of cash acquired (20,257) (321,571)

Net cash used in investing activities (62,914) (347,969)



FINANCING ACTIVITIES:

Proceeds from borrowings on revolving credit 45,000 175,000 facility

Payments on revolving credit facility (30,000) (30,000)

Payments of contingent consideration - (171)

Proceeds from exercise of stock options 6,683 4,914

Purchase of treasury stock for stock-based tax (12,816) (15,962) withholdings

Issuance of restricted stock units 3 3

Net cash provided by financing activities 8,870 133,784



EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,342) 166



INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND 9,637 (211,628) RESTRICTED CASH



CASH, CASH EQUIVALENTS AND RESTRICTED CASH, 82,755 289,671 BEGINNING OF PERIOD



CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END $ 92,392 $ 78,043 OF 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:

June 30, June 30,

2020 2019

Cash and cash equivalents $ 92,244 $ 77,717

Restricted cash included in prepaid expenses and other - 158 current assets

Restricted cash included in other non-current assets 148 168

Total cash, cash equivalents and restricted cash $ 92,392 $ 78,043



Reconciliation of Non-GAAP Financial Measures(in thousands)(unaudited)

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Total revenues $ 235,313 $ 224,445 $ 481,852 $ 424,111

Deferred revenue fair 77 3,414 516 3,420 value adjustment ^(a)

Adjusted revenues 235,390 227,859 482,368 427,531

Asset-based cost of (61,875) (60,293) (130,467) (114,135) revenues

Adjusted net revenues $ 173,515 $ 167,566 $ 351,901 $ 313,396



Net income (loss) $ (5,471) $ 613 $ (12,661) $ (17,655)

Add (deduct):

Deferred revenue fair 77 3,414 516 3,420 value adjustment ^(a)

Interest income ^(b) (197) (901) (588) (2,411)

Interest expense ^(b) 6,634 8,263 13,768 15,359

Accretion oncontingentconsideration and 311 502 910 742 purchase

liability ^(c)

Income tax provision 1,306 (28,382) (658) (24,614) (benefit)

Depreciation and 28,443 26,915 56,126 46,432 amortization

Non-cash compensation 13,875 14,988 27,345 27,852 expense ^(d)

Restructuring chargesand transaction costs 6,648 13,208 9,468 20,574 ^(c)

Severance ^(e) 1,869 3,280 15,851 5,760

Fair market valueadjustment oncontingent (1,982) - (1,982) - considerationliability ^(c)

Non-recurringlitigation and 3,517 - 4,220 - regulatory relatedexpenses ^(c)

Foreign currency ^(b) 463 (154) (31) (155)

Non-income taxexpense adjustment ^ (642) 908 (454) 1,118 (c)

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

Loss allocation fromequity method 1,256 347 3,286 550 investments ^(b)

(Income) lossattributable to (299) 210 (500) 241 non-controllinginterest

Adjusted EBITDA $ 55,808 $ 43,211 $ 110,386 $ 77,213

(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 2020 period, $29,869 included in compensation and benefits, and a fair value adjustment of $(2,524) included in other expense, net in the(d) condensed consolidated statements of operations. All of 2019 included in compensation and benefits 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 Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Net income (loss) $ (5,471) $ 613 $ (12,661) $ (17,655)

Income taxprovision (benefit) 1,306 (28,382) (658) (24,614) ^(a)

Loss before incometax provision (4,165) (27,769) (13,319) (42,269) (benefit)

Add (deduct):

Deferred revenuefair value 77 3,414 516 3,420 adjustment ^(b)

Accretion oncontingentconsideration and 311 502 910 742 purchase

liability ^(d)

Non-cash interest 2,983 4,646 5,945 9,262 expense ^(c)

Non-cashcompensation 13,875 14,988 27,345 27,852 expense ^(e)

Restructuringcharges and 6,648 13,208 9,468 20,574 transaction costs ^(d)

Severance ^(f) 1,869 3,280 15,851 5,760

Fair market valueadjustment oncontingent (1,982) - (1,982) - considerationliability ^(d)

Amortization ofacquired 18,746 19,278 37,504 31,806 intangibles ^(g)

Non-recurringlitigation and 3,517 - 4,220 - regulatory relatedexpenses ^(d)

Foreign currency ^ 463 (154) (31) (155) (c)

Non-income taxexpense adjustment (642) 908 (454) 1,118 ^(d)

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

Loss allocationfrom equity method 1,256 347 3,286 550 investments ^(c)

(Income) lossattributable to (299) 210 (500) 241 non-controllinginterest

Adjusted net incomebefore income tax 42,657 32,858 84,529 58,901 effect

Income tax effect ^ (10,884) (8,388) (21,554) (15,020) (h)

Adjusted net income $ 31,773 $ 24,470 $ 62,975 $ 43,881



Basic number ofweighted-average 53,562,850 50,870,296 53,288,741 49,526,774 shares outstanding

Effect of dilutive shares:

Options to purchase 374,070 1,164,246 519,886 1,185,480common stock

Unvested restricted 322,140 662,853 475,990 666,116stock units

Convertible notes - 261,075 11,719 12,532

Warrants - 24,218 22,714 -

Diluted number ofweighted-average 54,259,060 52,982,688 54,319,050 51,390,902 shares outstanding



Adjusted net income $ 0.59 $ 0.46 $ 1.16 $ 0.85 per share - diluted

For the three months ended June 30, 2020 and 2019, the effective tax rate(a) computed in accordance with GAAP equaled (31.4)% and 102.2%, respectively. For the six months ended June 30, 2020 and 2019, the effective tax rate computed in accordance with GAAP equaled 4.9% and 58.2%, respectively.

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

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

(d) Included within general and administrative expenses in the condensed consolidated statements of operations.

For the 2020 period, $29,869 included in compensation and benefits, and a fair value adjustment of $(2,524) included in other expense, net in the(e) condensed consolidated statements of operations. All of 2019 included in compensation and benefits 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 and six months ended June 30, 2020 and 2019.



Reconciliation of Non-GAAP Financial MeasuresSegment Information(in thousands)(unaudited)





Three months ended June 30, 2020

Envestnet Envestnet Wealth Data & Nonsegment Total Solutions Analytics

Total Revenues $ 187,685 $ 47,628 $ - $ 235,313

Deferred revenue fair 77 - - 77 value adjustment ^(a)

Adjusted revenues 187,762 47,628 - 235,390

Less: Asset-based cost (61,875) - - (61,875) of revenues

Adjusted net revenues $ 125,887 $ 47,628 $ - $ 173,515



Revenues:

Asset-based $ 122,246 $ - $ - $ 122,246

Subscription-based 61,410 43,569 - 104,979

Total recurring 183,656 43,569 - 227,225 revenues

Professional services 4,029 4,059 - 8,088 and other revenues

Total revenues 187,685 47,628 - 235,313



Operating expenses:

Cost of revenues:

Asset-based 61,875 - - 61,875

Subscription-based 1,227 5,580 - 6,807

Professional services 9 158 - 167 and other

Total cost of revenues 63,111 5,738 - 68,849

Compensation and 62,796 25,802 6,967 95,565 benefits

General and 21,830 8,667 7,951 38,448 administration

Depreciation and 20,081 8,362 - 28,443 amortization

Total operating $ 167,818 $ 48,569 $ 14,918 $ 231,305 expenses



Income (loss) from $ 19,867 $ (941) $ (14,918) $ 4,008 operations

Add:

Deferred revenue fair 77 - - 77 value adjustment ^(a)

Accretion on contingentconsideration and 373 (62) - 311 purchase liability ^(b)

Depreciation and 20,081 8,362 - 28,443 amortization

Non-cash compensation 9,055 2,981 1,839 13,875 expense ^(c)

Restructuring chargesand transaction costs ^ 3,731 271 2,646 6,648 (b)

Non-income tax expense (578) (64) - (642) adjustment ^(b)

Severance ^(c) 1,437 432 - 1,869

Fair market valueadjustment oncontingent - (1,982) - (1,982) consideration liability^(b)

Non-recurringlitigation and - 3,517 - 3,517 regulatory relatedexpenses ^(b)

Income attributable tonon-controlling (299) - - (299) interest

Other (17) - - (17)

Adjusted EBITDA $ 53,727 $ 12,514 $ (10,433) $ 55,808

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

Included within general and administrative expenses in the condensed(b) consolidated statements of operations.

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



Reconciliation of Non-GAAP Financial MeasuresSegment Information (continued)(in thousands)(unaudited)





Six months ended June 30, 2020

Envestnet Envestnet Wealth Data & Nonsegment Total Solutions Analytics

Total Revenues $ 386,105 $ 95,747 $ - $ 481,852

Deferred revenue fair value 516 - - 516 adjustment ^(a)

Adjusted revenues 386,621 95,747 - 482,368

Less: Asset-based cost of (130,467) - - (130,467) revenues

Adjusted net revenues $ 256,154 $ 95,747 $ - $ 351,901



Revenues:

Asset-based $ 257,057 $ - $ - $ 257,057

Subscription-based 121,733 87,797 - 209,530

Total recurring revenues 378,790 87,797 - 466,587

Professional services and 7,315 7,950 - 15,265 other revenues

Total revenues 386,105 95,747 - 481,852



Operating expenses:

Cost of revenues:

Asset-based 130,467 - - 130,467

Subscription-based 2,419 10,665 - 13,084

Professional services and 17 214 - 231 other

Total cost of revenues 132,903 10,879 - 143,782

Compensation and benefits 135,384 55,915 14,696 205,995

General and administration 47,110 17,854 14,594 79,558

Depreciation and 39,501 16,625 - 56,126 amortization

Total operating expenses $ 354,898 $ 101,273 $ 29,290 $ 485,461



Income (loss) from $ 31,207 $ (5,526) $ (29,290) $ (3,609) operations

Add:

Deferred revenue fair value 516 - - 516 adjustment ^(a)

Accretion on contingentconsideration and purchase 746 164 - 910 liability ^(b)

Depreciation and 39,501 16,625 - 56,126 amortization

Non-cash compensation 18,752 7,207 3,910 29,869 expense ^(c)

Restructuring charges and 4,920 456 4,092 9,468 transaction costs ^(b)

Non-income tax expense (328) (126) - (454) adjustment ^(b)

Severance ^(c) 12,439 2,092 1,320 15,851

Fair market value adjustmenton contingent consideration - (1,982) - (1,982) liability^ (b)

Non-recurring litigation andregulatory related expenses - 4,220 - 4,220 ^(b)

Income attributable to (500) - - (500) non-controlling interest

Other (29) - - (29)

Adjusted EBITDA $ 107,224 $ 23,130 $ (19,968) $ 110,386

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

Included within general and administrative expenses in the condensed(b) consolidated statements of operations.

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



Reconciliation of Non-GAAP Financial MeasuresSegment Information (continued)(in thousands)(unaudited)

Three months ended June 30, 2019

Envestnet Envestnet Wealth Data Nonsegment Total Solutions & Analytics

Revenues $ 176,890 $ 47,555 $ - $ 224,445

Deferred revenue fair 3,414 - - 3,414 value adjustment ^(a)

Adjusted revenues 180,304 47,555 - 227,859

Less: Asset-based (60,293) - - (60,293) cost of revenues

Adjusted net revenues $ 120,011 $ 47,555 $ - $ 167,566



Revenues:

Asset-based $ 120,070 $ - $ - $ 120,070

Subscription-based 50,078 42,180 - 92,258

Total recurring 170,148 42,180 - 212,328 revenues

Professional services 6,742 5,375 - 12,117 and other revenues

Total revenues 176,890 47,555 - 224,445



Operating expenses:

Cost of revenues:

Asset-based 60,293 - - 60,293

Subscription-based 1,115 5,582 - 6,697

Professional services 4,842 248 - 5,090 and other

Total cost of 66,250 5,830 - 72,080 revenues

Compensation and 56,219 31,593 15,474 103,286 benefits

General and 25,666 8,553 8,202 42,421 administration

Depreciation and 16,376 10,539 - 26,915 amortization

Total operating $ 164,511 $ 56,515 $ 23,676 $ 244,702 expenses



Income (loss) from $ 12,379 $ (8,960) $ (23,676) $ (20,257) operations

Add:

Deferred revenue fair 3,414 - - 3,414 value adjustment ^(a)

Accretion oncontingentconsideration and 502 - - 502 purchase liability ^(b)

Depreciation and 16,376 10,539 - 26,915 amortization

Non-cash compensation 8,592 3,767 2,629 14,988 expense ^(c)

Restructuring chargesand transaction costs 794 (196) 12,610 13,208 ^(b)

Non-income taxexpense adjustment ^ 908 - - 908 (b)

Severance ^(c) 818 2,448 14 3,280

Loss attributable tonon-controlling 210 - - 210 interest

Other 43 - - 43

Adjusted EBITDA $ 44,036 $ 7,598 $ (8,423) $ 43,211

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

Included within general and administrative expenses in the condensed(b) consolidated statements of operations.

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



Reconciliation of Non-GAAP Financial MeasuresSegment Information (continued)(in thousands)(unaudited)

Six Months Ended June 30, 2019

Envestnet Envestnet Wealth Data & Nonsegment Total Solutions Analytics

Revenues $ 329,595 $ 94,516 $ - $ 424,111

Deferred revenuefair value 3,420 - - 3,420 adjustment ^(a)

Adjusted revenues 333,015 94,516 - 427,531

Less: Asset-based (114,135) - - (114,135) cost of revenues

Adjusted net $ 218,880 $ 94,516 $ - $ 313,396 revenues



Revenues:

Asset-based $ 229,004 $ - $ - $ 229,004

Subscription-based 91,104 84,241 - 175,345

Total recurring 320,108 84,241 - 404,349 revenues

Professionalservices and other 9,487 10,275 - 19,762 revenues

Total revenues 329,595 94,516 - 424,111



Operating expenses:

Cost of revenues:

Asset-based 114,135 - - 114,135

Subscription-based 3,123 11,251 - 14,374

Professional 4,847 369 - 5,216 services and other

Total cost of 122,105 11,620 - 133,725 revenues

Compensation and 104,774 62,957 22,272 190,003 benefits

General and 45,850 18,038 19,057 82,945 administration

Depreciation and 27,643 18,789 - 46,432 amortization

Total operating $ 300,372 $ 111,404 $ 41,329 $ 453,105 expenses



Income (loss) from $ 29,223 $ (16,888) $ (41,329) $ (28,994) operations

Add:

Deferred revenuefair value 3,420 - - 3,420 adjustment ^(a)

Accretion oncontingentconsideration and 742 - - 742 purchase liability ^(b)

Depreciation and 27,643 18,789 - 46,432 amortization

Non-cashcompensation expense 14,269 7,955 5,628 27,852 ^(c)

Restructuringcharges and 1,056 769 18,749 20,574 transaction costs ^(b)

Non-income taxexpense adjustment ^ 1,108 10 - 1,118 (b)

Severance ^(c) 1,168 4,496 96 5,760

Loss attributable tonon-controlling 241 - - 241 interest

Other 65 1 2 68

Adjusted EBITDA $ 78,935 $ 15,132 $ (16,854) $ 77,213

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

Included within general and administrative expenses in the condensed(b) consolidated statements of operations.

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



Envestnet, Inc.Historical Assets, Accounts and Advisors(in millions, except accounts and advisors)(unaudited)

As of

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

2019 2019 2019 2020 2020

(in millions, except accounts and advisors data)

Platform Assets

Assets underManagement $ 182,143 $ 188,739 $ 207,083 $ 185,065 $ 215,994 ("AUM")

Assets underAdministration 330,226 316,742 343,505 312,472 344,957 ("AUA")

Total AUM/A 512,369 505,481 550,588 497,537 560,951

Subscription 2,835,780 2,947,582 3,205,281 2,875,394 3,247,400

Total Platform $ 3,348,149 $ 3,453,063 $ 3,755,869 $ 3,372,931 $ 3,808,351 Assets

Platform Accounts

AUM 907,034 934,811 935,039 970,896 1,007,386

AUA 1,196,114 1,136,430 1,193,882 1,254,856 1,252,247

Total AUM/A 2,103,148 2,071,241 2,128,921 2,225,752 2,259,633

Subscription 9,492,653 9,692,714 9,793,175 10,090,172 10,003,156

Total Platform 11,595,801 11,763,955 11,922,096 12,315,924 12,262,789 Accounts

Advisors

AUM/A 39,727 39,735 40,563 40,971 41,206

Subscription 59,292 60,319 61,180 62,077 62,404

Total Advisors 99,019 100,054 101,743 103,048 103,610



The following table summarizes the changes in AUM and AUA for the three months ended June 30, 2020:

3/31/2020 Gross Redemptions Net Market 6/30/2020 Sales Flows Impact

(in millions except account data)

AUM $ 185,065 $ 16,843 $ (9,860) $ 6,983 $ 23,946 $ 215,994

AUA 312,472 16,526 (23,025) (6,499) 38,984 344,957

Total AUM/A $ 497,537 $ 33,369 $ (32,885) $ 484 $ 62,930 $ 560,951



Fee-Based 2,225,752 33,881 2,259,633 Accounts

The above AUM/A gross sales figures include $1.6 billion in new client conversions. The Company onboarded an additional $24.1 billion in subscription conversions during the three months ended June 30, 2020, bringing total conversions for the quarter to $25.7 billion.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200806005971/en/

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