Envestnet Reports Fourth Quarter 2021 Financial Results
businesswire.com

CHICAGO -- Envestnet (NYSE: ENV), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for its quarter and year ended December 31, 2021.

“Envestnet continues to invest and innovate the capabilities that enable our clients to help more and more people achieve a connected, intelligent financial life. We are executing on our roadmap and focused on driving accelerated financial results for shareholders”

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Three Months Ended

 

 

 

Year Ended

 

 

Key Financial Metrics

 

December 31,

 

%

 

December 31,

 

%

(in millions, except per share data)

 

2021

 

2020

 

Change

 

2021

 

2020

 

Change

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

319.6

 

 

$

263.8

 

21

%

 

$

1,186.5

 

$

998.2

 

 

19

%

Net income (loss)

 

$

(5.3

)

 

$

7.7

 

n/m

 

 

$

12.7

 

$

(2.6

)

 

n/m

 

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

 

$

(0.09

)

 

$

0.13

 

n/m

 

 

$

0.24

 

$

(0.06

)

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenues(1)

 

$

319.7

 

 

$

263.9

 

21

%

 

$

1,186.8

 

$

998.9

 

 

19

%

Adjusted EBITDA(1)

 

$

56.2

 

 

$

65.0

 

(14

)%

 

$

261.7

 

$

242.9

 

 

8

%

Adjusted net income(1)

 

$

32.7

 

 

$

38.3

 

(15

)%

 

$

158.0

 

$

141.5

 

 

12

%

Adjusted net income per diluted share(1)

 

$

0.50

 

 

$

0.69

 

(28

)%

 

$

2.42

 

$

2.57

 

 

(6

)%

n/m - not meaningful

                       

“Envestnet delivered strong financial results during the fourth quarter and full year of 2021, building significant momentum for the year ahead,” said Bill Crager, Chief Executive Officer.

“Envestnet continues to invest and innovate the capabilities that enable our clients to help more and more people achieve a connected, intelligent financial life. We are executing on our roadmap and focused on driving accelerated financial results for shareholders,” remarked Mr. Crager.

Financial Results for the Fourth Quarter of 2021 Compared to the Fourth Quarter of 2020:

Total revenues increased 21% to $319.6 million for the fourth quarter of 2021 from $263.8 million for the fourth quarter of 2020. Asset-based recurring revenues increased 34% from the prior year period, and represented 61% of total revenues for the fourth quarter of 2021, compared to 55% of total revenues for the same period in 2020. Subscription-based recurring revenues increased 8% from the prior year period, and represented 37% of total revenues for the fourth quarter of 2021, compared to 41% of total revenues for the same period in 2020. Professional services and other non-recurring revenues decreased 35% from the prior year period.

Total operating expenses for the fourth quarter of 2021 increased 27% to $321.0 million from $252.4 million in the prior year period. Cost of revenues increased 44% to $120.5 million for the fourth quarter of 2021 from $83.6 million for the fourth quarter of 2020. Compensation and benefits increased 18% to $116.7 million for the fourth quarter of 2021 from $98.5 million for the prior year period. Compensation and benefits were 37% of total revenues for the fourth quarter of 2021, consistent with the fourth quarter of 2020. General and administration expenses increased 30% to $54.2 million for the fourth quarter of 2021 from $41.7 million for the prior year period. General and administration expenses were 17% of total revenues for the fourth quarter of 2021, compared to 16% in the prior year period.

Loss from operations was $1.3 million for the fourth quarter of 2021 compared to income from operations of $11.4 million for the fourth quarter of 2020. Net loss attributable to Envestnet, Inc. was $5.1 million, or $0.09 per diluted share, for the fourth quarter of 2021 compared to net income of $7.2 million, or $0.13 per diluted share, for the fourth quarter of 2020.

Adjusted revenues(1) for the fourth quarter of 2021 increased 21% to $319.7 million from $263.9 million for the prior year period. Adjusted EBITDA(1) for the fourth quarter of 2021 decreased 14% to $56.2 million from $65.0 million for the prior year period. Adjusted Net Income(1) for the fourth quarter of 2021 decreased 15% to $32.7 million from $38.3 million for the prior year period. Adjusted Net Income per Diluted Share(1) for the fourth quarter of 2021 was $0.50, compared to $0.69 in the fourth quarter of 2020.

Financial Results for the Full Year of 2021 Compared to the Full Year of 2020:

Total revenues increased 19% to $1.2 billion for the year ended December 31, 2021 from $998.2 million for the year ended December 31, 2020. Asset-based recurring revenues increased 31% from the prior year period, and represented 60% of total revenues for the year ended December 31, 2021 compared to 54% for the year ended December 31, 2020. Subscription-based revenues increased 6% from the prior year period, and represented 38% of total revenues for the year ended December 31, 2021 compared to 43% of total revenues for the same period in 2020. Professional services and other non-recurring revenues decreased 25% from the prior year period.

Total operating expenses for the year ended December 31, 2021 increased 17% to $1.1 billion from $978.8 million in the prior year period. Cost of revenues increased 39% to $423.7 million for the year ended December 31, 2021 from $305.9 million for the year ended December 31, 2020. Compensation and benefits increased 8% to $432.8 million for the year ended December 31, 2021 from $399.0 million for the prior year period. Compensation and benefits were 36% of total revenues for the year ended December 31, 2021, compared to 40% in the prior year period. General and administration expenses increased 7% to $171.7 million for the year ended December 31, 2021 from $160.2 million for the prior year period. General and administration expenses were 14% of total revenues for the year ended December 31, 2021, compared to 16% in the prior year period.

Income from operations was $40.5 million for the year ended December 31, 2021 compared to income from operations of $19.4 million for the year ended December 31, 2020. Net income attributable to Envestnet, Inc. was $13.3 million, or $0.24 per diluted share, for the year ended December 31, 2021 compared to net loss of $3.1 million, or $0.06 per diluted share, for the year ended December 31, 2020.

Adjusted revenues(1) for the year ended December 31, 2021 increased 19% to $1.2 billion from $998.9 million for the prior year period. Adjusted EBITDA(1) for the year ended December 31, 2021 increased 8% to $261.7 million from $242.9 million for the prior year period. Adjusted Net Income(1) increased 12% for the year ended December 31, 2021 to $158.0 million from $141.5 million for the prior year period. Adjusted Net Income per Diluted Share(1) for the year ended December 31, 2021 decreased 6% to $2.42 from $2.57 in the year ended December 31, 2020.

Outlook

Envestnet provided the following outlook for the first quarter ending March 31, 2022 and full year ending December 31, 2022. This outlook is based on the market value of assets on December 31, 2021. We caution that we cannot predict the market value of our assets on any future date. See “Cautionary Statement Regarding Forward-Looking Statements.”

Highlights:

  • Envestnet reported full-year adjusted revenues of $1.2 billion, a 19% year-over-year increase from 2020.
  • Adjusted EBITDA rose by 8% in 2021 to $261.7 million and Adjusted Net Income per Diluted Share was $2.42.

In Millions Except Adjusted EPS

 

1Q 2022

 

FY 2022

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based

 

$204.5

 

-

 

$206.0

 

 

 

 

 

 

Subscription-based

 

$114.0

 

-

 

$115.0

 

 

 

 

 

 

Total recurring revenues

 

$318.5

 

-

 

$321.0

 

 

 

 

 

 

Professional services and other revenues

 

$3.5

 

-

 

$4.0

 

 

 

 

 

 

Total revenues

 

$322.0

 

-

 

$325.0

 

$1,360.0

 

-

 

$1,385.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based cost of revenues

 

$116.0

 

-

 

$117.0

 

 

 

 

 

 

Total cost of revenues

 

$124.5

 

-

 

$125.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

(a)

 

-

 

(a)

 

(a)

 

-

 

(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

 

 

65.9

 

 

 

 

 

66.5

 

 

Net Income per diluted share

 

(a)

 

-

 

(a)

 

(a)

 

-

 

(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenues(1):

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based

 

$204.5

 

-

 

$206.0

 

 

 

 

 

 

Subscription-based

 

$114.0

 

-

 

$115.0

 

 

 

 

 

 

Total recurring revenues

 

$318.5

 

-

 

$321.0

 

 

 

 

 

 

Professional services and other revenues

 

$3.5

 

-

 

$4.0

 

 

 

 

 

 

Total revenues

 

$322.0

 

-

 

$325.0

 

$1,360.0

 

-

 

$1,385.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$52.5

 

-

 

$54.5

 

$270.0

 

-

 

$280.0

Adjusted net income per diluted share(1)

 

$0.44

 

 

 

$0.45

 

$2.30

 

-

 

$2.40

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Conference Call

Envestnet will host a conference call to discuss fourth quarter 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. Over 108,000 advisors and more than 6,000 companies including: 18 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, fair market value adjustment on investment in private company, litigation and regulatory related expenses, foreign currency, gain on settlement of liability, gain on insurance reimbursement, non-income tax expense adjustment, gain on acquisition of equity method investment, gain on sale of interest in private company, income or loss allocations from equity method investments and (income) loss attributable to non-controlling interest.

“Adjusted net income” represents net income before deferred revenue fair value adjustment, accretion on contingent consideration and purchase liability, non-cash interest expense, cash interest on our convertible notes (subsequent to the adoption of ASU 2020-06 on January 1, 2021), non-cash compensation expense, restructuring charges and transaction costs, severance, amortization of acquired intangibles and fair value adjustment to property and equipment, net, fair market value adjustment on contingent consideration liability, fair market value adjustment to investment in private company, litigation and regulatory related expenses, foreign currency, gain on settlement of liability, gain on insurance reimbursement, non-income tax expense adjustment, gain on acquisition of equity method investment, gain on sale of interest in private company, income or loss allocations from equity method investments and (income) loss attributable to non-controlling interest. Reconciling items are presented gross of tax, and a normalized tax rate is applied to the total of all reconciling items to arrive at adjusted net income. The normalized tax rate is based solely on the estimated blended statutory income tax rates in the jurisdictions in which we operate. We monitor the normalized tax rate based on events or trends that could materially impact the rate, including tax legislation changes and changes in the geographic mix of our operations.

“Adjusted net income per diluted share” represents adjusted net income attributable to common stockholders divided by the diluted number of weighted-average shares outstanding. Beginning January 1, 2021, the dilutive effect of our Convertible Notes are calculated using the if-converted method in accordance with the adoption of ASU 2020-06 (See Part I, “Note 2—Basis of Presentation”). 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 reconciliation of Non-GAAP Financial Measures on pages 11-17 of this press release. Reconciliations are not provided for guidance on such measures as the Company is unable to predict the amounts to be adjusted, such as the GAAP tax provision. The Company’s Non-GAAP Financial Measures should not be viewed as a substitute for revenues, net income (loss) or net income (loss) per share determined in accordance with GAAP.

Cautionary Statement Regarding Forward-Looking Statements

The forward-looking statements made in this press release and its attachments concerning, among other things, Envestnet, Inc.’s expected financial performance and outlook for the first quarter and full year of 2022, 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 may be unknown; the concentration of our revenues from the delivery of our solutions and services to clients in the financial services industry; our reliance on a limited number of clients for a material portion of our revenue; the renegotiation of fees by our clients; changes in the estimates of fair value of reporting units or of long-lived assets; the amount of our debt and our ability to service our debt; limitations on our ability to access information from third parties or charges for accessing such information; the targeting of some of our sales efforts at large financial institutions and large financial technology ("FinTech") companies which prolongs sales cycles, requires substantial upfront sales costs and results in less predictability in completing some of our sales; changes in investing patterns on the assets on which we derive revenue and the freedom of investors to redeem or withdraw investments generally at any time; the impact of fluctuations in market condition and interest rates on the demand for our products and services and the value of assets under management or administration; our ability to keep up with rapid technological change, evolving industry standards or changing requirements of clients; risks associated with our international operations; the competitiveness of our solutions and services as compared to those of others; liabilities associated with potential, perceived or actual breaches of fiduciary duties and/or conflicts of interest; harm to our reputation; our ability to successfully identify potential acquisition candidates, complete acquisitions and successfully integrate acquired companies; our ability to successfully execute the conversion of clients’ assets from their technology platform to our technology platforms in a timely and accurate manner; the failure to protect our intellectual property rights; our ability to introduce new solutions and services and enhancements; our ability to maintain the security and integrity of our systems and facilities and to maintain the privacy of personal information and potential liabilities for data security breaches; the effect of privacy laws and regulations, industry standards and contractual obligations and changes to these laws, regulations, standards and obligations on how we operate our business and the negative effects of failure to comply with these requirements; regulatory compliance failures; failure by our customers to obtain proper permissions or waivers for our use of disclosure of information; adverse judicial or regulatory proceedings against us; failure of our solutions, services or systems, or those of third parties on which we rely, to work properly; potential liability for use of inaccurate information by third parties provided by us; the occurrence of a deemed “change of control”; the uncertainty of the application and interpretation of certain tax laws; issuances of additional shares of common stock or issuances of shares of preferred stock or convertible securities on our existing stockholders; general economic conditions, political and regulatory conditions; global events, natural disasters, environmental disasters, terrorist attacks and pandemics, including their impact on the economy and trading markets; and management’s response to these factors. More information regarding these and other risks, uncertainties and factors is contained in our filings with the Securities and Exchange Commission (“SEC”) which are available on the SEC’s website at www.sec.gov or our Investor Relations website at http://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 February 24, 2022 and, unless required by law, we undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this press release or to report the occurrence of unanticipated events.

Envestnet, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

         

 

 

December 31,

 

December 31,

 

 

2021

 

2020

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

429,279

 

$

384,565

 

Fees receivable, net

 

 

95,291

 

 

80,064

 

Prepaid expenses and other current assets

 

 

42,706

 

 

40,570

 

Total current assets

 

 

567,276

 

 

505,199

 

 

 

 

 

 

Property and equipment, net

 

 

50,215

 

 

47,969

 

Internally developed software, net

 

 

133,659

 

 

96,501

 

Intangible assets, net

 

 

400,396

 

 

435,041

 

Goodwill

 

 

925,154

 

 

906,773

 

Operating lease right-of-use assets, net

 

 

90,714

 

 

105,249

 

Other non-current assets

 

 

73,768

 

 

47,558

 

Total assets

 

$

2,241,182

 

$

2,144,290

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accrued expenses and other liabilities

 

$

224,416

 

$

158,548

 

Accounts payable

 

 

19,092

 

 

18,003

 

Operating lease liabilities

 

 

10,999

 

 

13,649

 

Contingent consideration

 

 

743

 

 

11,251

 

Deferred revenue

 

 

33,473

 

 

34,918

 

Total current liabilities

 

 

288,723

 

 

236,369

 

 

 

 

 

 

Long-term debt

 

 

848,862

 

 

756,503

 

Non-current operating lease liabilities

 

 

105,920

 

 

112,182

 

Deferred tax liabilities, net

 

 

21,021

 

 

34,740

 

Other non-current liabilities

 

 

17,114

 

 

28,678

 

Total liabilities

 

 

1,281,640

 

 

1,168,472

 

 

 

 

 

 

Equity:

 

 

 

 

Total stockholders’ equity

 

 

957,089

 

 

976,337

 

Non-controlling interest

 

 

2,453

 

 

(519

)

Total liabilities and equity

 

$

2,241,182

 

$

2,144,290

 

Envestnet, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share information)

(unaudited)

         

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2021

 

2020

 

2021

 

2020

Revenues:

 

 

 

 

 

 

 

 

Asset-based

 

$

195,918

 

 

$

146,146

 

 

$

709,376

 

 

$

540,947

 

Subscription-based

 

 

118,084

 

 

 

109,080

 

 

 

453,989

 

 

 

426,507

 

Total recurring revenues

 

 

314,002

 

 

 

255,226

 

 

 

1,163,365

 

 

 

967,454

 

Professional services and other revenues

 

 

5,619

 

 

 

8,593

 

 

 

23,152

 

 

 

30,776

 

Total revenues

 

 

319,621

 

 

 

263,819

 

 

 

1,186,517

 

 

 

998,230

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenues

 

 

120,524

 

 

 

83,602

 

 

 

423,723

 

 

 

305,929

 

Compensation and benefits

 

 

116,728

 

 

 

98,547

 

 

 

432,829

 

 

 

398,970

 

General and administration

 

 

54,194

 

 

 

41,692

 

 

 

171,657

 

 

 

160,229

 

Depreciation and amortization

 

 

29,515

 

 

 

28,584

 

 

 

117,767

 

 

 

113,661

 

Total operating expenses

 

 

320,961

 

 

 

252,425

 

 

 

1,145,976

 

 

 

978,789

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

(1,340

)

 

 

11,394

 

 

 

40,541

 

 

 

19,441

 

Other expense, net

 

 

(5,377

)

 

 

(8,940

)

 

 

(20,180

)

 

 

(27,486

)

Income (loss) before income tax provision (benefit)

 

 

(6,717

)

 

 

2,454

 

 

 

20,361

 

 

 

(8,045

)

 

 

 

 

 

 

 

 

 

Income tax provision (benefit)

 

 

(1,407

)

 

 

(5,240

)

 

 

7,667

 

 

 

(5,401

)

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

(5,310

)

 

 

7,694

 

 

 

12,694

 

 

 

(2,644

)

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

 

 

201

 

 

 

(454

)

 

 

602

 

 

 

(466

)

Net income (loss) attributable to Envestnet, Inc.

 

$

(5,109

)

 

$

7,240

 

 

$

13,296

 

 

$

(3,110

)

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Basic

 

$

(0.09

)

 

$

0.13

 

 

$

0.24

 

 

$

(0.06

)

 

 

 

 

 

 

 

 

 

Diluted

 

$

(0.09

)

 

$

0.13

 

 

$

0.24

 

 

$

(0.06

)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

54,678,195

 

 

 

53,960,769

 

 

 

54,470,975

 

 

 

53,589,232

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

54,678,195

 

 

 

55,733,419

 

 

 

55,384,096

 

 

 

53,589,232

 

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

     

 

 

Year Ended

 

 

December 31,

 

 

2021

 

2020

OPERATING ACTIVITIES:

 

 

 

 

Net income (loss)

 

$

12,694

 

 

$

(2,644

)

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

 

 

 

 

Depreciation and amortization

 

 

117,767

 

 

 

113,661

 

Provision for doubtful accounts

 

 

1,598

 

 

 

2,817

 

Deferred income taxes

 

 

(320

)

 

 

(1,884

)

Release of uncertain tax positions

 

 

 

 

 

(7,101

)

Non-cash compensation expense

 

 

68,020

 

 

 

59,637

 

Non-cash interest expense

 

 

5,799

 

 

 

18,515

 

Accretion on contingent consideration and purchase liability

 

 

730

 

 

 

1,688

 

Payments of contingent consideration

 

 

(2,360

)

 

 

 

Fair market value adjustment to contingent consideration liability

 

 

(1,067

)

 

 

(3,105

)

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

 

 

7,093

 

 

 

5,399

 

Impairment of right of use assets

 

 

1,537

 

 

 

2,661

 

Other

 

 

465

 

 

 

(729

)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

Fees receivable, net

 

 

(16,731

)

 

 

(15,055

)

Prepaid expenses and other current assets

 

 

399

 

 

 

(9,666

)

Other non-current assets

 

 

2,741

 

 

 

(1,963

)

Accrued expenses and other liabilities

 

 

53,265

 

 

 

22,109

 

Accounts payable

 

 

1,290

 

 

 

(187

)

Deferred revenue

 

 

(2,080

)

 

 

(4,125

)

Other non-current liabilities

 

 

1,701

 

 

 

(5,962

)

Net cash provided by operating activities

 

 

250,577

 

 

 

169,836

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

Purchases of property and equipment

 

 

(23,731

)

 

 

(12,088

)

Capitalization of internally developed software

 

 

(65,170

)

 

 

(54,908

)

Investments in private companies

 

 

(25,926

)

 

 

(15,640

)

Acquisitions of businesses, net of cash acquired

 

 

(32,794

)

 

 

(20,257

)

Acquisition of proprietary technology

 

 

(25,517

)

 

 

 

Advance for technology solutions

 

 

(3,000

)

 

 

 

Other

 

 

 

 

 

2,897

 

Net cash used in investing activities

 

 

(176,138

)

 

 

(99,996

)

Envestnet, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(in thousands)

(unaudited)

     

 

 

Year Ended

 

 

December 31,

 

 

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 contribution - non-controlling interest

 

 

3,201

 

 

 

606

 

Payments of deferred consideration on prior acquisitions

 

 

 

 

 

(1,879

)

Payments of contingent consideration

 

 

(9,276

)

 

 

 

Proceeds from exercise of stock options

 

 

2,090

 

 

 

10,760

 

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

 

 

(20,529

)

 

 

(19,501

)

Share repurchases

 

 

(4,001

)

 

 

 

Other

 

 

(655

)

 

 

4

 

Net cash provided by (used in) financing activities

 

 

(29,170

)

 

 

232,950

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

 

(555

)

 

 

(831

)

 

 

 

 

 

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

 

 

44,714

 

 

 

301,959

 

 

 

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD

 

 

384,714

 

 

 

82,755

 

 

 

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

429,428

 

 

$

384,714

 

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

 

 

December 31,

 

 

2021

 

2020

Cash and cash equivalents

 

$

429,279

 

$

384,565

Restricted cash included in prepaid expenses and other current assets

 

 

149

 

 

Restricted cash included in other non-current assets

 

 

 

 

149

Total cash, cash equivalents and restricted cash

 

$

429,428

 

$

384,714

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands)

(unaudited)

         

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2021

 

2020

 

2021

 

2020

Total revenues

 

$

319,621

 

 

$

263,819

 

 

$

1,186,517

 

 

$

998,230

 

Deferred revenue fair value adjustment (a)

 

 

57

 

 

 

85

 

 

 

284

 

 

 

692

 

Adjusted revenues

 

$

319,678

 

 

$

263,904

 

 

$

1,186,801

 

 

$

998,922

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(5,310

)

 

$

7,694

 

 

$

12,694

 

 

$

(2,644

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

57

 

 

 

85

 

 

 

284

 

 

 

692

 

Interest income (b)

 

 

(258

)

 

 

(262

)

 

 

(827

)

 

 

(1,112

)

Interest expense (b)

 

 

4,249

 

 

 

9,597

 

 

 

16,931

 

 

 

31,504

 

Income tax provision (benefit)

 

 

(1,407

)

 

 

(5,240

)

 

 

7,667

 

 

 

(5,401

)

Depreciation and amortization

 

 

29,515

 

 

 

28,584

 

 

 

117,767

 

 

 

113,661

 

Non-cash compensation expense (d)

 

 

17,713

 

 

 

13,916

 

 

 

68,020

 

 

 

57,113

 

Restructuring charges and transaction costs (e)

 

 

7,275

 

 

 

4,922

 

 

 

18,490

 

 

 

19,383

 

Severance (f)

 

 

849

 

 

 

6,544

 

 

 

11,347

 

 

 

25,110

 

Accretion on contingent consideration and purchase

liability (c)

 

 

74

 

 

 

380

 

 

 

730

 

 

 

1,688

 

Fair market value adjustment on contingent consideration liability (c)

 

 

 

 

 

(1,049

)

 

 

(1,067

)

 

 

(3,105

)

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

 

 

 

 

 

 

 

 

(758

)

 

 

 

Non-recurring litigation and regulatory related expenses (c)

 

 

2,432

 

 

 

1,796

 

 

 

7,591

 

 

 

7,825

 

Foreign currency (b)

 

 

(117

)

 

 

184

 

 

 

(7

)

 

 

116

 

Non-recurring gains (b)

 

 

 

 

 

(1,647

)

 

 

 

 

 

(5,877

)

Gain on settlement of liability (b)

 

 

 

 

 

 

 

 

(1,206

)

 

 

 

Gain on insurance reimbursement (b)

 

 

 

 

 

 

 

 

(968

)

 

 

 

Non-income tax expense adjustment (c)

 

 

(245

)

 

 

(920

)

 

 

(1,347

)

 

 

421

 

Loss allocations from equity method investments (b)

 

 

1,540

 

 

 

1,119

 

 

 

7,093

 

 

 

5,399

 

Income attributable to non-controlling interest

 

 

(150

)

 

 

(727

)

 

 

(704

)

 

 

(1,830

)

Adjusted EBITDA

 

$

56,217

 

 

$

64,976

 

 

$

261,730

 

 

$

242,943

 

(a)

 

For the three months ended December 31, 2021 and 2020, $57 and $85, respectively, were included within subscription-based revenues in the condensed consolidated statements of operations. For the years ended December 31, 2021 and 2020, $284 and $690, respectively, were included within subscription-based revenues in the condensed consolidated statements of operations. The remaining amounts for all periods were included within professional services and other revenues in the condensed consolidated statements of operations.

(b)

 

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

(c)

 

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

(d)

 

For the three months and year ended December 31, 2021, the entire amount was included in compensation and benefits in the condensed consolidated statements of operations. For the three months ended December 31, 2020, the entire amount was included in compensation and benefits in the condensed consolidated statements of operations. For the year ended December 31, 2020, $59,637 was included in compensation and benefits and a fair value adjustment of $(2,524) was included in other expense, net in the condensed consolidated statements of operations.

(e)

 

For the three months ended December 31, 2021 and 2020, $1,711 and $4,121, respectively, were included within general and administration expenses in the condensed consolidated statements of operations. For the three months ended December 31, 2021 and 2020, $5,564 and $833, respectively, were included within compensation and benefits in the condensed consolidated statements of operations. For the year ended December 31, 2021 and 2020, $7,748 and $15,606, respectively, were included within general and administration expenses in the condensed consolidated statements of operations. For the year ended December 31, 2021 and 2020, $10,742 and $3,597, respectively, were included within compensation and benefits in the condensed consolidated statements of operations. The remaining amounts for the 2020 periods were included within other expense, net in the condensed consolidated statements of operations.

(f)

 

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

Envestnet, Inc.

Reconciliation of Non-GAAP Financial Measures (continued)

(in thousands, except share and per share information)

(unaudited)

         

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2021

 

2020

 

2021

 

2020

Net income (loss)

 

$

(5,310

)

 

$

7,694

 

 

$

12,694

 

 

$

(2,644

)

Income tax provision (benefit) (a)

 

 

(1,407

)

 

 

(5,240

)

 

 

7,667

 

 

 

(5,401

)

Loss before income tax provision (benefit)

 

 

(6,717

)

 

 

2,454

 

 

 

20,361

 

 

 

(8,045

)

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (b)

 

 

57

 

 

 

85

 

 

 

284

 

 

 

692

 

Non-cash interest expense (c)

 

 

1,450

 

 

 

6,798

 

 

 

5,745

 

 

 

17,480

 

Cash interest - Convertible Notes (c)

 

 

2,480

 

 

 

 

 

 

9,919

 

 

 

 

Non-cash compensation expense (f)

 

 

17,713

 

 

 

13,916

 

 

 

68,020

 

 

 

57,113

 

Restructuring charges and transaction costs (e)

 

 

7,275

 

 

 

4,922

 

 

 

18,490

 

 

 

19,383

 

Severance (g)

 

 

849

 

 

 

6,544

 

 

 

11,347

 

 

 

25,110

 

Accretion on contingent consideration and purchase

liability (d)

 

 

74

 

 

 

380

 

 

 

730

 

 

 

1,688

 

Fair market value adjustment on contingent consideration liability (d)

 

 

 

 

 

(1,049

)

 

 

(1,067

)

 

 

(3,105

)

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

 

 

 

 

 

 

 

 

(758

)

 

 

 

Amortization of acquired intangibles (h)

 

 

17,217

 

 

 

17,545

 

 

 

68,587

 

 

 

73,559

 

Non-recurring litigation and regulatory related expenses (d)

 

 

2,432

 

 

 

1,796

 

 

 

7,591

 

 

 

7,825

 

Foreign currency (c)

 

 

(117

)

 

 

184

 

 

 

(7

)

 

 

116

 

Non-recurring gains (c)

 

 

 

 

 

(1,647

)

 

 

 

 

 

(5,877

)

Gain on settlement of liability (c)

 

 

 

 

 

 

 

 

(1,206

)

 

 

 

Gain on insurance reimbursement (c)

 

 

 

 

 

 

 

 

(968

)

 

 

 

Non-income tax expense adjustment (d)

 

 

(245

)

 

 

(920

)

 

 

(1,347

)

 

 

421

 

Loss allocations from equity method investments (c)

 

 

1,540

 

 

 

1,119

 

 

 

7,093

 

 

 

5,399

 

Income attributable to non-controlling interest

 

 

(150

)

 

 

(727

)

 

 

(704

)

 

 

(1,830

)

Adjusted net income before income tax effect

 

 

43,858

 

 

 

51,400

 

 

 

212,110

 

 

 

189,929

 

Income tax effect (i)

 

 

(11,184

)

 

 

(13,107

)

 

 

(54,088

)