Envestnet Reports Second Quarter 2022 Financial Results

BERWYN, Pa. -- 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, 2022.

“During the second quarter, we grew revenues, we went deeper with our client base and we drove positive net flows despite the challenging market conditions”

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Three months ended

 

 

 

Six months ended

 

 

Key Financial Metrics

 

June 30,

 

%

 

June 30,

 

%

(in millions, except per share data)

 

 

2022

 

 

 

2021

 

 

Change

 

 

2022

 

 

 

2021

 

Change

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

318.9

 

 

$

288.7

 

 

10

%

 

$

640.2

 

 

$

563.8

 

14

%

Net income (loss)

 

$

(24.3

)

 

$

(8.4

)

 

n/m

 

 

$

(39.0

)

 

$

6.6

 

n/m

 

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

 

$

(0.42

)

 

$

(0.15

)

 

n/m

 

 

$

(0.67

)

 

$

0.12

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenues(1)

 

$

318.9

 

 

$

288.8

 

 

10

%

 

$

640.3

 

 

$

564.0

 

14

%

Adjusted EBITDA(1)

 

$

57.1

 

 

$

71.1

 

 

(20

)%

 

$

112.8

 

 

$

139.3

 

(19

)%

Adjusted net income(1)

 

$

32.0

 

 

$

43.5

 

 

(26

)%

 

$

63.0

 

 

$

85.4

 

(26

)%

Adjusted net income per diluted share(1)

 

$

0.49

 

 

$

0.67

 

 

(27

)%

 

$

0.96

 

 

$

1.31

 

(27

)%

                         

n/m - not meaningful

                       
                         

“We continue to execute on our strategy – aligning our organization to deliver industry leading solutions, technology and intelligence that can do more for more people – and positioning Envestnet for accelerated revenue growth in the coming years,” said Bill Crager, Co-Founder and Chief Executive Officer.

“During the second quarter, we grew revenues, we went deeper with our client base and we drove positive net flows despite the challenging market conditions,” concluded Mr. Crager.

Financial Results for the Second Quarter of 2022

Asset-based recurring revenues increased 13% from the second quarter of 2021, and represented 60% of total revenues for the second quarter of 2022 compared to 59% for the second quarter of 2021. Subscription-based recurring revenues increased 5% from the second quarter of 2021, and represented 37% of total revenues for the second quarter of 2022, compared to 39% for the second quarter of 2021. Professional services and other non-recurring revenues increased 42% from the prior year period. Total revenues increased 10% to $318.9 million for the second quarter of 2022 from $288.7 million for the second quarter of 2021.

Total operating expenses for the second quarter of 2022 increased 26% to $350.6 million from $277.8 million in the prior year period. Cost of revenues increased 26% to $126.5 million for the second quarter of 2022 from $100.5 million for the prior year period. Compensation and benefits increased 19% to $125.8 million for the second quarter of 2022 from $105.5 million for the prior year period. Compensation and benefits were 39% of total revenues for the second quarter of 2022, compared to 37% for the prior year period. General and administration expenses increased 58% to $66.1 million for the second quarter of 2022 from $41.8 million for the prior year period. General and administration expenses were 21% of total revenues for the second quarter of 2022, compared to 14% for the prior year period.

Loss from operations was $31.7 million for the second quarter of 2022 compared to income of $10.9 million for the second quarter of 2021. Net loss was $24.3 million for the second quarter of 2022 compared to net loss of $8.4 million for the second quarter of 2021. Net loss per diluted share attributable to Envestnet, Inc. was $0.42 for the second quarter of 2022 compared to net loss per diluted share attributable to Envestnet, Inc. of $0.15 for the second quarter of 2021.

Adjusted revenues(1) for the second quarter of 2022 increased 10% to $318.9 million from $288.8 million for the prior year period. Adjusted EBITDA(1) for the second quarter of 2022 decreased 20% to $57.1 million from $71.1 million for the prior year period. Adjusted net income(1) decreased 26% for the second quarter of 2022 to $32.0 million from $43.5 million for the prior year period. Adjusted net income per diluted share(1) for the second quarter of 2022 decreased 27% to $0.49 from $0.67 in the second quarter of 2021.

Balance Sheet and Liquidity

As of June 30, 2022, Envestnet had $338.1 million in cash and cash equivalents and $862.5 million in outstanding debt. The outstanding debt as of June 30, 2022 included $345 million in convertible notes maturing in 2023 and $517.5 million in convertible notes maturing in 2025. Envestnet's $500 million revolving credit facility was undrawn as of June 30, 2022.

Outlook

Envestnet provided the following outlook for the third quarter ending September 30, 2022 and full year ending December 31, 2022. This outlook is based on the market value of assets under management or administration as of June 30, 2022. We caution that we cannot predict the market value of these assets on any future date. See “Cautionary Statement Regarding Forward-Looking Statements.”

In Millions, Except Adjusted EPS

 

3Q 2022

 

FY 2022

GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based

 

$

176.0

 

-

 

$

177.0

 

 

 

 

 

 

Subscription-based

 

 

120.5

 

-

 

 

121.0

 

 

 

 

 

 

Total recurring revenues

 

$

296.5

 

-

 

$

298.0

 

 

 

 

 

 

Professional services and other revenues

 

 

5.0

 

-

 

 

5.5

 

 

 

 

 

 

Total revenues

 

$

301.5

 

-

 

$

303.5

 

$

1,255.0

 

-

 

$

1,260.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based cost of revenues

 

$

103.0

 

-

 

$

103.5

 

 

 

 

 

 

Total cost of revenues

 

$

110.5

 

-

 

$

111.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

(a)

 

-

 

(a)

 

(a)

 

-

 

(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

 

 

65.5

 

 

 

 

 

65.5

 

 

Net income per diluted share

 

(a)

 

-

 

(a)

 

(a)

 

-

 

(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted revenues (1):

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based

 

$

176.0

 

-

 

$

177.0

 

 

 

 

 

 

Subscription-based

 

 

120.5

 

-

 

 

121.0

 

 

 

 

 

 

Total recurring revenues

 

$

296.5

 

-

 

$

298.0

 

 

 

 

 

 

Professional services and other revenues

 

 

5.0

 

-

 

 

5.5

 

 

 

 

 

 

Total revenues

 

$

301.5

 

-

 

$

303.5

 

$

1,255.0

 

-

 

$

1,260.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

51.0

 

-

 

$

53.0

 

$

223.0

 

-

 

$

227.0

Adjusted net income per diluted share(1)

 

$

0.40

 

-

 

$

0.42

 

$

1.84

 

-

 

$

1.89

(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 second quarter 2022 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. More than 105,000 advisors and over 6,500 companies including: 16 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. On January 1, 2022, the Company adopted ASU 2021-08 whereby it now accounts for contract assets and contract liabilities obtained upon a business combination in accordance with ASC 606. Prior to the adoption of ASU 2021-08, we recorded 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 did 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, income tax provision (benefit), depreciation and amortization, non-cash compensation expense, restructuring charges and transaction costs, severance, accretion on contingent consideration and purchase liability, fair market value adjustment on contingent consideration liability, fair market value adjustment to investment in private company, litigation and regulatory related expenses, foreign currency, non-income tax expense adjustment, dilution gain on equity method investee share issuance, 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, non-cash interest expense, cash interest on our convertible notes, non-cash compensation expense, restructuring charges and transaction costs, severance, accretion on contingent consideration and purchase liability, fair market value adjustment on contingent consideration liability, fair market value adjustment to investment in private company, amortization of acquired intangibles, litigation and regulatory related expenses, foreign currency, non-income tax expense adjustment, dilution gain on equity method investee share issuance, 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.

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 (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 third 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; changes and volatility in financial and capital markets, including as a result of the current conflict between Russia and Ukraine, 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, political and regulatory conditions; the impact of fluctuations in market conditions; 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 and 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 August 4, 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)

 
 

 

 

June 30,

 

December 31,

 

 

2022

 

2021

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

338,115

 

$

429,279

Fees receivable, net

 

 

82,878

 

 

95,291

Prepaid expenses and other current assets

 

 

46,627

 

 

42,706

Total current assets

 

 

467,620

 

 

567,276

 

 

 

 

 

Property and equipment, net

 

 

61,392

 

 

50,215

Internally developed software, net

 

 

159,751

 

 

133,659

Intangible assets, net

 

 

386,231

 

 

400,396

Goodwill

 

 

936,054

 

 

925,154

Operating lease right-of-use-assets, net

 

 

83,494

 

 

90,714

Other non-current assets

 

 

92,858

 

 

73,768

Total assets

 

$

2,187,400

 

$

2,241,182

 

 

 

 

 

Liabilities and Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accrued expenses and other liabilities

 

$

198,230

 

$

225,159

Accounts payable

 

 

20,444

 

 

19,092

Operating lease liabilities

 

 

10,852

 

 

10,999

Deferred revenue

 

 

37,453

 

 

33,473

Current portion of long-term debt

 

 

343,057

 

 

Total current liabilities

 

 

610,036

 

 

288,723

 

 

 

 

 

Long-term debt, net of current portion

 

 

508,282

 

 

848,862

Non-current operating lease liabilities

 

 

110,623

 

 

105,920

Deferred tax liabilities, net

 

 

12,912

 

 

21,021

Other non-current liabilities

 

 

11,555

 

 

17,114

Total liabilities

 

 

1,253,408

 

 

1,281,640

 

 

 

 

 

Equity:

 

 

 

 

Total stockholders’ equity

 

 

933,165

 

 

957,089

Non-controlling interest

 

 

827

 

 

2,453

Total liabilities and equity

 

$

2,187,400

 

$

2,241,182

             
 

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,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

Asset-based

 

$

191,972

 

 

$

170,075

 

 

$

394,689

 

 

$

329,450

 

Subscription-based

 

 

118,120

 

 

 

112,504

 

 

 

232,854

 

 

 

222,333

 

Total recurring revenues

 

 

310,092

 

 

 

282,579

 

 

 

627,543

 

 

 

551,783

 

Professional services and other revenues

 

 

8,760

 

 

 

6,159

 

 

 

12,672

 

 

 

12,060

 

Total revenues

 

 

318,852

 

 

 

288,738

 

 

 

640,215

 

 

 

563,843

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenues

 

 

126,482

 

 

 

100,494

 

 

 

251,764

 

 

 

193,363

 

Compensation and benefits

 

 

125,767

 

 

 

105,548

 

 

 

252,616

 

 

 

206,262

 

General and administration

 

 

66,144

 

 

 

41,755

 

 

 

110,479

 

 

 

78,070

 

Depreciation and amortization

 

 

32,182

 

 

 

30,010

 

 

 

63,800

 

 

 

58,402

 

Total operating expenses

 

 

350,575

 

 

 

277,807

 

 

 

678,659

 

 

 

536,097

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

(31,723

)

 

 

10,931

 

 

 

(38,444

)

 

 

27,746

 

Other income (expense), net

 

 

1,622

 

 

 

(3,784

)

 

 

(4,345

)

 

 

(11,252

)

Income (loss) before income tax provision (benefit)

 

 

(30,101

)

 

 

7,147

 

 

 

(42,789

)

 

 

16,494

 

 

 

 

 

 

 

 

 

 

Income tax provision (benefit)

 

 

(5,833

)

 

 

15,516

 

 

 

(3,813

)

 

 

9,928

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

(24,268

)

 

 

(8,369

)

 

 

(38,976

)

 

 

6,566

 

Add: Net loss attributable to non-controlling interest

 

 

983

 

 

 

88

 

 

 

1,832

 

 

 

99

 

Net income (loss) attributable to Envestnet, Inc.

 

$

(23,285

)

 

$

(8,281

)

 

$

(37,144

)

 

$

6,665

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Basic

 

$

(0.42

)

 

$

(0.15

)

 

$

(0.67

)

 

$

0.12

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

(0.42

)

 

$

(0.15

)

 

$

(0.67

)

 

$

0.12

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

55,203,120

 

 

 

54,440,388

 

 

 

55,054,272

 

 

 

54,325,353

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

55,203,120

 

 

 

54,440,388

 

 

 

55,054,272

 

 

 

55,136,946

 

                                 
 

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

 
 

 

 

Six Months Ended

 

 

June 30,

 

 

 

2022

 

 

 

2021

 

OPERATING ACTIVITIES:

 

 

 

 

Net income (loss)

 

$

(38,976

)

 

$

6,566

 

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

 

 

 

 

Depreciation and amortization

 

 

63,800

 

 

 

58,402

 

Provision for doubtful accounts

 

 

(1,230

)

 

 

455

 

Deferred income taxes

 

 

(8,222

)

 

 

8,137

 

Release of uncertain tax positions

 

 

(3,095

)

 

 

 

Non-cash compensation expense

 

 

45,318

 

 

 

31,422

 

Non-cash interest expense

 

 

3,474

 

 

 

2,906

 

Accretion on contingent consideration and purchase liability

 

 

 

 

 

575

 

Payments of contingent consideration

 

 

 

 

 

(2,360

)

Fair market value adjustment to contingent consideration liability

 

 

 

 

 

(140

)

Fair market value adjustment to investment in private company

 

 

 

 

 

(758

)

Loss allocations from equity method investments

 

 

2,945

 

 

 

4,045

 

Dilution gain on equity method investee share issuance

 

 

(6,934

)

 

 

 

Impairment of right of use assets

 

 

12,961

 

 

 

1,110

 

Loss on property and equipment disposals - office closures

 

 

3,710

 

 

 

 

Other

 

 

167

 

 

 

282

 

Changes in operating assets and liabilities:

 

 

 

 

Fees receivable, net

 

 

13,694

 

 

 

(1,334

)

Prepaid expenses and other current assets

 

 

(2,721

)

 

 

(155

)

Other non-current assets

 

 

(3,638

)

 

 

3,665

 

Accrued expenses and other liabilities

 

 

(31,962

)

 

 

527

 

Accounts payable

 

 

1,368

 

 

 

2,333

 

Deferred revenue

 

 

4,277

 

 

 

2,789

 

Other non-current liabilities

 

 

(2,294

)

 

 

692

 

Net cash provided by operating activities

 

 

52,642

 

 

 

119,159

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

Purchases of property and equipment

 

 

(9,141

)

 

 

(11,357

)

Capitalization of internally developed software

 

 

(43,045

)

 

 

(31,802

)

Acquisition of proprietary technology

 

 

(15,000

)

 

 

(25,517

)

Acquisitions of businesses, net of cash acquired

 

 

(14,472

)

 

 

(33,143

)

Investments in private companies

 

 

(8,000

)

 

 

(4,549

)

Advance for technology solutions

 

 

(4,000

)

 

 

(3,000

)

Issuance of notes receivable to equity method investees

 

 

(4,350

)

 

 

 

Net cash used in investing activities

 

 

(98,008

)

 

 

(109,368

)

                 
 

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

 
 

 

 

Six Months Ended

 

 

June 30,

 

 

 

2022

 

 

 

2021

 

FINANCING ACTIVITIES:

 

 

 

 

Proceeds from exercise of stock options

 

 

742

 

 

 

573

 

Capital contributions - non-controlling shareholders

 

 

 

 

 

23

 

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

 

 

(18,113

)

 

 

(13,020

)

Finance lease payments

 

 

(14,517

)

 

 

 

Share repurchases

 

 

(9,235

)

 

 

(2,097

)

Revolving credit facility issuance costs

 

 

(1,872

)

 

 

 

Payments of contingent consideration

 

 

(750

)

 

 

(9,200

)

Other

 

 

4

 

 

 

(587

)

Net cash used in financing activities

 

 

(43,741

)

 

 

(24,308

)

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

 

(2,057

)

 

 

(524

)

 

 

 

 

 

DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

(91,164

)

 

 

(15,041

)

 

 

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD

 

 

429,428

 

 

 

384,714

 

 

 

 

 

 

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

 

$

338,264

 

 

$

369,673

 

(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,

 

 

2022

 

2021

Cash and cash equivalents

 

$

338,115

 

$

369,524

Restricted cash included in prepaid expenses and other current assets

 

 

149

 

 

149

Total cash, cash equivalents and restricted cash

 

$

338,264

 

$

369,673

             
 

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

 
 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Total revenues

 

$

318,852

 

 

$

288,738

 

 

$

640,215

 

 

$

563,843

 

Deferred revenue fair value adjustment (a)

 

 

54

 

 

 

80

 

 

 

108

 

 

 

160

 

Adjusted revenues

 

$

318,906

 

 

$

288,818

 

 

$

640,323

 

 

$

564,003

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(24,268

)

 

$

(8,369

)

 

$

(38,976

)

 

$

6,566

 

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (a)

 

 

54

 

 

 

80

 

 

 

108

 

 

 

160

 

Interest income (b)

 

 

(713

)

 

 

(197

)

 

 

(1,034

)

 

 

(367

)

Interest expense (b)

 

 

4,212

 

 

 

4,225

 

 

 

9,065

 

 

 

8,440

 

Income tax provision (benefit)

 

 

(5,833

)

 

 

15,516

 

 

 

(3,813

)

 

 

9,928

 

Depreciation and amortization

 

 

32,182

 

 

 

30,010

 

 

 

63,800

 

 

 

58,402

 

Non-cash compensation expense (d)

 

 

23,504

 

 

 

17,285

 

 

 

45,318

 

 

 

31,422

 

Restructuring charges and transaction costs (e)

 

 

21,026

 

 

 

5,028

 

 

 

23,372

 

 

 

7,812

 

Severance (d)

 

 

7,148

 

 

 

5,377

 

 

 

10,254

 

 

 

10,291

 

Accretion on contingent consideration and purchase

liability (c)

 

 

 

 

 

187

 

 

 

 

 

 

575

 

Fair market value adjustment on contingent consideration liability (c)

 

 

 

 

 

 

 

 

 

 

 

(140

)

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

 

 

 

 

 

(758

)

 

 

 

 

 

(758

)

Non-recurring litigation and regulatory related expenses (c)

 

 

4,306

 

 

 

1,938

 

 

 

7,383

 

 

 

3,647

 

Foreign currency (b)

 

 

413

 

 

 

(138

)

 

 

305

 

 

 

13

 

Non-income tax expense adjustment (c)

 

 

189

 

 

 

295

 

 

 

213

 

 

 

(271

)

Dilution gain on equity method investee share issuance (b)

 

 

(6,934

)

 

 

 

 

 

(6,934

)

 

 

 

Loss allocations from equity method investments (b)

 

 

1,400

 

 

 

757

 

 

 

2,945

 

 

 

4,045

 

(Income) loss attributable to non-controlling interest

 

 

440

 

 

 

(175

)

 

 

817

 

 

 

(440

)

Adjusted EBITDA

 

$

57,126

 

 

$

71,061

 

 

$

112,823

 

 

$

139,325

 

(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)  

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

(e)  

For the three months ended June 30, 2022 and 2021, $20.9 million and $2.7 million were included within general and administration expenses, respectively, in the condensed consolidated statements of operations. For the three months ended June 30, 2022 and 2021, $0.1 million and $2.3 million were included within compensation and benefits, respectively, in the condensed consolidated statements of operations. For the six months ended June 30, 2022 and 2021, $23.5 million and $4.5 million were included within general and administration expenses, respectively, in the condensed consolidated statements of operations. For the six months ended June 30, 2022 and 2021, $(0.1) million and $3.3 million were included within compensation and benefits, 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

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income (loss)

 

$

(24,268

)

 

$

(8,369

)

 

$

(38,976

)

 

$

6,566

 

Income tax provision (benefit) (a)

 

 

(5,833

)

 

 

15,516

 

 

 

(3,813

)

 

 

9,928

 

Income (loss) before income tax provision (benefit)

 

 

(30,101

)

 

 

7,147

 

 

 

(42,789

)

 

 

16,494

 

Add (deduct):

 

 

 

 

 

 

 

 

Deferred revenue fair value adjustment (b)

 

 

54

 

 

 

80

 

 

 

108

 

 

 

160

 

Non-cash interest expense (d)

 

 

1,415

 

 

 

1,429

 

 

 

3,474

 

 

 

2,852

 

Cash interest - Convertible Notes (d)

 

 

2,480

 

 

 

2,480

 

 

 

4,960

 

 

 

4,960

 

Non-cash compensation expense (e)

 

 

23,504

 

 

 

17,285

 

 

 

45,318

 

 

 

31,422

 

Restructuring charges and transaction costs (g)

 

 

21,026

 

 

 

5,028

 

 

 

23,372

 

 

 

7,812

 

Severance (e)

 

 

7,148

 

 

 

5,377

 

 

 

10,254

 

 

 

10,291

 

Accretion on contingent consideration and purchase

liability (c)

 

 

 

 

 

187

 

 

 

 

 

 

575

 

Fair market value adjustment on contingent consideration liability (c)

 

 

 

 

 

 

 

 

 

 

 

(140

)

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

 

 

 

 

 

(758

)

 

 

 

 

 

(758

)

Amortization of acquired intangibles (f)

 

 

17,645

 

 

 

17,502

 

 

 

35,165

 

 

 

33,980

 

Non-recurring litigation and regulatory related expenses (c)

 

 

4,306

 

 

 

1,938

 

 

 

7,383

 

 

 

3,647

 

Foreign currency (d)

 

 

413

 

 

 

(138

)

 

 

305

 

 

 

13

 

Non-income tax expense adjustment (c)

 

 

189

 

 

 

295

 

 

 

213

 

 

 

(271

)

Dilution gain on equity method investee share issuance (d)

 

 

(6,934

)

 

 

 

 

 

(6,934

)

 

 

 

Loss allocations from equity method investments (d)

 

 

1,400

 

 

 

757

 

 

 

2,945

 

 

 

4,045

 

Loss (income) attributable to non-controlling interest

 

 

440

 

 

 

(175

)

 

 

817

 

 

 

(440

)

Adjusted net income before income tax effect

 

 

42,985

 

 

 

58,434

 

 

 

84,591

 

 

 

114,642

 

Income tax effect (h)

 

 

(10,961

)

 

 

(14,901

)

 

 

(21,571

)

 

 

(29,234

)

Adjusted net income

 

$

32,024

 

 

$

43,533

 

 

$

63,020

 

 

$

85,408

 

 

 

 

 

 

 

 

 

 

Basic number of weighted-average shares outstanding