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Envestnet Reports Second Quarter 2018 Financial Results

08/07/18 4:05 pm EDT

CHICAGO--(BUSINESS WIRE)--Aug. 7, 2018-- Envestnet (NYSE: ENV), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for its quarter ended June 30, 2018.

               
Three Months Ended Six Months Ended
Key Financial Metrics June 30, % June 30, %
(in millions except per share data)       2018   2017   Change   2018   2017   Change
GAAP:
Total Revenues $ 201.1 $ 167.4 20% $ 399.1 $ 325.2 23%
Net income (loss) (6.0 ) (6.5 ) (7%) 2.0 (19.6 ) n/m
Net income (loss) per diluted share attributable to Envestnet, Inc. $ (0.12 ) $ (0.15 ) (20%) $ 0.05 $ (0.45 ) n/m
 
Non-GAAP:
Adjusted EBITDA(1) $ 34.8 $ 29.5 18% $ 67.5 $ 55.4 22%
Adjusted Net Income(1) 19.3 13.1 47% 36.9 24.7 50%
Adjusted Net Income per Diluted Share(1) $ 0.41 $ 0.29 41% $ 0.78 $ 0.54 44%

__________________________

n/m - Not meaningful
 

“Envestnet delivered solid results in the second quarter, with revenue, adjusted EBITDA and adjusted earnings per share exceeding our expectations,” said Jud Bergman, Chairman and CEO.

“We believe we are well positioned to create meaningful value for shareholders, as we expand our operating system for financial wellness, enabling our clients to attain better financial outcomes through better intelligence,” concluded Mr. Bergman.

Financial Results for the Second Quarter of 2018:

Total revenues increased 20% to $201.1 million in the three months ended June 30, 2018 from $167.4 million in the three months ended June 30, 2017. Revenues for FolioDynamix, which the Company acquired in January 2018, were $17.3 million in the three months ended June 30, 2018. The Company’s total revenues in the three months ended June 30, 2018 were negatively impacted by $3.7 million due to the adoption of ASU 2014-09. Excluding the effect of these items, total revenues grew 12% in the three months ended June 30, 2018 compared to the prior year period.

Asset-based revenues were 59% of total revenues for the second quarter of 2018, consistent with the same period in 2017, and increased 19% from the prior year period. Subscription-based revenues increased 20% from the prior year period. Professional services and other non-recurring revenues increased 30% from the prior year period.

Total operating expenses for the second quarter of 2018 increased 22% to $201.1 million from $164.7 million in the prior year period. Cost of revenues increased 21% to $67.6 million for the second quarter of 2018 from $55.7 million for the second quarter of 2017. Compensation and benefits increased 23% to $80.2 million for the second quarter of 2018 from $65.0 million for the prior year period. Compensation and benefits were 40% of total revenues for the second quarter of 2018, compared to 39% in the prior year period. General and administration expenses increased 20% to $34.1 million for the second quarter of 2018 from $28.5 million for the prior year period. General and administrative expenses were 17% of total revenues for the second quarter of 2018 consistent with the prior year period. FolioDynamix was a significant contributor to the year-over-year increase in cost of revenues, compensation and benefits, and general and administrative expenses for the second quarter of 2018. Excluding FolioDynamix, operating expenses for the second quarter of 2018 increased 10% to $180.5 million.

Income from operations was $5 thousand for the second quarter of 2018 compared to income of $2.7 million for the second quarter of 2017. Net loss was $6.0 million for the second quarter of 2018 compared to a loss of $6.5 million for the second quarter of 2017. Net loss per diluted share attributable to Envestnet, Inc. was $0.12 per diluted share for the second quarter of 2018 compared to a loss of $0.15 per diluted share for the second quarter of 2017.

Adjusted EBITDA(1) for the second quarter of 2018 increased 18% to $34.8 million from $29.5 million for the prior year period. Adjusted Net Income(1) increased 47% for the second quarter of 2018 to $19.3 million from $13.1 million for the prior year period. Adjusted Net Income per Diluted Share(1) for the second quarter of 2018 increased 41% to $0.41 from $0.29 in the second quarter of 2017.

Outlook

The Company provided the following outlook for the third quarter ended September 30, 2018 and full year ended December 31, 2018. This outlook is based on the market value of assets on June 30, 2018.

         
In Millions Except Adjusted EPS 3Q 2018 FY 2018
GAAP:
Revenues:
Asset-based $ 118.5

-

$ 119.5 -
Subscription-based   76.0 -   77.0 -
Total recurring revenues $ 194.5 $ 196.5
Professional services and other revenues   7.5   -   8.5 -
Total revenues $ 202.0 - $ 205.0 $ 812.0 - $ 818.0
 
Cost of revenues $ 65.0 - $ 66.5 -
Net Income - -
 
Diluted shares outstanding 47.5 -
Net Income per Diluted Share - -
 
Non-GAAP:
Adjusted EBITDA(1) $ 40.0 - $ 41.0 $ 153.0 - $ 156.0
Adjusted Net Income per Diluted Share(1) $ 0.50 $ 1.85 - $ 1.89
 

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 2018 financial results today at 5:00 p.m. ET. The live webcast can be accessed from Envestnet’s investor relations website at http://ir.envestnet.com/. The call can also be accessed live over the phone by dialing (800) 239-9838, or for international callers (323) 794-2551. A replay will be available two hours after the call and can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers; the conference ID is 2732311. The dial-in replay will be available for one week and the webcast replay will be available for one month following the date of the conference call.

About Envestnet

Envestnet, Inc. (NYSE: ENV) is a leading provider of intelligent systems for wealth management and financial wellness. Envestnet's unified technology enhances advisor productivity and strengthens the wealth management process. Envestnet empowers enterprises and advisors to more fully understand their clients and deliver better outcomes.

Envestnet enables financial advisors to better manage client outcomes and strengthen their practices. Institutional-quality research and advanced portfolio solutions are provided through Envestnet | PMC, our Portfolio Management Consultants group. Envestnet | Yodlee is a leading data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services. Envestnet | Tamarac provides leading rebalancing, reporting, and practice management software for advisors. Envestnet | Retirement Solutions provides retirement advisors with an integrated platform that combines leading practice management technology, research and due diligence, data aggregation, compliance tools, fiduciary solutions and intelligent managed account solutions.

More than 88,000 advisors and more than 3,500 companies including: 15 of the 20 largest U.S. banks, 43 of the 50 largest wealth management and brokerage firms, over 500 of the largest Registered Investment Advisers, and hundreds of Internet services companies, leverage Envestnet technology and services. Envestnet solutions enhance knowledge of the client, accelerate client on-boarding, improve client digital experiences, and help drive better outcomes for enterprises, advisors, and their clients.

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

______________________

(1) Non-GAAP Financial Measures

“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, litigation related expense, foreign currency, non-income tax expense adjustment, loss allocation from equity method investment and loss attributable to non-controlling interest.

“Adjusted net income” represents net income (loss) 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, amortization of acquired intangibles, litigation related expense, foreign currency, non-income tax expense adjustment, loss allocation from equity method investment and 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.

“Adjusted net income per diluted share” represents adjusted net income divided by the diluted number of weighted-average shares outstanding.

See reconciliation of Non-GAAP Financial Measures on pages 8-10 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 2018, 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, the possibility that the anticipated benefits of the Company’s acquisition of FolioDynamix will not be realized to the extent or when expected, difficulty in sustaining rapid revenue growth, which may place significant demands on the Company’s 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 revenue, 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 (“FinApps”), 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 the Company’s filings with the Securities and Exchange Commission (“SEC”) which are available on the SEC’s website at www.sec.gov or the Company’s 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 7, 2018 and, unless required by law, the Company undertakes 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,
2018 2017
Assets
Current assets:
Cash and cash equivalents $ 134,032 $ 60,115
Fees receivable, net 64,164 51,522
Prepaid expenses and other current assets   22,721   19,470
Total current assets   220,917   131,107
 
Property and equipment, net 40,397 35,909
Internally developed software, net 29,257 22,174
Intangible assets, net 313,743 222,731
Goodwill 526,955 432,955
Other non-current assets   23,907   17,176
Total assets $ 1,155,176 $ 862,052
 
Liabilities and Equity
Current liabilities:
Accrued expenses and other liabilities $ 109,537 $ 105,897
Accounts payable 21,133 11,097
Contingent consideration 707 2,115
Deferred revenue   25,739   21,246
Total current liabilities   157,116   140,355
 
Convertible Notes due 2019 162,299 158,990
Convertible Notes due 2023 289,562 -
Revolving credit facility - 81,168
Contingent consideration - 666
Deferred revenue 7,929 12,047
Deferred rent and lease incentive 17,334 15,185
Deferred tax liabilities, net 2,154 969
Other non-current liabilities   16,744   15,102
Total liabilities   653,138   424,482
 
Redeemable units in ERS 900 900
 
Equity:
Stockholders’ equity 500,434 436,272
Non-controlling interest   704   398
Total liabilities and equity $ 1,155,176 $ 862,052
 
           
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,
2018 2017 2018 2017
Revenues:
Asset-based $ 118,111 $ 98,959 $ 239,264 $ 193,121
Subscription-based   71,779     59,802     141,474     117,712  
Total recurring revenues 189,890 158,761 380,738 310,833
Professional services and other revenues   11,226     8,656     18,389     14,370  
Total revenues   201,116     167,417     399,127     325,203  
 
Operating expenses:
Cost of revenues 67,627 55,735 130,561 104,961
Compensation and benefits 80,210 64,996 163,750 130,528
General and administration 34,089 28,478 66,818 59,025
Depreciation and amortization   19,185     15,465     38,731     31,300  
Total operating expenses   201,111     164,674     399,860     325,814  
 
Income (loss) from operations 5 2,743 (733 ) (611 )
Other expense, net   (5,430 )   (4,369 )   (10,684 )   (9,852 )
Loss before income tax provision (benefit) (5,425 ) (1,626 ) (11,417 ) (10,463 )
 
Income tax provision (benefit)   566     4,844     (13,428 )   9,142  
 
Net income (loss) (5,991 ) (6,470 ) 2,011 (19,605 )
Add: Net loss attributable to non-controlling interest   465         567      
Net income (loss) attributable to Envestnet, Inc. $ (5,526 ) $ (6,470 ) $ 2,578   $ (19,605 )
 
Net income (loss) per share attributable to Envestnet, Inc.:
Basic $ (0.12 ) $ (0.15 ) $ 0.06   $ (0.45 )
 
Diluted $ (0.12 ) $ (0.15 ) $ 0.05   $ (0.45 )
 
Weighted average common shares outstanding:
Basic   45,247,331     43,855,479     44,963,735     43,513,074  
 
Diluted   45,247,331     43,855,479     47,156,205     43,513,074  
 
       
Envestnet, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
Six Months Ended
June 30,
2018 2017
OPERATING ACTIVITIES:
Net income (loss) $ 2,011 $ (19,605 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization 38,731 31,300
Deferred rent and lease incentive 1,069 583
Provision for doubtful accounts 924 341
Deferred income taxes (17,093 ) 6,524
Stock-based compensation expense 18,971 15,403
Non-cash interest expense 5,630 4,853
Accretion on contingent consideration and purchase liability 196 304
Payments of contingent consideration - (357 )
Loss allocation from equity method investment 811 702
Loss on disposal of fixed assets 10 69
Changes in operating assets and liabilities, net of acquisitions:
Fees and other receivables (8,204 ) (5,639 )
Prepaid expenses and other current assets (3,426 ) (2,681 )
Other non-current assets (2,450 ) (514 )
Accrued expenses and other liabilities (5,448 ) (752 )
Accounts payable 4,166 (184 )
Deferred revenue 3,478 1,818
Other non-current liabilities   1,578     3,022  
Net cash provided by operating activities   40,954     35,187  
 
INVESTING ACTIVITIES:
Purchase of property and equipment (9,569 ) (9,181 )
Capitalization of internally developed software (10,622 ) (5,651 )
Acquisition of business   (188,345 )   -  
Net cash used in investing activities   (208,536 )   (14,832 )
 
FINANCING ACTIVITIES:
Proceeds from issuance of Convertible Notes due 2023 345,000 -
Debt issuance costs (9,488 ) -
Proceeds from borrowings on revolving credit facility 195,000 25,000
Payments on revolving credit facility (276,168 ) (25,000 )
Payment of Term Notes - (35,862 )
Payments of definite consideration - (445 )
Payments of contingent consideration (2,193 ) (1,929 )
Payments of purchase consideration liabilities - (235 )
Proceeds from exercise of stock options 2,540 2,617
Purchase of treasury stock for stock-based tax withholdings (14,395 ) (9,650 )
Issuance of restricted stock   3     4  
Net cash provided by (used in) financing activities   240,299     (45,500 )
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH (572 ) 283
 
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH   72,145     (24,862 )
 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD 62,115 54,592
       
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (a) $ 134,260   $ 29,730  
 
(a) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheet:
Current Assets:
Cash and cash equivalents $ 134,032 $ 27,730
Restricted cash included in prepaid expenses and other current assets   228     2,000  
Total cash, cash equivalents and restricted cash $ 134,260   $ 29,730  
 
           
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,
2018 2017 2018 2017
 
Total revenues $ 201,116 $ 167,417 $ 399,127 $ 325,203
Deferred revenue fair value adjustment   62     52     66     105  
Adjusted revenues $ 201,178   $ 167,469   $ 399,193   $ 325,308  
 
Net income (loss) $ (5,991 ) $ (6,470 ) $ 2,011 $ (19,605 )
Add (deduct):
Deferred revenue fair value adjustment 62 52 66 105
Interest income (374 ) (29 ) (784 ) (50 )
Interest expense 5,992 3,877 11,228 8,813
Accretion on contingent consideration and purchase liability 95 148 196 304
Income tax provision (benefit) 566 4,844 (13,428 ) 9,142
Depreciation and amortization 19,185 15,465 38,731 31,300
Non-cash compensation expense 10,476 7,945 18,971 15,403
Restructuring charges and transaction costs 3,345 2,249 5,937 5,627
Severance 1,049 338 3,861 663
Litigation related expense - 52 - 1,033
Foreign currency (339 ) 122 (571 ) 412
Non-income tax expense adjustment 27 414 (101 ) 1,163
Loss allocation from equity method investment 151 417 811 702
Loss attributable to non-controlling interest   515     101     584     351  
Adjusted EBITDA $ 34,759   $ 29,525   $ 67,512   $ 55,363  
 
Net income (loss) $ (5,991 ) $ (6,470 ) $ 2,011 $ (19,605 )
Income tax provision (benefit) (1)   566     4,844     (13,428 )   9,142  
Loss before income tax provision (5,425 ) (1,626 ) $ (11,417 ) $ (10,463 )
Add (deduct):
Deferred revenue fair value adjustment 62 52 66 105
Accretion on contingent consideration and purchase liability 95 148 196 304
Non-cash interest expense 3,032 1,331 4,900 4,853
Non-cash compensation expense 10,476 7,945 18,971 15,403
Restructuring charges and transaction costs 3,345 2,249 5,937 5,627
Severance 1,049 338 3,861 663
Amortization of acquired intangibles 13,419 10,371 27,354 20,956
Litigation related expense - 52 - 1,033
Foreign currency (339 ) 122 (571 ) 412
Non-income tax expense adjustment 27 414 (101 ) 1,163
Loss allocation from equity method investment 151 417 811 702
Loss attributable to non-controlling interest   515     101     584     351  
Adjusted net income before income tax effect 26,407 21,914 50,591 41,109
Income tax effect (2)   (7,130 )   (8,766 )   (13,660 )   (16,444 )
Adjusted net income $ 19,277   $ 13,148   $ 36,931   $ 24,665  
 
Basic number of weighted-average shares outstanding 45,247,331 43,855,479 44,963,735 43,513,074
Effect of dilutive shares:
Options to purchase common stock 1,325,947 1,597,746 1,360,300 1,670,493
Unvested restricted stock units   643,319     473,892     832,170     551,227  
Diluted number of weighted-average shares outstanding   47,216,597     45,927,117     47,156,205     45,734,794  
 
Adjusted net income per share - diluted $ 0.41   $ 0.29   $ 0.78   $ 0.54  

________________________________

(1) For the three months ended June 30, 2018 and 2017, the effective tax rate computed in accordance with US GAAP equaled (10.4%) and (297.9%), respectively. For the six months ended June 30, 2018 and 2017, the effective tax rate computed in accordance with US GAAP equaled 117.6% and (87.4%), respectively.
(2) An estimated normalized effective tax rate of 27% has been used to compute adjusted net income for the three and six months ended June 30, 2018. An estimated normalized effective tax rate of 40% has been used to compute adjusted net income for the three and six months ended June 30, 2017.
 
           
Envestnet, Inc.
Reconciliation of Non-GAAP Financial Measures
Segment Information
(in thousands)
(unaudited)
 
Three Months Ended June 30, 2018
Envestnet Envestnet | Yodlee Nonsegment Total
 
Total revenues $ 156,928 $ 44,188 $ $ 201,116
Deferred revenue fair value adjustment   60     2         62  
Adjusted revenues $ 156,988   $ 44,190   $   $ 201,178  
 
Income (loss) from operations $ 16,359 $ (3,296 ) $ (13,058 ) $ 5
Add:
Deferred revenue fair value adjustment 60 2 62
Accretion on contingent consideration and purchase liability 95 95
Depreciation and amortization 11,026 8,159 19,185
Non-cash compensation expense 5,080 2,936 2,460 10,476
Restructuring charges and transaction costs 188 403 2,754 3,345
Non-income tax expense adjustment 27 27
Severance 1,049 1,049
Loss attributable to non-controlling interest   515             515  
Adjusted EBITDA $ 34,399   $ 8,204   $ (7,844 ) $ 34,759  
 
Three Months Ended June 30, 2017
Envestnet Envestnet | Yodlee Nonsegment Total
 
Total revenues $ 129,372 $ 38,045 $ $ 167,417
Deferred revenue fair value adjustment   7     45         52  
Adjusted revenues $ 129,379   $ 38,090   $   $ 167,469  
 
Income (loss) from operations $ 15,811 $ (5,635 ) $ (7,433 ) $ 2,743
Add:
Deferred revenue fair value adjustment 7 45 52
Accretion on contingent consideration and purchase liability 148 148
Depreciation and amortization 6,361 9,104 15,465
Non-cash compensation expense 4,218 2,721 1,006 7,945
Restructuring charges and transaction costs 600 1,649 2,249
Non-income tax expense adjustment 414 414
Severance 307 15 16 338
Litigation related expense 52 52
Other loss 18 18
Loss attributable to non-controlling interest   101             101  
Adjusted EBITDA $ 27,967   $ 6,302   $ (4,744 ) $ 29,525  
 
Six Months Ended June 30, 2018
Envestnet Envestnet | Yodlee Nonsegment Total
 
Total revenues $ 312,916 $ 86,211 $ $ 399,127
Deferred revenue fair value adjustment   58     8         66  
Adjusted revenues $ 312,974   $ 86,219   $   $ 399,193  
 
Income (loss) from operations $ 32,220 $ (7,705 ) $ (25,248 ) $ (733 )
Add (deduct):
Deferred revenue fair value adjustment 58 8 66
Accretion on contingent consideration and purchase liability 196 196
Depreciation and amortization 22,499 16,232 38,731
Non-cash compensation expense 9,134 5,400 4,437 18,971
Restructuring charges and transaction costs 225 603 5,109 5,937
Non-income tax expense adjustment (101 ) (101 )
Severance 3,478 383 3,861
Loss attributable to non-controlling interest   584             584  
Adjusted EBITDA $ 68,293   $ 14,921   $ (15,702 ) $ 67,512  
 
Six Months Ended June 30, 2017
Envestnet Envestnet | Yodlee Nonsegment Total
 
Total revenues $ 250,690 $ 74,513 $ $ 325,203
Deferred revenue fair value adjustment   36     69         105  
Adjusted revenues $ 250,726   $ 74,582   $   $ 325,308  
 
Income (loss) from operations $ 29,322 $ (13,343 ) $ (16,590 ) $ (611 )
Add:
Deferred revenue fair value adjustment 36 69 105
Accretion on contingent consideration and purchase liability 304 304
Depreciation and amortization 12,782 18,518 31,300
Non-cash compensation expense 7,892 5,462 2,049 15,403
Restructuring charges and transaction costs 695 4,932 5,627
Non-income tax expense adjustment 1,163 1,163
Severance 423 224 16 663
Litigation related expense 1,033 1,033
Other loss 25 25
Loss attributable to non-controlling interest   351             351  
Adjusted EBITDA $ 52,968   $ 11,963   $ (9,568 ) $ 55,363  
 
             
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,
2017   2017   2017   2018   2018
(in millions except accounts and advisors data)
Platform Assets
Assets Under Management (AUM) $ 122,543 $ 131,809 $ 141,518 $ 143,945 $ 148,537
Assets Under Administration (AUA)   271,450   293,963   308,480   353,379   360,850
Subtotal AUM/A 393,993 425,772 449,998 497,324 509,387
Subscription   1,099,775   1,161,893   1,253,528   2,076,382   2,167,084
Total Platform Assets $ 1,493,768 $ 1,587,665 $ 1,703,526 $ 2,573,706 $ 2,676,471
Platform Accounts
AUM 614,973 652,060 685,925 724,774 759,926
AUA   1,083,417   1,145,050   1,217,697   1,389,489   1,417,795
Subtotal AUM/A 1,698,390 1,797,110 1,903,622 2,114,263 2,177,721
Subscription   4,846,596   4,944,640   5,054,015   7,985,777   8,042,900
Total Platform Accounts   6,544,986   6,741,750   6,957,637   10,100,040   10,220,621
Advisors
AUM/A 38,498 40,379 40,485 44,790 44,900
Subscription   24,499   24,501   25,566   43,037   43,700
Total Advisors   62,997   64,880   66,051   87,827   88,600
 

The following tables summarize the changes in AUM and AUA for the three months ended June 30, 2018:

                 
In Millions Except Accounts 3/31/2018

Gross
Sales

Redemp-
tions

Net
Flows

Market
Impact

Reclass to
Subscription

6/30/2018
 
Assets under Management (AUM) $ 143,945 $ 13,859 $ (8,138 ) $ 5,721 $ 987 $ (2,116 ) $ 148,537
Assets under Administration (AUA)   353,379   27,015   (23,186 )   3,829   5,022   (1,380 )   360,850
Total AUM/A $ 497,324 $ 40,874 $ (31,324 ) $ 9,550 $ 6,009 $ (3,496 ) $ 509,387
 
Fee-Based Accounts 2,114,263 65,515 (2,057 ) 2,177,721
 
The above AUM/A gross sales figures include $5.1 billion in new client conversions. The Company onboarded an additional $31.0 billion in subscription conversions during the second quarter, bringing total conversions for the quarter to $36.1 billion.

Source: Envestnet, Inc.

Envestnet, Inc.
Investor Relations
investor.relations@envestnet.com
(312) 827-3940
or
Media Relations
mediarelations@envestnet.com

Information is current only as of the date(s) indicated on the materials. We do not have any current intention, and expressly disclaim any obligation, to supplement, update or revise any of the information in these documents. The information contained in these documents should be considered accurate only as of the date of the relevant document. This information may change over time; therefore, visitors to this web site should not assume that the information contained in these documents remains accurate at a later time. Envestnet, Inc.'s press releases, presentations and printed remarks are included on this website for historical purposes only.

Except for historical information and discussions, statements set forth throughout this web site may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 or other applicable laws. These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially, as discussed in the company's filings with the U.S. Securities and Exchange Commission.

Envestnet, Inc.'s financial performance is subject to risks and uncertainties, some of which are discussed in forward-looking statements contained in its reports filed with the U.S. Securities and Exchange Commission. Actual results may differ materially from those described in the forward-looking statements. The stock data above is presented for informational purposes only and is not intended for trading purposes. Stock information may be delayed and reflects stock splits. Historical investment performance is not an indication of future performance.

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