Envestnet Reports Unaudited Fourth Quarter and Full Year 2012 Financial Results; Announces Engagement of New Audit Firm
Envestnet (NYSE: ENV), a leading provider of unified wealth management
technology and services to investment advisors, today reported financial
results for its fourth quarter and full year ended December 31, 2012.
Key Financial Metrics
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Fourth Quarter
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%
|
|
|
|
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Full Year
|
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%
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(in millions except per share data)
|
|
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2012
|
|
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2011
|
|
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Change
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|
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2012
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|
|
2011
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Revenues from AUM/A
|
|
|
$34.7
|
|
|
$24.6
|
|
|
41%
|
|
|
|
|
$127.2
|
|
|
$99.2
|
|
|
28%
|
Total Revenues
|
|
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$44.4
|
|
|
$30.5
|
|
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45%
|
|
|
|
|
$157.3
|
|
|
$123.2
|
|
|
28%
|
Adjusted Revenues(1) |
|
|
$44.6
|
|
|
$30.5
|
|
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46%
|
|
|
|
|
$158.5
|
|
|
$123.2
|
|
|
29%
|
Adjusted EBITDA(1) |
|
|
$7.2
|
|
|
$6.5
|
|
|
11%
|
|
|
|
|
$24.0
|
|
|
$27.4
|
|
|
-13%
|
Adjusted Net Income per Share(1) |
|
|
$ 0.10
|
|
|
$ 0.11
|
|
|
-9%
|
|
|
|
|
$ 0.32
|
|
|
$ 0.42
|
|
|
-24%
|
|
|
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Financial Results for the Fourth Quarter of 2012 Compared to the
Fourth Quarter of 2011:
-
Revenues from assets under management (AUM) or assets under
administration (AUA) increased 41% to $34.7 million for the fourth
quarter of 2012 from $24.6 million for the fourth quarter of 2011;
total revenues, which include licensing and professional services
fees, increased 45% to $44.4 million for the fourth quarter of 2012
from $30.5 million for the fourth quarter of 2011.
-
Adjusted revenues, which exclude the effect of purchase accounting on
the fair value of acquired deferred revenue, increased 46% to $44.6
million for the fourth quarter of 2012 from $30.5 million for the
fourth quarter of 2011.
-
Net income was $0.8 million, or $0.02 per diluted share, for the
fourth quarter of 2012 compared to $1.8 million, or $0.06 per diluted
share, for the fourth quarter of 2011.
-
Adjusted EBITDA(1) was $7.2 million for the fourth quarter
of 2012 compared to $6.5 million for the fourth quarter of 2011.
-
Adjusted Net Income(1) was $3.3 million, or $0.10 per
diluted share, for the fourth quarter of 2012 compared to $3.5
million, or $0.11 per diluted share, for the fourth quarter of 2011.
Financial Results for Full Year 2012 Compared to Full Year 2011:
-
Revenues from AUM or AUA increased 28% to $127.2 million for 2012 from
$99.2 million for 2011; total revenues, which include licensing and
professional services fees, increased 28% to $157.3 million for 2012
from $123.2 million for 2011.
-
Adjusted revenues, which exclude the effect of purchase accounting on
the fair value of acquired deferred revenue, increased 29% to $158.5
million for 2012 from $123.2 million for 2011.
-
Net income was $1.4 million, or $0.04 per diluted share, for 2012
compared to $7.6 million, or $0.23 per diluted share, for 2011.
-
Adjusted EBITDA(1) was $24.0 million for 2012 compared to
$27.4 million for 2011. Adjusted EBITDA increased throughout 2012,
having grown 42% from $5.1 million in the first quarter to $7.2
million in the fourth quarter, ending the year at a $28.9 million
annual run rate.
-
Adjusted Net Income(1) was $10.6 million, or $0.32 per
diluted share, for 2012 compared to $13.8 million, or $0.42 per
diluted share, for 2011.
“During 2012, we successfully delivered on our organic growth and
acquisition plans, growing adjusted revenue by 29 percent year over
year,” said Jud Bergman, Chairman and CEO of Envestnet. “Our advisor
base grew by 16 percent and accounts grew by 32 percent, demonstrating
our ability to both add advisors to our platform, and more importantly
deepen our relationship with them. This is strong evidence of
Envestnet’s leadership role in empowering advisors to transform wealth
management to a transparent, conflict-free and fully-aligned standard of
care for investors.”
“We unify and simplify the wealth management process for advisors,
empowering them to achieve higher standards in portfolio and practice
management. As we empower advisors to deliver better results for their
clients, we believe Envestnet is well-positioned to deliver substantial
revenue growth and margin expansion in 2013,” concluded Mr. Bergman.
Key Operating Metrics as of and for the Quarter Ended December 31,
2012:
-
AUM/A of $98.3 billion, up 40% from December 31, 2011
-
Accounts (AUM/A only) of 449,478, up 32% from December 31, 2011
-
Advisors (AUM/A only) served totaled 16,085, up 16% from December 31,
2011
-
Gross sales of AUM/A of $9.7 billion, resulting in net flows of $4.2
billion
The following tables summarize the changes in AUM and AUA for the
quarter and year ended December 31, 2012:
|
|
|
|
|
|
Gross
|
|
|
Redemp-
|
|
|
Net
|
|
|
Market
|
|
|
|
In Millions Except Account Data
|
|
|
9/30/12
|
|
|
Sales
|
|
|
tions
|
|
|
Flows
|
|
|
Impact
|
|
|
12/31/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Assets under Management (AUM)
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|
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$
|
29,232
|
|
|
$
|
3,319
|
|
|
$
|
(1,908
|
)
|
|
|
$
|
1,411
|
|
|
$
|
327
|
|
|
$
|
30,970
|
Assets under Administration (AUA)
|
|
|
|
64,229
|
|
|
|
6,336
|
|
|
|
(3,565
|
)
|
|
|
|
2,771
|
|
|
|
368
|
|
|
|
67,368
|
Total AUM/A
|
|
|
$
|
93,461
|
|
|
$
|
9,655
|
|
|
$
|
(5,473
|
)
|
|
|
$
|
4,182
|
|
|
$
|
695
|
|
|
$
|
98,338
|
Fee-Based Accounts
|
|
|
|
427,112
|
|
|
|
43,532
|
|
|
|
(21,166
|
)
|
|
|
|
22,366
|
|
|
|
|
|
|
449,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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During the fourth quarter, the Company added $1.5 billion of conversions
included in the above AUM/A gross sales figures, and an additional $7.9
billion of conversions in Licensing.
|
|
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|
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Gross
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|
|
Redemp-
|
|
|
|
|
|
Market
|
|
|
|
In Millions Except Account Data
|
|
|
12/31/11
|
|
|
Sales
|
|
|
tions
|
|
|
Net Flows
|
|
|
Impact
|
|
|
12/31/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
Assets under Management (AUM)
|
|
|
$
|
22,936
|
|
|
$
|
12,487
|
|
|
$
|
(6,850
|
)
|
|
|
$
|
5,637
|
|
|
$
|
2,397
|
|
|
$
|
30,970
|
Assets under Administration (AUA)
|
|
|
|
47,148
|
|
|
|
28,381
|
|
|
|
(12,520
|
)
|
|
|
|
15,861
|
|
|
|
4,359
|
|
|
|
67,368
|
Total AUM/A
|
|
|
$
|
70,084
|
|
|
$
|
40,868
|
|
|
$
|
(19,370
|
)
|
|
|
$
|
21,498
|
|
|
$
|
6,756
|
|
|
$
|
98,338
|
Fee-Based Accounts
|
|
|
|
340,674
|
|
|
|
191,551
|
|
|
|
(82,747
|
)
|
|
|
|
108,804
|
|
|
|
|
|
|
449,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During 2012, the Company added $10.4 billion of conversions included in
the above AUM/A gross sales figures, and an additional $13.2 billion of
conversions in Licensing.
Review of Fourth Quarter Financial Results
Adjusted revenues increased 46% to $44.6 million for the fourth quarter
of 2012 from $30.5 million for the fourth quarter of 2011. The increase
was primarily due to a 41% increase in revenues from AUM or AUA to $34.7
million from $24.6 million in the prior year period, as well as higher
licensing and professional services revenues related to the acquisitions
of Tamarac Inc. and Prima Capital Holding, Inc., both of which closed
during the second quarter of 2012.
Total operating expenses in the fourth quarter of 2012 increased 52% to
$42.7 million from $28.1 million in the prior year period. Cost of
revenues increased 54% to $16.0 million in the fourth quarter of 2012
from $10.4 million in the fourth quarter of 2011 due to the increase in
revenue from AUM or AUA and additional cost from acquired businesses.
Compensation and benefits increased 59% to $15.2 million in the fourth
quarter of 2012 from $9.6 million in the prior year period due to higher
personnel cost from completed acquisitions, as well as higher
stock-based compensation expense. General and administration expenses
increased 34% to $8.1 million in the fourth quarter of 2012 from $6.0
million in the prior year period, primarily due to transaction costs
related to the completed acquisitions, and ongoing expense from the
acquired companies.
Income from operations was $1.7 million for the fourth quarter of 2012
compared to $2.4 million for the fourth quarter of 2011. Net income was
$0.8 million, or $0.02 per diluted share, for the fourth quarter of 2012
compared to $1.8 million, or $0.06 per diluted share, for the fourth
quarter of 2011. Adjusted EBITDA(1) in the fourth quarter of
2012 was $7.2 million, compared to $6.5 million in the prior year
period. Adjusted Net Income(1) was $3.3 million, compared to
$3.5 million in the fourth quarter of 2011. Adjusted Net Income Per Share(1)
was $0.10 per diluted share, compared to $0.11 per diluted share in the
fourth quarter of 2011.
Change in Independent Registered Public Accounting Firm
In a Form 8-K filed today with the Securities and Exchange Commission
(“Commission”), the Company reported that its Audit Committee terminated
McGladrey LLP (“McGladrey”) and appointed KPMG (“KPMG”) as its
independent registered public accounting firm. The Audit Committee
reached this decision after it was determined that certain non-audit tax
services provided by McGladrey to Envestnet may be inconsistent with the
Commission’s rules on auditor independence. As a result, KPMG will
perform the Company’s 2012 audit, as well as a re-audit of the Company’s
2011 financial statements, to ensure independent audit opinions are
provided on the Company’s financial statements.
Envestnet’s Audit Committee and management believe that the financial
statements contained in this press release and Envestnet’s previous SEC
filings fairly present, in all material respects, the financial
condition and results of operations of Envestnet as of and for the
periods presented and may continue to be relied upon. Nevertheless, in
light of the requirements of federal securities laws and regulations and
because the purpose of the auditor independence rules is to provide
investors with confidence that audits of public companies are carried
out objectively and impartially by the independent accounting firms, it
has been determined that Envestnet’s investors will receive a meaningful
benefit from the reassurance that will be provided by having Envestnet’s
financial statements for the year ended December 31, 2011 re-audited by
a new independent accountant. Consequently, Envestnet’s Audit Committee
has engaged KPMG, as Envestnet’s new independent registered public
accountants, to re-audit Envestnet’s financial statements for the year
ended December 31, 2011 and to re-review Envestnet’s quarterly financial
information that will be contained in Envestnet’s Annual Report on Form
10-K for the year ended December 31, 2012 (the “2012 Form 10-K”).
Envestnet is working with KPMG to complete the necessary audit work as
quickly as reasonably practicable. It is unlikely, however, that the
audit for the year ended December 31, 2012 and the re-audit for the year
ended December 31, 2011 will be completed on or before March 18, 2013,
the date by which the 2012 Form 10-K must be filed with the SEC.
The Company's financial results presented in this press release have not
yet been reviewed or audited by KPMG. Consequently, the financial
results contained in this press release are subject to any adjustments
that may result from the completion of the audit process which may be
material. Furthermore, there can be no assurance that KPMG will not
reach conclusions regarding the application of accounting standards,
management estimates or other factors affecting our financial statements
that are different from the Company's management in connection with
their audit process, or that these conclusions will not require
adjustments to our prior financial results.
Conference Call
The Company will host a conference call to discuss fourth quarter 2012
financial results today at 5:00 p.m. ET. The live webcast can be
accessed from the Company's investor relations website at http://ir.envestnet.com/.
The conference call can also be accessed live over the phone by dialing
(877) 681-3374, or (719) 325-4910 for international callers. A replay
will be available beginning one hour after the call and can be accessed
from the Company’s investor relations website, or by dialing (877)
870-5176, or (858) 384-5517 for international callers; the conference ID
is 3797447. 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 unified wealth
management technology and services to investment advisors. Our
open-architecture platforms unify and simplify the wealth management
process, delivering unparalleled flexibility, accuracy, performance and
value. Envestnet solutions enable the transformation of wealth
management into a transparent, conflict-free and fully-aligned standard
of care, and empower advisors to deliver better results.
Envestnet's Advisor Suite® software empowers financial advisors to
better manage client outcomes and strengthen their practice. Envestnet
provides institutional-quality research and advanced portfolio solutions
through our Portfolio Management Consultants group, Envestnet | PMC®.
Envestnet | Tamarac provides leading rebalancing, reporting and practice
management software. For more information on Envestnet, please visit www.envestnet.com.
(1) Non-GAAP Financial Measures
“Adjusted revenues” exclude the effect of purchase accounting on the
fair value of acquired deferred revenue. Under U.S. 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 EBITDA” represents net income before deferred revenue fair
value adjustment, interest income, interest expense, income tax
provision, depreciation and amortization, non-cash stock-based
compensation expense, gain on investments, other income, restructuring
charges and transaction costs, severance, customer inducement costs, and
litigation related expense.
“Adjusted net income” represents net income before deferred revenue fair
value adjustment, non-cash stock-based compensation expense,
restructuring expense and transaction costs, severance, amortization of
acquired intangibles, customer inducement costs, imputed interest
expense and litigation related expense. Reconciling items are tax
effected using the income tax rates in effect on the applicable date.
“Adjusted net income per share” represents adjusted net income divided
by the diluted number of weighted-average shares outstanding.
See reconciliation of Non-GAAP Financial Measures at the end of this
press release. These measures should not be viewed as a substitute for
revenues or net income determined in accordance with United States
generally accepted accounting principles (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 (the
“Company”) expected financial performance and outlook, 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,
difficulty in sustaining rapid revenue growth, which may place
significant demands on the Company’s administrative, operational and
financial resources, fluctuations in the Company’s revenue, the
concentration of nearly all of the Company’s revenues from the delivery
of investment solutions and services to clients in the financial
advisory industry, the Company’s reliance on a limited number of clients
for a material portion of its revenue, the renegotiation of fee
percentages or termination of the Company’s services by its clients, the
Company’s ability to identify potential acquisition candidates, complete
acquisitions and successfully integrate acquired companies, the impact
of market and economic conditions on the Company’s revenues, compliance
failures, regulatory actions against the Company, the failure to protect
the Company’s intellectual property rights, the Company’s inability to
successfully execute the conversion of its clients’ assets from their
technology platform to the Company’s technology platform in a timely and
accurate manner, general economic conditions, changes to the Company’s
previously reported financial information as a result of audit or
reaudit, political and regulatory conditions, as well as 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 February
14, 2013 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, except share information)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
Assets
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
29,983
|
|
|
|
$
|
64,909
|
|
Fees receivable
|
|
|
|
9,000
|
|
|
|
|
9,644
|
|
Deferred tax assets, net
|
|
|
|
682
|
|
|
|
|
192
|
|
Prepaid expenses and other current assets
|
|
|
|
2,502
|
|
|
|
|
4,040
|
|
Total current assets
|
|
|
|
42,167
|
|
|
|
|
78,785
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
11,791
|
|
|
|
|
11,091
|
|
Internally developed software, net
|
|
|
|
4,324
|
|
|
|
|
3,524
|
|
Intangible assets, net
|
|
|
|
27,150
|
|
|
|
|
12,225
|
|
Goodwill
|
|
|
|
66,152
|
|
|
|
|
22,223
|
|
Deferred tax assets, net
|
|
|
|
7,218
|
|
|
|
|
6,692
|
|
Other non-current assets
|
|
|
|
3,535
|
|
|
|
|
3,162
|
|
Total assets
|
|
|
$
|
162,337
|
|
|
|
$
|
137,702
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
$
|
20,507
|
|
|
|
$
|
14,919
|
|
Accounts payable
|
|
|
|
3,156
|
|
|
|
|
1,974
|
|
Note payable
|
|
|
|
-
|
|
|
|
|
171
|
|
Deferred revenue
|
|
|
|
5,768
|
|
|
|
|
79
|
|
Total current liabilities
|
|
|
|
29,431
|
|
|
|
|
17,143
|
|
|
|
|
|
|
|
|
|
|
Deferred rent liability
|
|
|
|
2,195
|
|
|
|
|
1,414
|
|
Lease incentive liability
|
|
|
|
3,886
|
|
|
|
|
2,933
|
|
Other non-current liabilities
|
|
|
|
753
|
|
|
|
|
573
|
|
Total liabilities
|
|
|
|
36,265
|
|
|
|
|
22,063
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
126,072
|
|
|
|
|
115,639
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
162,337
|
|
|
|
$
|
137,702
|
|
|
|
|
|
|
|
|
|
|
|
|
Envestnet, Inc.
|
Condensed Consolidated Statements of Operations
|
(In thousands, except share and per share information)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Assets under management or administration
|
|
$
|
34,715
|
|
|
$
|
24,567
|
|
|
$
|
127,213
|
|
|
$
|
99,236
|
|
Licensing and professional services
|
|
|
9,664
|
|
|
|
5,975
|
|
|
|
30,053
|
|
|
|
23,942
|
|
Total revenues
|
|
|
44,379
|
|
|
|
30,542
|
|
|
|
157,266
|
|
|
|
123,178
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
15,956
|
|
|
|
10,357
|
|
|
|
56,119
|
|
|
|
42,831
|
|
Compensation and benefits
|
|
|
15,247
|
|
|
|
9,612
|
|
|
|
55,278
|
|
|
|
40,305
|
|
General and administration
|
|
|
8,075
|
|
|
|
6,047
|
|
|
|
30,617
|
|
|
|
21,856
|
|
Depreciation and amortization
|
|
|
3,384
|
|
|
|
1,700
|
|
|
|
12,400
|
|
|
|
6,376
|
|
Restructuring charges
|
|
|
-
|
|
|
|
381
|
|
|
|
115
|
|
|
|
434
|
|
Total operating expenses
|
|
|
42,662
|
|
|
|
28,097
|
|
|
|
154,529
|
|
|
|
111,802
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
1,717
|
|
|
|
2,445
|
|
|
|
2,737
|
|
|
|
11,376
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
3
|
|
|
|
12
|
|
|
|
29
|
|
|
|
77
|
|
Interest expense
|
|
|
-
|
|
|
|
(165
|
)
|
|
|
(3
|
)
|
|
|
(786
|
)
|
Other income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,100
|
|
Other expense
|
|
|
-
|
|
|
|
(1,183
|
)
|
|
|
-
|
|
|
|
(1,183
|
)
|
Loss on investments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4
|
)
|
Total other income (expense)
|
|
|
3
|
|
|
|
(1,336
|
)
|
|
|
26
|
|
|
|
(796
|
)
|
|
|
|
|
|
|
|
|
|
|
Income before income tax provision (benefit)
|
|
|
1,720
|
|
|
|
1,109
|
|
|
|
2,763
|
|
|
|
10,580
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision (benefit)
|
|
|
943
|
|
|
|
(720
|
)
|
|
|
1,363
|
|
|
|
2,975
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
777
|
|
|
$
|
1,829
|
|
|
$
|
1,400
|
|
|
$
|
7,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.02
|
|
|
$
|
0.06
|
|
|
$
|
0.04
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.02
|
|
|
$
|
0.06
|
|
|
$
|
0.04
|
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
32,338,488
|
|
|
|
31,803,862
|
|
|
|
32,162,672
|
|
|
|
31,643,390
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
33,843,464
|
|
|
|
32,539,215
|
|
|
|
33,386,161
|
|
|
|
32,863,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Envestnet, Inc.
|
Condensed Consolidated Statements of Cash Flows
|
(In thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
1,400
|
|
|
|
|
$
|
7,605
|
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
12,400
|
|
|
|
|
|
6,376
|
|
Amortization of customer inducements
|
|
|
|
|
-
|
|
|
|
|
|
4,568
|
|
Deferred rent and lease incentive
|
|
|
|
|
1,389
|
|
|
|
|
|
332
|
|
Loss on investments
|
|
|
|
|
-
|
|
|
|
|
|
4
|
|
Write-off of customer inducemenet asset
|
|
|
|
|
-
|
|
|
|
|
|
174
|
|
Contract settlement charges
|
|
|
|
|
-
|
|
|
|
|
|
1,183
|
|
Deferred income taxes
|
|
|
|
|
(664
|
)
|
|
|
|
|
2,162
|
|
Stock-based compensation
|
|
|
|
|
4,342
|
|
|
|
|
|
3,062
|
|
Interest expense
|
|
|
|
|
3
|
|
|
|
|
|
786
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Fees receivable
|
|
|
|
|
1,205
|
|
|
|
|
|
1,940
|
|
Prepaid expenses and other current assets
|
|
|
|
|
3,518
|
|
|
|
|
|
(1,988
|
)
|
Customer inducements, net
|
|
|
|
|
-
|
|
|
|
|
|
(1,000
|
)
|
Other non-current assets
|
|
|
|
|
(188
|
)
|
|
|
|
|
(1,006
|
)
|
Accrued expenses
|
|
|
|
|
3,406
|
|
|
|
|
|
802
|
|
Accounts payable
|
|
|
|
|
1,182
|
|
|
|
|
|
267
|
|
Deferred revenue
|
|
|
|
|
1,028
|
|
|
|
|
|
(507
|
)
|
Other non-current liabilities
|
|
|
|
|
180
|
|
|
|
|
|
(39
|
)
|
Net cash provided by operating activities
|
|
|
|
|
29,201
|
|
|
|
|
|
24,721
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
|
|
(4,838
|
)
|
|
|
|
|
(4,798
|
)
|
Capitalization of internally developed software
|
|
|
|
|
(2,350
|
)
|
|
|
|
|
(1,482
|
)
|
Repayment of notes payable
|
|
|
|
|
(174
|
)
|
|
|
|
|
(162
|
)
|
Proceeds from investments
|
|
|
|
|
7
|
|
|
|
|
|
28
|
|
Goodwill - working capital settlement
|
|
|
|
|
889
|
|
|
|
|
|
-
|
|
Acquisition of businesses, net
|
|
|
|
|
(62,352
|
)
|
|
|
|
|
(23,719
|
)
|
Net cash used in investing activities
|
|
|
|
|
(68,818
|
)
|
|
|
|
|
(30,133
|
)
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options
|
|
|
|
|
2,069
|
|
|
|
|
|
2,747
|
|
Issuance of restricted stock
|
|
|
|
|
2,759
|
|
|
|
|
|
-
|
|
Purchase of treasury stock
|
|
|
|
|
(137
|
)
|
|
|
|
|
(94
|
)
|
Net cash provided by financing activities
|
|
|
|
|
4,691
|
|
|
|
|
|
2,653
|
|
|
|
|
|
|
|
|
|
|
DECREASE IN CASH AND CASH EQUIVALENTS
|
|
|
|
|
(34,926
|
)
|
|
|
|
|
(2,759
|
)
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
|
|
64,909
|
|
|
|
|
|
67,668
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
|
|
$
|
29,983
|
|
|
|
|
$
|
64,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Envestnet, Inc.
|
Reconciliation of Non-GAAP Financial Measures
|
(in thousands, except share and per share information, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
44,379
|
|
|
$
|
30,542
|
|
|
$
|
157,266
|
|
|
$
|
123,178
|
|
Deferred revenue fair value adjustment
|
|
|
|
230
|
|
|
|
-
|
|
|
|
1,248
|
|
|
|
-
|
|
Adjusted revenues
|
|
|
$
|
44,609
|
|
|
$
|
30,542
|
|
|
$
|
158,514
|
|
|
$
|
123,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
777
|
|
|
$
|
1,829
|
|
|
$
|
1,400
|
|
|
$
|
7,605
|
|
Deferred revenue fair value adjustment
|
|
|
|
230
|
|
|
|
-
|
|
|
|
1,248
|
|
|
|
-
|
|
Interest income
|
|
|
|
(3
|
)
|
|
|
(12
|
)
|
|
|
(29
|
)
|
|
|
(77
|
)
|
Interest expense
|
|
|
|
-
|
|
|
|
165
|
|
|
|
3
|
|
|
|
786
|
|
Income tax provision (benefit)
|
|
|
|
943
|
|
|
|
(720
|
)
|
|
|
1,363
|
|
|
|
2,975
|
|
Depreciation and amortization
|
|
|
|
3,384
|
|
|
|
1,700
|
|
|
|
12,400
|
|
|
|
6,376
|
|
Stock-based compensation expense
|
|
|
|
1,217
|
|
|
|
703
|
|
|
|
4,342
|
|
|
|
3,062
|
|
Restructuring charges and transaction costs
|
|
|
|
506
|
|
|
|
689
|
|
|
|
2,718
|
|
|
|
1,054
|
|
Severance
|
|
|
|
49
|
|
|
|
25
|
|
|
|
278
|
|
|
|
698
|
|
Litigation related expense
|
|
|
|
115
|
|
|
|
13
|
|
|
|
265
|
|
|
|
128
|
|
Loss on investments
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
Impairment of customer inducement asset
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
174
|
|
Contract settlement charges
|
|
|
|
-
|
|
|
|
1,183
|
|
|
|
-
|
|
|
|
1,183
|
|
Other income
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,100
|
)
|
Customer inducement costs
|
|
|
|
-
|
|
|
|
948
|
|
|
|
-
|
|
|
|
4,568
|
|
Adjusted EBITDA
|
|
|
$
|
7,218
|
|
|
$
|
6,523
|
|
|
$
|
23,988
|
|
|
$
|
27,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
777
|
|
|
$
|
1,829
|
|
|
$
|
1,400
|
|
|
$
|
7,605
|
|
Deferred revenue fair value adjustment
|
|
|
|
137
|
|
|
|
-
|
|
|
|
746
|
|
|
|
-
|
|
Stock-based compensation expense
|
|
|
|
729
|
|
|
|
420
|
|
|
|
2,597
|
|
|
|
1,831
|
|
Restructuring charges and transaction costs
|
|
|
|
486
|
|
|
|
412
|
|
|
|
1,810
|
|
|
|
630
|
|
Severance
|
|
|
|
29
|
|
|
|
15
|
|
|
|
166
|
|
|
|
417
|
|
Amortization of acquired intangibles
|
|
|
|
1,053
|
|
|
|
176
|
|
|
|
3,687
|
|
|
|
559
|
|
Litigation related expense
|
|
|
|
69
|
|
|
|
8
|
|
|
|
158
|
|
|
|
77
|
|
Customer inducement costs
|
|
|
|
-
|
|
|
|
567
|
|
|
|
-
|
|
|
|
2,732
|
|
Contract settlement charges
|
|
|
|
-
|
|
|
|
1,183
|
|
|
|
-
|
|
|
|
1,183
|
|
Contract settlement - reversal of deferred taxes
|
|
|
|
-
|
|
|
|
(1,187
|
)
|
|
|
-
|
|
|
|
(1,187
|
)
|
Impairment of customer inducement asset
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
104
|
|
Other income
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(658
|
)
|
Imputed interest expense
|
|
|
|
-
|
|
|
|
97
|
|
|
|
-
|
|
|
|
461
|
|
Adjusted net income
|
|
|
$
|
3,280
|
|
|
$
|
3,520
|
|
|
$
|
10,564
|
|
|
$
|
13,754
|
|
|
|
|
|
|
|
|
|
|
|
Diluted number of weighted-average shares outstanding
|
|
|
|
33,843,464
|
|
|
|
32,539,215
|
|
|
|
33,386,161
|
|
|
|
32,863,834
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share
|
|
|
$
|
0.10
|
|
|
$
|
0.11
|
|
|
$
|
0.32
|
|
|
$
|
0.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Adjustments to net income, excluding $459 of non-deductible
transaction costs in 2012, are tax-effected using an income tax rate of
40.2% for 2012 and 2011, respectively.
Envestnet, Inc.
|
Historical Assets, Accounts and Advisors
|
(in millions, except account and advisor data; unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
December 31,
|
|
|
March 31,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets Under Management (AUM)
|
|
|
$
|
22,936
|
|
|
$
|
26,084
|
|
|
$
|
26,758
|
|
|
$
|
29,232
|
|
|
$
|
30,970
|
Assets Under Administration (AUA)
|
|
|
|
47,148
|
|
|
|
54,336
|
|
|
|
60,511
|
|
|
|
64,229
|
|
|
|
67,368
|
Subtotal AUM/A
|
|
|
|
70,084
|
|
|
|
80,420
|
|
|
|
87,269
|
|
|
|
93,461
|
|
|
|
98,338
|
Licensing
|
|
|
|
69,514
|
|
|
|
76,235
|
|
|
|
229,268
|
|
|
|
254,256
|
|
|
|
269,729
|
Total Platform Assets
|
|
|
$
|
139,598
|
|
|
$
|
156,655
|
|
|
$
|
316,537
|
|
|
$
|
347,717
|
|
|
$
|
368,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUM
|
|
|
|
124,636
|
|
|
|
134,294
|
|
|
|
141,695
|
|
|
|
148,920
|
|
|
|
156,327
|
AUA
|
|
|
|
216,038
|
|
|
|
229,942
|
|
|
|
274,322
|
|
|
|
278,192
|
|
|
|
293,151
|
Subtotal AUM/A
|
|
|
|
340,674
|
|
|
|
364,236
|
|
|
|
416,017
|
|
|
|
427,112
|
|
|
|
449,478
|
Licensing
|
|
|
|
588,038
|
|
|
|
588,936
|
|
|
|
1,138,233
|
|
|
|
1,170,978
|
|
|
|
1,228,016
|
Total Platform Accounts
|
|
|
|
928,712
|
|
|
|
953,172
|
|
|
|
1,554,250
|
|
|
|
1,598,090
|
|
|
|
1,677,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUM/A
|
|
|
|
13,887
|
|
|
|
14,386
|
|
|
|
15,045
|
|
|
|
15,735
|
|
|
|
16,085
|
Licensing
|
|
|
|
5,709
|
|
|
|
5,351
|
|
|
|
6,758
|
|
|
|
6,878
|
|
|
|
6,941
|
Total Advisors
|
|
|
|
19,596
|
|
|
|
19,737
|
|
|
|
21,803
|
|
|
|
22,613
|
|
|
|
23,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Licensing metrics include Envestnet | Tamarac, which added
approximately $149 billion in assets, 550,000 accounts and 1,700
advisors as of May 1, 2012.