Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 04, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | ENVESTNET, INC. | |
Entity Central Index Key | 1,337,619 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 44,020,006 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 27,730 | $ 52,592 |
Fees and other receivables, net | 49,566 | 44,268 |
Prepaid expenses and other current assets | 18,938 | 16,224 |
Total current assets | 96,234 | 113,084 |
Property and equipment, net | 34,787 | 33,000 |
Internally developed software, net | 18,111 | 14,860 |
Intangible assets, net | 243,902 | 265,558 |
Goodwill | 432,850 | 431,936 |
Other non-current assets | 13,782 | 13,963 |
Total assets | 839,666 | 872,401 |
Current liabilities: | ||
Accrued expenses and other liabilities | 86,230 | 87,763 |
Accounts payable | 11,542 | 11,480 |
Current portion of debt | 38,696 | 37,926 |
Contingent consideration | 1,995 | 2,286 |
Deferred revenue | 19,055 | 16,499 |
Total current liabilities | 157,518 | 155,954 |
Convertible Notes | 155,729 | 152,575 |
Term Notes | 65,350 | 100,409 |
Contingent consideration | 617 | 2,582 |
Deferred revenue | 14,865 | 15,643 |
Deferred rent and lease incentive | 14,398 | 12,060 |
Deferred tax liabilities, net | 12,094 | 5,555 |
Other non-current liabilities | 15,027 | 13,436 |
Total liabilities | 435,598 | 458,214 |
Commitments and contingencies | ||
Redeemable units in ERS | 900 | 900 |
Stockholders’ equity: | ||
Preferred stock, par value $0.005, 50,000,000 shares authorized | ||
Common stock, par value $0.005, 500,000,000 shares authorized; 56,661,704 and 55,642,686 shares issued as of June 30, 2017 and December 31, 2016, respectively; 43,998,099 and 43,240,567 shares outstanding as of June 30, 2017 and December 31, 2016, respectively | 283 | 278 |
Additional paid-in capital | 534,997 | 516,675 |
Accumulated deficit | (90,179) | (70,574) |
Treasury stock at cost, 12,663,605 and 12,402,119 shares as of June 30, 2017 and December 31, 2016, respectively | (42,718) | (33,068) |
Accumulated other comprehensive income (loss) | 387 | (422) |
Total stockholders’ equity | 402,770 | 412,889 |
Non-controlling interest | 398 | 398 |
Total equity | 403,168 | 413,287 |
Total liabilities and equity | $ 839,666 | $ 872,401 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Condensed Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.005 | $ 0.005 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, par value (in dollars per share) | $ 0.005 | $ 0.005 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 56,661,704 | 55,642,686 |
Common stock, shares outstanding | 43,998,099 | 43,240,567 |
Treasury stock, shares | 12,663,605 | 12,402,119 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues: | ||||
Assets under management or administration | $ 98,959 | $ 86,056 | $ 193,121 | $ 168,927 |
Subscription and licensing | 59,802 | 47,037 | 117,712 | 90,657 |
Professional services and other | 8,656 | 8,615 | 14,370 | 13,945 |
Total revenues | 167,417 | 141,708 | 325,203 | 273,529 |
Operating expenses: | ||||
Cost of revenues | 55,735 | 44,902 | 104,961 | 85,060 |
Compensation and benefits | 64,996 | 57,664 | 130,528 | 120,280 |
General and administration | 28,478 | 28,372 | 59,025 | 54,099 |
Depreciation and amortization | 15,465 | 17,100 | 31,300 | 33,180 |
Total operating expenses | 164,674 | 148,038 | 325,814 | 292,619 |
Income (loss) from operations | 2,743 | (6,330) | (611) | (19,090) |
Other expense, net | (4,369) | (4,831) | (9,852) | (8,780) |
Loss before income tax provision (benefit) | (1,626) | (11,161) | (10,463) | (27,870) |
Income tax provision (benefit) | 4,844 | (3,218) | 9,142 | (8,934) |
Net loss | (6,470) | (7,943) | (19,605) | (18,936) |
Net loss attributable to Envestnet, Inc. | $ (6,470) | $ (7,943) | $ (19,605) | $ (18,936) |
Net loss per share attributable to Envestnet, Inc.: | ||||
Basic (in dollars per share) | $ (0.15) | $ (0.19) | $ (0.45) | $ (0.44) |
Diluted (in dollars per share) | $ (0.15) | $ (0.19) | $ (0.45) | $ (0.44) |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 43,855,479 | 42,752,465 | 43,513,074 | 42,632,964 |
Diluted (in shares) | 43,855,479 | 42,752,465 | 43,513,074 | 42,632,964 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Condensed Consolidated Statements of Comprehensive Loss | ||||
Net loss attributable to Envestnet, Inc. | $ (6,470) | $ (7,943) | $ (19,605) | $ (18,936) |
Other comprehensive income, net of taxes | ||||
Foreign currency translation gain (loss) | 76 | (299) | 809 | (314) |
Gains on foreign currency contracts designated as cash flow hedges reclassified to earnings | 175 | 352 | ||
Total other comprehensive income (loss), net of taxes | 76 | (124) | 809 | 38 |
Comprehensive loss, net of taxes | $ (6,394) | $ (8,067) | $ (18,796) | $ (18,898) |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Equity - 6 months ended Jun. 30, 2017 - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Non-controlling Interest | Total |
Balance at Dec. 31, 2016 | $ 278 | $ (33,068) | $ 516,675 | $ (422) | $ (70,574) | $ 398 | $ 413,287 |
Balance (in shares) at Dec. 31, 2016 | 55,642,686 | (12,402,119) | |||||
Increase (decrease) in shareholders' equity | |||||||
Exercise of stock options | $ 1 | 2,616 | 2,617 | ||||
Exercise of stock options (in shares) | 293,283 | ||||||
Issuance of common stock - vesting of restricted stock units | $ 4 | 4 | |||||
Issuance of common stock units - vesting of restricted stock (in shares) | 725,735 | ||||||
Stock-based compensation expense | 15,706 | 15,706 | |||||
Purchase of treasury stock for stock-based tax withholdings | $ (9,650) | (9,650) | |||||
Purchase of treasury stock for stock-based tax withholdings (in shares) | (261,486) | ||||||
Foreign currency translation gain | 809 | 809 | |||||
Net loss | (19,605) | (19,605) | |||||
Balance at Jun. 30, 2017 | $ 283 | $ (42,718) | $ 534,997 | $ 387 | $ (90,179) | $ 398 | $ 403,168 |
Balance (in shares) at Jun. 30, 2017 | 56,661,704 | (12,663,605) |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows $ in Thousands | 6 Months Ended | |
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | |
OPERATING ACTIVITIES: | ||
Net loss | $ (19,605) | $ (18,936) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 31,300 | 33,180 |
Deferred rent and lease incentive | 583 | (325) |
Provision for doubtful accounts | 341 | 106 |
Deferred income taxes | 6,524 | 3,504 |
Stock-based compensation expense | 15,403 | 18,318 |
Non-cash interest expense | 4,853 | 4,031 |
Accretion on contingent consideration and purchase liability | 304 | 120 |
Fair market value adjustment on contingent consideration | 489 | |
Loss on disposal of fixed assets | 69 | 220 |
Loss allocation from equity method investment | 702 | |
Changes in operating assets and liabilities, net of acquisitions: | ||
Fees and other receivables | (5,639) | 4,242 |
Prepaid expenses and other current assets | (2,681) | (17,116) |
Other non-current assets | (514) | (2,320) |
Accrued expenses and other liabilities | (752) | (4,967) |
Accounts payable | (184) | 2,597 |
Deferred revenue | 1,818 | 1,447 |
Other non-current liabilities | 3,022 | 1,535 |
Net cash provided by operating activities | 35,544 | 26,125 |
INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (9,181) | (4,632) |
Capitalization of internally developed software | (5,651) | (3,245) |
Purchase of ERS units | (1,500) | |
Acquisition of businesses, net of cash acquired | (18,394) | |
Net cash used in investing activities | (14,832) | (27,771) |
FINANCING ACTIVITIES: | ||
Proceeds from borrowings on revolving credit facility | 25,000 | 15,000 |
Payment on revolving credit facility | (25,000) | (15,000) |
Payments of contingent consideration | (2,286) | |
Payments of definite consideration | (445) | |
Payments of purchase consideration liabilities | (235) | |
Payment of term notes | (35,862) | (4,000) |
Proceeds from exercise of stock options | 2,617 | 2,279 |
Purchase of treasury stock for stock-based tax withholdings | (9,650) | (9,834) |
Issuance of restricted stock units | 4 | 5 |
Net cash used in financing activities | (45,857) | (11,550) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 283 | |
DECREASE IN CASH AND CASH EQUIVALENTS | (24,862) | (13,196) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 52,592 | 51,718 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 27,730 | 38,522 |
Supplemental disclosure of cash flow information - net cash refunded (paid) during the period for income taxes | 275 | (915) |
Supplemental disclosure of cash flow information - cash paid during the period for interest | 3,960 | 4,192 |
Supplemental disclosure of non-cash operating, investing and financing activities: | ||
Leasehold improvements funded by lease incentive | 281 | |
Purchase liabilities included in accrued expenses and other liabilities | 818 | |
Purchase of fixed assets included in accounts payable and accrued expenses and other liabilities | $ 260 | |
Contingent consideration issued in a business acquisition | $ 1,929 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2017 | |
Organization and Description of Business | |
Organization and Description of Business | 1. Organization and Description of Business Envestnet, Inc. (“Envestnet”) and its subsidiaries (collectively, the “Company”) provide intelligent systems for wealth management and financial wellness. Envestnet’s unified technology enhances advisor productivity and strengthens the wealth management process, delivering unparalleled flexibility, accuracy, performance, and value. Envestnet enables a transparent, independent, objective, and fiduciary standard of care, and empowers enterprises and advisors to more fully understand their clients. Through a combination of platform enhancements, partnerships and acquisitions, Envestnet uniquely provides a financial network connecting software, services and data, delivering better intelligence and enabling its customers to drive better outcomes. The Company offers these solutions principally through the following product/services suites: · Envestnet | Enterprise provides an end-to-end open architecture wealth management platform, through which advisors can construct portfolios for clients. It begins with aggregated household data which then leads to a financial plan, asset allocation, investment strategy, portfolio management, rebalancing and performance reporting. Advisors have access to over 17,000 investment products. Envestnet | Enterprise also sells data aggregation and reporting, data analytics, and digital advice capabilities to customers. · Envestnet | Tamarac TM provides leading trading, rebalancing, portfolio accounting, performance reporting and client relationship management (“CRM”) software, principally to high ‑ end registered investment advisers (“RIA”). · Envestnet | Retirement Solutions (“ERS”) offers a comprehensive suite of services for advisor-sold retirement plans. Leveraging integrated technology, ERS addresses the regulatory, data, and investment needs of retirement plans and delivers the information holistically. · Envestnet | PMC ® or Portfolio Management Consultants (“PMC”) provides research due diligence and consulting services to assist advisors in creating investment solutions for their clients. These solutions include more than 4,000 vetted managed account products, multi-manager portfolios, fund strategist portfolios, as well as proprietary products, such as Quantitative Portfolios. PMC also offers an Overlay Service, which includes patented portfolio overlay and tax optimization services. · Envestnet | Yodlee is a leading data aggregation and data intelligence platform. As a “big data” specialist, Yodlee gathers, refines and aggregates a massive set of end-user permissioned transaction level data, which it then provides to customers as data analytics solutions and market research services. Envestnet operates four RIAs and a registered broker-dealer. The RIAs are registered with the Securities and Exchange Commission (“SEC”). The broker-dealer is registered with the SEC, all 50 states and the District of Columbia and is a member of the Financial Industry Regulatory Authority (“FINRA”). |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation | |
Basis of Presentation | 2. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company as of June 30, 2017 and for the three and six months ended June 30, 2017 and 2016 have not been audited by an independent registered public accounting firm. These unaudited condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements for the year ended December 31, 2016 and reflect all normal recurring adjustments which are, in the opinion of management, necessary to present fairly the Company’s financial position as of June 30, 2017 and the results of operations, equity, comprehensive (income) loss and cash flows for the periods presented herein. The unaudited condensed consolidated balance sheet as of June 30, 2017 was derived from the Company’s audited financial statements for the year ended December 31, 2016 but does not include all disclosures, including notes required by accounting principles generally accepted in the United States of America (“GAAP”). The unaudited condensed consolidated financial statements include the accounts of Envestnet and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Accounts for the Envestnet segment that are denominated in a non-U.S. currency have been re-measured using the U.S. dollar as the functional currency. Certain accounts within the Envestnet | Yodlee segment are recorded and measured in foreign currencies. The assets and liabilities for those subsidiaries with a foreign currency functional currency are translated at exchange rates in effect at the balance sheet date, and revenues and expenses are translated at average exchange rates. Differences arising from these foreign currency translations are recorded in the unaudited condensed consolidated balance sheets as accumulated other comprehensive income (loss) within shareholders’ equity. The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the operating results to be expected for other interim periods or for the full fiscal year. The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 24, 2017. The preparation of these unaudited condensed consolidated financial statements requires management to make estimates and assumptions related to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these unaudited condensed consolidated financial statements in conformity with GAAP. Areas requiring the use of management estimates relate to estimating uncollectible receivables, revenue recognition, valuations and assumptions used for impairment testing of goodwill, intangible and other long-lived assets, fair value of restricted stock and stock options issued, fair value of contingent consideration, realization of deferred tax assets, uncertain tax positions, sales tax liabilities, fair value of the liability portion of the convertible debt and assumptions used to allocate purchase prices in business combinations. Actual results could differ materially from these estimates under different assumptions or conditions. Share repurchase program – On February 25, 2016, the Company announced that its Board of Directors had authorized a share repurchase program under which the Company may repurchase up to 2,000,000 shares of its common stock. The timing and volume of share repurchases will be determined by the Company’s management based on its ongoing assessments of the capital needs of the business, the market price of its common stock and general market conditions. No time limit has been set for the completion of the repurchase program, and the program may be suspended or discontinued at any time. The repurchase program authorizes the Company to purchase its common stock from time to time in the open market (including pursuant to a “Rule 10b5-1 plan”), in block transactions, in privately negotiated transactions, through accelerated stock repurchase programs, through option or other transactions or otherwise, all in compliance with applicable laws and other restrictions. As of June 30, 2017, 1,956,390 shares could still be purchased under this program. For the six month period ended June 30, 2017, the Company purchased no shares under this program. Recent Accounting Pronouncements - In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers,” which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. The original effective date for ASU 2014-09 would have required the Company to adopt beginning in its first quarter of 2017. However, in July 2015, the FASB voted to amend ASU 2014-09 by approving a one-year deferral of the effective date as well as providing the option to early adopt the standard on the original effective date. Accordingly, the Company will adopt the standard in its first quarter of 2018. In 2016, the Company began evaluating the impact of the adoption of the new revenue standard on its consolidated financial statements, including enhanced disclosures, as well as assessing the impact on systems, processes, controls. The Company expects the new revenue standard to have an impact on the estimation of variable transaction considerations, the allocation of variable considerations across distinct services, and the tracking and amortization of contract costs. We expect to begin capitalizing certain costs to obtain and fulfill a contract upon adoption of the new standard and are currently in the process of evaluating the period over which to amortize these capitalized costs. The Company has not yet quantified these amounts. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company plans to adopt the standard using the modified retrospective approach with the cumulative effect recognized as of the date of adoption. In February 2016, the FASB issued ASU 2016-02, “Leases.” This update amends the requirements for assets and liabilities recognized for all leases longer than twelve months. Lessees will be required to recognize a lease liability measured on a discounted basis, which is the lessee’s obligation to make lease payments arising from the lease, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. This standard will be effective for financial statements issued by public companies for the annual and interim periods beginning after December 15, 2018. Early adoption of the standard is permitted. The Company is currently evaluating the potential impact of this guidance on our consolidated financial statements. In March 2016, The FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” This update is intended to reduce the cost and complexity of accounting for share-based payments; however, some changes may also increase volatility in reported earnings. Under the new guidance, all excess tax benefits and deficiencies will be recorded as an income tax benefit or expense in the income statement and excess tax benefits will be recorded as an operating activity in the statements of cash flows. Upon adoption, we determined that we did not have previously unrecognized excess tax benefits to be recognized on a modified retrospective transition method as an adjustment to retained earnings. The new guidance also allows withholding up to the maximum individual statutory tax rate without classifying the awards as a liability. We did not elect an accounting policy change to withhold at the maximum individual statutory tax rate. The cash paid to satisfy the statutory income tax withholding obligation will continue to be classified as a financing activity in the statements of cash flows. Lastly, the update allows forfeitures to be estimated or recognized when they occur. The requirements for the excess tax effects related to share-based payments at settlement must be applied on a prospective basis, and the other requirements under this standard are to be applied on a retrospective basis. We did not elect an accounting policy change to record forfeitures as they occur and will continue to estimate forfeitures at each period. This standard is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2016. These changes became effective for the Company’s fiscal year beginning January 1, 2017 and have been reflected in these condensed consolidated financial statements. As a result of the retrospective adoption of ASU 2016-09, for the six months ended June 30, 2016, net cash provided by operating activities decreased by $183 with a corresponding offset to net cash used for financing activities. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,” which clarifies eight specific cash flow issues in an effort to reduce diversity in practice in how certain transactions are classified within the statement of cash flows. This ASU is effective for the Company January 1, 2018 with early adoption permitted. The ASU requires a retrospective application unless it is determined that it is impractical to do so for which it must be retrospectively applied at the earliest date practical. Upon adoption, the Company does not anticipate significant changes to the Company’s existing accounting policies or presentation of the consolidated statements of cash flows. In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350),” which removes step two from the goodwill impairment test. As a result, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units’ fair value. This standard will be effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2019. Early adoption is permitted. The Company has adopted this standard as of April 1, 2017, however it did not have a material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business (Topic 805), which provides a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This standard will be effective for public companies for annual and interim periods beginning after December 15, 2017. Early adoption is permitted effective for transactions not yet reported in financial statements issued or made available for issuance. The Company is currently evaluating the potential impact of this guidance on our consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. This update clarifies which changes to the terms and conditions of a share-based payment award require an entity to apply modification accounting. Specifically, an entity would not apply modification account if the fair value, vesting conditions, and classification as an equity or liability instrument are the same before and after the modification. The ASU is effective for financial statements issued by public companies for the annual and interim periods beginning after December 15, 2017. Early adoption of the standard is permitted. The standard will be applied prospectively to awards modified on or after the adoption date. The Company is currently evaluating the potential impact of our adoption of this guidance on our consolidated financial statements. |
Business Acquisitions
Business Acquisitions | 6 Months Ended |
Jun. 30, 2017 | |
Business Acquisitions | |
Business Acquisitions | 3. Business Acquisitions Wheelhouse Analytics LLC On October 3, 2016, the Company acquired all of the issued and outstanding membership interests of Wheelhouse Analytics LLC (“Wheelhouse”). Wheelhouse is a technology company that provides data analytics, mobile sales solutions, and online education tools to financial advisors, asset managers and enterprises. Wheelhouse is included in the Envestnet | Yodlee segment. The Company acquired Wheelhouse to be integrated with Yodlee’s industry-leading data and analytics solutions to strengthen Envestnet’s data-driven insights to financial advisors, asset managers and enterprises enabling them to better manage their businesses and client relationships and deliver better outcomes to their clients. Envestnet expects to deeply integrate Wheelhouse’s tools, delivering robust online dashboards and reporting that provides actionable intelligence. In connection with the acquisition of Wheelhouse, the Company paid cash consideration of $13,299 and is required to pay contingent consideration with the aggregate amount not to exceed $4,000 and certain holdbacks upon release. Changes to the estimated fair value of the contingent consideration are recognized in earnings of the Company. The preliminary estimated consideration transferred in the acquisition was as follows: Measurement Preliminary Period Estimate as of Estimate Adjustments June 30, 2017 Cash consideration $ 13,299 $ — $ 13,299 Contingent consideration liability 2,582 (218) 2,364 Purchase consideration liability 887 — 887 Working capital adjustment 110 — 110 Cash acquired (80) — (80) Total $ 16,798 $ (218) $ 16,580 The estimated fair values of certain working capital balances, contingent consideration, deferred revenue, identifiable intangible assets and goodwill are provisional and are based on the information that was available as of the acquisition date. The estimated fair values of these provisional items are based on certain valuation and other studies and are in progress and not yet at the point where there is sufficient information for a definitive measurement. The Company believes the preliminary information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair values reflected are subject to change and such changes could be significant. The Company expects to finalize the valuation of working capital balances, contingent consideration, deferred revenue, identifiable intangible assets and goodwill, and complete the acquisition accounting as soon as practicable but no later than October 3, 2017. The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition: Measurement Preliminary Period Estimate as of Estimate Adjustments June 30, 2017 Total tangible assets acquired $ 399 $ (14) $ 385 Total liabilities assumed (1,459) 39 (1,420) Identifiable intangible assets 7,300 (700) 6,600 Goodwill 10,558 457 11,015 Total net assets acquired $ 16,798 $ (218) $ 16,580 A summary of preliminary estimated identifiable intangible assets acquired, estimated useful lives and amortization method is as follows: Measurement Preliminary Period Estimate as of Estimated Amortization Estimate Adjustments June 30, 2017 Useful Life in Years Method Customer list $ 4,100 $ (100) $ 4,000 15 Accelerated Proprietary technology 3,000 (500) 2,500 6 Straight-line Trade names and domains 200 (100) 100 2 Straight-line Total $ 7,300 $ (700) $ 6,600 The results of Wheelhouse’s operations are included in the condensed consolidated statements of operations beginning October 3, 2016, and are not considered material to the Company’s results of operations. As such, no pro forma information is presented for the three and six months ended June 30, 2016. |
Cost of Revenues
Cost of Revenues | 6 Months Ended |
Jun. 30, 2017 | |
Cost of Revenues | |
Cost of Revenues | 4. Cost of Revenues The following table summarizes cost of revenues by revenue category for the periods presented herein: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Assets under management or administration $ 47,015 $ 38,500 $ 91,500 $ 75,409 Subscription and licensing 5,142 3,720 9,756 6,824 Professional services and other 3,578 2,682 3,705 2,827 Total $ 55,735 $ 44,902 $ 104,961 $ 85,060 |
Property and Equipment, Net
Property and Equipment, Net | 6 Months Ended |
Jun. 30, 2017 | |
Property and Equipment, Net | |
Property and Equipment, Net | 5. Property and equipment, net consists of the following: June 30, December 31, Estimated Useful Life 2017 2016 Cost: Computer equipment and software 3 years $ 58,442 $ 52,921 Leasehold improvements Shorter of the lease term or useful life of the asset 20,524 17,286 Office furniture and fixtures 3-7 years 7,710 6,911 Other office equipment 3-5 years 1,764 1,367 88,440 78,485 Less: accumulated depreciation and amortization (53,653) (45,485) Property and equipment, net $ 34,787 $ 33,000 Depreciation and amortization expense was as follows: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Depreciation and amortization expense $ $ 4,048 $ $ 7,407 |
Internally Developed Software,
Internally Developed Software, Net | 6 Months Ended |
Jun. 30, 2017 | |
Internally Developed Software, Net | |
Internally Developed Software, Net | 6. Internally developed software, net consists of the following: June 30, December 31, Estimated Useful Life 2017 2016 Internally developed software 5 years $ 39,369 $ 33,718 Less: accumulated amortization (21,258) (18,858) Internally developed software, net $ 18,111 $ 14,860 Amortization expense was as follows: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Amortization expense $ $ 857 $ $ 1,652 |
Intangible Assets, Net
Intangible Assets, Net | 6 Months Ended |
Jun. 30, 2017 | |
Intangible Assets, Net | |
Intangible Assets, Net | 7. Intangible Assets, Net Intangible assets, net consist of the following: June 30, 2017 December 31, 2016 Gross Net Gross Net Estimated Carrying Accumulated Carrying Carrying Accumulated Carrying Useful Life Amount Amortization Amount Amount Amortization Amount Customer lists 4 - 15 years $ 259,350 $ (66,820) $ 192,530 $ 259,490 $ (54,861) $ 204,629 Proprietary technologies 2 - 8 years 57,328 (25,419) 31,909 57,770 (20,214) 37,556 Trade names 2 - 7 years 24,889 (7,905) 16,984 25,007 (6,178) 18,829 Backlog 4 years 11,000 (8,521) 2,479 11,000 (6,456) 4,544 Total intangible assets $ 352,567 $ (108,665) $ 243,902 $ 353,267 $ (87,709) $ 265,558 Amortization expense was as follows: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Amortization expense $ $ 12,195 $ $ 24,121 Future amortization expense of the intangible assets as of June 30, 2017, is expected to be as follows: Years ending December 31: Remainder of 2017 $ 2018 2019 2020 2021 Thereafter $ |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 6 Months Ended |
Jun. 30, 2017 | |
Prepaid Expenses and Other Current Assets | |
Prepaid Expenses and Other Current Assets | 8. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following: June 30, December 31, 2017 2016 Non-income tax receivable $ $ 3,879 FinaConnect escrow 429 Income tax receivable 1,864 Prepaid technology 1,318 Prepaid insurance 552 Other 8,182 $ 18,938 $ 16,224 |
Other Non-Current Assets
Other Non-Current Assets | 6 Months Ended |
Jun. 30, 2017 | |
Other Non-Current Assets. | |
Other Non-Current Assets | 9. Other Non-Current Assets Other non-current assets consist of the following: June 30, December 31, 2017 2016 Investments in private companies $ $ 2,750 Deposits: Lease 4,262 Other 2,083 Assets to fund deferred compensation liability 2,738 Other 2,130 $ 13,782 $ 13,963 The Company owns 756,347 Class B Units in a privately held company at a historical purchase price of $1,250. The Company uses the cost method of accounting for this investment. T he Company owns 1,500,000 Class A units representing 21.4% of the outstanding membership interests of a privately held company for cash consideration of $1,500. Upon the approval by a majority of the Board of Directors of the privately held company in its sole discretion, prior to December 31, 2017, the privately held company may require that Envestnet purchase up to an additional 1,500,000 Class A units. The Company uses the equity method of accounting to record its portion of this privately held company’s net income or loss on a one quarter lag from the actual results of operations. The Company uses the equity method of accounting because of its less than 50 percent ownership. The Company’s interest in the earnings or losses of the privately held company is reflected in other expense, net on the condensed consolidated statements of operations. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | 10. Fair Value Measurements The Company follows ASC 825-10, Financial Instruments, which provides companies the option to report selected financial assets and liabilities at fair value. ASC 825-10 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect of the company’s choice to use fair value on its earnings. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the balance sheet. The Company has not elected the ASC 825-10 option to report selected financial assets and liabilities at fair value. Financial assets and liabilities at fair value are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels: Level I: Inputs based on quoted market prices in active markets for identical assets or liabilities at the measurement date. Level II: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or inputs that are observable and can be corroborated by observable market data. Level III: Inputs reflect management’s best estimates and assumptions of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments. The following tables set forth the fair value of the Company’s financial assets and liabilities measured at fair value in the condensed consolidated balance sheets as of June 30, 2017 and December 31, 2016, based on the three-tier fair value hierarchy. June 30, 2017 Fair Value Level I Level II Level III Assets Money market funds(1) $ $ $ — $ — Assets to fund deferred compensation liability(2) — — Total assets $ $ $ — $ Liabilities Contingent consideration $ $ — $ — $ Deferred compensation liability(3) — — Total liabilities $ $ $ — $ December 31, 2016 Fair Value Level I Level II Level III Assets Money market funds(1) $ $ $ — $ — Assets to fund deferred compensation liability(2) — — Total assets $ $ $ — $ Liabilities Contingent consideration $ $ — $ — $ Deferred compensation liability(3) — — Total liabilities $ $ $ — $ (1) The fair values of the Company’s investments in money-market funds are based on the daily quoted market prices for the net asset value of the various money market funds. (2) The fair value of assets to fund deferred compensation liability approximates the cash surrender value of the life insurance premiums and is included in other non-current assets in the condensed consolidated balance sheets. (3) The deferred compensation liability is included in other non-current liabilities in the condensed consolidated balance sheets and its fair market value is based on the daily quoted market prices for the net asset value of the various funds in which the participants have selected. Level I assets and liabilities include money-market funds not insured by the FDIC and deferred compensation liability. The Company periodically invests excess cash in money-market funds not insured by the FDIC. The Company believes that the investments in money market funds are on deposit with creditworthy financial institutions and that the funds are highly liquid. These money-market funds are considered Level I and are included in cash and cash equivalents in the condensed consolidated balance sheets. The fair value of the deferred compensation liability is based upon the daily quoted market prices for net asset value on the various funds selected by participants. Level III assets and liabilities consist of the estimated fair value of contingent consideration as well as the assets to fund deferred compensation liability. The fair market value of the assets to fund deferred compensation liability is based upon the cash surrender value of the life insurance premiums. The fair value of the contingent consideration liabilities related to the FinaConnect and Wheelhouse acquisitions were estimated using a discounted cash flow method with significant inputs that are not observable in the market and thus represent a Level III fair value measurement as defined in ASC 820, Fair Value Measurements and Disclosures . The significant inputs in the Level III measurement not supported by market activity included our assessments of expected future cash flows related to our acquisitions of FinaConnect and Wheelhouse during the subsequent periods from the date of acquisition, appropriately discounted considering the uncertainties associated with the obligation, and calculated in accordance with the terms of the agreement. The Company utilized a discounted cash flow method with expected future performance of FinaConnect and Wheelhouse, and their ability to meet the target performance objectives as the main driver of the valuation, to arrive at the fair values of their respective contingent consideration. The Company will continue to reassess the fair value of the contingent consideration made subsequent to the measurement period for each acquisition at each reporting date until settlement. Changes to the estimated fair values of the contingent consideration will be recognized in earnings of the Company and included in general and administration on the condensed consolidated statements of operations. The table below presents a reconciliation of contingent consideration liabilities of which the Company measured at fair value on a recurring basis using significant unobservable inputs (Level III) for the period from December 31, 2016 to June 30, 2017: Fair Value of Contingent Consideration Liabilities Balance at December 31, 2016 $ Settlement of contingent consideration liability Contingent consideration adjustment Accretion on contingent consideration Balance at June 30, 2017 $ 2,612 The table below presents a reconciliation of the assets to fund deferred compensation liability of which the Company measured at fair value on a recurring basis using significant unobservable inputs (Level III) for the period from December 31, 2016 to June 30, 2017: Fair Value of Assets to Fund Deferred Compensation Liability Balance at December 31, 2016 $ Contributions Balance at June 30, 2017 $ 4,776 The asset value was increased due to funding of the plan, which resulted in an asset value as of June 30, 2017 of $4,776, which was included in other non-current assets on the condensed consolidated balance sheets. The Company assesses the categorization of assets and liabilities by level at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer, in accordance with the Company’s accounting policy regarding the recognition of transfers between levels of the fair value hierarchy. There were no transfers between Levels I, II and III during the six months ended June 30, 2017. On December 15, 2014, the Company issued $172,500 of Convertible Notes. As of June 30, 2017 and December 31, 2016, the carrying value of the 2019 Convertible Notes equaled $ 155,729 and $152,575, respectively, and represents the aggregate principal amount outstanding less the unamortized discount and debt issuance costs. As of June 30, 2017 and December 31, 2016, the fair value of the Convertible Notes was $167,325 and $164,824, respectively. The Company considers the Convertible Notes to be Level II liabilities and uses a market approach to calculate the fair value of the Convertible Notes. The estimated fair value was determined based on the estimated or actual bids and offers of the Convertible Notes in an over-the-counter market on June 30, 2017 (see Note 14). As of June 30, 2017 and December 31, 2016, there was $106,138 and $142,000, respectively, of Term Notes outstanding. As of June 30, 2017 and December 31, 2016, there were no amounts outstanding on the revolving credit facility under the Amended and Restated Credit Agreement. The outstanding value of our Term Notes approximated fair value as the Term Notes bear interest at variable rates and we believe our credit risk quality is consistent with when the debt originated. As of June 30, 2017 and December 31, 2016, the carrying value of the Term Notes equaled $1 04,046 and $ 138,335 , respectively, and represents the aggregate principal amount outstanding less the unamortized debt issuance costs. The Company considers the Term Notes and revolving credit facility to be a Level II liability as of June 30, 2017. We consider the recorded value of our other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable and accounts payable, to approximate the fair value of the respective assets and liabilities at June 30, 2017 based upon the short-term nature of the assets and liabilities. |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 6 Months Ended |
Jun. 30, 2017 | |
Accrued Expenses and Other Liabilities | |
Accrued Expenses and Other Liabilities | 11. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consist of the following: June 30, December 31, 2017 2016 Accrued investment manager fees $ 34,510 $ 31,278 Accrued compensation and related taxes 27,874 35,287 Sales and use tax payable 12,115 10,108 Accrued professional services 3,157 3,213 Definite consideration 1,250 445 Other accrued expenses 7,324 7,432 $ 86,230 $ 87,763 |
Other Non-Current Liabilities
Other Non-Current Liabilities | 6 Months Ended |
Jun. 30, 2017 | |
Other Non-Current Liabilities | |
Other Non-Current Liabilities | 12. Other Non-Current Liabilities Other non-current liabilities consist of the following: June 30, December 31, 2017 2016 Uncertain tax positions $ $ Accrued deferred compensation Accrued purchase liability — Other $ 15,027 $ 13,436 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Taxes | |
Income Taxes | 13. Income Taxes The following table includes the Company’s loss before income tax provision (benefit), income tax provision (benefit) and effective tax rate: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Loss before income tax provision (benefit) $ (1,626) $ (11,161) $ $ (27,870) Income tax provision (benefit) 4,844 (3,218) (8,934) Effective tax rate % % % % The Company’s effective tax rate in the three and six months ended June 30, 2017 differed from the effective tax rate in the three and six months ended June 30, 2016, primarily due to the valuation allowance the company has put on all U.S. deferreds with the exception of indefinite-lived intangibles and unrepatriated foreign earnings and profits, resulting in no benefit being recognized for the tax loss in the U.S. Gross unrecognized tax benefits were $17,414 and $16,476 at June 30, 2017 and December 31, 2016, respectively. At June 30, 2017, the amount of unrecognized tax benefits that would benefit the Company’s effective tax rate, if recognized, was $17,414. The Company recognizes potential interest and penalties related to unrecognized tax benefits in income tax expense. The Company recorded interest and penalties of $373 and $890 for the three and six months period ended June 30, 2017, respectively. The Company recorded interest and penalties of $156 and $388 for the three and six months period ended June 30, 2016, respectively. The Company files a consolidated federal income tax return and separate tax returns with various states. Additionally, foreign subsidiaries of the Company file tax returns in foreign jurisdictions. The Company’s tax returns for the calendar years ended December 31, 2016, 2015, 2014, and 2013 remain open to examination by the Internal Revenue Service in their entirety. With respect to state taxing jurisdictions, the Company’s tax returns for calendar years ended December 31, 2016, 2015, 2014, 2013, 2012 and 2011 remain open to examination by various state revenue services. The Company’s Indian subsidiaries are currently under examination by the India Tax Authority for the fiscal years ended March 31, 2006 and forward. Based on the outcome of examinations of our subsidiaries or the result of the expiration of statutes of limitations it is reasonably possible that the related unrecognized tax benefits could change from those recorded in the consolidated balance sheet. It is possible that one or more of these audits may be finalized within the next twelve months however, at this time we have not been notified by the India Tax Authority of any audit scheduled for finalization within the next twelve months. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2017 | |
Debt | |
Debt | 14. Debt The Company’s outstanding debt obligations as of June 30, 2017 and December 31, 2016 were as follows: June 30, December 31, 2017 2016 Convertible Notes $ 172,500 $ 172,500 Unaccreted discount on Convertible Notes (14,468) (17,149) Unamortized issuance costs on Convertible Notes (2,303) (2,776) Convertible Notes carrying value $ 155,729 $ 152,575 Term Notes $ 106,138 $ 142,000 Unamortized issuance costs on Term Notes (2,092) (3,665) Term Notes carrying value $ 104,046 $ 138,335 Interest expense was comprised of the following and is included in other expense, net in the condensed consolidated statement of operations: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Coupon interest $ 754 $ 755 $ 1,509 $ 1,510 Amortization of issuance costs 616 719 2,046 1,438 Accretion of debt discount 1,344 1,292 2,681 2,578 Interest on credit agreement 1,110 1,263 2,455 2,531 Undrawn and other fees 53 102 122 166 $ 3,877 $ 4,131 $ 8,813 $ 8,223 Credit Agreement On November 19, 2015, the Company and certain of its subsidiaries entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) with a group of banks (the “Banks”), for which Bank of Montreal is acting as administrative agent (the “Administrative Agent”). The Amended and Restated Credit Agreement amended and restated the Credit Agreement, dated as of June 19, 2014, as amended, among the Company, the guarantors party thereto, the lenders party thereto and Bank of Montreal, as administrative agent. Pursuant to the Amended and Restated Credit Agreement, the Banks agreed to provide (i) term loans (“Term Notes”) in the aggregate principal amount of $160,000, which were used to fund a portion of the cash consideration paid by the Company in connection with the acquisition of Yodlee, and (ii) revolving credit commitments in the aggregate amount of up to $100,000, which includes a $5,000 subfacility for the issuance of letters of credit. Obligations under the Amended and Restated Credit Agreement are guaranteed by substantially all of the Company’s U.S. subsidiaries. In accordance with the terms of the Security Agreement, dated November 19, 2015 (the “Security Agreement”), among the Company, the Debtors party thereto, the Banks and the Administrative Agent, obligations under the Amended and Restated Credit Agreement are secured by substantially all of the Company’s domestic assets and the Company’s pledge of 66% of the voting equity and 100% of the non-voting equity of certain of its first-tier foreign subsidiaries. Future borrowings under the Amended and Restated Credit Agreement may be used to finance capital expenditures, working capital, permitted acquisitions and for general corporate purposes. Envestnet will pay interest on borrowings made under the Amended and Restated Credit Agreement at rates between 1.50 percent and 3.25 percent above LIBOR based on the Company’s total leverage ratio. Borrowings under the Amended and Restated Credit Agreement are scheduled to mature on November 19, 2018. The Term Notes are payable in quarterly installments of $2,000 per installment and commenced in March 2016, with the final payment of all remaining term loan principal due and payable on the scheduled maturity date. Within 90 days of each year-end, beginning December 31, 2016, an excess cash flow prepayment, as defined in the Amended and Restated Credit Agreement, may also be required if the Company’s total leverage ratio is greater than 2.0 to 1.0 as of the end of the mostly recently completed two consecutive fiscal quarters of the Company. During the first quarter of 2017, the Company made an excess cash flow payment of $31,862. As of June 30, 2017, the Company estimated the 2018 prepayment to be approximately $32,206. The Amended and Restated Credit Agreement contains customary conditions, representations and warranties, affirmative and negative covenants and events of default. The covenants include certain financial covenants requiring Envestnet to maintain compliance with a maximum senior leverage ratio, a maximum total leverage ratio, a minimum interest coverage ratio and minimum adjusted EBITDA, and provisions that limit the ability of Envestnet and its subsidiaries to incur debt, make investments, sell assets, create liens, engage in transactions with affiliates, engage in mergers and acquisitions, pay dividends and other restricted payments, grant negative pledges and change their business. As of June 30, 2017, there was $106,138 of Term Notes and no amounts outstanding on the revolving credit facility under the Amended and Restated Credit Agreement. The Company was in compliance with all covenants under the Amended and Restated Credit Agreement as of June 30, 2017. On July 18, 2017, the Company and certain of its subsidiaries amended and restated the Amended and Restated Credit Agreement. See Note 21 for further discussion. Convertible Notes On December 15, 2014, the Company issued $172,500 of Convertible Notes. Net proceeds from the offering were $166,967. The Convertible Notes bear interest at a rate of 1.75 percent per annum payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2015. The Convertible Notes are general unsecured obligations, subordinated in right of payment to our obligations under our Credit Agreement. The Convertible Notes rank equally in right of payment with all of the Company’s existing and future senior indebtedness and will be senior in right of payment to any of the Company’s future subordinated indebtedness. The Convertible Notes will be structurally subordinated to the indebtedness and other liabilities of any of our subsidiaries, other than to the extent the Convertible Notes are guaranteed in the future by our subsidiaries as described in the indenture and will be effectively subordinated to and future secured indebtedness to the extent of the value of the assets securing such indebtedness. Certain of our subsidiaries guarantee our obligations under our Credit Agreement. Upon the occurrence of a “fundamental change,” as defined in the indenture, the holders may require the Company to repurchase all or a portion of the Convertible Notes for cash at 100% of the principal amount of the Convertible Notes being purchased, plus any accrued and unpaid interest. The Convertible Notes are convertible into shares of the Company’s common stock under certain circumstances prior to maturity at a conversion rate of 15.9022 shares per $1 principal amount of the Convertible Notes, which represents a conversion price of $62.88 per share, subject to adjustment under certain conditions. Holders may convert their Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding July 1, 2019, only under the following circumstances: (a) during any calendar quarter commencing after the calendar quarter ending on March 31, 2015 (and only during such calendar quarter), if the last reported sale price of our common stock, for at least 20 trading days (whether or not consecutive) in the period of 30 consecutive trading days ending on the last trading day of the calendar quarter immediately preceding the calendar quarter in which the conversion occurs, is more than 130% of the conversion price of the Convertible Notes in effect on each applicable trading day; (b) during the five consecutive business-day period following any five consecutive trading-day period in which the trading price for the Convertible Notes for each such trading day was less than 98% of the last reported sale price of our common stock on such date multiplied by the then-current conversion rate; or (c) upon the occurrence of specified corporate events as defined in the indenture. Upon conversion, the Company may pay cash, shares of the Company’s common stock or a combination of cash and stock, as determined by the Company in its discretion. The Company’s stated policy is to settle the debt component of the Convertible Notes at least partially or wholly in cash. This policy is based both on the Company’s intent and the Company’s ability to settle these instruments in cash. The Company has separately accounted for the liability and equity components of the Convertible Notes by allocating the proceeds from issuance of the Convertible Notes between the liability component and the embedded conversion option, or equity component. This allocation was done by first estimating an interest rate at the time of issuance for similar notes that do not include the embedded conversion option. The Company allocated $26,618 to the equity component, net of offering costs of $882. The Company recorded a discount on the Convertible Notes of $27,500 which is being accreted and recorded as additional interest expense over the life of the Convertible Notes. During the three and six month periods ended June 30, 2017, the Company recognized $1,344 and $2,681, respectively, in accretion related to the discount. During the three and six month periods ended June 30, 2016, the Company recognized $1,292 and $2,578 respectively, in accretion related to the discount. The effective interest rate of the liability component of the Convertible Notes is equal to the stated interest rate plus the accretion of original issue discount. The effective interest rate on the liability component of the Convertible Notes for the three and six month periods ended June 30, 2017 was 5.3%. The effective interest rate on the liability component of the Convertible Notes for the three and six month periods ended June 30, 2016 was 6.1%. See Note 16 for further discussion of the effect of conversion on net loss per common share. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2017 | |
Stock-Based Compensation | |
Stock-Based Compensation | 15. Stock-Based Compensation The Company has stock options and restricted stock units outstanding under the 2004 Stock Incentive Plan (the “2004 Plan”), the 2010 Long-Term Incentive Plan (the “2010 Plan”) and the Envestnet, Inc. Management Incentive Plan for Envestnet | Tamarac Management Employees (the “2012 Plan”). On May 13, 2015, the shareholders approved the 2010 Long-Term Incentive Plan as Amended. The amendment increased the number of common shares of the Company reserved for delivery under the 2010 Plan by 2,700,000 shares. In connection with the Yodlee merger, the Company adopted the 2015 Acquisition Equity Award Plan (the “2015 Plan”). The 2015 Plan provides for the grant of restricted common stock units for certain Envestnet | Yodlee employees. The maximum number of shares of stock which may be issued with respect to awards under the 2015 Plan is 1,052,000. These awards vest over a period of 43 months subsequent to the acquisition date of November 19, 2015. As of June 30, 2017, the remaining amount of unrecognized expense totaled $6,634. As of June 30, 2017, the maximum number of common shares of the Company available for future issuance under the Company’s plans is 416,967. See Note 21. Stock-based compensation expense under the Company’s plans was as follows: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Stock-based compensation expense $ 7,945 $ 6,703 $ 15,403 $ 18,318 Tax effect on stock-based compensation expense (2,983) (2,681) (5,784) (7,327) Net effect on income $ 4,962 $ 4,022 $ 9,619 $ 10,991 The tax effect on stock-based compensation expense above was calculated using a blended statutory rate of 37.5% and 40.0% for the three months ended June 30, 2017 and 2016, respectively. However, due to the valuation allowance recorded on domestic deferreds, there was no tax effect related to stock-based compensation expense for the three and six months ended June 30, 2017. Stock Options The following weighted average assumptions were used to value options granted during the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Grant date fair value of options $ — $ 13.26 $ 14.51 $ 9.49 Volatility — % 42.4 % 43.8 % 42.2 % Risk-free interest rate — % 1.4 % 2.1 % 1.4 % Dividend yield — % — % — % — % Expected term (in years) — 6.2 6.3 6.3 The following table summarizes option activity under the Company’s plans: Weighted-Average Weighted- Remaining Average Contractual Life Aggregate Options Exercise Price (Years) Intrinsic Value Outstanding as of December 31, 2016 3,033,194 $ 16.33 4.3 $ 63,264 Granted 75,238 31.70 Exercised (208,334) 9.12 Forfeited (9,062) 45.81 Outstanding as of March 31, 2017 2,891,036 17.15 4.5 50,792 Granted — — Exercised (84,949) 8.46 Forfeited (1,667) 32.46 Outstanding as of June 30, 2017 2,804,420 17.41 4.3 66,206 Options exercisable 2,549,439 15.85 3.8 63,824 Exercise prices of stock options outstanding as of June 30, 2017 range from $0.11 to $55.29. At June 30, 2017, there was $2,956 of unrecognized stock-based compensation expense related to unvested stock options, which the Company expects to recognize over a weighted-average period of 1.9 years. Restricted Stock Units and Restricted Stock Awards Periodically, the Company grants restricted stock unit awards to employees that vest one-third on each of the first three anniversaries of the grant date. Beginning with grants issued in February 2016, restricted stock units awards vest one-third on the first anniversary of the grant date and quarterly thereafter. The following is a summary of the activity for unvested restricted stock units and awards granted under the Company’s plans: Weighted- Average Grant Number of Date Fair Value Shares per Share Outstanding as of December 31, 2016 1,894,759 $ Granted 872,941 Vested (526,572) Forfeited (20,084) Outstanding as of March 31, 2017 2,221,044 Granted 47,700 Vested (199,163) Forfeited (45,683) Outstanding as of June 30, 2017 2,023,898 At June 30, 2017, there was $56,907 of unrecognized stock-based compensation expense related to unvested restricted stock units and awards, which the Company expects to recognize over a weighted-average period of 2.2 years. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Net Loss Per Share | |
Net Loss Per Share | 16. Net Loss Per Share Basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding for the period. For the calculation of diluted loss per share, the basic weighted average number of shares is increased by the dilutive effect of stock options, restricted stock awards, restricted stock units and Convertible Notes using the treasury stock method, if dilutive. No items were included in the computation of diluted loss per share in the three and six months ended June 30, 2016 and 2017 because the Company incurred a net loss attributable to Envestnet, Inc. in each of these periods and therefore these items were considered anti-dilutive. The Company accounts for the effect of the Convertible Notes on diluted earnings per share using the treasury stock method since they may be settled in cash, shares or a combination thereof at the Company’s option. As a result, the Convertible Notes have no effect on diluted earnings per share until the Company’s stock price exceeds the conversion price of $62.88 per share, or if the trading price of the Convertible Notes meets certain criteria as described in Note 14 at which point, the effect of the conversion feature would be included in the Company’s calculation of diluted earnings per share. In the period of conversion, the Convertible Notes will have no impact on diluted earnings if the Convertible Notes are settled in cash and will have an impact on dilutive earnings per share if the Convertible Notes are settled in shares upon conversion. The following table provides the numerators and denominators used in computing basic and diluted net loss per share attributable to Envestnet, Inc.: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Net loss attributable to Envestnet, Inc. $ $ (7,943) $ $ (18,936) Basic number of weighted-average shares outstanding 42,752,465 42,632,964 Diluted number of weighted-average shares outstanding 43,855,479 42,752,465 43,513,074 42,632,964 Net loss per share attributable to Envestnet, Inc. Basic $ $ $ $ Diluted $ $ $ $ Securities that were anti-dilutive for the three and six months ended June 30, 2017 and 2016 were as follows: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Options to purchase common stock 2,804,420 3,383,899 2,804,420 3,383,899 Unvested restricted stock awards and units 2,023,898 1,791,769 2,023,898 1,791,769 Convertible Notes 2,743,321 2,743,321 2,743,321 2,743,321 Total 7,571,639 7,918,989 7,571,639 7,918,989 |
Major Customers
Major Customers | 6 Months Ended |
Jun. 30, 2017 | |
Major Customers | |
Major Customers | 17. Major Customers One customer accounted for more than 10% of the Company’s total revenues: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Fidelity % 15 % % 15 % |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | 18. Purchase Obligations and Indemnifications The Company includes various types of indemnification and guarantee clauses in certain arrangements. These indemnifications and guarantees may include, but are not limited to, infringement claims related to intellectual property, direct or consequential damages and guarantees to certain service providers and service level requirements with certain customers. The type and amount of any potential indemnification or guarantee varies substantially based on the nature of each arrangement. The Company has experienced no previous claims and cannot determine the maximum amount of potential future payments, if any, related to such indemnification and guarantee provisions. The Company believes that it is unlikely it will have to make material payments under these arrangements and therefore has not recorded a contingent liability in the condensed consolidated balance sheets. The Company enters into unconditional purchase obligations arrangements for certain of its services that it receives in the normal course of business. Litigation In December 2014, Yodlee filed a complaint in the United States District Court for the District of Delaware alleging that Plaid Technologies Inc. (“Plaid”) had and was continuing to infringe on seven of Yodlee’s U.S. patents. The complaint sought unspecified monetary damages, enhanced damages, interest, fees, expenses, costs and injunctive relief against Plaid. In May 2016, Plaid filed its answer to Yodlee’s complaint as well as counterclaims seeking declaratory judgment that Yodlee’s patents were not infringed and were invalid and unenforceable. In addition, Plaid’s counterclaims also alleged, among other things, violation of federal antitrust and false advertising laws and unfair competition under California state law and common law. The counterclaims sought unspecified monetary damages, enhanced damages, interest, fees, expenses, costs and injunctive relief against Yodlee. During the course of the litigation, Plaid also filed petitions for review before the Patent Office’s Board of Patent Trials and Appeals against the seven Yodlee patents that were the subject of the lawsuit as well as a petition for reexamination against one of the patents. On January 31, 2017, Yodlee and Plaid agreed to resolve the lawsuit brought by Yodlee, the counterclaims brought by Plaid and the review petitions brought by Plaid before the Patent Office. Plaid also agreed not to participate further in the reexamination proceedings which the Patent Office may elect to continue without Plaid’s participation. As part of the resolution of the lawsuit, Plaid will license Envestnet’s worldwide patent portfolio. The Company is involved in litigation arising in the ordinary course of its business. Legal fees and other costs associated with such actions are expensed as incurred. The Company will record a provision for these claims when it is both probable that a liability has been incurred and the amount of the loss, or a range of the potential loss, can be reasonably estimated. These provisions are reviewed regularly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information or events pertaining to a particular case. Litigation accruals are recorded when and if it is determined that a loss is both probable and reasonably estimable. For litigation matters where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established, but if the matter is material, it is subject to disclosures. The Company believes that liabilities associated with any claims, while possible, are not probable, and therefore has not recorded any accrual for any claims as of June 30, 2017. Further, while any possible range of loss cannot be reasonably estimated at this time, the Company does not believe that the outcome of any of these proceedings, individually or in the aggregate, would, if determined adversely to it, have a material adverse effect on its financial condition or business, although an adverse resolution of litigation could have a material adverse effect on Envestnet’s results of operations or cash flow in a particular quarter or year. Contingencies Certain of the Company’s revenues are subject to sales and use taxes in certain jurisdictions where it conducts business in the United States. As of June 30, 2017, the Company estimated a sales and use tax liability of $12,115. This amount is included in accrued expenses and other liabilities on the condensed consolidated balance sheet. The Company also estimated a sales and use tax receivable of $4,633 related to estimated recoverability of amounts due from customers. This amount is included in prepaid expenses and other current assets on the condensed consolidated balance sheet. As a result, net sales and use taxes of $7,482 were probable of being assessed related to multiple jurisdictions with respect to revenues in the six month period ended June 30, 2017 and prior years. Additional future information obtained from the applicable jurisdictions may affect the Company’s estimate of its sales and use tax liability, but such change in the estimate cannot currently be made. Leases The Company rents office space under leases that expire at various dates through 2030. Future minimum lease commitments under these operating leases, as of June 30, 2017, were as follows: Years ending December 31: Remainder of 2017 $ 2018 2019 2020 2021 Thereafter Total $ |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2017 | |
Segment Information | |
Segment Information | 19. Segment Information Business segments are generally organized around our business services. Our business segments are: · Envestnet – a leading provider of unified wealth management software and services to empower financial advisors and institutions. · Envestnet | Yodlee – a leading data aggregation and data intelligence platform powering dynamic, cloud-based innovation for digital financial services. The information in the following tables is derived from the Company’s internal financial reporting used for corporate management purposes. Nonsegment expenses include salary and benefits for certain corporate officers, certain types of professional service expenses, insurance, acquisition related transaction costs, restructuring charges, and other non-recurring and/or non-operationally related expenses. The following table presents revenue by segment: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Revenue: Envestnet $ 129,372 $ 110,716 $ 250,690 $ 213,906 Envestnet | Yodlee 38,045 30,992 74,513 59,623 Consolidated revenue $ 167,417 $ 141,708 $ 325,203 $ 273,529 Fidelity revenue as a percentage of Envestnet segment revenue: No single customer amounts for Envestnet | Yodlee exceeded 10% of the segment total. The following table presents a reconciliation from income (loss) from operations by segment to consolidated net loss attributable to Envestnet, Inc.: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Envestnet $ 15,811 $ 10,490 $ 29,322 $ 20,064 Envestnet | Yodlee (5,635) (11,271) (13,343) (25,312) Total segment income (loss) from operations 10,176 (781) 15,979 (5,248) Nonsegment operating expenses (7,433) (5,549) (16,590) (13,842) Other expense, net (4,369) (4,831) (9,852) (8,780) Consolidated loss before income taxes (benefit) (1,626) (11,161) (10,463) (27,870) Income tax provision (benefit) 4,844 (3,218) 9,142 (8,934) Consolidated net loss (6,470) (7,943) (19,605) (18,936) Add: Net loss attributable to non-controlling interest — — — — Consolidated net loss attributable to Envestnet, Inc. $ (6,470) $ (7,943) $ (19,605) $ (18,936) Segment assets consist of cash, accounts receivable, prepaid expenses and other current assets, property, plant and equipment, internally developed software, goodwill, and other intangibles, net, and other non-current assets. Segment capital expenditures consist of property and equipment and internally developed software expenditures. A summary of consolidated total assets, consolidated depreciation and amortization and consolidated capital expenditures follows: June 30, December 31, 2017 2016 Segment assets: Envestnet $ 320,709 $ 341,602 Envestnet | Yodlee 518,957 530,799 Consolidated total assets $ 839,666 $ 872,401 Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Segment depreciation and amortization: Envestnet $ 6,361 $ 6,360 $ 12,782 $ 12,424 Envestnet | Yodlee 9,104 10,740 18,518 20,756 Consolidated depreciation and amortization $ 15,465 $ 17,100 $ 31,300 $ 33,180 Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Segment capital expenditures: Envestnet $ 7,580 $ 3,134 $ 12,931 $ 5,163 Envestnet | Yodlee 1,154 1,544 1,901 2,714 Consolidated capital expenditures $ 8,734 $ 4,678 $ 14,832 $ 7,877 |
Geographical Information
Geographical Information | 6 Months Ended |
Jun. 30, 2017 | |
Geographical Information | |
Geographical Information | 20. Geographical Information Revenue by geography is based on the billing address of the customer. The following table sets forth revenue by geographic area: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 United States $ 151,621 $ 127,070 $ 293,583 $ 251,004 International (1) 15,796 14,638 31,620 22,525 Total $ 167,417 $ 141,708 $ 325,203 $ 273,529 (1) No foreign country accounted for more than 10% of total revenues. The following table sets forth property, plant, and equipment by geographic area: June 30, December 31, 2017 2016 United States $ 29,897 $ 28,713 India 4,370 3,596 Other 520 Total $ 34,787 $ 33,000 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Event. | |
Subsequent Events | 21. Subsequent Events Credit Agreement On July 18, 2017, the Company and certain of its subsidiaries entered into a Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”) with a group of banks (the “Banks”), for which Bank of Montreal is acting as administrative agent (the “Administrative Agent”). The Second Amended and Restated Credit Agreement amends and restates the Amended and Restated Credit Agreement, dated as of November 19, 2015, as amended, among the Company, the guarantors party thereto, the lenders party thereto and Bank of Montreal, as administrative agent (the “Prior Credit Facility”). Pursuant to the Second Amended and Restated Credit Agreement, the Banks have agreed to provide to the Company revolving credit commitments in the aggregate amount of up to $350,000 which amount may be increased by $50,000. The Second Amended and Restated Credit Agreement also includes a $5,000 subfacility for the issuance of letters of credit. Obligations under the Second Amended and Restated Credit Agreement are guaranteed by substantially all of the Company’s U.S. subsidiaries. In accordance with the terms of the Amended and Restated Security Agreement, dated July 18, 2017 (the “Security Agreement”), among the Company, the Debtors party thereto and the Administrative Agent, obligations under the Second Amended and Restated Credit Agreement are secured by substantially all of the Company’s domestic assets and the Company’s pledge of 66% of the voting equity and 100% of the non-voting equity of certain of its first-tier foreign subsidiaries. Proceeds under the Second Amended and Restated Credit Agreement may be used to finance capital expenditures, working capital, permitted acquisitions and for general corporate purposes. The Company will pay interest on borrowings made under the Second Amended and Restated Credit Agreement at rates between 1.50 percent and 3.25 percent above LIBOR based on the Company’s total leverage ratio. Borrowings under the Second Amended and Restated Credit Agreement are scheduled to mature on July 18, 2022. The Second Amended and Restated Credit Agreement contains customary conditions, representations and warranties, affirmative and negative covenants, mandatory prepayment provisions and events of default. The covenants include certain financial covenants requiring the Company to maintain compliance with a maximum senior leverage ratio, a maximum total leverage ratio, a minimum interest coverage ratio and minimum liquidity requirement, and provisions that limit the ability of the Company and its subsidiaries to incur debt, make investments, sell assets, create liens, engage in transactions with affiliates, engage in mergers and acquisitions, pay dividends and other restricted payments, grant negative pledges and change their business activities. 2010 Long-Term Incentive Plan Amendment On July 13, 2017, the shareholders approved the 2010 Long-Term Incentive Plan as Amended. The amendment increased the number of common shares of the Company reserved for delivery under the 2010 Plan by 3,525,000 shares. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation | |
Share repurchase program | Share repurchase program – On February 25, 2016, the Company announced that its Board of Directors had authorized a share repurchase program under which the Company may repurchase up to 2,000,000 shares of its common stock. The timing and volume of share repurchases will be determined by the Company’s management based on its ongoing assessments of the capital needs of the business, the market price of its common stock and general market conditions. No time limit has been set for the completion of the repurchase program, and the program may be suspended or discontinued at any time. The repurchase program authorizes the Company to purchase its common stock from time to time in the open market (including pursuant to a “Rule 10b5-1 plan”), in block transactions, in privately negotiated transactions, through accelerated stock repurchase programs, through option or other transactions or otherwise, all in compliance with applicable laws and other restrictions. As of June 30, 2017, 1,956,390 shares could still be purchased under this program. For the six month period ended June 30, 2017, the Company purchased no shares under this program. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements - In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers,” which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. The original effective date for ASU 2014-09 would have required the Company to adopt beginning in its first quarter of 2017. However, in July 2015, the FASB voted to amend ASU 2014-09 by approving a one-year deferral of the effective date as well as providing the option to early adopt the standard on the original effective date. Accordingly, the Company will adopt the standard in its first quarter of 2018. In 2016, the Company began evaluating the impact of the adoption of the new revenue standard on its consolidated financial statements, including enhanced disclosures, as well as assessing the impact on systems, processes, controls. The Company expects the new revenue standard to have an impact on the estimation of variable transaction considerations, the allocation of variable considerations across distinct services, and the tracking and amortization of contract costs. We expect to begin capitalizing certain costs to obtain and fulfill a contract upon adoption of the new standard and are currently in the process of evaluating the period over which to amortize these capitalized costs. The Company has not yet quantified these amounts. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company plans to adopt the standard using the modified retrospective approach with the cumulative effect recognized as of the date of adoption. In February 2016, the FASB issued ASU 2016-02, “Leases.” This update amends the requirements for assets and liabilities recognized for all leases longer than twelve months. Lessees will be required to recognize a lease liability measured on a discounted basis, which is the lessee’s obligation to make lease payments arising from the lease, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. This standard will be effective for financial statements issued by public companies for the annual and interim periods beginning after December 15, 2018. Early adoption of the standard is permitted. The Company is currently evaluating the potential impact of this guidance on our consolidated financial statements. In March 2016, The FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” This update is intended to reduce the cost and complexity of accounting for share-based payments; however, some changes may also increase volatility in reported earnings. Under the new guidance, all excess tax benefits and deficiencies will be recorded as an income tax benefit or expense in the income statement and excess tax benefits will be recorded as an operating activity in the statements of cash flows. Upon adoption, we determined that we did not have previously unrecognized excess tax benefits to be recognized on a modified retrospective transition method as an adjustment to retained earnings. The new guidance also allows withholding up to the maximum individual statutory tax rate without classifying the awards as a liability. We did not elect an accounting policy change to withhold at the maximum individual statutory tax rate. The cash paid to satisfy the statutory income tax withholding obligation will continue to be classified as a financing activity in the statements of cash flows. Lastly, the update allows forfeitures to be estimated or recognized when they occur. The requirements for the excess tax effects related to share-based payments at settlement must be applied on a prospective basis, and the other requirements under this standard are to be applied on a retrospective basis. We did not elect an accounting policy change to record forfeitures as they occur and will continue to estimate forfeitures at each period. This standard is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2016. These changes became effective for the Company’s fiscal year beginning January 1, 2017 and have been reflected in these condensed consolidated financial statements. As a result of the retrospective adoption of ASU 2016-09, for the six months ended June 30, 2016, net cash provided by operating activities decreased by $183 with a corresponding offset to net cash used for financing activities. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,” which clarifies eight specific cash flow issues in an effort to reduce diversity in practice in how certain transactions are classified within the statement of cash flows. This ASU is effective for the Company January 1, 2018 with early adoption permitted. The ASU requires a retrospective application unless it is determined that it is impractical to do so for which it must be retrospectively applied at the earliest date practical. Upon adoption, the Company does not anticipate significant changes to the Company’s existing accounting policies or presentation of the consolidated statements of cash flows. In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350),” which removes step two from the goodwill impairment test. As a result, an entity should perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units’ fair value. This standard will be effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2019. Early adoption is permitted. The Company has adopted this standard as of April 1, 2017, however it did not have a material impact on the Company’s consolidated financial statements. |
Business Acquisitions (Tables)
Business Acquisitions (Tables) - Wheelhouse Analytics, LLC | 6 Months Ended |
Jun. 30, 2017 | |
Business acquisitions | |
Summary of consideration transferred in the acquisition | Measurement Preliminary Period Estimate as of Estimate Adjustments June 30, 2017 Cash consideration $ 13,299 $ — $ 13,299 Contingent consideration liability 2,582 (218) 2,364 Purchase consideration liability 887 — 887 Working capital adjustment 110 — 110 Cash acquired (80) — (80) Total $ 16,798 $ (218) $ 16,580 |
Summary of the estimated fair values of the assets acquired and liabilities assumed | Measurement Preliminary Period Estimate as of Estimate Adjustments June 30, 2017 Total tangible assets acquired $ 399 $ (14) $ 385 Total liabilities assumed (1,459) 39 (1,420) Identifiable intangible assets 7,300 (700) 6,600 Goodwill 10,558 457 11,015 Total net assets acquired $ 16,798 $ (218) $ 16,580 |
Summary of intangible assets acquired, estimated useful lives and amortization method | Measurement Preliminary Period Estimate as of Estimated Amortization Estimate Adjustments June 30, 2017 Useful Life in Years Method Customer list $ 4,100 $ (100) $ 4,000 15 Accelerated Proprietary technology 3,000 (500) 2,500 6 Straight-line Trade names and domains 200 (100) 100 2 Straight-line Total $ 7,300 $ (700) $ 6,600 |
Cost of Revenues (Tables)
Cost of Revenues (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Cost of Revenues | |
Schedule of costs of revenues by revenue category | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Assets under management or administration $ 47,015 $ 38,500 $ 91,500 $ 75,409 Subscription and licensing 5,142 3,720 9,756 6,824 Professional services and other 3,578 2,682 3,705 2,827 Total $ 55,735 $ 44,902 $ 104,961 $ 85,060 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property and Equipment, Net | |
Schedule of components of property and equipment, net | June 30, December 31, Estimated Useful Life 2017 2016 Cost: Computer equipment and software 3 years $ 58,442 $ 52,921 Leasehold improvements Shorter of the lease term or useful life of the asset 20,524 17,286 Office furniture and fixtures 3-7 years 7,710 6,911 Other office equipment 3-5 years 1,764 1,367 88,440 78,485 Less: accumulated depreciation and amortization (53,653) (45,485) Property and equipment, net $ 34,787 $ 33,000 |
Schedule of depreciation and amortization expense | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Depreciation and amortization expense $ $ 4,048 $ $ 7,407 |
Internally Developed Software33
Internally Developed Software, Net (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Internally Developed Software, Net | |
Schedule of components of internally developed software, net | June 30, December 31, Estimated Useful Life 2017 2016 Internally developed software 5 years $ 39,369 $ 33,718 Less: accumulated amortization (21,258) (18,858) Internally developed software, net $ 18,111 $ 14,860 |
Schedule of amortization expense | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Amortization expense $ $ 857 $ $ 1,652 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Intangible Assets, Net | |
Schedule of components of intangible assets, net | June 30, 2017 December 31, 2016 Gross Net Gross Net Estimated Carrying Accumulated Carrying Carrying Accumulated Carrying Useful Life Amount Amortization Amount Amount Amortization Amount Customer lists 4 - 15 years $ 259,350 $ (66,820) $ 192,530 $ 259,490 $ (54,861) $ 204,629 Proprietary technologies 2 - 8 years 57,328 (25,419) 31,909 57,770 (20,214) 37,556 Trade names 2 - 7 years 24,889 (7,905) 16,984 25,007 (6,178) 18,829 Backlog 4 years 11,000 (8,521) 2,479 11,000 (6,456) 4,544 Total intangible assets $ 352,567 $ (108,665) $ 243,902 $ 353,267 $ (87,709) $ 265,558 |
Schedule of amortization expense | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Amortization expense $ $ 12,195 $ $ 24,121 |
Schedule of future amortization expense of the intangible assets | Future amortization expense of the intangible assets as of June 30, 2017, is expected to be as follows: Years ending December 31: Remainder of 2017 $ 2018 2019 2020 2021 Thereafter $ |
Prepaid Expenses and Other Cu35
Prepaid Expenses and Other Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Prepaid Expenses and Other Current Assets | |
Schedule of prepaid expenses and other current assets | June 30, December 31, 2017 2016 Non-income tax receivable $ $ 3,879 FinaConnect escrow 429 Income tax receivable 1,864 Prepaid technology 1,318 Prepaid insurance 552 Other 8,182 $ 18,938 $ 16,224 |
Other Non-Current Assets (Table
Other Non-Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Other Non-Current Assets. | |
Schedule of components of other non-current assets | June 30, December 31, 2017 2016 Investments in private companies $ $ 2,750 Deposits: Lease 4,262 Other 2,083 Assets to fund deferred compensation liability 2,738 Other 2,130 $ 13,782 $ 13,963 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Measurements | |
Schedule of changes in fair value of the Company’s financial assets and liabilities measured at fair value | June 30, 2017 Fair Value Level I Level II Level III Assets Money market funds(1) $ $ $ — $ — Assets to fund deferred compensation liability(2) — — Total assets $ $ $ — $ Liabilities Contingent consideration $ $ — $ — $ Deferred compensation liability(3) — — Total liabilities $ $ $ — $ December 31, 2016 Fair Value Level I Level II Level III Assets Money market funds(1) $ $ $ — $ — Assets to fund deferred compensation liability(2) — — Total assets $ $ $ — $ Liabilities Contingent consideration $ $ — $ — $ Deferred compensation liability(3) — — Total liabilities $ $ $ — $ (1) The fair values of the Company’s investments in money-market funds are based on the daily quoted market prices for the net asset value of the various money market funds. (2) The fair value of assets to fund deferred compensation liability approximates the cash surrender value of the life insurance premiums and is included in other non-current assets in the condensed consolidated balance sheets. (3) The deferred compensation liability is included in other non-current liabilities in the condensed consolidated balance sheets and its fair market value is based on the daily quoted market prices for the net asset value of the various funds in which the participants have selected. |
Summary of changes in the fair value of the Company's Level 3 liability | Fair Value of Contingent Consideration Liabilities Balance at December 31, 2016 $ Settlement of contingent consideration liability Contingent consideration adjustment Accretion on contingent consideration Balance at June 30, 2017 $ 2,612 |
Summary of changes in the fair value of the Company's Level 3 assets | Fair Value of Assets to Fund Deferred Compensation Liability Balance at December 31, 2016 $ Contributions Balance at June 30, 2017 $ 4,776 |
Accrued Expenses and Other Li38
Accrued Expenses and Other Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accrued Expenses and Other Liabilities | |
Schedule accrued expenses and other liabilities | June 30, December 31, 2017 2016 Accrued investment manager fees $ 34,510 $ 31,278 Accrued compensation and related taxes 27,874 35,287 Sales and use tax payable 12,115 10,108 Accrued professional services 3,157 3,213 Definite consideration 1,250 445 Other accrued expenses 7,324 7,432 $ 86,230 $ 87,763 |
Other Non-Current Liabilities (
Other Non-Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Other Non-Current Liabilities | |
Other Non-Current Liabilities | June 30, December 31, 2017 2016 Uncertain tax positions $ $ Accrued deferred compensation Accrued purchase liability — Other $ 15,027 $ 13,436 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Income Taxes | |
Summary of income (loss) before income tax provision (benefit) | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Loss before income tax provision (benefit) $ (1,626) $ (11,161) $ $ (27,870) Income tax provision (benefit) 4,844 (3,218) (8,934) Effective tax rate % % % % |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt | |
Schedule of outstanding debt obligations | June 30, December 31, 2017 2016 Convertible Notes $ 172,500 $ 172,500 Unaccreted discount on Convertible Notes (14,468) (17,149) Unamortized issuance costs on Convertible Notes (2,303) (2,776) Convertible Notes carrying value $ 155,729 $ 152,575 Term Notes $ 106,138 $ 142,000 Unamortized issuance costs on Term Notes (2,092) (3,665) Term Notes carrying value $ 104,046 $ 138,335 |
Schedule of interest expense | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Coupon interest $ 754 $ 755 $ 1,509 $ 1,510 Amortization of issuance costs 616 719 2,046 1,438 Accretion of debt discount 1,344 1,292 2,681 2,578 Interest on credit agreement 1,110 1,263 2,455 2,531 Undrawn and other fees 53 102 122 166 $ 3,877 $ 4,131 $ 8,813 $ 8,223 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Stock-Based Compensation | |
Schedule of stock-based compensation expense | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Stock-based compensation expense $ 7,945 $ 6,703 $ 15,403 $ 18,318 Tax effect on stock-based compensation expense (2,983) (2,681) (5,784) (7,327) Net effect on income $ 4,962 $ 4,022 $ 9,619 $ 10,991 |
Schedule of weighted average assumptions used to value options granted | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Grant date fair value of options $ — $ 13.26 $ 14.51 $ 9.49 Volatility — % 42.4 % 43.8 % 42.2 % Risk-free interest rate — % 1.4 % 2.1 % 1.4 % Dividend yield — % — % — % — % Expected term (in years) — 6.2 6.3 6.3 |
Summary of option activity under the Company's plans | Weighted-Average Weighted- Remaining Average Contractual Life Aggregate Options Exercise Price (Years) Intrinsic Value Outstanding as of December 31, 2016 3,033,194 $ 16.33 4.3 $ 63,264 Granted 75,238 31.70 Exercised (208,334) 9.12 Forfeited (9,062) 45.81 Outstanding as of March 31, 2017 2,891,036 17.15 4.5 50,792 Granted — — Exercised (84,949) 8.46 Forfeited (1,667) 32.46 Outstanding as of June 30, 2017 2,804,420 17.41 4.3 66,206 Options exercisable 2,549,439 15.85 3.8 63,824 |
Summary of the activity for unvested restricted stock units and awards granted under the Company's plans | Weighted- Average Grant Number of Date Fair Value Shares per Share Outstanding as of December 31, 2016 1,894,759 $ Granted 872,941 Vested (526,572) Forfeited (20,084) Outstanding as of March 31, 2017 2,221,044 Granted 47,700 Vested (199,163) Forfeited (45,683) Outstanding as of June 30, 2017 2,023,898 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Net Loss Per Share | |
Schedule of reconciliation of the numerators and denominators used in computing basic and diluted net loss per share attributable to common stockholders | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Net loss attributable to Envestnet, Inc. $ $ (7,943) $ $ (18,936) Basic number of weighted-average shares outstanding 42,752,465 42,632,964 Diluted number of weighted-average shares outstanding 43,855,479 42,752,465 43,513,074 42,632,964 Net loss per share attributable to Envestnet, Inc. Basic $ $ $ $ Diluted $ $ $ $ |
Schedule of anti-dilutive securities excluded from computation of diluted earings per share | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Options to purchase common stock 2,804,420 3,383,899 2,804,420 3,383,899 Unvested restricted stock awards and units 2,023,898 1,791,769 2,023,898 1,791,769 Convertible Notes 2,743,321 2,743,321 2,743,321 2,743,321 Total 7,571,639 7,918,989 7,571,639 7,918,989 |
Major Customers (Tables)
Major Customers (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Major Customers | |
Summary of revenues from major customers | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Fidelity % 15 % % 15 % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies | |
Schedule of future minimum lease commitments under operating leases | Years ending December 31: Remainder of 2017 $ 2018 2019 2020 2021 Thereafter Total $ |
Segment information (Tables)
Segment information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Information | |
Schedule of revenue by segment | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Revenue: Envestnet $ 129,372 $ 110,716 $ 250,690 $ 213,906 Envestnet | Yodlee 38,045 30,992 74,513 59,623 Consolidated revenue $ 167,417 $ 141,708 $ 325,203 $ 273,529 Fidelity revenue as a percentage of Envestnet segment revenue: |
Schedule of income (loss) from operations by segment | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Envestnet $ 15,811 $ 10,490 $ 29,322 $ 20,064 Envestnet | Yodlee (5,635) (11,271) (13,343) (25,312) Total segment income (loss) from operations 10,176 (781) 15,979 (5,248) Nonsegment operating expenses (7,433) (5,549) (16,590) (13,842) Other expense, net (4,369) (4,831) (9,852) (8,780) Consolidated loss before income taxes (benefit) (1,626) (11,161) (10,463) (27,870) Income tax provision (benefit) 4,844 (3,218) 9,142 (8,934) Consolidated net loss (6,470) (7,943) (19,605) (18,936) Add: Net loss attributable to non-controlling interest — — — — Consolidated net loss attributable to Envestnet, Inc. $ (6,470) $ (7,943) $ (19,605) $ (18,936) |
Summary of consolidated total assets, consolidated depreciation and amortization and consolidated capital expenditures | June 30, December 31, 2017 2016 Segment assets: Envestnet $ 320,709 $ 341,602 Envestnet | Yodlee 518,957 530,799 Consolidated total assets $ 839,666 $ 872,401 Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Segment depreciation and amortization: Envestnet $ 6,361 $ 6,360 $ 12,782 $ 12,424 Envestnet | Yodlee 9,104 10,740 18,518 20,756 Consolidated depreciation and amortization $ 15,465 $ 17,100 $ 31,300 $ 33,180 Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Segment capital expenditures: Envestnet $ 7,580 $ 3,134 $ 12,931 $ 5,163 Envestnet | Yodlee 1,154 1,544 1,901 2,714 Consolidated capital expenditures $ 8,734 $ 4,678 $ 14,832 $ 7,877 |
Geographical Information (Table
Geographical Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Geographical Information | |
Schedule of revenue by geography | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 United States $ 151,621 $ 127,070 $ 293,583 $ 251,004 International (1) 15,796 14,638 31,620 22,525 Total $ 167,417 $ 141,708 $ 325,203 $ 273,529 (1) No foreign country accounted for more than 10% of total revenues. |
Schedule of property, plant, and equipment, net by geographic area | June 30, December 31, 2017 2016 United States $ 29,897 $ 28,713 India 4,370 3,596 Other 520 Total $ 34,787 $ 33,000 |
Organization and Description 48
Organization and Description of Business (Details) | 6 Months Ended |
Jun. 30, 2017stateitemproduct | |
Number of RIAs | item | 4 |
Number of states with which the broker-dealer is registered | state | 50 |
Envestnet Enterprise | |
Number of investment products | 17,000 |
Envestnet Portfolio Management Consultants (“PMC”) | |
Number of investment products | 4,000 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Feb. 25, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Shares authorized for repurchase | 2,000,000 | ||
Remaining shares authorized for repurchase | 1,956,390 | ||
Shares repurchased | 0 | ||
Net cash provided by operating activities | $ 35,544 | $ 26,125 | |
Net cash used in financing activities | $ (45,857) | (11,550) | |
Accounting Standards Update 2016-09 | Adjustment | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Net cash provided by operating activities | (183) | ||
Net cash used in financing activities | $ 183 |
Business Acquisitions (Details)
Business Acquisitions (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Oct. 03, 2016 | Jun. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Consideration transferred in acquisition | |||||
Cash consideration | $ 445 | ||||
Estimated fair values of the assets acquired and liabilities assumed | |||||
Goodwill | $ 432,850 | 432,850 | $ 432,850 | $ 431,936 | |
Wheelhouse Analytics, LLC | |||||
Consideration transferred in acquisition | |||||
Cash consideration | 13,299 | $ 13,299 | |||
Contingent consideration, maximum | 4,000 | ||||
Contingent consideration liability | 2,364 | ||||
Purchase consideration liability | 887 | ||||
Working capital adjustment | 110 | ||||
Cash acquired | (80) | ||||
Total | 16,580 | ||||
Estimated fair values of the assets acquired and liabilities assumed | |||||
Total tangible assets acquired | 385 | 385 | 385 | ||
Total liabilities assumed | (1,420) | (1,420) | (1,420) | ||
Identifiable intangible assets | 6,600 | 6,600 | 6,600 | ||
Goodwill | 11,015 | 11,015 | 11,015 | ||
Total net assets acquired | 16,580 | 16,580 | 16,580 | ||
Intangible assets | |||||
Intangible assets acquired, Amount | 6,600 | ||||
Wheelhouse Analytics, LLC | Preliminary Estimate | |||||
Consideration transferred in acquisition | |||||
Cash consideration | 13,299 | ||||
Contingent consideration liability | 2,582 | ||||
Purchase consideration liability | 887 | ||||
Working capital adjustment | 110 | ||||
Cash acquired | (80) | ||||
Total | 16,798 | ||||
Estimated fair values of the assets acquired and liabilities assumed | |||||
Total tangible assets acquired | 399 | ||||
Total liabilities assumed | (1,459) | ||||
Identifiable intangible assets | 7,300 | ||||
Goodwill | 10,558 | ||||
Total net assets acquired | 16,798 | ||||
Intangible assets | |||||
Intangible assets acquired, Amount | $ 7,300 | ||||
Wheelhouse Analytics, LLC | Measurement Period Adjustments | |||||
Consideration transferred in acquisition | |||||
Contingent consideration liability | (218) | ||||
Total | (218) | ||||
Estimated fair values of the assets acquired and liabilities assumed | |||||
Total tangible assets acquired | (14) | (14) | (14) | ||
Total liabilities assumed | 39 | 39 | 39 | ||
Identifiable intangible assets | (700) | (700) | (700) | ||
Goodwill | 457 | 457 | 457 | ||
Total net assets acquired | (218) | $ (218) | (218) | ||
Intangible assets | |||||
Intangible assets acquired, Amount | (700) | ||||
Wheelhouse Analytics, LLC | Customer lists | |||||
Intangible assets | |||||
Intangible assets acquired, Amount | 4,000 | ||||
Intangible assets acquired, Useful Life In Years | 15 years | ||||
Wheelhouse Analytics, LLC | Customer lists | Preliminary Estimate | |||||
Intangible assets | |||||
Intangible assets acquired, Amount | $ 4,100 | ||||
Wheelhouse Analytics, LLC | Customer lists | Measurement Period Adjustments | |||||
Intangible assets | |||||
Intangible assets acquired, Amount | (100) | ||||
Wheelhouse Analytics, LLC | Proprietary technologies | |||||
Intangible assets | |||||
Intangible assets acquired, Amount | 2,500 | ||||
Intangible assets acquired, Useful Life In Years | 6 years | ||||
Wheelhouse Analytics, LLC | Proprietary technologies | Preliminary Estimate | |||||
Intangible assets | |||||
Intangible assets acquired, Amount | $ 3,000 | ||||
Wheelhouse Analytics, LLC | Proprietary technologies | Measurement Period Adjustments | |||||
Intangible assets | |||||
Intangible assets acquired, Amount | (500) | ||||
Wheelhouse Analytics, LLC | Trade names and domains | |||||
Intangible assets | |||||
Intangible assets acquired, Amount | $ 100 | ||||
Intangible assets acquired, Useful Life In Years | 2 years | ||||
Wheelhouse Analytics, LLC | Trade names and domains | Preliminary Estimate | |||||
Intangible assets | |||||
Intangible assets acquired, Amount | $ 200 | ||||
Wheelhouse Analytics, LLC | Trade names and domains | Measurement Period Adjustments | |||||
Intangible assets | |||||
Intangible assets acquired, Amount | $ (100) |
Cost of Revenues (Details)
Cost of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Cost of Revenues | ||||
Assets under management or administration | $ 47,015 | $ 38,500 | $ 91,500 | $ 75,409 |
Subscription and licensing | 5,142 | 3,720 | 9,756 | 6,824 |
Professional services and other | 3,578 | 2,682 | 3,705 | 2,827 |
Total | $ 55,735 | $ 44,902 | $ 104,961 | $ 85,060 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Property and equipment, cost: | |||||
Property and equipment, gross | $ 88,440 | $ 88,440 | $ 78,485 | ||
Less accumulated depreciation and amortization | (53,653) | (53,653) | (45,485) | ||
Property and equipment, net | 34,787 | 34,787 | 33,000 | ||
Depreciation and amortization expense | 3,853 | $ 4,048 | $ 7,944 | $ 7,407 | |
Computer equipment and software | |||||
Property and equipment, cost: | |||||
Estimated Useful Life | 3 years | ||||
Property and equipment, gross | 58,442 | $ 58,442 | 52,921 | ||
Leasehold improvements | |||||
Property and equipment, cost: | |||||
Property and equipment, gross | 20,524 | 20,524 | 17,286 | ||
Office furniture and fixtures | |||||
Property and equipment, cost: | |||||
Property and equipment, gross | 7,710 | $ 7,710 | 6,911 | ||
Office furniture and fixtures | Minimum | |||||
Property and equipment, cost: | |||||
Estimated Useful Life | 3 years | ||||
Office furniture and fixtures | Maximum | |||||
Property and equipment, cost: | |||||
Estimated Useful Life | 7 years | ||||
Other office equipment | |||||
Property and equipment, cost: | |||||
Property and equipment, gross | $ 1,764 | $ 1,764 | $ 1,367 | ||
Other office equipment | Minimum | |||||
Property and equipment, cost: | |||||
Estimated Useful Life | 3 years | ||||
Other office equipment | Maximum | |||||
Property and equipment, cost: | |||||
Estimated Useful Life | 5 years |
Internally Developed Software53
Internally Developed Software, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Internally developed software | $ 39,369 | $ 39,369 | $ 33,718 | ||
Less accumulated amortization | (21,258) | (21,258) | (18,858) | ||
Internally developed software, net | 18,111 | 18,111 | $ 14,860 | ||
Amortization expense | $ 1,241 | $ 857 | $ 2,400 | $ 1,652 | |
Internally developed software | |||||
Estimated Useful Life | 5 years |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Components of intangible assets | |||||
Gross Carrying Amount | $ 352,567 | $ 352,567 | $ 353,267 | ||
Accumulated Amortization | (108,665) | (108,665) | (87,709) | ||
Net Carrying Amount | 243,902 | 243,902 | 265,558 | ||
Amortization expense | 10,371 | $ 12,195 | 20,956 | $ 24,121 | |
Customer lists | |||||
Components of intangible assets | |||||
Gross Carrying Amount | 259,350 | 259,350 | 259,490 | ||
Accumulated Amortization | (66,820) | (66,820) | (54,861) | ||
Net Carrying Amount | 192,530 | $ 192,530 | 204,629 | ||
Customer lists | Minimum | |||||
Components of intangible assets | |||||
Estimated Useful Life | 4 years | ||||
Customer lists | Maximum | |||||
Components of intangible assets | |||||
Estimated Useful Life | 15 years | ||||
Proprietary technologies | |||||
Components of intangible assets | |||||
Gross Carrying Amount | 57,328 | $ 57,328 | 57,770 | ||
Accumulated Amortization | (25,419) | (25,419) | (20,214) | ||
Net Carrying Amount | 31,909 | $ 31,909 | 37,556 | ||
Proprietary technologies | Minimum | |||||
Components of intangible assets | |||||
Estimated Useful Life | 2 years | ||||
Proprietary technologies | Maximum | |||||
Components of intangible assets | |||||
Estimated Useful Life | 8 years | ||||
Trade names and domains | |||||
Components of intangible assets | |||||
Gross Carrying Amount | 24,889 | $ 24,889 | 25,007 | ||
Accumulated Amortization | (7,905) | (7,905) | (6,178) | ||
Net Carrying Amount | 16,984 | $ 16,984 | 18,829 | ||
Trade names and domains | Minimum | |||||
Components of intangible assets | |||||
Estimated Useful Life | 2 years | ||||
Trade names and domains | Maximum | |||||
Components of intangible assets | |||||
Estimated Useful Life | 7 years | ||||
Backlog | |||||
Components of intangible assets | |||||
Estimated Useful Life | 4 years | ||||
Gross Carrying Amount | 11,000 | $ 11,000 | 11,000 | ||
Accumulated Amortization | (8,521) | (8,521) | (6,456) | ||
Net Carrying Amount | $ 2,479 | $ 2,479 | $ 4,544 |
Intangible Assets, Net (FutExp)
Intangible Assets, Net (FutExp) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Future amortization expense of the intangible assets | ||
Remainder of 2017 | $ 20,645 | |
2,018 | 35,691 | |
2,019 | 32,092 | |
2,020 | 28,368 | |
2,021 | 20,678 | |
Thereafter | 106,428 | |
Net Carrying Amount | $ 243,902 | $ 265,558 |
Prepaid Expenses and Other Cu56
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Prepaid Expenses and Other Current Assets | ||
Non-income tax receivable | $ 4,633 | $ 3,879 |
FinaConnect escrow | 2,000 | 429 |
Income tax receivable | 1,324 | 1,864 |
Prepaid technology | 1,103 | 1,318 |
Prepaid insurance | 1,063 | 552 |
Other | 8,815 | 8,182 |
Total prepaid expenses and other current assets | $ 18,938 | $ 16,224 |
Other Non-Current Assets (Detai
Other Non-Current Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Investment in private companies | $ 2,048 | $ 2,750 |
Deposits: | ||
Lease | 4,635 | 4,262 |
Other | 512 | 2,083 |
Assets to fund deferred compensation liability | 4,776 | 2,738 |
Other | 1,811 | 2,130 |
Total other non-current assets | 13,782 | $ 13,963 |
Upfront consideration | $ 445 | |
Class B units | ||
Deposits: | ||
Units owned | 756,347 | |
Historical purchase price | $ 1,250 | |
Class A units | ||
Deposits: | ||
Number of shares purchased | 1,500,000 | |
Upfront consideration | $ 1,500 | |
Ownership interest (as a percent) | 21.40% | |
Number of additional shares purchased | 1,500,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Jun. 30, 2017 | Dec. 31, 2016 | Nov. 19, 2015 | Dec. 15, 2014 | |
Fair Value Measurements | ||||
Convertible Debt, Noncurrent | $ 155,729 | $ 152,575 | ||
Term Notes | $ 65,350 | 100,409 | ||
Liabilities | ||||
Debt instrument covenant, prepayment term | 90 days | |||
Debt instrument covenant, leverage ratio | 2.00% | |||
Excess cash flow payment | $ 31,862 | |||
Non-current liabilities, other | ||||
Assets | ||||
Total Assets | 4,776 | |||
Fair Value | Recurring Basis | ||||
Assets | ||||
Total Assets | 16,936 | 34,382 | ||
Liabilities | ||||
Total liabilities | 6,823 | 7,753 | ||
Fair Value | Recurring Basis | Contingent consideration | ||||
Liabilities | ||||
Total liabilities | 2,612 | 4,868 | ||
Fair Value | Recurring Basis | Deferred compensation liability | ||||
Liabilities | ||||
Total liabilities | 4,211 | 2,885 | ||
Fair Value | Recurring Basis | Money market funds | ||||
Assets | ||||
Total Assets | 12,160 | 31,644 | ||
Fair Value | Recurring Basis | Asset to fund deferred compensation liability | ||||
Assets | ||||
Total Assets | 4,776 | 2,738 | ||
Fair Value | Level 1 | Recurring Basis | ||||
Assets | ||||
Total Assets | 12,160 | 31,644 | ||
Liabilities | ||||
Total liabilities | 4,211 | 2,885 | ||
Fair Value | Level 1 | Recurring Basis | Deferred compensation liability | ||||
Liabilities | ||||
Total liabilities | 4,211 | 2,885 | ||
Fair Value | Level 1 | Recurring Basis | Money market funds | ||||
Assets | ||||
Total Assets | 12,160 | 31,644 | ||
Fair Value | Level 3 | Recurring Basis | ||||
Assets | ||||
Total Assets | 4,776 | 2,738 | ||
Liabilities | ||||
Total liabilities | 2,612 | 4,868 | ||
Fair Value | Level 3 | Recurring Basis | Contingent consideration | ||||
Liabilities | ||||
Total liabilities | 2,612 | 4,868 | ||
Fair Value | Level 3 | Recurring Basis | Asset to fund deferred compensation liability | ||||
Assets | ||||
Total Assets | 4,776 | 2,738 | ||
Convertible Notes | ||||
Fair Value Measurements | ||||
Face amount | $ 172,500 | |||
Convertible Debt, Noncurrent | 155,729 | 152,575 | ||
Liabilities | ||||
Total liabilities | 167,325 | 164,824 | ||
Convertible Notes | Carrying Value | ||||
Fair Value Measurements | ||||
Convertible Debt, Noncurrent | 155,729 | 152,575 | ||
Term Notes | ||||
Fair Value Measurements | ||||
Face amount | $ 160,000 | |||
Term Notes | 104,046 | 138,335 | ||
Liabilities | ||||
Total liabilities | 106,138 | 142,000 | ||
Revolving credit facility | ||||
Liabilities | ||||
Total liabilities | $ 0 | $ 0 |
Fair Value Measurements (Lev3 r
Fair Value Measurements (Lev3 rec) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Changes in the fair value of Contingent Consideration Liabilities | |
Fair value asset transfers between Levels 1, 2 and 3 | $ 0 |
Recurring Basis | |
Changes in the fair value of Contingent Consideration Liabilities | |
Balance | 4,868 |
Settlement of contingent consideration liability | (2,286) |
Contingent consideration adjustment | (218) |
Accretion on contingent consideration | 248 |
Balance | 2,612 |
Reconciliation of assets to fund deferred compensation liability | |
Balance | 2,738 |
Contributions | 2,038 |
Balance | $ 4,776 |
Accrued Expenses and Other Li60
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Components of accrued expenses | ||
Accrued investment manager fees | $ 34,510 | $ 31,278 |
Accrued compensation and related taxes | 27,874 | 35,287 |
Sales and use tax payable | 12,115 | 10,108 |
Accrued professional services | 3,157 | 3,213 |
Definite consideration | 1,250 | 445 |
Other accrued expenses | 7,324 | 7,432 |
Total accrued expenses | $ 86,230 | $ 87,763 |
Other Non-Current Liabilities61
Other Non-Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Other Non-Current Liabilities | ||
Uncertain tax positions | $ 10,069 | $ 7,762 |
Accrued deferred compensation | 4,211 | 2,885 |
Accrued purchase liability | 1,250 | |
Other | 747 | 1,539 |
Other non-current liabilities | $ 15,027 | $ 13,436 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income tax provision and the effective tax rate | ||||
Loss before income tax provision (benefit) | $ (1,626) | $ (11,161) | $ (10,463) | $ (27,870) |
Income tax provision (benefit) | $ 4,844 | $ (3,218) | $ 9,142 | $ (8,934) |
Effective tax rate (as a percent) | (297.90%) | 28.80% | (87.40%) | 32.10% |
Income Taxes (Interim) (Details
Income Taxes (Interim) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Income taxes | |||||
Unrecognized tax benefits that would impact effective tax rate, if recognized | $ 17,414 | $ 17,414 | |||
Recorded interest and penalties | 373 | $ 156 | 890 | $ 388 | |
United States | |||||
Income taxes | |||||
Unrecognized tax benefits that would impact effective tax rate, if recognized | 0 | 0 | |||
Non-current liabilities, other | |||||
Income taxes | |||||
Gross unrecognized tax benefits | $ 17,414 | $ 17,414 | $ 16,476 |
Debt (Summary) (Details)
Debt (Summary) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | Dec. 15, 2014 |
Outstanding debt obligations | |||
Convertible Notes carrying value | $ 155,729 | $ 152,575 | |
Term notes | 65,350 | 100,409 | |
Convertible Notes | |||
Outstanding debt obligations | |||
Face amount | 172,500 | 172,500 | |
Unaccredited discount on Convertible Notes | (14,468) | (17,149) | $ (27,500) |
Unamortized issuance costs | (2,303) | (2,776) | |
Convertible Notes carrying value | 155,729 | 152,575 | |
Term Notes | |||
Outstanding debt obligations | |||
Face amount | 106,138 | 142,000 | |
Unamortized issuance costs | (2,092) | (3,665) | |
Term notes | $ 104,046 | $ 138,335 |
Debt (Int) (Details)
Debt (Int) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Interest expense on convertible debt | ||||
Total interest expense | $ 4,853 | $ 4,031 | ||
Convertible Notes, Credit and Amended and Restated Credit Agreements | ||||
Interest expense on convertible debt | ||||
Coupon interest | $ 754 | $ 755 | 1,509 | 1,510 |
Amortization of issuance costs | 616 | 719 | 2,046 | 1,438 |
Accretion of debt discount | 1,344 | 1,292 | 2,681 | 2,578 |
Interest on credit agreement | 1,110 | 1,263 | 2,455 | 2,531 |
Undrawn and other fees | 53 | 102 | 122 | 166 |
Total interest expense | 3,877 | 4,131 | 8,813 | 8,223 |
Convertible Notes | ||||
Interest expense on convertible debt | ||||
Accretion of debt discount | $ 1,344 | $ 1,292 | $ 2,681 | $ 2,578 |
Debt (CredAg) (Details)
Debt (CredAg) (Details) - USD ($) $ in Thousands | Nov. 19, 2015 | Jun. 30, 2017 |
Debt | ||
Debt instrument covenant, prepayment term | 90 days | |
Debt instrument covenant, leverage ratio | 2.00% | |
Excess cash flow payment | $ 31,862 | |
Estimated prepayment portion | 32,206 | |
Credit Agreement | ||
Debt | ||
Credit facility amount | $ 100,000 | |
Amount outstanding | 0 | |
Voting equity of foreign subsidiary pledged (as a percent) | 66.00% | |
Non-voting equity of foreign subsidiary pledged (as a percent) | 100.00% | |
Letters of credit | ||
Debt | ||
Credit facility amount | $ 5,000 | |
Term Notes | ||
Debt | ||
Amount outstanding | $ 106,138 | |
Face amount | 160,000 | |
Periodic payment | $ 2,000 | |
Minimum | LIBOR | ||
Debt | ||
Spread on variable rate basis (as a percent) | 1.50% | |
Minimum | Credit Agreement | LIBOR | ||
Debt | ||
Spread on variable rate basis (as a percent) | 1.50% | |
Maximum | LIBOR | ||
Debt | ||
Spread on variable rate basis (as a percent) | 3.25% | |
Maximum | Credit Agreement | LIBOR | ||
Debt | ||
Spread on variable rate basis (as a percent) | 3.25% |
Debt (Conv) (Details)
Debt (Conv) (Details) - Convertible Notes $ / shares in Units, $ in Thousands | Dec. 15, 2014USD ($)item$ / shares | Jun. 30, 2017USD ($)$ / shares | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)$ / shares | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Debt | ||||||
Face amount | $ 172,500 | |||||
Net proceeds from offering | $ 166,967 | |||||
Interest rate (as a percent) | 1.75% | |||||
Repurchase percentage of principal (as a percent) | 100.00% | |||||
Conversion rate | 15.9022 | |||||
Principal amount | $ / shares | $ 1 | |||||
Conversion price (in dollars per share) | $ / shares | $ 62.88 | $ 62.88 | $ 62.88 | |||
Threshold trading days (in days) | item | 20 | |||||
Consecutive trading days | 30 days | |||||
Threshold percentage of stock price trigger (as a percent) | 130.00% | |||||
Threshold business days | 5 days | |||||
Threshold consecutive trading-day period | 5 days | |||||
Threshold percentage of trading price trigger (as a percent) | 98.00% | |||||
Allocated to equity components | $ 26,618 | |||||
Offering costs | 882 | |||||
Discount | $ 27,500 | $ 14,468 | $ 14,468 | $ 17,149 | ||
Accretion of debt discount | $ 1,344 | $ 1,292 | $ 2,681 | $ 2,578 | ||
Effective interest rate on the liability component (as a percent) | 5.30% | 6.10% | 5.30% | 6.10% |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | May 13, 2015 | Jun. 30, 2017 |
Stock-Based compensation | ||
Maximum number of shares available for future issuance | 416,967 | |
Unvested restricted stock units and awards | ||
Stock-Based compensation | ||
Unrecognized compensation expense related to shares | $ 56,907 | |
2010 Plan | ||
Stock-Based compensation | ||
Shares reserved for delivery | 2,700,000 | |
2015 Plan | Unvested restricted stock units and awards | ||
Stock-Based compensation | ||
Shares authorized for issuance | 1,052,000 | |
Vesting period | 43 months | |
Unrecognized compensation expense related to shares | $ 6,634 |
Stock-Based Compensation (Exp)
Stock-Based Compensation (Exp) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Summary of employee stock-based compensation expense | ||||
Stock-based compensation expense | $ 7,945 | $ 6,703 | $ 15,403 | $ 18,318 |
Tax effect on stock-based compensation expense | (2,983) | (2,681) | (5,784) | (7,327) |
Net effect on income | 4,962 | $ 4,022 | $ 9,619 | $ 10,991 |
Statutory rate (as a percent) | 37.50% | 40.00% | ||
Tax effect on stock-based compensation expense after valuation allowance | $ 0 | $ 0 |
Stock-Based Compensation (Assum
Stock-Based Compensation (Assump) (Details) - $ / shares | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Summary of weighted average assumptions used to value options granted | |||
Grant date fair value of options (in dollars per share) | $ 13.26 | $ 14.51 | $ 9.49 |
Volatility (as a percent) | 42.40% | 43.80% | 42.20% |
Risk-free interest rate (as a percent) | 1.40% | 2.10% | 1.40% |
Expected term (in years) | 6 years 2 months 12 days | 6 years 3 months 18 days | 6 years 3 months 18 days |
Stock-Based Compensation (Optio
Stock-Based Compensation (Options) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Weighted-Average Remaining Contractual Life | ||||
Outstanding | 4 years 6 months | |||
Stock options | ||||
Options | ||||
Outstanding at the beginning of the period (in shares) | 2,891,036 | 3,033,194 | 3,033,194 | |
Granted (in shares) | 75,238 | |||
Exercised (in shares) | (84,949) | (208,334) | ||
Forfeited (in shares) | (1,667) | (9,062) | ||
Outstanding at the end of the period (in shares) | 2,804,420 | 2,891,036 | 2,804,420 | 3,033,194 |
Options exercisable (in shares) | 2,549,439 | 2,549,439 | ||
Weighted-Average Exercise Price | ||||
Outstanding at the beginning of the period (in dollars per share) | $ 17.15 | $ 16.33 | $ 16.33 | |
Granted (in dollars per share) | 31.70 | |||
Exercised (in dollars per share) | 8.46 | 9.12 | ||
Forfeited (in dollars per share) | 32.46 | 45.81 | ||
Outstanding at the end of the period (in dollars per share) | 17.41 | $ 17.15 | 17.41 | $ 16.33 |
Options exercisable (in dollars per share) | $ 15.85 | $ 15.85 | ||
Weighted-Average Remaining Contractual Life | ||||
Outstanding | 4 years 3 months 18 days | 4 years 3 months 18 days | ||
Options exercisable | 3 years 9 months 18 days | |||
Aggregate Intrinsic Value | ||||
Outstanding (in dollars) | $ 66,206 | $ 50,792 | $ 66,206 | $ 63,264 |
Options exercisable (in dollars) | 63,824 | 63,824 | ||
Additional disclosures | ||||
Unrecognized stock-based compensation expense related to unvested stock options | $ 2,956 | $ 2,956 | ||
Unrecognized compensation expense weighted-average recognition period | 1 year 10 months 24 days | |||
Stock options | Minimum | ||||
Additional disclosures | ||||
Exercise prices of stock options outstanding (in dollars per share) | $ 0.11 | $ 0.11 | ||
Stock options | Maximum | ||||
Additional disclosures | ||||
Exercise prices of stock options outstanding (in dollars per share) | $ 55.29 | $ 55.29 |
Stock-Based Compensation (ResSt
Stock-Based Compensation (ResSt) (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2017USD ($)item$ / sharesshares | Mar. 31, 2017$ / sharesshares | Jun. 30, 2017USD ($)item$ / sharesshares | |
Unvested restricted stock units and awards | |||
Stock-Based compensation | |||
Award vesting rights proportion (as a percent) | 33.00% | ||
Number of vesting rights anniversaries | item | 3 | 3 | |
Number of Shares | |||
Balance at the beginning of the period (in shares) | shares | 2,221,044 | 1,894,759 | 1,894,759 |
Granted (in shares) | shares | 47,700 | 872,941 | |
Vested (in shares) | shares | (199,163) | (526,572) | |
Forfeited (in shares) | shares | (45,683) | (20,084) | |
Balance at the end of the period (in shares) | shares | 2,023,898 | 2,221,044 | 2,023,898 |
Weighted-Average Grant Date Fair Value per Share | |||
Balance at the beginning of the period (in dollars per share) | $ / shares | $ 31.98 | $ 30.40 | $ 30.40 |
Granted (in dollars per share) | $ / shares | 35.05 | 31.89 | |
Vested (in dollars per share) | $ / shares | 30.59 | 31.68 | |
Forfeited (in dollars per share) | $ / shares | 30.11 | 27.52 | |
Balance at the end of the period (in dollars per share) | $ / shares | $ 32.17 | $ 31.98 | $ 32.17 |
Additional disclosures | |||
Unrecognized compensation expense related to shares | $ | $ 56,907 | $ 56,907 | |
Unrecognized compensation expense weighted-average recognition period | 2 years 2 months 12 days | ||
Stock options | |||
Additional disclosures | |||
Unrecognized compensation expense weighted-average recognition period | 1 year 10 months 24 days |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 15, 2014 | |
Items included in the computation of diluted loss per share | 0 | 0 | 0 | 0 | |
Basic income (loss) per share calculation: | |||||
Net loss attributable to Envestnet, Inc. | $ (6,470) | $ (7,943) | $ (19,605) | $ (18,936) | |
Basic number of weighted-average shares outstanding | 43,855,479 | 42,752,465 | 43,513,074 | 42,632,964 | |
Effect of dilutive shares: | |||||
Diluted number of weighted-average shares outstanding | 43,855,479 | 42,752,465 | 43,513,074 | 42,632,964 | |
Net loss per share attributable to Envestnet, Inc. | |||||
Basic (in dollars per share) | $ (0.15) | $ (0.19) | $ (0.45) | $ (0.44) | |
Diluted (in dollars per share) | (0.15) | $ (0.19) | (0.45) | $ (0.44) | |
Convertible Notes | |||||
Conversion price (in dollars per share) | $ 62.88 | $ 62.88 | $ 62.88 |
Net Loss Per Share (Details)74
Net Loss Per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Common share equivalents for securities that were anti-dilutive and therefore excluded from the computation of diluted earnings per share | ||||
Anti-dilutive securities excluded from computation of diluted earnings per share (in shares) | 7,571,639 | 7,918,989 | 7,571,639 | 7,918,989 |
Stock options | ||||
Common share equivalents for securities that were anti-dilutive and therefore excluded from the computation of diluted earnings per share | ||||
Anti-dilutive securities excluded from computation of diluted earnings per share (in shares) | 2,804,420 | 3,383,899 | 2,804,420 | 3,383,899 |
Unvested restricted stock units and awards | ||||
Common share equivalents for securities that were anti-dilutive and therefore excluded from the computation of diluted earnings per share | ||||
Anti-dilutive securities excluded from computation of diluted earnings per share (in shares) | 2,023,898 | 1,791,769 | 2,023,898 | 1,791,769 |
Convertible Notes | ||||
Common share equivalents for securities that were anti-dilutive and therefore excluded from the computation of diluted earnings per share | ||||
Anti-dilutive securities excluded from computation of diluted earnings per share (in shares) | 2,743,321 | 2,743,321 | 2,743,321 | 2,743,321 |
Major Customers (Details)
Major Customers (Details) - Revenues - Customer concentration risk - Fidelity - customer | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Major Customers | ||||
Number of customers accounted for as major customer | 1 | 1 | 1 | 1 |
Revenue as a percentage of the company's total | 16.00% | 15.00% | 16.00% | 15.00% |
Commitments and Contingencies76
Commitments and Contingencies (Details) $ in Thousands | 1 Months Ended | 6 Months Ended | |
Dec. 31, 2014patent | Jun. 30, 2017USD ($)item | Dec. 31, 2016USD ($) | |
Number of previous claims experienced | item | 0 | ||
Patents allegedly infringed upon, number | patent | 7 | ||
Future minimum unconditional purchase obligations | |||
Net sales and use taxes | $ 7,482 | ||
Sales and use tax liability | 12,115 | $ 10,108 | |
Sales and excise tax receivable | 4,633 | $ 3,879 | |
Prepaid expense and other current assets | |||
Future minimum unconditional purchase obligations | |||
Sales and excise tax receivable | 4,633 | ||
Accounts Payable and Accrued Liabilities | |||
Future minimum unconditional purchase obligations | |||
Sales and use tax liability | $ 12,115 | ||
Petition for reexamination | |||
Patents allegedly infringed upon, number | patent | 1 |
Commitments and Contingencies77
Commitments and Contingencies (Leases) (Details) $ in Thousands | Jun. 30, 2017USD ($) |
Future annual minimum lease commitments under operating leases | |
Remainder of 2017 | $ 7,003 |
2,018 | 13,982 |
2,019 | 14,851 |
2,020 | 14,721 |
2,021 | 13,933 |
Thereafter | 55,198 |
Total | $ 119,688 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Segment Information | |||||
Revenues | $ 167,417 | $ 141,708 | $ 325,203 | $ 273,529 | |
Income (loss) from operations | 2,743 | (6,330) | (611) | (19,090) | |
Operating expenses | (164,674) | (148,038) | (325,814) | (292,619) | |
Other expense, net | (4,369) | (4,831) | (9,852) | (8,780) | |
Loss before income tax provision (benefit) | (1,626) | (11,161) | (10,463) | (27,870) | |
Income tax provision (benefit) | 4,844 | (3,218) | 9,142 | (8,934) | |
Net loss | (6,470) | (7,943) | (19,605) | (18,936) | |
Net loss attributable to Envestnet, Inc. | (6,470) | (7,943) | (19,605) | (18,936) | |
Assets | 839,666 | 839,666 | $ 872,401 | ||
Depreciation and amortization | 15,465 | 17,100 | 31,300 | 33,180 | |
Capital expenditures | 8,734 | 4,678 | 14,832 | 7,877 | |
Operating Segments | |||||
Segment Information | |||||
Income (loss) from operations | 10,176 | (781) | 15,979 | (5,248) | |
Segment Reconciling | |||||
Segment Information | |||||
Operating expenses | (7,433) | (5,549) | (16,590) | (13,842) | |
Envestnet | |||||
Segment Information | |||||
Revenues | 129,372 | 110,716 | 250,690 | 213,906 | |
Assets | 320,709 | 320,709 | 341,602 | ||
Depreciation and amortization | 6,361 | 6,360 | 12,782 | 12,424 | |
Capital expenditures | 7,580 | 3,134 | 12,931 | 5,163 | |
Envestnet | Operating Segments | |||||
Segment Information | |||||
Income (loss) from operations | 15,811 | 10,490 | 29,322 | 20,064 | |
Envestnet | Yodlee | |||||
Segment Information | |||||
Revenues | 38,045 | 30,992 | 74,513 | 59,623 | |
Assets | 518,957 | 518,957 | $ 530,799 | ||
Depreciation and amortization | 9,104 | 10,740 | 18,518 | 20,756 | |
Capital expenditures | 1,154 | 1,544 | 1,901 | 2,714 | |
Envestnet | Yodlee | Operating Segments | |||||
Segment Information | |||||
Income (loss) from operations | $ (5,635) | $ (11,271) | $ (13,343) | $ (25,312) | |
Revenues | Customer concentration risk | Fidelity | |||||
Segment Information | |||||
Fidelity revenue as a percentage of Envestnet segment revenue | 16.00% | 15.00% | 16.00% | 15.00% | |
Revenues | Envestnet | Customer concentration risk | Fidelity | |||||
Segment Information | |||||
Fidelity revenue as a percentage of Envestnet segment revenue | 20.00% | 19.00% | 20.00% | 19.00% |
Geographical Information (Detai
Geographical Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | $ 167,417 | $ 141,708 | $ 325,203 | $ 273,529 | |
Property, Plant and Equipment, Net | 34,787 | 34,787 | $ 33,000 | ||
United States | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 151,621 | 127,070 | 293,583 | 251,004 | |
Property, Plant and Equipment, Net | 29,897 | 29,897 | 28,713 | ||
International | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 15,796 | $ 14,638 | 31,620 | $ 22,525 | |
India | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Property, Plant and Equipment, Net | 4,370 | 4,370 | 3,596 | ||
Other | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Property, Plant and Equipment, Net | $ 520 | $ 520 | $ 691 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Jul. 18, 2017 | Jul. 13, 2017 | May 13, 2015 | Jun. 30, 2017 | Nov. 19, 2015 |
2010 Plan | |||||
Subsequent Events | |||||
Shares reserved for delivery | 2,700,000 | ||||
Minimum | LIBOR | |||||
Subsequent Events | |||||
Spread on variable rate basis (as a percent) | 1.50% | ||||
Maximum | LIBOR | |||||
Subsequent Events | |||||
Spread on variable rate basis (as a percent) | 3.25% | ||||
Letters of credit | |||||
Subsequent Events | |||||
Credit facility amount | $ 5,000 | ||||
Subsequent Event | 2010 Plan | |||||
Subsequent Events | |||||
Shares reserved for delivery | 3,525,000 | ||||
Subsequent Event | Second Amended and Restated Credit Agreement | |||||
Subsequent Events | |||||
Credit facility amount | $ 350,000 | ||||
Expected additional credit facility amount | $ 50,000 | ||||
Voting equity of foreign subsidiary pledged (as a percent) | 66.00% | ||||
Non-voting equity of foreign subsidiary pledged (as a percent) | 100.00% | ||||
Subsequent Event | Letters of credit | |||||
Subsequent Events | |||||
Credit facility amount | $ 5,000 |