Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 05, 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 | Sep. 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 | 44,305,791 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 48,704 | $ 52,592 |
Fees and other receivables, net | 49,726 | 44,268 |
Prepaid expenses and other current assets | 23,999 | 16,224 |
Total current assets | 122,429 | 113,084 |
Property and equipment, net | 35,274 | 33,000 |
Internally developed software, net | 20,279 | 14,860 |
Intangible assets, net | 233,525 | 265,558 |
Goodwill | 432,746 | 431,936 |
Other non-current assets | 17,969 | 13,963 |
Total assets | 862,222 | 872,401 |
Current liabilities: | ||
Accrued expenses and other liabilities | 102,877 | 87,763 |
Accounts payable | 13,215 | 11,480 |
Current portion of debt | 37,926 | |
Contingent consideration | 2,055 | 2,286 |
Deferred revenue | 18,388 | 16,499 |
Total current liabilities | 136,535 | 155,954 |
Convertible Notes | 157,353 | 152,575 |
Revolving credit facility | 101,168 | |
Term Notes | 100,409 | |
Contingent consideration | 641 | 2,582 |
Deferred revenue | 14,454 | 15,643 |
Deferred rent and lease incentive | 14,867 | 12,060 |
Deferred tax liabilities, net | 12,216 | 5,555 |
Other non-current liabilities | 14,527 | 13,436 |
Total liabilities | 451,761 | 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; 56,918,043 and 55,642,686 shares issued as of September 30, 2017 and December 31, 2016, respectively; 44,213,751 and 43,240,567 shares outstanding as of September 30, 2017 and December 31, 2016, respectively | 284 | 278 |
Additional paid-in capital | 544,895 | 516,675 |
Accumulated deficit | (91,499) | (70,574) |
Treasury stock at cost, 12,704,292 and 12,402,119 shares as of September 30, 2017 and December 31, 2016, respectively | (44,687) | (33,068) |
Accumulated other comprehensive income (loss) | 170 | (422) |
Total stockholders’ equity | 409,163 | 412,889 |
Non-controlling interest | 398 | 398 |
Total equity | 409,561 | 413,287 |
Total liabilities and equity | $ 862,222 | $ 872,401 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 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 | 56,918,043 | 55,642,686 |
Common stock, shares outstanding | 44,213,751 | 43,240,567 |
Treasury stock, shares | 12,704,292 | 12,402,119 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues: | ||||
Assets under management or administration | $ 106,147 | $ 90,042 | $ 299,268 | $ 258,969 |
Subscription and licensing | 62,963 | 51,959 | 180,675 | 142,303 |
Professional services and other | 6,504 | 7,154 | 20,874 | 21,412 |
Total revenues | 175,614 | 149,155 | 500,817 | 422,684 |
Operating expenses: | ||||
Cost of revenues | 56,070 | 47,259 | 161,031 | 132,319 |
Compensation and benefits | 68,551 | 60,345 | 199,079 | 180,625 |
General and administration | 31,153 | 26,150 | 90,178 | 80,249 |
Depreciation and amortization | 15,492 | 16,692 | 46,792 | 49,872 |
Total operating expenses | 171,266 | 150,446 | 497,080 | 443,065 |
Income (loss) from operations | 4,348 | (1,291) | 3,737 | (20,381) |
Other expense, net | (3,986) | (4,434) | (13,838) | (13,214) |
Income (loss) before income tax provision (benefit) | 362 | (5,725) | (10,101) | (33,595) |
Income tax provision (benefit) | 1,682 | (1,668) | 10,824 | (10,602) |
Net loss | (1,320) | (4,057) | (20,925) | (22,993) |
Net loss attributable to Envestnet, Inc. | $ (1,320) | $ (4,057) | $ (20,925) | $ (22,993) |
Net loss per share attributable to Envestnet, Inc.: | ||||
Basic (in dollars per share) | $ (0.03) | $ (0.09) | $ (0.48) | $ (0.54) |
Diluted (in dollars per share) | $ (0.03) | $ (0.09) | $ (0.48) | $ (0.54) |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 44,044,527 | 42,843,103 | 43,604,869 | 42,704,383 |
Diluted (in shares) | 44,044,527 | 42,843,103 | 43,604,869 | 42,704,383 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Condensed Consolidated Statements of Comprehensive Loss | ||||
Net loss attributable to Envestnet, Inc. | $ (1,320) | $ (4,057) | $ (20,925) | $ (22,993) |
Other comprehensive income (loss), net of taxes | ||||
Foreign currency translation gain (loss) | (217) | 192 | 592 | (122) |
Gains on foreign currency contracts designated as cash flow hedges reclassified to earnings | (556) | (204) | ||
Total other comprehensive income (loss), net of taxes | (217) | (364) | 592 | (326) |
Comprehensive loss, net of taxes | $ (1,537) | $ (4,421) | $ (20,333) | $ (23,319) |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Equity - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | 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 | $ 2 | 4,466 | 4,468 | ||||
Exercise of stock options (in shares) | 428,173 | ||||||
Issuance of common stock - vesting of restricted stock units | $ 4 | 4 | |||||
Issuance of common stock - vesting of restricted stock units (in shares) | 847,184 | ||||||
Stock-based compensation expense | 23,754 | 23,754 | |||||
Purchase of treasury stock for stock-based tax withholdings | $ (11,619) | (11,619) | |||||
Purchase of treasury stock for stock-based tax withholdings (in shares) | (302,173) | ||||||
Foreign currency translation gain | 592 | 592 | |||||
Net loss | (20,925) | (20,925) | |||||
Balance at Sep. 30, 2017 | $ 284 | $ (44,687) | $ 544,895 | $ 170 | $ (91,499) | $ 398 | $ 409,561 |
Balance (in shares) at Sep. 30, 2017 | 56,918,043 | (12,704,292) |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows $ in Thousands | 9 Months Ended | |
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | |
OPERATING ACTIVITIES: | ||
Net loss | $ (20,925) | $ (22,993) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 46,792 | 49,872 |
Deferred rent and lease amortization | 709 | (324) |
Provision for doubtful accounts | 828 | 369 |
Deferred income taxes | 6,646 | (10,273) |
Stock-based compensation expense | 23,451 | 25,872 |
Non-cash interest expense | 8,711 | 6,955 |
Accretion on contingent consideration and purchase liability | 408 | 143 |
Fair market value adjustment on contingent consideration | 838 | |
Loss on disposal of fixed assets | 69 | 220 |
Loss allocation from equity method investment | 984 | 1,130 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Fees and other receivables | (6,286) | 4,077 |
Prepaid expenses and other current assets | (5,316) | (4,960) |
Other non-current assets | (1,784) | (4,271) |
Accrued expenses and other liabilities | 13,289 | 275 |
Accounts payable | 1,435 | 124 |
Deferred revenue | 740 | 1,959 |
Other non-current liabilities | 1,852 | 4,337 |
Net cash provided by operating activities | 71,603 | 53,350 |
INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (11,432) | (10,839) |
Capitalization of internally developed software | (9,210) | (6,217) |
Investment in private company | (1,450) | (738) |
Purchase of ERS units | (1,500) | |
Acquisition of businesses, net of cash acquired | (18,394) | |
Net cash used in investing activities | (22,092) | (37,688) |
FINANCING ACTIVITIES: | ||
Convertible Notes issuance costs | (94) | |
Payment of term notes | (35,862) | (6,000) |
Proceeds from borrowings on revolving credit facility | 35,000 | 25,000 |
Payments on revolving credit facility | (42,500) | (25,000) |
Debt issuance costs | (94) | |
Payments of contingent consideration | (2,286) | (2,924) |
Payments of definite consideration | (445) | |
Payments of purchase consideration liabilities | (235) | |
Proceeds from exercise of stock options | 4,468 | 3,166 |
Purchase of treasury stock for stock-based tax withholdings | (11,619) | (9,517) |
Common stock acquired under the share repurchase program | (1,448) | |
Issuance of restricted stock units | 4 | 5 |
Net cash used in financing activities | (53,569) | (16,718) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 170 | |
DECREASE IN CASH AND CASH EQUIVALENTS | (3,888) | (1,056) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 52,592 | 51,718 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 48,704 | 50,662 |
Supplemental disclosure of cash flow information - net cash refunded (paid) during the period for income taxes | 1,449 | (175) |
Supplemental disclosure of cash flow information - cash paid during the period for interest | 4,887 | 5,390 |
Supplemental disclosure of non-cash operating, investing and financing activities: | ||
Leasehold improvements funded by lease incentive | 2,098 | 1,522 |
Non-cash debt issuance costs | 2,230 | |
Purchase liabilities included in accrued expenses and other liabilities | 837 | |
Purchase of fixed assets included in accounts payable and accrued expenses and other liabilities | $ 505 | |
Contingent consideration issued in a business acquisition | $ 1,929 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 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 three 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 | 9 Months Ended |
Sep. 30, 2017 | |
Basis of Presentation | |
Basis of Presentation | 2. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company as of September 30, 2017 and for the three and nine months ended September 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 September 30, 2017 and the results of operations, equity, comprehensive loss and cash flows for the periods presented herein. 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 stockholders’ equity. The results of operations for the three and nine months ended September 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 September 30, 2017, 1,956,390 shares could still be purchased under this program. For the nine month period ended September 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 and 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. The new revenue standard may have an impact on the Company’s principal versus agent considerations. We expect to begin capitalizing certain costs to obtain 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 made progress on its contract and business process reviews but 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 nine months ended September 30, 2016, net cash provided by operating activities increased by $1,470 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 | 9 Months Ended |
Sep. 30, 2017 | |
Business Acquisitions | |
Business Acquisitions | 3. Business Acquisitions FolioDynamix On September 25, 2017, the Company entered into an agreement and plan of merger (the “Merger Agreement”) with Folio Dynamics Holdings, Inc., a Delaware corporation (“FolioDynamix”), FCD Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), and Actua USA Corporation, a Delaware corporation, solely in its capacity as the representative of the stockholders of FolioDynamix. Pursuant to the Merger Agreement, Merger Sub will merge with and into FolioDynamix, with FolioDynamix continuing as the surviving corporation (the “Acquisition”) and a wholly owned subsidiary of the Company. FolioDynamix will be included in the Envestnet segment. FolioDynamix provides financial institutions, registered investment advisors, and other wealth management clients with an end-to-end technology solution paired with a suite of advisory tools including model portfolios, research, and overlay management services. The Company plans to acquire FolioDynamix to add complementary trading tools as well as commission and brokerage support to Envestnet’s existing suite of offerings. The Company expects to integrate the technology and operations of FolioDynamix into the Company’s wealth management channel, enabling the Company to further leverage its operating scale and data analytics capabilities. Subject to the terms and conditions of the Merger Agreement, the Company will pay $195,000 in cash for all the outstanding shares of FolioDynamix, subject to certain post-closing adjustments. The Company will fund the Acquisition price with a combination of cash on the Company’s balance sheet and borrowings under its revolving credit facility. Either the Company or FolioDynamix may terminate the Agreement if the closing does not occur by March 31, 2018. The applicable antitrust pre-clearance filings were made by the parties on October 10, 2017 and October 11, 2017. The Company is withdrawing its filing and plans to refile it immediately thereafter to allow the Department of Justice additional time to review the filing without having to issue a second request. The Company continues to expect the transaction to close in the first quarter of 2018, subject to satisfaction of the closing conditions. The Company and FolioDynamix will continue to operate separately until the transaction closes. 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 estimated consideration transferred in the acquisition was as follows: Measurement Preliminary Period As of Estimate Adjustments September 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 following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition: Measurement Preliminary Period As of Estimate Adjustments September 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 estimated identifiable intangible assets acquired, estimated useful lives and amortization method is as follows: AS Measurement Preliminary Period As of Estimated Amortization Estimate Adjustments September 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 nine months ended September 30, 2016. |
Cost of Revenues
Cost of Revenues | 9 Months Ended |
Sep. 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 Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Assets under management or administration $ 50,597 $ 41,960 $ 142,097 $ 117,369 Subscription and licensing 5,076 5,110 14,832 11,934 Professional services and other 397 189 4,102 3,016 Total $ 56,070 $ 47,259 $ 161,031 $ 132,319 |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2017 | |
Property and Equipment, Net | |
Property and Equipment, Net | 5. Property and equipment, net consists of the following: September 30, December 31, Estimated Useful Life 2017 2016 Cost: Computer equipment and software 3 years $ 60,073 $ 52,921 Leasehold improvements Shorter of the lease term or useful life of the asset 22,580 17,286 Office furniture and fixtures 3-7 years 8,048 6,911 Other office equipment 3-5 years 1,883 1,367 92,584 78,485 Less: accumulated depreciation and amortization (57,310) (45,485) Property and equipment, net $ 35,274 $ 33,000 Depreciation and amortization expense was as follows: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Depreciation and amortization expense $ 3,724 $ 3,740 $ 11,668 $ 11,147 |
Internally Developed Software,
Internally Developed Software, Net | 9 Months Ended |
Sep. 30, 2017 | |
Internally Developed Software, Net | |
Internally Developed Software, Net | 6. Internally developed software, net consists of the following: September 30, December 31, Estimated Useful Life 2017 2016 Internally developed software 5 years $ 42,928 $ 33,718 Less: accumulated amortization (22,649) (18,858) Internally developed software, net $ 20,279 $ 14,860 Amortization expense was as follows: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Amortization expense $ 1,391 $ 917 $ 3,791 $ 2,569 |
Goodwill & Intangible Assets, N
Goodwill & Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill & Intangible Assets, Net | |
Goodwill & Intangible Assets, Net | 7. Goodwill & Intangible Assets, Net Changes in the carrying amount of goodwill were as follows: Envestnet Envestnet | Yodlee Total Balance at December 31, 2016 $ $ 268,185 $ Purchase accounting adjustments - Wheelhouse — 457 457 Foreign currency translation — 353 Balance at September 30, 2017 $ $ $ Intangible assets, net consist of the following: September 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 $ (72,743) $ 186,607 $ 259,490 $ (54,861) $ 204,629 Proprietary technologies 2 - 8 years 57,328 (27,979) 29,349 57,770 (20,214) 37,556 Trade names 2 - 7 years 24,889 (8,766) 16,123 25,007 (6,178) 18,829 Backlog 4 years 11,000 (9,554) 1,446 11,000 (6,456) 4,544 Total intangible assets $ 352,567 $ (119,042) $ 233,525 $ 353,267 $ (87,709) $ 265,558 Amortization expense was as follows: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Amortization expense $ 10,377 $ 12,035 $ 31,333 $ 36,156 Future amortization expense of the intangible assets as of September 30, 2017, is expected to be as follows: Years ending December 31: Remainder of 2017 $ 10,232 2018 35,657 2019 32,038 2020 28,344 2021 20,638 Thereafter 106,616 $ 233,525 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Sep. 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: September 30, December 31, 2017 2016 Non-income tax receivable $ 4,952 $ 3,879 FinaConnect escrow 429 Income tax receivable 2,267 1,864 Prepaid technology 1,827 1,318 Prepaid insurance 1,055 552 Other 11,898 8,182 $ 23,999 $ 16,224 |
Other Non-Current Assets
Other Non-Current Assets | 9 Months Ended |
Sep. 30, 2017 | |
Other Non-Current Assets. | |
Other Non-Current Assets | 9. Other Non-Current Assets Other non-current assets consist of the following: September 30, December 31, 2017 2016 Assets to fund deferred compensation liability $ 5,122 $ 2,738 Deposits: Lease 4,262 Other 2,083 Unamortized issuance costs on revolving credit facility 3,320 — Investments in private companies 3,216 2,750 Other 2,130 $ 17,969 $ 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 previously owned 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. During the third quarter of 2017, the Company purchased an additional 1,450,000 Class A units in this privately held company for cash consideration of $1,450. The additional investment increased the Company’s ownership interest to 34.5%. 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 | 9 Months Ended |
Sep. 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 on a recurring basis in the condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016, based on the three-tier fair value hierarchy. September 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 September 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 332 Balance at September 30, 2017 $ 2,696 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 September 30, 2017: Fair Value of Assets to Fund Deferred Compensation Liability Balance at December 31, 2016 $ Contributions and fair value adjustments 2,384 Balance at September 30, 2017 $ 5,122 The asset value was increased due to funding of the plan as well as a gain on the underlying investment vehicles of $350, which resulted in an asset value as of September 30, 2017 of $5,122, 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 nine months ended September 30, 2017. On December 15, 2014, the Company issued $172,500 of Convertible Notes. As of September 30, 2017 and December 31, 2016, the carrying value of the 2019 Convertible Notes equaled $ 157,353 and $152,575, respectively, and represents the aggregate principal amount outstanding less the unamortized discount and debt issuance costs. As of September 30, 2017 and December 31, 2016, the fair value of the Convertible Notes was $181,142 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 September 30, 2017 (see Note 14). As of September 30, 2017 and December 31, 2016, there was $0 and $142,000, respectively, of Term Notes outstanding. As of December 31, 2016 the outstanding value of our Term Notes approximated fair value as the Term Notes bore interest at variable rates and we believed our credit risk quality was consistent with when the debt originated. As of September 30, 2017 and December 31, 2016, the carrying value of the Term Notes equaled $ 0 and $ 138,335 , respectively, and represents the aggregate principal amount outstanding less the unamortized debt issuance costs. The Company considered the Term Notes as of December 31, 2016 to be Level II liability (See Note 14). As of September 30, 2017 and December 31, 2016, there was $101,168 and $0, respectively, outstanding on the revolving credit facility under the Amended and Restated Credit Agreement. As of September 30, 2017 and December 31, 2016 the outstanding balance on our revolving credit facility approximated fair value as the revolving credit facility bore interest at variable rates and we believed our credit risk quality was consistent with when the debt originated. The Company considered the revolving credit facility as of December 31, 2016 and as of September 30, 2017 to be Level I liability (See Note 14). 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 September 30, 2017 based upon the short-term nature of the assets and liabilities. |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 9 Months Ended |
Sep. 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: September 30, December 31, 2017 2016 Accrued investment manager fees $ 37,344 $ 31,278 Accrued compensation and related taxes 37,882 35,287 Sales and use tax payable 12,914 10,108 Accrued professional services 4,646 3,213 Definite consideration 1,250 445 Other accrued expenses 8,841 7,432 $ 102,877 $ 87,763 |
Other Non-Current Liabilities
Other Non-Current Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Other Non-Current Liabilities | |
Other Non-Current Liabilities | 12. Other Non-Current Liabilities Other non-current liabilities consist of the following: September 30, December 31, 2017 2016 Uncertain tax positions $ 10,379 $ Accrued deferred compensation 4,006 Accrued purchase liability — Other 142 $ 14,527 $ 13,436 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 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 Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Income (loss) before income tax provision (benefit) $ 362 $ (5,725) $ $ (33,595) Income tax provision (benefit) 1,682 (1,668) 10,824 (10,602) Effective tax rate 464.6 % 29.1 % % 31.6 % The Company's effective tax rate in the three and nine months ended September 30, 2017 differed from the effective tax rate in the three and nine months ended September 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 $17,853 and $16,476 at September 30, 2017 and December 31, 2016, respectively. At September 30, 2017, the amount of unrecognized tax benefits that would benefit the Company’s effective tax rate, if recognized, was $17,853. The Company recognizes potential interest and penalties related to unrecognized tax benefits in income tax expense. The Company recorded interest and penalties of $371 and $1,261 for the three and nine months period ended September 30, 2017, respectively. The Company recorded interest and penalties of $334 and $723 for the three and nine months period ended September 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, 2011 through 2016 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 | 9 Months Ended |
Sep. 30, 2017 | |
Debt | |
Debt | 14. Debt The Company’s outstanding debt obligations as of September 30, 2017 and December 31, 2016 were as follows: September 30, December 31, 2017 2016 Convertible Notes $ 172,500 $ 172,500 Unaccreted discount on Convertible Notes (13,075) (17,149) Unamortized issuance costs on Convertible Notes (2,072) (2,776) Convertible Notes carrying value $ 157,353 $ 152,575 Term Notes $ — $ 142,000 Unamortized issuance costs on Term Notes — (3,665) Term Notes carrying value $ — $ 138,335 Revolving credit facility balance $ 101,168 $ — Interest expense was comprised of the following and is included in other expense, net in the condensed consolidated statement of operations: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Coupon interest $ 755 $ 754 $ 2,264 $ 2,264 Amortization of issuance costs 483 737 2,529 2,169 Accretion of debt discount 1,393 1,323 4,074 3,901 Interest on credit agreement 1,088 1,255 3,543 3,792 Undrawn and other fees 139 53 261 219 $ 3,858 $ 4,122 $ 12,671 $ 12,345 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 (the “Revolving Credit Facility”) 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. As of September 30, 2017, an amount of $101,168 was outstanding on the Revolving Credit Facility. The July 18, 2017 amendment to the Prior Credit Facility replaced the Term Notes and related excess cash flow payment obligations with a revolving line of credit. The Company’s condensed consolidated balance sheets reflect these changes as of September 30, 2017 with no portion of debt related to the revolving credit facility being classified as short-term. As of September 30, 2017, the debt issuance costs related to the Second Amended and Restated Credit Agreement and the Prior Credit Facility are presented in other non-current assets and prepaid expenses and other current assets which have outstanding amounts of $3,320 and $855, respectively. 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 nine month periods ended September 30, 2017, the Company recognized $1,393 and $4,074, respectively, in accretion related to the discount. During the three and nine month periods ended September 30, 2016, the Company recognized $1,323 and $3,901, 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 nine month periods ended September 30, 2017 was 5.4%. The effective interest rate on the liability component of the Convertible Notes for the three and nine month periods ended September 30, 2016 was 6.0%. See Note 16 for further discussion of the effect of conversion on net loss per common share. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 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 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. 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 September 30, 2017, the remaining amount of unrecognized expense totaled $6,070. As of September 30, 2017, the maximum number of common shares of the Company available for future issuance under the Company’s plans is 3,945,537. Stock-based compensation expense under the Company’s plans was as follows: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Stock-based compensation expense $ 8,048 $ 7,554 $ 23,451 $ 25,872 Tax effect on stock-based compensation expense (3,018) (3,022) (8,794) (10,349) Net effect on income $ 5,030 $ 4,532 $ 14,657 $ 15,523 The tax effect on stock-based compensation expense above was calculated using a blended statutory rate of 37.5% for the three and nine months ended September 30, 2017. The tax effect on stock-based compensation expense above was calculated using a blended statutory rate of 40.0% for the three and nine months ended September 30, 2016. 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 nine months ended September 30, 2017. Stock Options The following weighted average assumptions were used to value options granted during the periods indicated: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Grant date fair value of options $ — $ 14.46 $ 14.51 $ 9.56 Volatility — % 42.2 % 43.8 % 42.2 % Risk-free interest rate — % 1.1 % 2.1 % 1.4 % Dividend yield — % — % — % — % Expected term (in years) — 5.0 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 Granted — — Exercised (134,890) 13.71 Forfeited (2,201) 30.33 Outstanding as of September 30, 2017 2,667,329 17.58 4.1 89,739 Options exercisable 2,435,815 16.11 3.7 85,448 Exercise prices of stock options outstanding as of September 30, 2017 range from $0.11 to $55.29. At September 30, 2017, there was $2,414 of unrecognized stock-based compensation expense related to unvested stock options, which the Company expects to recognize over a weighted-average period of 1.8 years. Restricted Stock Units and Restricted Stock Awards Periodically, the Company grants restricted stock unit awards to employees. 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. For grants issued prior to February 2016, restricted stock units awards would vest ratably in three annual tranches from the date of grant. 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 Granted 29,000 Vested (121,449) Forfeited (30,369) Outstanding as of September 30, 2017 1,901,080 At September 30, 2017, there was $49,527 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 2.0 years. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 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 nine months ended September 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 Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Net loss attributable to Envestnet, Inc. $ $ (4,057) $ $ (22,993) Basic number of weighted-average shares outstanding 44,044,527 42,843,103 43,604,869 42,704,383 Diluted number of weighted-average shares outstanding 44,044,527 42,843,103 43,604,869 42,704,383 Net loss per share attributable to Envestnet, Inc. Basic $ $ $ $ Diluted $ $ $ $ Securities that were anti-dilutive for the three and nine months ended September 30, 2017 and 2016 were as follows: As of September 30, 2017 2016 Options to purchase common stock 2,667,329 3,283,331 Unvested restricted stock awards and units 1,901,080 1,981,775 Convertible Notes 2,743,321 2,743,321 Total 7,311,730 8,008,427 |
Major Customers
Major Customers | 9 Months Ended |
Sep. 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 Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Fidelity 17 % 15 % 17 % 15 % |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 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 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 September 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 September 30, 2017, the Company estimated a sales and use tax liability of $12,914. 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 $4,952 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, a net sales and use tax liability of $7,962 related to multiple jurisdictions with respect to revenues in the nine month period ended September 30, 2017 and prior years was probable. 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 September 30, 2017, were as follows: Years ending December 31: Remainder of 2017 $ 3,309 2018 13,640 2019 14,492 2020 14,343 2021 13,751 Thereafter 53,538 Total $ 113,073 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 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 employees and 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 Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Revenue: Envestnet $ 135,948 $ 114,511 $ 386,638 $ 328,417 Envestnet | Yodlee 39,666 34,644 114,179 94,267 Consolidated revenue $ 175,614 $ 149,155 $ 500,817 $ 422,684 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 Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Envestnet $ 18,955 $ 12,361 $ 48,277 $ 32,425 Envestnet | Yodlee (3,364) (8,416) (16,707) (33,728) Total segment income (loss) from operations 15,591 3,945 31,570 (1,303) Nonsegment operating expenses (11,243) (5,236) (27,833) (19,078) Other expense, net (3,986) (4,434) (13,838) (13,214) Consolidated income (loss) before income taxes (benefit) 362 (5,725) (10,101) (33,595) Income tax provision (benefit) 1,682 (1,668) 10,824 (10,602) Consolidated net loss (1,320) (4,057) (20,925) (22,993) Add: Net loss attributable to non-controlling interest — — — — Consolidated net loss attributable to Envestnet, Inc. $ (1,320) $ (4,057) $ (20,925) $ (22,993) Segment assets consist of cash, accounts receivable, prepaid expenses and other current assets, property, plant and equipment, net, internally developed software, net, 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: September 30, December 31, 2017 2016 Segment assets: Envestnet $ 344,269 $ 341,602 Envestnet | Yodlee 517,953 530,799 Consolidated total assets $ 862,222 $ 872,401 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Segment depreciation and amortization: Envestnet $ 6,414 $ 6,362 $ 19,196 $ 18,786 Envestnet | Yodlee 9,078 10,330 27,596 31,086 Consolidated depreciation and amortization $ 15,492 $ 16,692 $ 46,792 $ 49,872 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Segment capital expenditures: Envestnet $ 4,406 $ 7,967 $ 17,337 $ 13,130 Envestnet | Yodlee 1,404 1,212 3,305 3,926 Consolidated capital expenditures $ 5,810 $ 9,179 $ 20,642 $ 17,056 |
Geographical Information
Geographical Information | 9 Months Ended |
Sep. 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 Nine Months Ended September 30, September 30, 2017 2016 2017 2016 United States $ 158,750 $ 135,160 $ 452,333 $ 381,628 International (1) 16,864 13,995 48,484 41,056 Total $ 175,614 $ 149,155 $ 500,817 $ 422,684 (1) No foreign country accounted for more than 10% of total revenues. The following table sets forth property, plant, and equipment, net by geographic area: September 30, December 31, 2017 2016 United States $ 29,927 $ 28,713 India 4,886 3,596 Other 461 Total $ 35,274 $ 33,000 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 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 September 30, 2017, 1,956,390 shares could still be purchased under this program. For the nine month period ended September 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 and 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. The new revenue standard may have an impact on the Company’s principal versus agent considerations. We expect to begin capitalizing certain costs to obtain 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 made progress on its contract and business process reviews but 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 nine months ended September 30, 2016, net cash provided by operating activities increased by $1,470 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 (Tables)
Business Acquisitions (Tables) - Wheelhouse Analytics, LLC | 9 Months Ended |
Sep. 30, 2017 | |
Business acquisitions | |
Summary of consideration transferred in the acquisition | Measurement Preliminary Period As of Estimate Adjustments September 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 As of Estimate Adjustments September 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 | AS Measurement Preliminary Period As of Estimated Amortization Estimate Adjustments September 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) | 9 Months Ended |
Sep. 30, 2017 | |
Cost of Revenues | |
Schedule of costs of revenues by revenue category | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Assets under management or administration $ 50,597 $ 41,960 $ 142,097 $ 117,369 Subscription and licensing 5,076 5,110 14,832 11,934 Professional services and other 397 189 4,102 3,016 Total $ 56,070 $ 47,259 $ 161,031 $ 132,319 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property and Equipment, Net | |
Schedule of components of property and equipment, net | September 30, December 31, Estimated Useful Life 2017 2016 Cost: Computer equipment and software 3 years $ 60,073 $ 52,921 Leasehold improvements Shorter of the lease term or useful life of the asset 22,580 17,286 Office furniture and fixtures 3-7 years 8,048 6,911 Other office equipment 3-5 years 1,883 1,367 92,584 78,485 Less: accumulated depreciation and amortization (57,310) (45,485) Property and equipment, net $ 35,274 $ 33,000 |
Schedule of depreciation and amortization expense | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Depreciation and amortization expense $ 3,724 $ 3,740 $ 11,668 $ 11,147 |
Internally Developed Software32
Internally Developed Software, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Internally Developed Software, Net | |
Schedule of components of internally developed software, net | September 30, December 31, Estimated Useful Life 2017 2016 Internally developed software 5 years $ 42,928 $ 33,718 Less: accumulated amortization (22,649) (18,858) Internally developed software, net $ 20,279 $ 14,860 |
Schedule of amortization expense | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Amortization expense $ 1,391 $ 917 $ 3,791 $ 2,569 |
Goodwill & Intangible Assets,33
Goodwill & Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill & Intangible Assets, Net | |
Schedule of changes in the carrying amount of goodwill by segment | Envestnet Envestnet | Yodlee Total Balance at December 31, 2016 $ $ 268,185 $ Purchase accounting adjustments - Wheelhouse — 457 457 Foreign currency translation — 353 Balance at September 30, 2017 $ $ $ |
Schedule of components of intangible assets, net | September 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 $ (72,743) $ 186,607 $ 259,490 $ (54,861) $ 204,629 Proprietary technologies 2 - 8 years 57,328 (27,979) 29,349 57,770 (20,214) 37,556 Trade names 2 - 7 years 24,889 (8,766) 16,123 25,007 (6,178) 18,829 Backlog 4 years 11,000 (9,554) 1,446 11,000 (6,456) 4,544 Total intangible assets $ 352,567 $ (119,042) $ 233,525 $ 353,267 $ (87,709) $ 265,558 |
Schedule of amortization expense | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Amortization expense $ 10,377 $ 12,035 $ 31,333 $ 36,156 |
Schedule of future amortization expense of the intangible assets | Future amortization expense of the intangible assets as of September 30, 2017, is expected to be as follows: Years ending December 31: Remainder of 2017 $ 10,232 2018 35,657 2019 32,038 2020 28,344 2021 20,638 Thereafter 106,616 $ 233,525 |
Prepaid Expenses and Other Cu34
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Prepaid Expenses and Other Current Assets | |
Schedule of prepaid expenses and other current assets | September 30, December 31, 2017 2016 Non-income tax receivable $ 4,952 $ 3,879 FinaConnect escrow 429 Income tax receivable 2,267 1,864 Prepaid technology 1,827 1,318 Prepaid insurance 1,055 552 Other 11,898 8,182 $ 23,999 $ 16,224 |
Other Non-Current Assets (Table
Other Non-Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Non-Current Assets. | |
Schedule of components of other non-current assets | September 30, December 31, 2017 2016 Assets to fund deferred compensation liability $ 5,122 $ 2,738 Deposits: Lease 4,262 Other 2,083 Unamortized issuance costs on revolving credit facility 3,320 — Investments in private companies 3,216 2,750 Other 2,130 $ 17,969 $ 13,963 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements | |
Schedule of changes in fair value of the Company’s financial assets and liabilities measured at fair value | September 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 332 Balance at September 30, 2017 $ 2,696 |
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 and fair value adjustments 2,384 Balance at September 30, 2017 $ 5,122 |
Accrued Expenses and Other Li37
Accrued Expenses and Other Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accrued Expenses and Other Liabilities | |
Schedule accrued expenses and other liabilities | September 30, December 31, 2017 2016 Accrued investment manager fees $ 37,344 $ 31,278 Accrued compensation and related taxes 37,882 35,287 Sales and use tax payable 12,914 10,108 Accrued professional services 4,646 3,213 Definite consideration 1,250 445 Other accrued expenses 8,841 7,432 $ 102,877 $ 87,763 |
Other Non-Current Liabilities (
Other Non-Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Non-Current Liabilities | |
Other Non-Current Liabilities | September 30, December 31, 2017 2016 Uncertain tax positions $ 10,379 $ Accrued deferred compensation 4,006 Accrued purchase liability — Other 142 $ 14,527 $ 13,436 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes | |
Summary of loss before income tax provision (benefit) | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Income (loss) before income tax provision (benefit) $ 362 $ (5,725) $ $ (33,595) Income tax provision (benefit) 1,682 (1,668) 10,824 (10,602) Effective tax rate 464.6 % 29.1 % % 31.6 % |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt | |
Schedule of outstanding debt obligations | September 30, December 31, 2017 2016 Convertible Notes $ 172,500 $ 172,500 Unaccreted discount on Convertible Notes (13,075) (17,149) Unamortized issuance costs on Convertible Notes (2,072) (2,776) Convertible Notes carrying value $ 157,353 $ 152,575 Term Notes $ — $ 142,000 Unamortized issuance costs on Term Notes — (3,665) Term Notes carrying value $ — $ 138,335 Revolving credit facility balance $ 101,168 $ — |
Schedule of interest expense | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Coupon interest $ 755 $ 754 $ 2,264 $ 2,264 Amortization of issuance costs 483 737 2,529 2,169 Accretion of debt discount 1,393 1,323 4,074 3,901 Interest on credit agreement 1,088 1,255 3,543 3,792 Undrawn and other fees 139 53 261 219 $ 3,858 $ 4,122 $ 12,671 $ 12,345 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stock-Based Compensation | |
Schedule of stock-based compensation expense | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Stock-based compensation expense $ 8,048 $ 7,554 $ 23,451 $ 25,872 Tax effect on stock-based compensation expense (3,018) (3,022) (8,794) (10,349) Net effect on income $ 5,030 $ 4,532 $ 14,657 $ 15,523 |
Schedule of weighted average assumptions used to value options granted | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Grant date fair value of options $ — $ 14.46 $ 14.51 $ 9.56 Volatility — % 42.2 % 43.8 % 42.2 % Risk-free interest rate — % 1.1 % 2.1 % 1.4 % Dividend yield — % — % — % — % Expected term (in years) — 5.0 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 Granted — — Exercised (134,890) 13.71 Forfeited (2,201) 30.33 Outstanding as of September 30, 2017 2,667,329 17.58 4.1 89,739 Options exercisable 2,435,815 16.11 3.7 85,448 |
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 Granted 29,000 Vested (121,449) Forfeited (30,369) Outstanding as of September 30, 2017 1,901,080 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 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 Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Net loss attributable to Envestnet, Inc. $ $ (4,057) $ $ (22,993) Basic number of weighted-average shares outstanding 44,044,527 42,843,103 43,604,869 42,704,383 Diluted number of weighted-average shares outstanding 44,044,527 42,843,103 43,604,869 42,704,383 Net loss per share attributable to Envestnet, Inc. Basic $ $ $ $ Diluted $ $ $ $ |
Schedule of anti-dilutive securities excluded from computation of diluted earings per share | As of September 30, 2017 2016 Options to purchase common stock 2,667,329 3,283,331 Unvested restricted stock awards and units 1,901,080 1,981,775 Convertible Notes 2,743,321 2,743,321 Total 7,311,730 8,008,427 |
Major Customers (Tables)
Major Customers (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Major Customers | |
Summary of revenues from major customers | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Fidelity 17 % 15 % 17 % 15 % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies | |
Schedule of future minimum lease commitments under operating leases | Years ending December 31: Remainder of 2017 $ 3,309 2018 13,640 2019 14,492 2020 14,343 2021 13,751 Thereafter 53,538 Total $ 113,073 |
Segment information (Tables)
Segment information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Information | |
Schedule of revenue by segment | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Revenue: Envestnet $ 135,948 $ 114,511 $ 386,638 $ 328,417 Envestnet | Yodlee 39,666 34,644 114,179 94,267 Consolidated revenue $ 175,614 $ 149,155 $ 500,817 $ 422,684 Fidelity revenue as a percentage of Envestnet segment revenue: |
Schedule of income (loss) from operations by segment | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Envestnet $ 18,955 $ 12,361 $ 48,277 $ 32,425 Envestnet | Yodlee (3,364) (8,416) (16,707) (33,728) Total segment income (loss) from operations 15,591 3,945 31,570 (1,303) Nonsegment operating expenses (11,243) (5,236) (27,833) (19,078) Other expense, net (3,986) (4,434) (13,838) (13,214) Consolidated income (loss) before income taxes (benefit) 362 (5,725) (10,101) (33,595) Income tax provision (benefit) 1,682 (1,668) 10,824 (10,602) Consolidated net loss (1,320) (4,057) (20,925) (22,993) Add: Net loss attributable to non-controlling interest — — — — Consolidated net loss attributable to Envestnet, Inc. $ (1,320) $ (4,057) $ (20,925) $ (22,993) |
Summary of consolidated total assets, consolidated depreciation and amortization and consolidated capital expenditures | September 30, December 31, 2017 2016 Segment assets: Envestnet $ 344,269 $ 341,602 Envestnet | Yodlee 517,953 530,799 Consolidated total assets $ 862,222 $ 872,401 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Segment depreciation and amortization: Envestnet $ 6,414 $ 6,362 $ 19,196 $ 18,786 Envestnet | Yodlee 9,078 10,330 27,596 31,086 Consolidated depreciation and amortization $ 15,492 $ 16,692 $ 46,792 $ 49,872 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Segment capital expenditures: Envestnet $ 4,406 $ 7,967 $ 17,337 $ 13,130 Envestnet | Yodlee 1,404 1,212 3,305 3,926 Consolidated capital expenditures $ 5,810 $ 9,179 $ 20,642 $ 17,056 |
Geographical Information (Table
Geographical Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Geographical Information | |
Schedule of revenue by geography | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 United States $ 158,750 $ 135,160 $ 452,333 $ 381,628 International (1) 16,864 13,995 48,484 41,056 Total $ 175,614 $ 149,155 $ 500,817 $ 422,684 (1) No foreign country accounted for more than 10% of total revenues. |
Schedule of property, plant, and equipment, net by geographic area | September 30, December 31, 2017 2016 United States $ 29,927 $ 28,713 India 4,886 3,596 Other 461 Total $ 35,274 $ 33,000 |
Organization and Description 47
Organization and Description of Business (Details) | 9 Months Ended |
Sep. 30, 2017stateitemproduct | |
Number of RIAs | item | 3 |
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 | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 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 (used in) operating activities | $ 71,603 | $ 53,350 | |
Net cash provided by (used in) financing activities | $ (53,569) | (16,718) | |
Accounting Standards Update 2016-09 | Adjustment | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Net cash provided by (used in) operating activities | 1,470 | ||
Net cash provided by (used in) financing activities | $ (1,470) |
Business Acquisitions (Details)
Business Acquisitions (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Oct. 03, 2016 | Sep. 30, 2017 | Dec. 31, 2016 |
Consideration transferred in acquisition | ||||
Cash consideration | $ 445 | |||
Estimated fair values of the assets acquired and liabilities assumed | ||||
Goodwill | $ 432,746 | 432,746 | $ 431,936 | |
FolioDynamics | ||||
Consideration transferred in acquisition | ||||
Cash consideration | 195,000 | |||
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 | ||
Total liabilities assumed | (1,420) | (1,420) | ||
Identifiable intangible assets | 6,600 | 6,600 | ||
Goodwill | 11,015 | 11,015 | ||
Total net assets acquired | 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 | 399 | ||
Total liabilities assumed | (1,459) | (1,459) | ||
Identifiable intangible assets | 7,300 | 7,300 | ||
Goodwill | 10,558 | 10,558 | ||
Total net assets acquired | 16,798 | 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) | ||
Total liabilities assumed | 39 | 39 | ||
Identifiable intangible assets | (700) | (700) | ||
Goodwill | 457 | 457 | ||
Total net assets acquired | (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 | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Cost of Revenues | ||||
Assets under management or administration | $ 50,597 | $ 41,960 | $ 142,097 | $ 117,369 |
Subscription and licensing | 5,076 | 5,110 | 14,832 | 11,934 |
Professional services and other | 397 | 189 | 4,102 | 3,016 |
Total | $ 56,070 | $ 47,259 | $ 161,031 | $ 132,319 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Property and equipment, cost: | |||||
Property and equipment, gross | $ 92,584 | $ 92,584 | $ 78,485 | ||
Less accumulated depreciation and amortization | (57,310) | (57,310) | (45,485) | ||
Property and equipment, net | 35,274 | 35,274 | 33,000 | ||
Depreciation and amortization expense | 3,724 | $ 3,740 | $ 11,668 | $ 11,147 | |
Computer equipment and software | |||||
Property and equipment, cost: | |||||
Estimated Useful Life | 3 years | ||||
Property and equipment, gross | 60,073 | $ 60,073 | 52,921 | ||
Leasehold improvements | |||||
Property and equipment, cost: | |||||
Property and equipment, gross | 22,580 | 22,580 | 17,286 | ||
Office furniture and fixtures | |||||
Property and equipment, cost: | |||||
Property and equipment, gross | 8,048 | $ 8,048 | 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 | $ 1,883 | $ 1,883 | $ 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 Software52
Internally Developed Software, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Internally developed software | $ 42,928 | $ 42,928 | $ 33,718 | ||
Less accumulated amortization | (22,649) | (22,649) | (18,858) | ||
Internally developed software, net | 20,279 | 20,279 | $ 14,860 | ||
Amortization expense | $ 1,391 | $ 917 | $ 3,791 | $ 2,569 | |
Internally developed software | |||||
Estimated Useful Life | 5 years |
Goodwill & Intangible Assets,53
Goodwill & Intangible Assets, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Changes in the carrying amount of the Company's goodwill | |||||
Balance | $ 431,936 | ||||
Purchase accounting adjustment | 457 | ||||
Foreign currency translation | 353 | ||||
Balance | $ 432,746 | 432,746 | |||
Gross Carrying Amount | 352,567 | 352,567 | $ 353,267 | ||
Accumulated Amortization | (119,042) | (119,042) | (87,709) | ||
Net Carrying Amount | 233,525 | 233,525 | 265,558 | ||
Amortization expense | 10,377 | $ 12,035 | 31,333 | $ 36,156 | |
Customer lists | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Gross Carrying Amount | 259,350 | 259,350 | 259,490 | ||
Accumulated Amortization | (72,743) | (72,743) | (54,861) | ||
Net Carrying Amount | 186,607 | $ 186,607 | 204,629 | ||
Customer lists | Minimum | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Estimated Useful Life | 4 years | ||||
Customer lists | Maximum | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Estimated Useful Life | 15 years | ||||
Proprietary technologies | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Gross Carrying Amount | 57,328 | $ 57,328 | 57,770 | ||
Accumulated Amortization | (27,979) | (27,979) | (20,214) | ||
Net Carrying Amount | 29,349 | $ 29,349 | 37,556 | ||
Proprietary technologies | Minimum | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Estimated Useful Life | 2 years | ||||
Proprietary technologies | Maximum | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Estimated Useful Life | 8 years | ||||
Trade names and domains | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Gross Carrying Amount | 24,889 | $ 24,889 | 25,007 | ||
Accumulated Amortization | (8,766) | (8,766) | (6,178) | ||
Net Carrying Amount | 16,123 | $ 16,123 | 18,829 | ||
Trade names and domains | Minimum | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Estimated Useful Life | 2 years | ||||
Trade names and domains | Maximum | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Estimated Useful Life | 7 years | ||||
Backlog | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Estimated Useful Life | 4 years | ||||
Gross Carrying Amount | 11,000 | $ 11,000 | 11,000 | ||
Accumulated Amortization | (9,554) | (9,554) | (6,456) | ||
Net Carrying Amount | 1,446 | 1,446 | $ 4,544 | ||
Envestnet | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Balance | 163,751 | ||||
Balance | 163,751 | 163,751 | |||
Envestnet | Yodlee | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Balance | 268,185 | ||||
Purchase accounting adjustment | 457 | ||||
Foreign currency translation | 353 | ||||
Balance | $ 268,995 | $ 268,995 |
Goodwill & Intangible Assets,54
Goodwill & Intangible Assets, Net (FutExp) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Future amortization expense of the intangible assets | ||
Remainder of 2017 | $ 10,232 | |
2,018 | 35,657 | |
2,019 | 32,038 | |
2,020 | 28,344 | |
2,021 | 20,638 | |
Thereafter | 106,616 | |
Net Carrying Amount | $ 233,525 | $ 265,558 |
Prepaid Expenses and Other Cu55
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Prepaid Expenses and Other Current Assets | ||
Non-income tax receivable | $ 4,952 | $ 3,879 |
FinaConnect escrow | 2,000 | 429 |
Income tax receivable | 2,267 | 1,864 |
Prepaid technology | 1,827 | 1,318 |
Prepaid insurance | 1,055 | 552 |
Other | 11,898 | 8,182 |
Total prepaid expenses and other current assets | $ 23,999 | $ 16,224 |
Other Non-Current Assets (Detai
Other Non-Current Assets (Details) - USD ($) $ in Thousands | Nov. 01, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Assets to fund deferred compensation liability | $ 5,122 | $ 5,122 | $ 2,738 | |
Deposits: | ||||
Lease | 4,548 | 4,548 | 4,262 | |
Other | 614 | 614 | 2,083 | |
Unamortized issuance costs on revolving credit facility | 3,320 | 3,320 | ||
Investments in private companies | 3,216 | 3,216 | 2,750 | |
Other | 1,149 | 1,149 | 2,130 | |
Total other non-current assets | $ 17,969 | 17,969 | $ 13,963 | |
Upfront consideration | $ 445 | |||
Class B units | ||||
Deposits: | ||||
Units owned | 756,347 | 756,347 | ||
Historical purchase price | $ 1,250 | $ 1,250 | ||
Class A units | ||||
Deposits: | ||||
Number of shares purchased | 1,500,000 | 1,450,000 | 1,450,000 | |
Upfront consideration | $ 1,500 | $ 1,450 | ||
Ownership interest (as a percent) | 21.40% | 34.50% | 34.50% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2016 | Dec. 15, 2014 | |
Fair Value Measurements | |||
Convertible Debt, Noncurrent | $ 157,353 | $ 152,575 | |
Term Notes | 100,409 | ||
Other non-current assets | |||
Assets | |||
Gain on the underlying investment | 350 | ||
Total Assets | 5,122 | ||
Fair Value | Recurring Basis | |||
Assets | |||
Total Assets | 33,301 | 34,382 | |
Liabilities | |||
Total liabilities | 6,702 | 7,753 | |
Fair Value | Recurring Basis | Contingent consideration | |||
Liabilities | |||
Total liabilities | 2,696 | 4,868 | |
Fair Value | Recurring Basis | Deferred compensation liability | |||
Liabilities | |||
Total liabilities | 4,006 | 2,885 | |
Fair Value | Recurring Basis | Money market funds | |||
Assets | |||
Total Assets | 28,179 | 31,644 | |
Fair Value | Recurring Basis | Asset to fund deferred compensation liability | |||
Assets | |||
Total Assets | 5,122 | 2,738 | |
Fair Value | Level 1 | Recurring Basis | |||
Assets | |||
Total Assets | 28,179 | 31,644 | |
Liabilities | |||
Total liabilities | 4,006 | 2,885 | |
Fair Value | Level 1 | Recurring Basis | Deferred compensation liability | |||
Liabilities | |||
Total liabilities | 4,006 | 2,885 | |
Fair Value | Level 1 | Recurring Basis | Money market funds | |||
Assets | |||
Total Assets | 28,179 | 31,644 | |
Fair Value | Level 3 | Recurring Basis | |||
Assets | |||
Total Assets | 5,122 | 2,738 | |
Liabilities | |||
Total liabilities | 2,696 | 4,868 | |
Fair Value | Level 3 | Recurring Basis | Contingent consideration | |||
Liabilities | |||
Total liabilities | 2,696 | 4,868 | |
Fair Value | Level 3 | Recurring Basis | Asset to fund deferred compensation liability | |||
Assets | |||
Total Assets | 5,122 | 2,738 | |
Convertible Notes | |||
Fair Value Measurements | |||
Face amount | 172,500 | 172,500 | $ 172,500 |
Convertible Debt, Noncurrent | 157,353 | 152,575 | |
Liabilities | |||
Total liabilities | 181,142 | 164,824 | |
Convertible Notes | Carrying Value | |||
Fair Value Measurements | |||
Convertible Debt, Noncurrent | 157,353 | 152,575 | |
Term Notes | |||
Fair Value Measurements | |||
Face amount | 142,000 | ||
Term Notes | 0 | 138,335 | |
Liabilities | |||
Total liabilities | 0 | 142,000 | |
Revolving credit facility | |||
Liabilities | |||
Total liabilities | $ 101,168 | $ 0 |
Fair Value Measurements (Lev3 r
Fair Value Measurements (Lev3 rec) (Details) $ in Thousands | 9 Months Ended |
Sep. 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 | 332 |
Balance | 2,696 |
Reconciliation of assets to fund deferred compensation liability | |
Balance | 2,738 |
Contributions and fair value adjustments | 2,384 |
Balance | $ 5,122 |
Accrued Expenses and Other Li59
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Components of accrued expenses | ||
Accrued investment manager fees | $ 37,344 | $ 31,278 |
Accrued compensation and related taxes | 37,882 | 35,287 |
Sales and use tax payable | 12,914 | 10,108 |
Accrued professional services | 4,646 | 3,213 |
Definite consideration | 1,250 | 445 |
Other accrued expenses | 8,841 | 7,432 |
Total accrued expenses | $ 102,877 | $ 87,763 |
Other Non-Current Liabilities60
Other Non-Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Other Non-Current Liabilities | ||
Uncertain tax positions | $ 10,379 | $ 7,762 |
Accrued deferred compensation | 4,006 | 2,885 |
Accrued purchase liability | 1,250 | |
Other | 142 | 1,539 |
Other non-current liabilities | $ 14,527 | $ 13,436 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income tax provision and the effective tax rate | ||||
Income (loss) before income tax provision (benefit) | $ 362 | $ (5,725) | $ (10,101) | $ (33,595) |
Income tax provision (benefit) | $ 1,682 | $ (1,668) | $ 10,824 | $ (10,602) |
Effective tax rate (as a percent) | 464.60% | 29.10% | (107.20%) | 31.60% |
Income Taxes (Interim) (Details
Income Taxes (Interim) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Income taxes | |||||
Gross unrecognized tax benefits | $ 17,853 | $ 17,853 | $ 16,476 | ||
Unrecognized tax benefits that would impact effective tax rate, if recognized | 17,853 | 17,853 | |||
Recorded interest and penalties | 371 | $ 334 | 1,261 | $ 723 | |
United States | |||||
Income taxes | |||||
Gross unrecognized tax benefits | $ 0 | $ 0 |
Debt (Summary) (Details)
Debt (Summary) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 15, 2014 |
Outstanding debt obligations | |||
Unamortized issuance costs | $ (3,320) | ||
Convertible Notes carrying value | 157,353 | $ 152,575 | |
Term notes | 100,409 | ||
Revolving credit facility balance | 101,168 | ||
Other non-current assets | 17,969 | 13,963 | |
Prepaid expenses and other current assets | 23,999 | 16,224 | |
Accounting Standards Update 2015-03 | Adjustment | |||
Outstanding debt obligations | |||
Other non-current assets | 3,320 | ||
Prepaid expenses and other current assets | 855 | ||
Convertible Notes | |||
Outstanding debt obligations | |||
Face amount | 172,500 | 172,500 | $ 172,500 |
Unaccredited discount on Convertible Notes | (13,075) | (17,149) | $ (27,500) |
Unamortized issuance costs | (2,072) | (2,776) | |
Convertible Notes carrying value | 157,353 | 152,575 | |
Term Notes | |||
Outstanding debt obligations | |||
Face amount | 142,000 | ||
Unamortized issuance costs | (3,665) | ||
Term notes | $ 0 | $ 138,335 |
Debt (Int) (Details)
Debt (Int) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Interest expense on convertible debt | ||||
Total interest expense | $ 8,711 | $ 6,955 | ||
Convertible Notes, Credit and Amended and Restated Credit Agreements | ||||
Interest expense on convertible debt | ||||
Coupon interest | $ 755 | $ 754 | 2,264 | 2,264 |
Amortization of issuance costs | 483 | 737 | 2,529 | 2,169 |
Accretion of debt discount | 1,393 | 1,323 | 4,074 | 3,901 |
Interest on credit agreement | 1,088 | 1,255 | 3,543 | 3,792 |
Undrawn and other fees | 139 | 53 | 261 | 219 |
Total interest expense | 3,858 | 4,122 | 12,671 | 12,345 |
Convertible Notes | ||||
Interest expense on convertible debt | ||||
Accretion of debt discount | $ 1,393 | $ 1,323 | $ 4,074 | $ 3,901 |
Debt (CredAg) (Details)
Debt (CredAg) (Details) - USD ($) $ in Thousands | Jul. 18, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Debt | |||
Amount outstanding | $ 101,168 | ||
Term Notes | |||
Debt | |||
Face amount | $ 142,000 | ||
Second Amended and Restated Credit Agreement | |||
Debt | |||
Credit facility amount | $ 350,000 | ||
Right to increase 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% | ||
Amount outstanding | $ 101,168 | ||
Letters of credit | |||
Debt | |||
Credit facility amount | $ 5,000 | ||
Minimum | Second Amended and Restated Credit Agreement | LIBOR | |||
Debt | |||
Spread on variable rate basis (as a percent) | 1.50% | ||
Maximum | Second Amended and Restated 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 | Sep. 30, 2017USD ($)$ / shares | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)$ / shares | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Debt | ||||||
Face amount | $ 172,500 | $ 172,500 | $ 172,500 | $ 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 | item | 30 | |||||
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 | $ 13,075 | $ 13,075 | $ 17,149 | ||
Accretion of debt discount | $ 1,393 | $ 1,323 | $ 4,074 | $ 3,901 | ||
Effective interest rate (as a percent) | 5.40% | 6.00% | 6.00% |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | Jul. 13, 2017 | Sep. 30, 2017 |
Stock-Based compensation | ||
Maximum number of shares available for future issuance | 3,945,537 | |
Unvested restricted stock units and awards | ||
Stock-Based compensation | ||
Unrecognized compensation expense related to shares | $ 49,527 | |
2010 Plan | ||
Stock-Based compensation | ||
Shares reserved for delivery | 3,525,000 | |
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 | $ 6,070 |
Stock-Based Compensation (Exp)
Stock-Based Compensation (Exp) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Summary of employee stock-based compensation expense | ||||
Stock-based compensation expense | $ 8,048 | $ 7,554 | $ 23,451 | $ 25,872 |
Tax effect on stock-based compensation expense | (3,018) | (3,022) | (8,794) | (10,349) |
Net effect on income | $ 5,030 | $ 4,532 | $ 14,657 | $ 15,523 |
Statutory rate (as a percent) | 37.50% | 40.00% | 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 | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Summary of weighted average assumptions used to value options granted | |||
Grant date fair value of options (in dollars per share) | $ 14.46 | $ 14.51 | $ 9.56 |
Volatility (as a percent) | 42.20% | 43.80% | 42.20% |
Risk-free interest rate (as a percent) | 1.10% | 2.10% | 1.40% |
Expected term (in years) | 5 years | 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 | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Weighted-Average Remaining Contractual Life | |||||
Outstanding | 4 years 1 month 6 days | 4 years 6 months | |||
Aggregate Intrinsic Value | |||||
Outstanding (in dollars) | $ 89,739 | $ 89,739 | |||
Stock options | |||||
Options | |||||
Outstanding at the beginning of the period (in shares) | 2,804,420 | 2,891,036 | 3,033,194 | 3,033,194 | |
Granted (in shares) | 75,238 | ||||
Exercised (in shares) | (134,890) | (84,949) | (208,334) | ||
Forfeited (in shares) | (2,201) | (1,667) | (9,062) | ||
Outstanding at the end of the period (in shares) | 2,667,329 | 2,804,420 | 2,891,036 | 2,667,329 | 3,033,194 |
Options exercisable (in shares) | 2,435,815 | 2,435,815 | |||
Weighted-Average Exercise Price | |||||
Outstanding at the beginning of the period (in dollars per share) | $ 17.41 | $ 17.15 | $ 16.33 | $ 16.33 | |
Granted (in dollars per share) | 31.70 | ||||
Exercised (in dollars per share) | 13.71 | 8.46 | 9.12 | ||
Forfeited (in dollars per share) | 30.33 | 32.46 | 45.81 | ||
Outstanding at the end of the period (in dollars per share) | 17.58 | $ 17.41 | $ 17.15 | 17.58 | $ 16.33 |
Options exercisable (in dollars per share) | $ 16.11 | $ 16.11 | |||
Weighted-Average Remaining Contractual Life | |||||
Outstanding | 4 years 3 months 18 days | 4 years 3 months 18 days | |||
Options exercisable | 3 years 8 months 12 days | ||||
Aggregate Intrinsic Value | |||||
Outstanding (in dollars) | $ 66,206 | $ 50,792 | $ 63,264 | ||
Options exercisable (in dollars) | $ 85,448 | $ 85,448 | |||
Additional disclosures | |||||
Unrecognized stock-based compensation expense related to unvested stock options | $ 2,414 | $ 2,414 | |||
Unrecognized compensation expense weighted-average recognition period | 1 year 9 months 18 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 | 9 Months Ended | |||
Sep. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2017$ / sharesshares | Mar. 31, 2017$ / sharesshares | Sep. 30, 2017USD ($)$ / sharesshares | Dec. 31, 2015tranche | |
Restricted Stock Units | |||||
Stock-Based compensation | |||||
Award vesting rights proportion (as a percent) | 0.33% | ||||
Number of annual vesting rights tranches | tranche | 3 | ||||
Unvested restricted stock units and awards | |||||
Number of Shares | |||||
Balance at the beginning of the period (in shares) | shares | 2,023,898 | 2,221,044 | 1,894,759 | 1,894,759 | |
Granted (in shares) | shares | 29,000 | 47,700 | 872,941 | ||
Vested (in shares) | shares | (121,449) | (199,163) | (526,572) | ||
Forfeited (in shares) | shares | (30,369) | (45,683) | (20,084) | ||
Balance at the end of the period (in shares) | shares | 1,901,080 | 2,023,898 | 2,221,044 | 1,901,080 | |
Weighted-Average Grant Date Fair Value per Share | |||||
Balance at the beginning of the period (in dollars per share) | $ / shares | $ 32.17 | $ 31.98 | $ 30.40 | $ 30.40 | |
Granted (in dollars per share) | $ / shares | 39.10 | 35.05 | 31.89 | ||
Vested (in dollars per share) | $ / shares | 32.26 | 30.59 | 31.68 | ||
Forfeited (in dollars per share) | $ / shares | 31.61 | 30.11 | 27.52 | ||
Balance at the end of the period (in dollars per share) | $ / shares | $ 32.28 | $ 32.17 | $ 31.98 | $ 32.28 | |
Additional disclosures | |||||
Unrecognized compensation expense related to shares | $ | $ 49,527 | $ 49,527 | |||
Unrecognized compensation expense weighted-average recognition period | 2 years | ||||
Stock options | |||||
Additional disclosures | |||||
Unrecognized compensation expense weighted-average recognition period | 1 year 9 months 18 days |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 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. | $ (1,320) | $ (4,057) | $ (20,925) | $ (22,993) | |
Basic number of weighted-average shares outstanding | 44,044,527 | 42,843,103 | 43,604,869 | 42,704,383 | |
Effect of dilutive shares: | |||||
Diluted number of weighted-average shares outstanding | 44,044,527 | 42,843,103 | 43,604,869 | 42,704,383 | |
Net loss per share attributable to Envestnet, Inc. | |||||
Basic (in dollars per share) | $ (0.03) | $ (0.09) | $ (0.48) | $ (0.54) | |
Diluted (in dollars per share) | (0.03) | $ (0.09) | (0.48) | $ (0.54) | |
Convertible Notes | |||||
Conversion price (in dollars per share) | $ 62.88 | $ 62.88 | $ 62.88 |
Net Loss Per Share (Details)73
Net Loss Per Share (Details) - shares | 9 Months Ended | |
Sep. 30, 2017 | Sep. 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) | 7,311,730 | 8,008,427 |
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) | 2,667,329 | 3,283,331 |
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) | 1,901,080 | 1,981,775 |
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 |
Major Customers (Details)
Major Customers (Details) - Revenues - Customer concentration risk - Fidelity - customer | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 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 | 17.00% | 15.00% | 17.00% | 15.00% |
Commitments and Contingencies75
Commitments and Contingencies (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017USD ($)item | Dec. 31, 2016USD ($) | |
Number of previous claims experienced | item | 0 | |
Future minimum unconditional purchase obligations | ||
Net sales and use tax liability | $ 7,962 | |
Sales and use tax liability | 12,914 | $ 10,108 |
Sales and use tax receivable | 4,952 | $ 3,879 |
Prepaid expense and other current assets | ||
Future minimum unconditional purchase obligations | ||
Sales and use tax receivable | 4,952 | |
Accounts Payable and Accrued Liabilities | ||
Future minimum unconditional purchase obligations | ||
Sales and use tax liability | $ 12,914 |
Commitments and Contingencies76
Commitments and Contingencies (Leases) (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Future annual minimum lease commitments under operating leases | |
Remainder of 2017 | $ 3,309 |
2,018 | 13,640 |
2,019 | 14,492 |
2,020 | 14,343 |
2,021 | 13,751 |
Thereafter | 53,538 |
Total | $ 113,073 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Segment Information | |||||
Revenues | $ 175,614 | $ 149,155 | $ 500,817 | $ 422,684 | |
Income (loss) from operations | 4,348 | (1,291) | 3,737 | (20,381) | |
Operating expenses | (171,266) | (150,446) | (497,080) | (443,065) | |
Other expense, net | (3,986) | (4,434) | (13,838) | (13,214) | |
Income (loss) before income tax provision (benefit) | 362 | (5,725) | (10,101) | (33,595) | |
Income tax provision (benefit) | 1,682 | (1,668) | 10,824 | (10,602) | |
Net loss | (1,320) | (4,057) | (20,925) | (22,993) | |
Net loss attributable to Envestnet, Inc. | (1,320) | (4,057) | (20,925) | (22,993) | |
Assets | 862,222 | 862,222 | $ 872,401 | ||
Depreciation and amortization | 15,492 | 16,692 | 46,792 | 49,872 | |
Capital expenditures | 5,810 | 9,179 | 20,642 | 17,056 | |
Operating Segments | |||||
Segment Information | |||||
Income (loss) from operations | 15,591 | 3,945 | 31,570 | (1,303) | |
Segment Reconciling | |||||
Segment Information | |||||
Operating expenses | (11,243) | (5,236) | (27,833) | (19,078) | |
Envestnet | |||||
Segment Information | |||||
Revenues | 135,948 | 114,511 | 386,638 | 328,417 | |
Assets | 344,269 | 344,269 | 341,602 | ||
Depreciation and amortization | 6,414 | 6,362 | 19,196 | 18,786 | |
Capital expenditures | 4,406 | 7,967 | 17,337 | 13,130 | |
Envestnet | Operating Segments | |||||
Segment Information | |||||
Income (loss) from operations | 18,955 | 12,361 | 48,277 | 32,425 | |
Envestnet | Yodlee | |||||
Segment Information | |||||
Revenues | 39,666 | 34,644 | 114,179 | 94,267 | |
Assets | 517,953 | 517,953 | $ 530,799 | ||
Depreciation and amortization | 9,078 | 10,330 | 27,596 | 31,086 | |
Capital expenditures | 1,404 | 1,212 | 3,305 | 3,926 | |
Envestnet | Yodlee | Operating Segments | |||||
Segment Information | |||||
Income (loss) from operations | $ (3,364) | $ (8,416) | $ (16,707) | $ (33,728) | |
Revenues | Customer concentration risk | Fidelity | |||||
Segment Information | |||||
Fidelity revenue as a percentage of Envestnet segment revenue | 17.00% | 15.00% | 17.00% | 15.00% | |
Revenues | Envestnet | Customer concentration risk | Fidelity | |||||
Segment Information | |||||
Fidelity revenue as a percentage of Envestnet segment revenue | 22.00% | 19.00% | 22.00% | 19.00% |
Geographical Information (Detai
Geographical Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | $ 175,614 | $ 149,155 | $ 500,817 | $ 422,684 | |
Property, Plant and Equipment, Net | 35,274 | 35,274 | $ 33,000 | ||
United States | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 158,750 | 135,160 | 452,333 | 381,628 | |
Property, Plant and Equipment, Net | 29,927 | 29,927 | 28,713 | ||
International | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 16,864 | $ 13,995 | 48,484 | $ 41,056 | |
India | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Property, Plant and Equipment, Net | 4,886 | 4,886 | 3,596 | ||
Other | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Property, Plant and Equipment, Net | $ 461 | $ 461 | $ 691 |