Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 01, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | ENVESTNET, INC. | |
Entity Central Index Key | 1,337,619 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
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 | 45,384,004 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 134,032 | $ 60,115 |
Fees receivable, net | 64,164 | 51,522 |
Prepaid expenses and other current assets | 22,721 | 19,470 |
Total current assets | 220,917 | 131,107 |
Property and equipment, net | 40,397 | 35,909 |
Internally developed software, net | 29,257 | 22,174 |
Intangible assets, net | 313,743 | 222,731 |
Goodwill | 526,955 | 432,955 |
Other non-current assets | 23,907 | 17,176 |
Total assets | 1,155,176 | 862,052 |
Current liabilities: | ||
Accrued expenses and other liabilities | 109,537 | 105,897 |
Accounts payable | 21,133 | 11,097 |
Contingent consideration | 707 | 2,115 |
Deferred revenue | 25,739 | 21,246 |
Total current liabilities | 157,116 | 140,355 |
Revolving credit facility | 81,168 | |
Contingent consideration | 666 | |
Deferred revenue | 7,929 | 12,047 |
Deferred rent and lease incentive | 17,334 | 15,185 |
Deferred tax liabilities, net | 2,154 | 969 |
Other non-current liabilities | 16,744 | 15,102 |
Total liabilities | 653,138 | 424,482 |
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; 58,382,026 and 57,450,056 shares issued as of June 30, 2018 and December 31, 2017, respectively; 45,375,594 and 44,700,641 shares outstanding as of June 30, 2018 and December 31, 2017, respectively | 291 | 287 |
Additional paid-in capital | 624,378 | 556,257 |
Accumulated deficit | (62,059) | (73,854) |
Treasury stock at cost, 13,006,432 and 12,749,415 shares as of June 30, 2018 and December 31, 2017, respectively | (61,437) | (47,042) |
Accumulated other comprehensive income (loss) | (739) | 624 |
Total stockholders’ equity | 500,434 | 436,272 |
Non-controlling interest | 704 | 398 |
Total equity | 501,138 | 436,670 |
Total liabilities and equity | 1,155,176 | 862,052 |
Convertible Notes due 2019 | ||
Current liabilities: | ||
Convertible Notes | 162,299 | $ 158,990 |
Convertible Notes due 2023 | ||
Current liabilities: | ||
Convertible Notes | $ 289,562 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
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 | 58,382,026 | 57,450,056 |
Common stock, shares outstanding | 45,375,594 | 44,700,641 |
Treasury stock, shares | 13,006,432 | 12,749,415 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Total revenues | $ 201,116 | $ 167,417 | $ 399,127 | $ 325,203 |
Operating expenses: | ||||
Cost of revenues | 67,627 | 55,735 | 130,561 | 104,961 |
Compensation and benefits | 80,210 | 64,996 | 163,750 | 130,528 |
General and administration | 34,089 | 28,478 | 66,818 | 59,025 |
Depreciation and amortization | 19,185 | 15,465 | 38,731 | 31,300 |
Total operating expenses | 201,111 | 164,674 | 399,860 | 325,814 |
Income (loss) from operations | 5 | 2,743 | (733) | (611) |
Other expense, net | (5,430) | (4,369) | (10,684) | (9,852) |
Loss before income tax provision (benefit) | (5,425) | (1,626) | (11,417) | (10,463) |
Income tax provision (benefit) | 566 | 4,844 | (13,428) | 9,142 |
Net income (loss) | (5,991) | (6,470) | 2,011 | (19,605) |
Add: Net loss attributable to non-controlling interest | 465 | 567 | ||
Net income (loss) attributable to Envestnet, Inc. | $ (5,526) | $ (6,470) | $ 2,578 | $ (19,605) |
Net income (loss) per share attributable to Envestnet, Inc.: | ||||
Basic (in dollars per share) | $ (0.12) | $ (0.15) | $ 0.06 | $ (0.45) |
Diluted (in dollars per share) | $ (0.12) | $ (0.15) | $ 0.05 | $ (0.45) |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 45,247,331 | 43,855,479 | 44,963,735 | 43,513,074 |
Diluted (in shares) | 45,247,331 | 43,855,479 | 47,156,205 | 43,513,074 |
Asset-based | ||||
Revenues: | ||||
Total revenues | $ 118,111 | $ 98,959 | $ 239,264 | $ 193,121 |
Subscription-based | ||||
Revenues: | ||||
Total revenues | 71,779 | 59,802 | 141,474 | 117,712 |
Recurring | ||||
Revenues: | ||||
Total revenues | 189,890 | 158,761 | 380,738 | 310,833 |
Professional services and other revenues | ||||
Revenues: | ||||
Total revenues | $ 11,226 | $ 8,656 | $ 18,389 | $ 14,370 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
Net income (loss) attributable to Envestnet, Inc. | $ (5,526) | $ (6,470) | $ 2,578 | $ (19,605) |
Other comprehensive income (loss), net of taxes: | ||||
Foreign currency translation gain (loss) | (1,036) | 76 | (1,363) | 809 |
Comprehensive income (loss) attributable to Envestnet, Inc. | $ (6,562) | $ (6,394) | $ 1,215 | $ (18,796) |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Equity - 6 months ended Jun. 30, 2018 - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Non-controlling Interest | Total |
Balance at Dec. 31, 2017 | $ 287 | $ (47,042) | $ 556,257 | $ 624 | $ (73,854) | $ 398 | $ 436,670 |
Balance (in shares) at Dec. 31, 2017 | 57,450,056 | (12,749,415) | |||||
Increase (decrease) in shareholders' equity | |||||||
Adoption of ASC 606 (See Note 4) | Accounting Standards Update 2014-09 | 9,217 | 9,217 | |||||
Exercise of stock options | $ 1 | 2,539 | 2,540 | ||||
Exercise of stock options (in shares) | 175,023 | ||||||
Issuance of common stock - vesting of restricted stock units | $ 3 | 3 | |||||
Issuance of common stock - vesting of restricted stock units (in shares) | 756,947 | ||||||
Stock-based compensation expense | 18,971 | 18,971 | |||||
Purchase of treasury stock for stock-based tax withholdings | $ (14,395) | (14,395) | |||||
Purchase of treasury stock for stock-based tax withholdings (in shares) | (257,017) | ||||||
Issuance of non-controlling units in private company | 873 | 873 | |||||
Issuance of Convertible Notes due 2023, net of offering costs | 46,611 | 46,611 | |||||
Foreign currency translation loss | (1,363) | (1,363) | |||||
Net income (loss) | 2,578 | (567) | 2,011 | ||||
Balance at Jun. 30, 2018 | $ 291 | $ (61,437) | $ 624,378 | $ (739) | $ (62,059) | $ 704 | $ 501,138 |
Balance (in shares) at Jun. 30, 2018 | 58,382,026 | (13,006,432) |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
OPERATING ACTIVITIES: | ||
Net income (loss) | $ 2,011 | $ (19,605) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 38,731 | 31,300 |
Deferred rent and lease incentive amortization | 1,069 | 583 |
Provision for doubtful accounts | 924 | 341 |
Deferred income taxes | (17,093) | 6,524 |
Stock-based compensation expense | 18,971 | 15,403 |
Non-cash interest expense | 5,630 | 4,853 |
Accretion on contingent consideration and purchase liability | 196 | 304 |
Payments of contingent consideration | (357) | |
Loss allocation from equity method investment | 811 | 702 |
Loss on disposal of fixed assets | 10 | 69 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Fees receivable, net | (8,204) | (5,639) |
Prepaid expenses and other current assets | (3,426) | (2,681) |
Other non-current assets | (2,450) | (514) |
Accrued expenses and other liabilities | (5,448) | (752) |
Accounts payable | 4,166 | (184) |
Deferred revenue | 3,478 | 1,818 |
Other non-current liabilities | 1,578 | 3,022 |
Net cash provided by operating activities | 40,954 | 35,187 |
INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (9,569) | (9,181) |
Capitalization of internally developed software | (10,622) | (5,651) |
Acquisition of businesses | (188,345) | |
Net cash used in investing activities | (208,536) | (14,832) |
FINANCING ACTIVITIES: | ||
Proceeds from issuance of Convertible Notes due 2023 | 345,000 | |
Convertible Notes due 2023 issuance costs | 195,000 | 25,000 |
Proceeds from borrowings on revolving credit facility | (276,168) | (25,000) |
Payments on revolving credit facility | (9,488) | |
Payments of contingent consideration | (2,193) | (1,929) |
Payments of definite consideration | (445) | |
Payments of purchase consideration liabilities | (235) | |
Payment of Term Notes | (35,862) | |
Proceeds from exercise of stock options | 2,540 | 2,617 |
Purchase of treasury stock for stock-based tax withholdings | (14,395) | (9,650) |
Issuance of restricted stock units | 3 | 4 |
Net cash provided by (used in) financing activities | 240,299 | (45,500) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (572) | 283 |
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 72,145 | (24,862) |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD | 62,115 | 54,592 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD (See Note 2) | 134,260 | 29,730 |
Supplemental disclosure of cash flow information - net cash paid during the period for income taxes | 2,225 | 275 |
Supplemental disclosure of cash flow information - cash paid during the period for interest | 4,271 | 3,960 |
Supplemental disclosure of non-cash operating, investing and financing activities: | ||
Leasehold improvements funded by lease incentive | 1,080 | 281 |
Purchase liabilities included in accrued expenses and other liabilities | 1,422 | 818 |
Purchase of fixed assets included in accounts payable and accrued expenses and other liabilities | $ 1,188 | $ 260 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2018 | |
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. Through a combination of platform enhancements, partnerships and acquisitions, Envestnet empowers enterprises and advisors to more fully understand their clients and deliver better outcomes. The Company offers these solutions principally through the following product and 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 18,400 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 software, principally to high ‑ end registered investment advisers (“RIAs”). · 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 nearly 4,900 vetted third party managed account products, multi-manager portfolios, fund strategist portfolios, as well as over 1,700 proprietary products, such as quantitative portfolios and fund strategist portfolios. PMC also offers an overlay service, which includes patented portfolio overlay and tax optimization services. · Envestnet | Yodlee TM is a leading data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services. Envestnet operates four RIAs and a registered broker-dealer. The RIAs are registered with the Securities and Exchange Commission (“SEC”). The broker-dealer is registered with the SEC, all 50 states and the District of Columbia and is a member of the Financial Industry Regulatory Authority. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Basis of Presentation | |
Basis of Presentation | 2. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company as of June 30, 2018 and for the three and six months ended June 30, 2018 and 2017 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, 2017 and reflect all normal recurring adjustments which are, in the opinion of management, necessary to present fairly the Company’s financial position as of June 30, 2018 and the results of operations, equity, comprehensive income (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 six months ended June 30, 2018 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, 2017, filed with the SEC on February 28, 2018. 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, the determination of the period of benefit for deferred sales incentive commissions, 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. The following table reconciles cash, cash equivalents and restricted cash from the condensed consolidated balance sheets to amounts reported within the condensed consolidated statements of cash flows: June 30, 2018 2017 Cash and cash equivalents $ 134,032 $ 27,730 Restricted cash included in prepaid expenses and other current assets 228 2,000 Total cash, cash equivalents and restricted cash $ 134,260 $ 29,730 Recent Accounting Pronouncements - In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” which amends the existing accounting standards for revenue recognition. This standard is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2017. These changes became effective for the Company’s fiscal year beginning January 1, 2018 and have been reflected in these condensed consolidated financial statements (See “Note 4 – Revenue”). 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 and will be applied using a modified retrospective approach with optional practical expedients. Early adoption of the standard is permitted. The Company will adopt the new standard on its effective date of January 1, 2019 and expects to elect certain available transitional practical expedients. Based on current analysis, the adoption of the standard may have a material impact on our consolidated balance sheets and related disclosures while not significantly impacting financial results. We continue to evaluate the accounting, transition, and disclosure requirements of this standard. 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 standard is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2017. These changes became effective for the Company’s fiscal year beginning January 1, 2018 and have been reflected in these condensed consolidated financial statements. Retrospective adoption of ASU 2016-15 did not have a material impact on the Company’s presentation of the condensed consolidated statements of cash flows. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230) – Restricted Cash,” which amends ASC 230 to provide clarifying guidance on the classification and presentation of restricted cash in the statement of cash flows. Additional disclosure is required to reconcile between the statement of financial position and the statement of cash flows when the statement of financial position includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents. This standard is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2017. These changes became effective for the Company’s fiscal year beginning January 1, 2018 and included $228 and $2,000 of restricted cash in the total of cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows for the six months ended June 30, 2018 and 2017, respectively. A reconciliation of restricted cash for each period is included within this footnote. 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 is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2017. These changes became effective for the Company’s fiscal year beginning January 1, 2018 and did not have a material impact to these condensed consolidated financial statements. This standard will be applied to all future business acquisition and disposal transactions. 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. This standard is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2017. These changes became effective for the Company’s fiscal year beginning January 1, 2018. This standard will be applied to all future modifications of share-based payment awards. In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” This update clarifies the accounting for share-based payment transactions for acquiring goods and services from nonemployees. Specifically, the update aligns the accounting for payments to nonemployees to match the accounting for payments to employees, no longer accounting for these transactions differently. This standard is effective for financial statements issued by public companies for 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. |
Business Acquisitions
Business Acquisitions | 6 Months Ended |
Jun. 30, 2018 | |
Business Acquisitions | |
Business Acquisitions | 3. Business Acquisitions FolioDynamix On January 2, 2018, the Company acquired (the “Acquisition”) all of the issued and outstanding membership interests of FolioDynamics Holdings, Inc. (“FolioDynamix”) through a merger of FolioDynamix with and into a wholly owned subsidiary of Envestnet. FolioDynamix provides financial institutions, RIAs, 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. FolioDynamix is included in the Envestnet segment. The Company acquired FolioDynamix to add complementary trading tools as well as commission and brokerage support to Envestnet’s existing suite of offerings. Envestnet 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. The Company funded the transaction with a combination of cash on the Company’s balance sheet, purchase consideration liabilities and borrowings under its revolving credit facility. The estimated consideration transferred in the acquisition was as follows: Measurement Preliminary Period Revised Estimate Adjustments Estimate Cash consideration $ 187,580 $ 12,297 $ 199,877 Purchase consideration liability 12,297 (12,297) — Working capital and other adjustments (3,893) (2,500) (6,393) Total $ 195,984 $ (2,500) $ 193,484 The estimated fair values of working capital balances, property and equipment, deferred revenue, deferred income taxes, unrecognized tax benefits, identifiable intangible assets and goodwill are provisional and are based on the information that was available as of the acquisition date. The estimated fair values of these provisional items are based on certain valuation and other studies and are in progress and not yet at the point where there is sufficient information for a definitive measurement. The Company believes the preliminary information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair values reflected are subject to change and such changes could be significant. The Company expects to finalize the valuation of tangible assets and liabilities, identifiable intangible assets and goodwill, and complete the acquisition accounting as soon as practicable but no later than January 2, 2019. The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition: Measurement Preliminary Period Revised Estimate Adjustments Estimate Cash and cash equivalents $ 4,876 $ — $ 4,876 Accounts receivable 4,962 — 4,962 Prepaid expenses and other current assets 1,600 — 1,600 Property and equipment, net 927 — 927 Other non-current assets 441 — 441 Identifiable intangible assets 117,700 — 117,700 Goodwill 97,248 (2,624) 94,624 Total assets acquired 227,754 (2,624) 225,130 Accounts payable (5,358) — (5,358) Accrued expenses (7,173) — (7,173) Deferred tax liability (18,245) — (18,245) Deferred revenue (930) 124 (806) Other non-current liabilities (64) — (64) Total liabilities assumed (31,770) 124 (31,646) Total net assets acquired $ 195,984 $ (2,500) $ 193,484 The goodwill arising from the acquisition represents the expected synergistic benefits of the transaction, primarily related to lower future operating expenses and the knowledge and experience of the workforce in place. The goodwill is not deductible for income tax purposes. A summary of preliminary estimated identifiable intangible assets acquired, preliminary estimated useful lives and amortization method is as follows: Measurement Preliminary Period Revised Amortization Estimate Adjustments Estimate Useful Life in Years Method Customer list $ 95,000 $ 500 $ 95,500 12 Accelerated Proprietary technology 18,000 (500) 17,500 5 Straight-line Trade names and domains 4,700 — 4,700 6 Straight-line Total $ 117,700 $ — $ 117,700 The results of FolioDynamix’s operations are included in the condensed consolidated statements of operations beginning January 2, 2018. FolioDynamix’s revenues for the three and six month periods ended June 30, 2018 totaled $17,346 and $34,800, respectively. FolioDynamix’s pre-tax loss for the three and six month periods ended June 30, 2018 totaled $3,255 and $7,981, respectively. The pre-tax loss includes estimated acquired intangible asset amortization of $4,390 and $8,701 for the three and six month periods ended June 30, 2018. For the three and six month periods ended June 30, 2018, acquisition related costs for FolioDynamix totaled $167 and $594, respectively, and are included in general and administration expenses. The Company will incur additional acquisition related costs during 2018. Pro forma results for Envestnet, Inc. giving effect to the FolioDynamix acquisition The following pro forma financial information presents the combined results of operations of Envestnet and FolioDynamix for the three and six month periods ended June 30, 2017. The pro forma financial information presents the results as if the acquisition had occurred as of the beginning of 2017. The unaudited pro forma results presented include amortization charges for acquired intangible assets, interest expense and stock-based compensation expense. Pro forma financial information is presented for informational purposes and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place as of the beginning of 2017. Three Months Ended Six Months Ended June 30, 2017 June 30, 2017 Revenues $ $ Net loss Net loss per share: Basic Diluted |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2018 | |
Revenue | |
Revenue | 4. Revenue On January 1, 2018, the Company adopted ASU 2014-09 and all subsequent ASUs that modified Topic 606 (“ASC 606” or “new revenue standard”) using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. The Company recognized the cumulative effect of the initial application of the new revenue standard as an adjustment to the opening balance of accumulated deficit. The comparative information has not been restated and will continue to be reported under the accounting standards in effect for those periods. The Company does not expect the adoption of the new revenue standard to have a material impact to the results of operations on an ongoing basis. The majority of our revenues continue to be recognized when services are provided. The adoption of the new revenue standard primarily impacts timing of revenue recognition for initial implementation services, deferral of incremental direct costs in obtaining contracts with customers and gross versus net presentation related to certain third party manager agreements. The cumulative effect of the changes made to the Company’s condensed consolidated balance sheets as of January 1, 2018 for the adoption of the new revenue standard was as follows: Balance at Cumulative Catch-up Balance at December 31, 2017 Adjustments January 1, 2018 Balance Sheets Assets: Other non-current assets $ 17,176 $ 5,315 $ 22,491 Liabilities: Deferred revenue, current 21,246 (1,122) 20,124 Deferred revenue, non-current 12,047 (2,780) 9,267 Equity: Accumulated deficit (73,854) 9,217 (64,637) In accordance with the new revenue standard requirements, the impact of adoption on the Company’s condensed consolidated statements of operations and condensed consolidated balance sheets was as follows: Three Months Ended June 30, 2018 Without Adoption of Effect of Change As Reported ASC 606 Higher/(Lower) Statements of Operations Revenues: Asset-based $ 118,111 $ 121,646 $ (3,535) Subscription-based 71,779 71,779 — Total recurring revenues 189,890 193,425 (3,535) Professional services and other revenues 11,226 11,385 (159) Total revenues 201,116 204,810 (3,694) Operating expenses: Cost of revenues 67,627 71,162 (3,535) Compensation and benefits 80,210 80,530 (320) Total operating expenses 201,111 204,966 (3,855) Income (loss) from operations 5 (156) 161 Net loss (5,991) (6,152) 161 Net loss attributable to Envestnet, Inc. (5,526) (5,687) 161 Six Months Ended June 30, 2018 Without Adoption of Effect of Change As Reported ASC 606 Higher/(Lower) Statements of Operations Revenues: Asset-based $ 239,264 $ 246,399 $ (7,135) Subscription-based 141,474 141,474 — Total recurring revenues 380,738 387,873 (7,135) Professional services and other revenues 18,389 18,585 (196) Total revenues 399,127 406,458 (7,331) Operating expenses: Cost of revenues 130,561 137,696 (7,135) Compensation and benefits 163,750 164,197 (447) Total operating expenses 399,860 407,442 (7,582) Loss from operations (733) (984) 251 Net income 2,011 1,760 251 Net income attributable to Envestnet, Inc. 2,578 2,327 251 At June 30, 2018 Without Adoption of Effect of Change As Reported ASC 606 Higher/(Lower) Balance Sheets Assets: Fees receivable, net $ 64,164 $ 63,218 $ 946 Other non-current assets 23,907 18,145 5,762 Liabilities: Accounts payable 21,133 20,187 946 Deferred revenue, current 25,739 26,720 (981) Deferred revenue, non-current 7,929 10,654 (2,725) Equity: Accumulated deficit (62,059) (71,527) 9,468 The impact of adoption on the Company’s condensed consolidated statements of cash flows is immaterial. Summary of Significant Accounting Policies Except for the accounting policies for revenue recognition, fees receivable including unbilled receivables and deferred sales incentive compensation that were updated as a result of adopting ASC 606, there have been no changes to our significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 28, 2018, that have had a material impact on our condensed consolidated financial statements and related notes. Revenue Recognition The Company derives revenues from asset-based and subscription-based services and professional services and other sources. Revenues are recognized when control of these services is transferred to our customers, in an amount that reflects the consideration that we expect to be entitled to in exchange for those services. All revenue recognized in the condensed consolidated statements of operations is considered to be revenue from contracts with customers. Sales and usage-based taxes are excluded from revenues. Asset-based revenue (formerly assets under management or administration revenue) Asset-based revenue primarily consists of fees for providing customers continuous access to platform services through the Company’s uniquely customized platforms. These platform services include investment manager due diligence and research, portfolio diagnostics, proposal generation, investment model management, rebalancing and trading, portfolio performance reporting and monitoring solutions, billing and back office and middle-office operations and administration and are made available to customers throughout the contractual term from the date the customized platform is launched. The asset-based fees the Company earns are generally based upon variable percentages of assets managed or administered on our platforms. The fee percentage varies based on the level and type of services the Company provides to its customers, as well as the values of existing customer accounts. The values of the customer accounts are affected by inflows or outflows of customer funds and market fluctuations. The platform services are substantially the same over each quarter and performed in a similar manner over the contract period, and are considered stand-ready promises. The platform services that are delivered to the customer over the quarter are considered distinct, as the customer benefits distinctly from each increment of our services and each quarter is separately identified in the contract, and are considered to be a single performance obligation under the new revenue standard. The pricing generally resets each quarter and the pricing structure is consistent throughout the term of the contract. The variable fees are generally calculated and billed quarterly in advance based on preceding quarter-end values and the variable amounts earned from the platform services relate specifically to the benefits transferred to the customer during that quarter. Accordingly, revenue is allocated to the specific quarter in which services are performed. The asset-based contracts generally contain one performance obligation and revenue is recognized on a ratable basis over the quarter beginning on the date that the platform services are made available to the customer as the customer simultaneously consumes and receives the benefits of the services. All asset-based fees are recognized in the Envestnet segment. For certain services provided by third parties, the Company evaluates whether it is the principal (revenues reported on a gross basis) or agent (revenues reported on a net basis). Generally, the Company reports customer fees including charges for third party service providers where the Company has a direct contract with such third party service providers on a gross basis, whereas the amounts billed to its customers are recorded as revenues, and amounts paid to third party service providers are recorded as cost of revenues. The Company is the principal in the transaction because it controls the services before they are transferred to its customers. Control is evidenced by the Company being primarily responsible to its customers and having discretion in establishing pricing. Subscription-based revenue (formerly subscription and licensing revenue) Subscription-based revenue primarily consists of fees for providing customers continuous access to the Company’s platform for wealth management and financial wellness. The subscription-based fees generally include fixed fees and or usage-based fees. Generally, the subscription services are substantially the same over each quarter and performed in a similar manner over the contract period, and are considered stand-ready promises. Quarterly subscription services are considered distinct as the customer can benefit from each increment of services on its own and each quarter is separately identified in the contract, and services are considered to be a single performance obligation under the new revenue standard. The usage-based pricing generally resets each quarter and the pricing structure is generally consistent throughout the term of the contract. The fixed fees are generally calculated and billed quarterly in advance. The usage-based fees are generally calculated and are billed either monthly or quarterly based on the actual usage and relate specifically to the benefits transferred to the customer during that quarter. Accordingly, revenue is allocated to the specific quarter in which services are performed. Certain subscription-based contracts contain multiple performance obligations (i.e. platform services performance obligation and professional services performance obligation). Fixed fees are generally recognized on a ratable basis over the quarter beginning when the subscription services are made available to the customer, as the customer simultaneously receives and consumes the benefits of the subscription services. Usage-based revenue is recognized on a monthly basis as the customer receives and consumes the benefit as the Company provides the services. Subscription-based fees are recognized in both the Envestnet and Envestnet | Yodlee segments. Professional services and other revenues The Company earns professional services fees by providing contractual customized services and platform software development as well as initial implementation fees. Professional services contracts generally have fixed prices, and generally specify the deliverables in the contract. Certain professional services contracts are billed on a time and materials basis and revenue is recognized over time as the services are performed. For contracts billed on a fixed price basis, revenue is recognized over time based on the proportion of services performed. Initial implementation fees are fixed and recognized ratably over the contract term. Other revenue primarily includes revenue related to the Advisor Summit. Other revenue is recognized when the events are held. Other revenue is not significant. The majority of the professional services and other contracts contain one performance obligation. Professional services and other revenues are recognized in both the Envestnet and Envestnet | Yodlee segments. Arrangements with multiple performance obligations Certain of the Company’s contracts with customers contain multiple performance obligations such as platform services performance obligation and professional services performance obligation. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. Standalone selling prices of services are estimated based on observable transactions when these services are sold on a standalone basis or based on expected cost plus margin. Disaggregation of Revenue The following table presents the Company’s revenues disaggregated by major source: Three Months Ended June 30, 2018 2017 Envestnet Envestnet | Yodlee Consolidated Envestnet (1) Envestnet | Yodlee (1) Consolidated (1) Revenues: Asset-based $ 118,111 $ — $ 118,111 $ 98,959 $ — $ 98,959 Subscription-based 33,023 38,756 71,779 25,471 34,331 59,802 Total recurring revenues 151,134 38,756 189,890 124,430 34,331 158,761 Professional services and other revenues 5,794 5,432 11,226 4,942 3,714 8,656 Total revenues $ 156,928 $ 44,188 $ 201,116 $ 129,372 $ 38,045 $ 167,417 (1) As noted above, prior period amounts have not been adjusted under the modified retrospective method. Six Months Ended June 30, 2018 2017 Envestnet Envestnet | Yodlee Consolidated Envestnet (1) Envestnet | Yodlee (1) Consolidated (1) Revenues: Asset-based $ 239,264 $ — $ 239,264 $ 193,121 $ — $ 193,121 Subscription-based 65,608 75,866 141,474 50,708 67,004 117,712 Total recurring revenues 304,872 75,866 380,738 243,829 67,004 310,833 Professional services and other revenues 8,044 10,345 18,389 6,861 7,509 14,370 Total revenues $ 312,916 $ 86,211 $ 399,127 $ 250,690 $ 74,513 $ 325,203 (1) As noted above, prior period amounts have not been adjusted under the modified retrospective method. The following table presents the Company’s revenues disaggregated by geography, based on the billing address of the customer: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 (2) 2018 2017 (2) United States $ 193,237 $ 151,621 $ 381,552 $ 293,583 International (1) 7,879 15,796 17,575 31,620 Total $ 201,116 $ 167,417 $ 399,127 $ 325,203 (1) No foreign country accounted for more than 10% of total revenues. (2) As noted above, prior period amounts have not been adjusted under the modified retrospective method. One customer accounted for more than 10% of the Company’s total revenues: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Fidelity 16 % 16 % 16 % 16 % Remaining Performance Obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2018: Years ending December 31: Remainder of 2018 $ 105,353 2019 164,482 2020 92,639 2021 53,793 2022 40,774 Thereafter 54,122 Total $ 511,163 Only fixed consideration from significant contracts with customers is included in the amounts presented above. The Company has applied the practical expedients and exemption and does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less; (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed; and (iii) contracts for which the variable consideration is allocated entirely to a wholly unsatisfied performance obligations or to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation. Contract Balances The Company records contract liabilities (deferred revenue) when cash payments are received in advance of its performance. The term between invoicing date and when payment is due is generally not significant. For the majority of its arrangements, the Company requires advance quarterly payments before the services are delivered to the customer. Deferred revenue primarily consists of implementation fees, professional services, and subscription fee payments received in advance from customers. Contract assets would exist when revenues have been recorded (i.e. control of goods or services has been transferred to the customer) but customer payment is contingent on a future event beyond the passage of time (i.e. satisfaction of additional performance obligations). The Company does not have any material contract assets. Unbilled receivables, which are not classified as contract assets, represent arrangements in which revenues have been recorded prior to billing and right to payment is unconditional. The opening and closing balances of the Company’s billed receivables, unbilled receivables, and deferred revenues are as follows: Receivables, Unbilled receivables, which are included in which are included in Deferred Revenue Deferred Revenue Fees receivable, net Fees receivable, net (current) (non-current) Opening balance as of January 1, 2018 $ 36,605 $ 13,229 $ 20,124 $ 9,267 Increase/(decrease), net 11,177 3,153 5,615 (1,338) Ending balance as of June 30, 2018 $ 47,782 $ 16,382 $ 25,739 $ 7,929 The increase in receivables is primarily a result of timing of payments for subscription-based revenues relative to the first six months of 2018 and the acquisition of FolioDynamix. The increase in unbilled receivables is primarily driven by revenue recognized in excess of billings related to asset-based services during the six months ended June 30, 2018. The increase in deferred revenue is primarily the result of an increase in deferred revenue related to subscription-based services during the six months ended June 30, 2018, most of which will be recognized over the course of the next twelve months. The amount of revenue recognized that was included in the opening deferred revenue balance was $5,737 and $13,253 for the three and six months ended June 30, 2018, respectively. The majority of this revenue consists of subscription-based revenue and professional services arrangements. The amount of revenue recognized from performance obligations satisfied in prior periods was not material. Deferred sales incentive compensation Sales incentive compensation earned by the Company’s sales force is considered an incremental and recoverable cost to acquire a contract with a customer. Sales incentive compensation for initial contracts is deferred and amortized on a straight-line basis over the period of benefit, which the Company has determined to be five years. The Company determined the period of benefit by taking into consideration its customer contracts, life of the technology and other factors. Sales incentive compensation for renewal contracts are deferred and amortized on a straight-line basis over the related contractual renewal period. Deferred sales incentive compensation is included in other non-current assets on the consolidated balance sheet and amortization expense is included in compensation and benefits expenses on the condensed consolidated statements of operations. Deferred sales incentive compensation was $5,762 as of June 30, 2018. Amortization expense for the deferred sales incentive compensation was $536 and $1,018 for the three and six months ended June 30, 2018, respectively. No significant impairment loss for capitalized costs was recorded during the period. The Company has applied the practical expedient to recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period would have been one year or less. These costs are included in compensation and benefits expenses on the condensed consolidated statements of operations. |
Cost of Revenues
Cost of Revenues | 6 Months Ended |
Jun. 30, 2018 | |
Cost of Revenues | |
Cost of Revenues | 5. The following table summarizes cost of revenues by revenue category for the periods presented herein: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Asset-based $ 56,748 $ 47,015 $ 114,320 $ 91,500 Subscription-based 6,213 5,142 11,439 9,756 Professional services and other 4,666 3,578 4,802 3,705 Total $ 67,627 $ 55,735 $ 130,561 $ 104,961 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 6 Months Ended |
Jun. 30, 2018 | |
Prepaid Expenses and Other Current Assets | |
Prepaid Expenses and Other Current Assets | 6. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following: June 30, December 31, 2018 2017 Prepaid technology $ 7,293 $ 1,843 Non-income tax receivable 3,332 2,704 Prepaid outside information services 1,556 1,395 Prepaid insurance 1,355 575 Service tax receivable 1,277 1,507 Prepaid rent 856 959 Restricted cash 228 2,000 Income tax receivable — 1,684 Other 6,824 6,803 $ 22,721 $ 19,470 |
Property and Equipment, Net
Property and Equipment, Net | 6 Months Ended |
Jun. 30, 2018 | |
Property and Equipment, Net | |
Property and Equipment, Net | 7. Property and equipment, net consists of the following: June 30, December 31, Estimated Useful Life 2018 2017 Cost: Computer equipment and software 3 years $ 60,525 $ 56,192 Leasehold improvements Shorter of the lease term or useful life of the asset 25,448 23,192 Office furniture and fixtures 3-7 years 8,498 8,110 Other office equipment 3-5 years 5,075 2,052 99,546 89,546 Less: accumulated depreciation and amortization (59,149) (53,637) Property and equipment, net $ 40,397 $ 35,909 During the three and six months ended June 30, 2018, the Company retired property and equipment that were no longer in service in the amount of $3,651 and $6,738, primarily related to fully depreciated computer equipment and software assets. Of the $3,651, $1,126 of the assets originated in the Envestnet segment and the remaining $2,525 originated in the Envestnet | Yodlee segment for the three months ended June 30, 2018. Of the $6,738, $3,337 of the assets originated in the Envestnet segment and the remaining $3,401 originated in the Envestnet | Yodlee segment for the six months ended June 30, 2018. Asset retirements during the three and six months ended June 30, 2017 were not material. Losses on asset retirements were not material during the three and six months ended June 30, 2018 and 2017. Depreciation and amortization expense was as follows: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Depreciation and amortization expense $ 3,920 $ 3,853 $ 7,838 $ 7,944 |
Internally Developed Software,
Internally Developed Software, Net | 6 Months Ended |
Jun. 30, 2018 | |
Internally Developed Software, Net | |
Internally Developed Software, Net | 8. Internally developed software, net consists of the following: June 30, December 31, Estimated Useful Life 2018 2017 Internally developed software 5 years $ 56,964 $ 46,342 Less: accumulated amortization (27,707) (24,168) Internally developed software, net $ 29,257 $ 22,174 Amortization expense was as follows: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Amortization expense $ $ 1,241 $ $ 2,400 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets, Net | |
Goodwill and Intangible Assets, Net | 9. Goodwill & Intangible Assets, Net Changes in the carrying amount of goodwill were as follows: Envestnet Envestnet | Yodlee Total Balance at December 31, 2017 $ $ $ FolioDynamix acquisition 94,624 — 94,624 Foreign currency — (624) (624) Balance at June 30, 2018 $ $ $ Intangible assets, net consist of the following: June 30, 2018 December 31, 2017 Gross Net Gross Net Estimated Carrying Accumulated Carrying Carrying Accumulated Carrying Useful Life Amount Amortization Amount Amount Amortization Amount Customer lists 7 - 15 years $ 354,850 $ (96,095) $ 258,755 $ 259,350 $ (78,482) $ 180,868 Proprietary technologies 4 - 8 years 75,543 (38,411) 37,132 57,377 (31,067) 26,310 Trade names 1 - 7 years 29,540 (11,923) 17,617 24,840 (9,701) 15,139 Backlog 4 years 11,000 (10,761) 239 11,000 (10,586) 414 Total intangible assets $ 470,933 $ (157,190) $ 313,743 $ 352,567 $ (129,836) $ 222,731 Amortization expense was as follows: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Amortization expense $ 13,419 $ 10,371 $ 27,354 $ 20,956 Future amortization expense of the intangible assets as of June 30, 2018, is expected to be as follows: Years ending December 31: Remainder of 2018 $ 26,051 2019 47,690 2020 43,548 2021 34,762 2022 32,168 Thereafter 129,524 $ 313,743 |
Other Non-Current Assets
Other Non-Current Assets | 6 Months Ended |
Jun. 30, 2018 | |
Other Non-Current Assets. | |
Other Non-Current Assets | 10. Other Non-Current Assets Other non-current assets consist of the following: June 30, December 31, 2018 2017 Assets to fund deferred compensation liability $ $ 5,185 Deposits: Lease 4,291 Other 615 Deferred sales incentive compensation — Unamortized issuance costs on revolving credit facility 3,106 Investments in private companies 2,731 Other 1,248 $ 23,907 $ 17,176 |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Accrued Expenses and Other Liabilities | |
Accrued Expenses and Other Liabilities | 11. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consist of the following: June 30, December 31, 2018 2017 Accrued investment manager fees $ 44,154 $ 39,324 Accrued compensation and related taxes 38,597 43,724 Sales and use tax payable 9,408 9,037 Accrued professional services 4,432 4,985 Accrued interest 864 — Definite consideration — 1,250 Other accrued expenses 12,082 7,577 $ 109,537 $ 105,897 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt | |
Debt | 12. Debt The Company’s outstanding debt obligations as of June 30, 2018 and December 31, 2017 were as follows: June 30, December 31, 2018 2017 Convertible Notes due 2019 $ 172,500 $ 172,500 Unaccreted discount on Convertible Notes due 2019 (8,832) (11,677) Unamortized issuance costs on Convertible Notes due 2019 (1,369) (1,833) Convertible Notes due 2019 carrying value $ 162,299 $ 158,990 Convertible Notes due 2023 $ 345,000 $ — Unaccreted discount on Convertible Notes due 2023 (47,016) — Unamortized issuance costs on Convertible Notes due 2023 (8,422) — Convertible Notes due 2023 carrying value $ 289,562 $ — Revolving credit facility balance $ — $ 81,168 Interest expense was comprised of the following and is included in other expense, net in the condensed consolidated statement of operations: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Interest on revolving credit facility $ 1,429 $ 1,110 $ 3,994 $ 2,455 Accretion of debt discount 2,411 1,344 3,829 2,681 Coupon interest 1,366 754 2,121 1,509 Amortization of issuance costs 621 616 1,071 2,046 Undrawn and other fees 165 53 213 122 $ 5,992 $ 3,877 $ 11,228 $ 8,813 Credit Agreement In July 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”). 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 Company incurs 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. Obligations under the Second Amended and Restated Credit Agreement are guaranteed by substantially all of the Company’s U.S. subsidiaries. The Second Amended and Restated Credit Agreement includes certain financial covenants and, as of June 30, 2018, the Company was in compliance with these requirements. On May 24, 2018, Envestnet Inc. and certain of its subsidiaries entered into a first amendment to the second amended and restated credit agreement (the “Credit Agreement Amendment”) amending the second amended and restated credit agreement, dated as of July 18, 2017. The Credit Agreement Amendment made certain technical changes to the calculations of various covenants contained in the Credit Agreement. Convertible Notes due 2019 On December 15, 2014, the Company issued $172,500 of Convertible Notes that mature on December 15, 2019. 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. 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, under certain circumstances. 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 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 due 2019 for the three and six months ended June 30, 2018 and 2017 was 6%. Convertible Notes due 2023 In May 2018, the Company issued $345,000 of Convertible Notes that mature on June 1, 2023. The Convertible Notes bear interest at a rate of 1.75 percent per annum payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2018. The Convertible Notes are general unsecured obligations, subordinated in right of payment to our obligations under our Credit Agreement. The notes are structurally subordinated to the indebtedness and other liabilities of any of our subsidiaries, other than our wholly owned subsidiary, Envestnet Asset Management, Inc., which will fully and unconditionally guarantee the notes on an unsecured basis. The Convertible Notes rank equally in right of payment with all our other existing and future senior indebtedness. 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 Company may redeem for cash all or any portion of the notes, at our option, on or after June 5, 2021 if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days, consecutive or non-consecutive, within a 30 consecutive trading day period ending on, and including, any of the five trading days immediately preceding the date on which we provide notice of redemption. The Convertible Notes are convertible into shares of the Company’s common stock under certain circumstances prior to maturity at a conversion rate of 14.6381 shares per $1 principal amount of the Convertible Notes, which represents a conversion price of $68.31 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 December 15, 2022, under certain circumstances. 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 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 due 2023 for the three and six months ended June 30, 2018 was 6%. See “Note 17 – Net Income (Loss) Per Share” for further discussion of the effect of conversion on net loss per common share. |
Other Non-Current Liabilities
Other Non-Current Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Other Non-Current Liabilities | |
Other Non-Current Liabilities | 13. Other Non-Current Liabilities Other non-current liabilities consist of the following: June 30, December 31, 2018 2017 Uncertain tax positions $ 10,827 $ 10,640 Deferred compensation liability 5,852 4,364 Other 65 98 $ 16,744 $ 15,102 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | 14. 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 June 30, 2018 and December 31, 2017, based on the three-tier fair value hierarchy. June 30, 2018 Fair Value Level I Level II Level III Assets Money market funds and other (1) $ $ $ — $ — Assets to fund deferred compensation liability (2) — — Total assets $ $ $ — $ Liabilities Contingent consideration $ $ — $ — $ Deferred compensation liability (3) — — Total liabilities $ $ $ — $ December 31, 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 $ $ $ — $ (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 and time deposit accounts which mature on a daily basis. (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 values 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. Time deposit account fair values are determined by trade confirmations which mature daily and therefore are considered highly liquid investments. 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 liability related to the Wheelhouse acquisition was 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 acquisition of 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 Wheelhouse, and its ability to meet the target performance objectives as the main driver of the valuation, to arrive at the fair value of its 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 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, 2017 to June 30, 2018: Fair Value of Assets to Fund Deferred Compensation Liability Balance at December 31, 2017 $ Contributions and fair value adjustments Balance at June 30, 2018 $ 6,729 The asset value was increased due to contributions to the Plan and immaterial gains on the underlying investment vehicles which resulted in an asset value as of June 30, 2018 of $6,729, which was included in other non-current assets on the condensed consolidated balance sheets. 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, 2017 to June 30, 2018: Fair Value of Contingent Consideration Liabilities Balance at December 31, 2017 $ Payment of contingent consideration liability Accretion on contingent consideration Balance at June 30, 2018 $ 707 The Company assesses the categorization of assets and liabilities by level at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer, in accordance with the Company’s accounting policy regarding the recognition of transfers between levels of the fair value hierarchy. There were no transfers between Levels I, II and III during the six months ended June 30, 2018. On December 15, 2014, the Company issued $172,500 of Convertible Notes due 2019. As of June 30, 2018 and December 31, 2017, the carrying value of the Convertible Notes due 2019 equaled $ 162,299 and $158, 990 , respectively, and represents the aggregate principal amount outstanding less the unamortized discount and debt issuance costs. As of June 30, 2018 and December 31, 2017, the fair value of the Convertible Notes due 2019 was $182,333 and $180,180, respectively. The Company considers the Convertible Notes due 2019 to be Level II liabilities and uses a market approach to calculate the fair value. The estimated fair value was determined based on the estimated or actual bids and offers of the Convertible Notes due 2019 in an over-the-counter market on June 30, 2018 (see “Note 12 – Debt”). On May 25, 2018, the Company issued $345,000 of Convertible Notes due 2023. As of June 30, 2018, the carrying value of the Convertible Notes due 2023 equaled $289,562 and represents the aggregate principal amount outstanding less the unamortized discount and debt issuance costs. As of June 30, 2018, the fair value of the Convertible Notes due 2023 was $356,923. The Company considers the Convertible Notes due 2023 to be Level II liabilities and uses a market approach to calculate the fair value. The estimated fair value was determined based on the estimated or actual bids and offers of the Convertible Notes due 2023 in an over-the-counter market on June 30, 2018 (see “Note 12 – Debt”). As of June 30, 2018 and December 31, 2017, there was $0 and $81,168, respectively, outstanding on the revolving credit facility under the Second Amended and Restated Credit Agreement. As of December 31, 2017, the outstanding balance on our revolving credit facility approximated fair value as the revolving credit facility bore interest at variable rates and we believe our credit risk quality is consistent with when the debt originated. The Company considers the revolving credit facility as of December 31, 2017 to be Level I liability (See “Note 12 – Debt”). We consider the recorded value of our other financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable and accounts payable, to approximate the fair value of the respective assets and liabilities at June 30, 2018 based upon the short-term nature of the assets and liabilities. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2018 | |
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”) and the 2010 Long-Term Incentive Plan (the “2010 Plan”). As of June 30, 2018, the maximum number of common shares of the Company available for future issuance under the Company’s plans is 3,091,345. Stock-based compensation expense under the Company’s plans was as follows: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Stock-based compensation expense $ 10,476 $ 7,945 $ 18,971 $ 15,403 Tax effect on stock-based compensation expense (2,650) (2,983) (4,800) (5,784) Net effect on income $ 7,826 $ 4,962 $ 14,171 $ 9,619 The tax effect on stock-based compensation expense above was calculated using a blended statutory rate of 25.3% for the three and six months ended June 30, 2018. The tax effect on stock-based compensation expense above was calculated using a blended statutory rate of 37.5% for the three and six months ended June 30, 2017. However, due to the valuation allowance recorded on domestic deferreds, there was no tax effect related to stock-based compensation expense for the three and six months ended June 30, 2018. Stock Options The following weighted average assumptions were used to value options granted during the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Grant date fair value of options $ — $ — $ — $ 14.51 Volatility — % — % — % 43.8 % Risk-free interest rate — % — % — % 2.1 % Dividend yield — % — % — % — % Expected term (in years) — — — 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, 2017 2,254,565 $ 19.23 4.3 $ 69,939 Exercised (162,857) 14.76 Forfeited (1,668) 32.46 Outstanding as of March 31, 2018 2,090,040 19.57 4.1 78,859 Granted — — Exercised (12,166) 11.42 Forfeited — — Outstanding as of June 30, 2018 2,077,874 19.62 3.9 73,421 Options exercisable 1,975,716 19.17 3.6 $ 70,703 Exercise prices of stock options outstanding as of June 30, 2018 range from $7.15 to $55.29. At June 30, 2018, there was $1,197 of unrecognized stock-based compensation expense related to unvested stock options, which the Company expects to recognize over a weighted-average period of 1.4 years. Restricted Stock Units and Restricted Stock Awards Periodically, the Company grants restricted stock unit awards to employees. 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, 2017 1,766,639 $ 32.48 Granted 925,641 55.21 Vested (503,668) 34.05 Forfeited (27,265) 30.79 Outstanding as of March 31, 2018 2,161,347 41.59 Granted — — Vested (253,279) 31.13 Forfeited (27,324) 39.78 Outstanding as of June 30, 2018 1,880,744 $ 43.36 At June 30, 2018, there was $73,482 of unrecognized stock-based compensation expense related to unvested restricted stock units and awards, which the Company expects to recognize over a weighted-average period of 2.2 years. During March 2018, the Company granted 26,000 performance-based restricted stock unit awards to certain employees. These performance-based shares vest upon the achievement of certain business and financial metrics. The business and financial metrics governing the vesting of these stock unit awards provide thresholds which dictate the number of shares to vest upon each evaluation date, which range from 50% to 150%. If these metrics are achieved at 100%, as defined in the individual grant terms, these shares would vest over three annual tranches equally. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Taxes | |
Income Taxes | 16. Income Taxes The following table includes the Company’s loss before income tax provision (benefit), income tax provision (benefit) and effective tax rate: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Loss before income tax provision (benefit) $ (5,425) $ (1,626) $ $ (10,463) Income tax provision (benefit) 566 4,844 9,142 Effective tax rate % % % % For the three months ended June 30, 2018, our effective tax rate differed from the statutory rate primarily due to the valuation allowance the Company has placed on all US deferreds with the exception of indefinite lived intangibles, additional accruals for uncertain tax positions, the impact of clarifying Base Erosion and Anti Abuse tax positions, as well as differences between the foreign tax rates and statutory US tax rate. For the three months ended June 30, 2017, our effective tax rate differed from the statutory rate primarily due to the valuation allowance the Company had placed on all US 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 US. For the six months ended June 30, 2018, our effective tax rate differed from the statutory rate primarily due to the release of the Company’s valuation allowance as a result of additional deferred tax liabilities recorded with the acquisition of FolioDynamix, additional accruals for uncertain tax positions as well as differences between the foreign tax rates and statutory US tax rate. For the six months ended June 30, 2017, our effective tax rate differed from the statutory rate primarily due to the valuation allowance the Company had placed on all US 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 US. In December 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted into United States law. Beginning in 2018, the Tax Act includes the global intangible low-taxed income (“GILTI”) provision and base erosion anti abuse tax (“BEAT”). We elected to account for GILTI tax in the period in which it is incurred. The GILTI provision requires us to include in our U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. We expect to fully offset any GILTI income with Net Operating Losses (“NOLs”). As a result of our domestic valuation allowance, we do not expect a financial statement impact due to the GILTI provision. Additionally the Tax Act requires us to calculate a minimum tax on our foreign earnings and profits; BEAT. As a result of further research and developing guidance we do not require a BEAT provision to be recorded. In accordance with Staff Accounting Bulletin 118, we recognized provisional tax impacts related to the deemed repatriated foreign earnings in our consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from those provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions we have made, additional regulatory guidance that may be issued, and actions we may take as a result of the Tax Act. During the six months ended June 30, 2018 we did not record any adjustments to our provisional amounts included in our consolidated financial statements for the year ended December 31, 2017. The accounting is expected to be completed when the 2017 U.S. corporate income tax return is filed in October of 2018. The total gross liability for unrecognized tax benefits, exclusive of interest and penalties, was $18,895 and $18,312 at June 30, 2018 and December 31, 2017, respectively. Of this amount, a portion of the unrecognized tax benefits was recorded as a reduction of deferred tax assets instead of a non-current liability. The portion of the unrecognized tax benefits, exclusive of interest and penalties, recorded as a non-current liability is $4,871 and $4,626 at June 30, 2018 and December 31, 2017, respectively. At June 30, 2018, the amount of unrecognized tax benefits, including interest and penalties, that would benefit the Company’s effective tax rate, if recognized, was $10,827. At this time, the Company estimates that the liability for unrecognized tax benefits will not decrease in the next twelve months as it is not anticipated that reviews by tax authorities will be completed and there will be any expiration of certain statutes of limitations in this time period. The Company recognizes potential interest and penalties related to unrecognized tax benefits in income tax expense. Income tax expense includes $548 and $890 of potential interest and penalties related to unrecognized tax benefits for the six months ended June 30, 2018 and 2017, respectively. The Company had accrued interest and penalties of $6,566 and $6,018 as of June 30, 2018 and December 31, 2017, respectively. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Net Income (Loss) Per Share | |
Net Income (Loss) Per Share | 17. Net Income (Loss) Per Share Basic income (loss) per common share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding for the period. For the calculation of diluted income (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 due 2019 and 2023 (collectively “Convertible Notes”) using the treasury stock method, if dilutive. No items were included in the computation of diluted loss per share in the three months ended June 30, 2018 and 2017 as well as the six months ended June 30, 2017 because the Company incurred a net loss attributable to Envestnet, Inc. in those 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 and $68.31 per share, respectively, or if the trading price of the Convertible Notes meets certain criteria (See “Note 12 – Debt” in Part II, Item 8 of our 2017 Form 10-K and “Note 12 – Debt” in this Form 10-Q). 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 income (loss) per share attributable to Envestnet, Inc.: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Basic income (loss) per share calculation: Net income (loss) attributable to Envestnet, Inc. $ $ (6,470) $ 2,578 $ (19,605) Basic number of weighted-average shares outstanding 45,247,331 43,855,479 44,963,735 43,513,074 Basic net income (loss) per share $ $ $ 0.06 $ Diluted income (loss) per share calculation: Net income (loss) attributable to Envestnet, Inc. $ $ (6,470) $ 2,578 $ (19,605) Basic number of weighted-average shares outstanding 45,247,331 43,855,479 44,963,735 43,513,074 Effect of dilutive shares: Options to purchase common stock — — 1,360,300 — Unvested restricted stock units — — 832,170 — Diluted number of weighted-average shares outstanding 45,247,331 43,855,479 47,156,205 43,513,074 Diluted net income (loss) per share $ $ $ 0.05 $ Securities that were anti-dilutive for the three and six months ended June 30, 2018 and 2017 were as follows: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Options to purchase common stock 2,077,874 2,804,420 9,045 2,804,420 Unvested restricted stock awards and units 1,880,744 2,023,898 — 2,023,898 Convertible Notes 7,793,826 2,743,321 7,793,826 2,743,321 Total 11,752,444 7,571,639 7,802,871 7,571,639 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | 18. Commitments and Contingencies 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. Legal Proceedings The Company is involved in legal proceedings 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. Legal proceedings accruals are recorded when and if it is determined that a loss is both probable and reasonably estimable. For litigation matters where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established, but if the matter is material, it is subject to disclosures. The Company believes that liabilities associated with any claims, while possible, are not probable, and therefore has not recorded any accrual for any claims as of June 30, 2018. 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 legal proceedings could have a material adverse effect on Envestnet’s results of operations or cash flow in a particular quarter or year. Contingencies Certain of the Company’s revenues are subject to sales and use taxes in certain jurisdictions where it conducts business in the United States. As of June 30, 2018, the Company estimated a sales and use tax liability of $9,234. This amount is included in accrued expenses and other liabilities on the condensed consolidated balance sheets. The Company also estimated a sales and use tax receivable of $3,413 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 sheets. As a result, a net sales and use tax liability of $5,830 related to multiple jurisdictions with respect to revenues in the three and six months ended June 30, 2018 and prior periods 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. As of June 30, 2018, the Company’s future minimum lease commitments under these operating leases totaled $105,124. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2018 | |
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 analytics 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 fees, insurance, acquisition related transaction costs, restructuring charges, and other non-operationally related expenses. Inter-segment revenues were not material for the three and six months ended June 30, 2018 and 2017. The following table presents revenue by segment: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Revenue: Envestnet $ 156,928 $ 129,372 $ 312,916 $ 250,690 Envestnet | Yodlee 44,188 38,045 86,211 74,513 Consolidated revenue $ 201,116 $ 167,417 $ 399,127 $ 325,203 Fidelity revenue as a percentage of Envestnet segment revenue: No single customer amounts for Envestnet | Yodlee exceeded 10% of the segment total for any period presented. The following table presents a reconciliation from income from operations by segment to consolidated net income (loss) attributable to Envestnet, Inc.: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Envestnet $ 16,359 $ 15,811 $ 32,220 $ 29,322 Envestnet | Yodlee (3,296) (5,635) (7,705) (13,343) Total segment income from operations 13,063 10,176 24,515 15,979 Nonsegment operating expenses (13,058) (7,433) (25,248) (16,590) Other expense, net (5,430) (4,369) (10,684) (9,852) Consolidated loss before income tax provision (benefit) (5,425) (1,626) (11,417) (10,463) Income tax provision (benefit) 566 4,844 (13,428) 9,142 Consolidated net income (loss) (5,991) (6,470) 2,011 (19,605) Add: Net loss attributable to non-controlling interest 465 — 567 — Consolidated net income (loss) attributable to Envestnet, Inc. $ (5,526) $ (6,470) $ 2,578 $ (19,605) 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: June 30, December 31, 2018 2017 Segment assets: Envestnet $ 650,363 $ 353,048 Envestnet | Yodlee 504,813 509,004 Consolidated total assets $ 1,155,176 $ 862,052 Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Segment depreciation and amortization: Envestnet $ 11,026 $ 6,361 $ 22,499 $ 12,782 Envestnet | Yodlee 8,159 9,104 16,232 18,518 Consolidated depreciation and amortization $ 19,185 $ 15,465 $ 38,731 $ 31,300 Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Segment capital expenditures: Envestnet $ 8,344 $ 7,580 $ 16,536 $ 12,931 Envestnet | Yodlee 2,260 1,154 3,655 1,901 Consolidated capital expenditures $ 10,604 $ 8,734 $ 20,191 $ 14,832 |
Geographical Information
Geographical Information | 6 Months Ended |
Jun. 30, 2018 | |
Geographical Information | |
Geographical Information | 20. Geographical Information The following table sets forth property and equipment, net by geographic area: June 30, December 31, 2018 2017 United States $ 35,812 $ 30,647 India 4,109 4,907 Other 476 355 Total $ 40,397 $ 35,909 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Basis of Presentation | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements - In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” which amends the existing accounting standards for revenue recognition. This standard is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2017. These changes became effective for the Company’s fiscal year beginning January 1, 2018 and have been reflected in these condensed consolidated financial statements (See “Note 4 – Revenue”). 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 and will be applied using a modified retrospective approach with optional practical expedients. Early adoption of the standard is permitted. The Company will adopt the new standard on its effective date of January 1, 2019 and expects to elect certain available transitional practical expedients. Based on current analysis, the adoption of the standard may have a material impact on our consolidated balance sheets and related disclosures while not significantly impacting financial results. We continue to evaluate the accounting, transition, and disclosure requirements of this standard. 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 standard is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2017. These changes became effective for the Company’s fiscal year beginning January 1, 2018 and have been reflected in these condensed consolidated financial statements. Retrospective adoption of ASU 2016-15 did not have a material impact on the Company’s presentation of the condensed consolidated statements of cash flows. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230) – Restricted Cash,” which amends ASC 230 to provide clarifying guidance on the classification and presentation of restricted cash in the statement of cash flows. Additional disclosure is required to reconcile between the statement of financial position and the statement of cash flows when the statement of financial position includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents. This standard is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2017. These changes became effective for the Company’s fiscal year beginning January 1, 2018 and included $228 and $2,000 of restricted cash in the total of cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows for the six months ended June 30, 2018 and 2017, respectively. A reconciliation of restricted cash for each period is included within this footnote. 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 is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2017. These changes became effective for the Company’s fiscal year beginning January 1, 2018 and did not have a material impact to these condensed consolidated financial statements. This standard will be applied to all future business acquisition and disposal transactions. 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. This standard is effective for financial statements issued by public companies for annual and interim periods beginning after December 15, 2017. These changes became effective for the Company’s fiscal year beginning January 1, 2018. This standard will be applied to all future modifications of share-based payment awards. In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” This update clarifies the accounting for share-based payment transactions for acquiring goods and services from nonemployees. Specifically, the update aligns the accounting for payments to nonemployees to match the accounting for payments to employees, no longer accounting for these transactions differently. This standard is effective for financial statements issued by public companies for 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. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Basis of Presentation | |
Schedule of reconciliation of cash, cash equivalents and restricted cash | June 30, 2018 2017 Cash and cash equivalents $ 134,032 $ 27,730 Restricted cash included in prepaid expenses and other current assets 228 2,000 Total cash, cash equivalents and restricted cash $ 134,260 $ 29,730 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Acquisitions | |
Summary of consideration transferred in the acquisition | Measurement Preliminary Period Revised Estimate Adjustments Estimate Cash consideration $ 187,580 $ 12,297 $ 199,877 Purchase consideration liability 12,297 (12,297) — Working capital and other adjustments (3,893) (2,500) (6,393) Total $ 195,984 $ (2,500) $ 193,484 |
Summary of the estimated fair values of the assets acquired and liabilities assumed | Measurement Preliminary Period Revised Estimate Adjustments Estimate Cash and cash equivalents $ 4,876 $ — $ 4,876 Accounts receivable 4,962 — 4,962 Prepaid expenses and other current assets 1,600 — 1,600 Property and equipment, net 927 — 927 Other non-current assets 441 — 441 Identifiable intangible assets 117,700 — 117,700 Goodwill 97,248 (2,624) 94,624 Total assets acquired 227,754 (2,624) 225,130 Accounts payable (5,358) — (5,358) Accrued expenses (7,173) — (7,173) Deferred tax liability (18,245) — (18,245) Deferred revenue (930) 124 (806) Other non-current liabilities (64) — (64) Total liabilities assumed (31,770) 124 (31,646) Total net assets acquired $ 195,984 $ (2,500) $ 193,484 |
Summary of intangible assets acquired, estimated useful lives and amortization method | Measurement Preliminary Period Revised Amortization Estimate Adjustments Estimate Useful Life in Years Method Customer list $ 95,000 $ 500 $ 95,500 12 Accelerated Proprietary technology 18,000 (500) 17,500 5 Straight-line Trade names and domains 4,700 — 4,700 6 Straight-line Total $ 117,700 $ — $ 117,700 |
Schedule of pro forma financial information | Three Months Ended Six Months Ended June 30, 2017 June 30, 2017 Revenues $ $ Net loss Net loss per share: Basic Diluted |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue | |
Summary of cumulative effect of the changes made to the Company’s condensed consolidated balance sheets as of January 1, 2018 for the adoption of the new revenue standard | The cumulative effect of the changes made to the Company’s condensed consolidated balance sheets as of January 1, 2018 for the adoption of the new revenue standard was as follows: Balance at Cumulative Catch-up Balance at December 31, 2017 Adjustments January 1, 2018 Balance Sheets Assets: Other non-current assets $ 17,176 $ 5,315 $ 22,491 Liabilities: Deferred revenue, current 21,246 (1,122) 20,124 Deferred revenue, non-current 12,047 (2,780) 9,267 Equity: Accumulated deficit (73,854) 9,217 (64,637) In accordance with the new revenue standard requirements, the impact of adoption on the Company’s condensed consolidated statements of operations and condensed consolidated balance sheets was as follows: Three Months Ended June 30, 2018 Without Adoption of Effect of Change As Reported ASC 606 Higher/(Lower) Statements of Operations Revenues: Asset-based $ 118,111 $ 121,646 $ (3,535) Subscription-based 71,779 71,779 — Total recurring revenues 189,890 193,425 (3,535) Professional services and other revenues 11,226 11,385 (159) Total revenues 201,116 204,810 (3,694) Operating expenses: Cost of revenues 67,627 71,162 (3,535) Compensation and benefits 80,210 80,530 (320) Total operating expenses 201,111 204,966 (3,855) Income (loss) from operations 5 (156) 161 Net loss (5,991) (6,152) 161 Net loss attributable to Envestnet, Inc. (5,526) (5,687) 161 Six Months Ended June 30, 2018 Without Adoption of Effect of Change As Reported ASC 606 Higher/(Lower) Statements of Operations Revenues: Asset-based $ 239,264 $ 246,399 $ (7,135) Subscription-based 141,474 141,474 — Total recurring revenues 380,738 387,873 (7,135) Professional services and other revenues 18,389 18,585 (196) Total revenues 399,127 406,458 (7,331) Operating expenses: Cost of revenues 130,561 137,696 (7,135) Compensation and benefits 163,750 164,197 (447) Total operating expenses 399,860 407,442 (7,582) Loss from operations (733) (984) 251 Net income 2,011 1,760 251 Net income attributable to Envestnet, Inc. 2,578 2,327 251 At June 30, 2018 Without Adoption of Effect of Change As Reported ASC 606 Higher/(Lower) Balance Sheets Assets: Fees receivable, net $ 64,164 $ 63,218 $ 946 Other non-current assets 23,907 18,145 5,762 Liabilities: Accounts payable 21,133 20,187 946 Deferred revenue, current 25,739 26,720 (981) Deferred revenue, non-current 7,929 10,654 (2,725) Equity: Accumulated deficit (62,059) (71,527) 9,468 |
Schedule of disaggregation of revenue by major source | Three Months Ended June 30, 2018 2017 Envestnet Envestnet | Yodlee Consolidated Envestnet (1) Envestnet | Yodlee (1) Consolidated (1) Revenues: Asset-based $ 118,111 $ — $ 118,111 $ 98,959 $ — $ 98,959 Subscription-based 33,023 38,756 71,779 25,471 34,331 59,802 Total recurring revenues 151,134 38,756 189,890 124,430 34,331 158,761 Professional services and other revenues 5,794 5,432 11,226 4,942 3,714 8,656 Total revenues $ 156,928 $ 44,188 $ 201,116 $ 129,372 $ 38,045 $ 167,417 (1) As noted above, prior period amounts have not been adjusted under the modified retrospective method. Six Months Ended June 30, 2018 2017 Envestnet Envestnet | Yodlee Consolidated Envestnet (1) Envestnet | Yodlee (1) Consolidated (1) Revenues: Asset-based $ 239,264 $ — $ 239,264 $ 193,121 $ — $ 193,121 Subscription-based 65,608 75,866 141,474 50,708 67,004 117,712 Total recurring revenues 304,872 75,866 380,738 243,829 67,004 310,833 Professional services and other revenues 8,044 10,345 18,389 6,861 7,509 14,370 Total revenues $ 312,916 $ 86,211 $ 399,127 $ 250,690 $ 74,513 $ 325,203 (1) As noted above, prior period amounts have not been adjusted under the modified retrospective method. |
Schedule of disaggregation of revenue by geography | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 (2) 2018 2017 (2) United States $ 193,237 $ 151,621 $ 381,552 $ 293,583 International (1) 7,879 15,796 17,575 31,620 Total $ 201,116 $ 167,417 $ 399,127 $ 325,203 (1) No foreign country accounted for more than 10% of total revenues. (2) As noted above, prior period amounts have not been adjusted under the modified retrospective method. One customer accounted for more than 10% of the Company’s total revenues: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Fidelity 16 % 16 % 16 % 16 % |
Schedule of estimated revenue expected to be recognized in the future | Years ending December 31: Remainder of 2018 $ 105,353 2019 164,482 2020 92,639 2021 53,793 2022 40,774 Thereafter 54,122 Total $ 511,163 |
Schedule of billed receivables, unbilled receivables and deferred revenues | Receivables, Unbilled receivables, which are included in which are included in Deferred Revenue Deferred Revenue Fees receivable, net Fees receivable, net (current) (non-current) Opening balance as of January 1, 2018 $ 36,605 $ 13,229 $ 20,124 $ 9,267 Increase/(decrease), net 11,177 3,153 5,615 (1,338) Ending balance as of June 30, 2018 $ 47,782 $ 16,382 $ 25,739 $ 7,929 |
Summary of revenues from major customers | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Fidelity 16 % 16 % 16 % 16 % |
Cost of Revenues (Tables)
Cost of Revenues (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Cost of Revenues | |
Schedule of costs of revenues by revenue category | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Asset-based $ 56,748 $ 47,015 $ 114,320 $ 91,500 Subscription-based 6,213 5,142 11,439 9,756 Professional services and other 4,666 3,578 4,802 3,705 Total $ 67,627 $ 55,735 $ 130,561 $ 104,961 |
Prepaid Expenses and Other Cu33
Prepaid Expenses and Other Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Prepaid Expenses and Other Current Assets | |
Schedule of prepaid expenses and other current assets | June 30, December 31, 2018 2017 Prepaid technology $ 7,293 $ 1,843 Non-income tax receivable 3,332 2,704 Prepaid outside information services 1,556 1,395 Prepaid insurance 1,355 575 Service tax receivable 1,277 1,507 Prepaid rent 856 959 Restricted cash 228 2,000 Income tax receivable — 1,684 Other 6,824 6,803 $ 22,721 $ 19,470 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property and Equipment, Net | |
Schedule of components of property and equipment, net | June 30, December 31, Estimated Useful Life 2018 2017 Cost: Computer equipment and software 3 years $ 60,525 $ 56,192 Leasehold improvements Shorter of the lease term or useful life of the asset 25,448 23,192 Office furniture and fixtures 3-7 years 8,498 8,110 Other office equipment 3-5 years 5,075 2,052 99,546 89,546 Less: accumulated depreciation and amortization (59,149) (53,637) Property and equipment, net $ 40,397 $ 35,909 |
Schedule of depreciation and amortization expense | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Depreciation and amortization expense $ 3,920 $ 3,853 $ 7,838 $ 7,944 |
Internally Developed Software35
Internally Developed Software, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Internally Developed Software, Net | |
Schedule of components of internally developed software, net | June 30, December 31, Estimated Useful Life 2018 2017 Internally developed software 5 years $ 56,964 $ 46,342 Less: accumulated amortization (27,707) (24,168) Internally developed software, net $ 29,257 $ 22,174 |
Schedule of amortization expense | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Amortization expense $ $ 1,241 $ $ 2,400 |
Goodwill and Intangible Asset36
Goodwill and Intangible Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets, Net | |
Schedule of changes in the carrying amount of goodwill by segment | Envestnet Envestnet | Yodlee Total Balance at December 31, 2017 $ $ $ FolioDynamix acquisition 94,624 — 94,624 Foreign currency — (624) (624) Balance at June 30, 2018 $ $ $ |
Schedule of components of intangible assets, net | June 30, 2018 December 31, 2017 Gross Net Gross Net Estimated Carrying Accumulated Carrying Carrying Accumulated Carrying Useful Life Amount Amortization Amount Amount Amortization Amount Customer lists 7 - 15 years $ 354,850 $ (96,095) $ 258,755 $ 259,350 $ (78,482) $ 180,868 Proprietary technologies 4 - 8 years 75,543 (38,411) 37,132 57,377 (31,067) 26,310 Trade names 1 - 7 years 29,540 (11,923) 17,617 24,840 (9,701) 15,139 Backlog 4 years 11,000 (10,761) 239 11,000 (10,586) 414 Total intangible assets $ 470,933 $ (157,190) $ 313,743 $ 352,567 $ (129,836) $ 222,731 |
Schedule of amortization expense | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Amortization expense $ 13,419 $ 10,371 $ 27,354 $ 20,956 |
Schedule of future amortization expense of the intangible assets | Future amortization expense of the intangible assets as of June 30, 2018, is expected to be as follows: Years ending December 31: Remainder of 2018 $ 26,051 2019 47,690 2020 43,548 2021 34,762 2022 32,168 Thereafter 129,524 $ 313,743 |
Other Non-Current Assets (Table
Other Non-Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Other Non-Current Assets. | |
Schedule of components of other non-current assets | June 30, December 31, 2018 2017 Assets to fund deferred compensation liability $ $ 5,185 Deposits: Lease 4,291 Other 615 Deferred sales incentive compensation — Unamortized issuance costs on revolving credit facility 3,106 Investments in private companies 2,731 Other 1,248 $ 23,907 $ 17,176 |
Accrued Expenses and Other Li38
Accrued Expenses and Other Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accrued Expenses and Other Liabilities | |
Schedule accrued expenses and other liabilities | June 30, December 31, 2018 2017 Accrued investment manager fees $ 44,154 $ 39,324 Accrued compensation and related taxes 38,597 43,724 Sales and use tax payable 9,408 9,037 Accrued professional services 4,432 4,985 Accrued interest 864 — Definite consideration — 1,250 Other accrued expenses 12,082 7,577 $ 109,537 $ 105,897 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt | |
Schedule of convertible debt obligations | June 30, December 31, 2018 2017 Convertible Notes due 2019 $ 172,500 $ 172,500 Unaccreted discount on Convertible Notes due 2019 (8,832) (11,677) Unamortized issuance costs on Convertible Notes due 2019 (1,369) (1,833) Convertible Notes due 2019 carrying value $ 162,299 $ 158,990 Convertible Notes due 2023 $ 345,000 $ — Unaccreted discount on Convertible Notes due 2023 (47,016) — Unamortized issuance costs on Convertible Notes due 2023 (8,422) — Convertible Notes due 2023 carrying value $ 289,562 $ — Revolving credit facility balance $ — $ 81,168 |
Schedule of interest expense | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Interest on revolving credit facility $ 1,429 $ 1,110 $ 3,994 $ 2,455 Accretion of debt discount 2,411 1,344 3,829 2,681 Coupon interest 1,366 754 2,121 1,509 Amortization of issuance costs 621 616 1,071 2,046 Undrawn and other fees 165 53 213 122 $ 5,992 $ 3,877 $ 11,228 $ 8,813 |
Other Non-Current Liabilities (
Other Non-Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Other Non-Current Liabilities | |
Other Non-Current Liabilities | June 30, December 31, 2018 2017 Uncertain tax positions $ 10,827 $ 10,640 Deferred compensation liability 5,852 4,364 Other 65 98 $ 16,744 $ 15,102 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Measurements | |
Schedule of changes in fair value of the Company’s financial assets and liabilities measured at fair value | June 30, 2018 Fair Value Level I Level II Level III Assets Money market funds and other (1) $ $ $ — $ — Assets to fund deferred compensation liability (2) — — Total assets $ $ $ — $ Liabilities Contingent consideration $ $ — $ — $ Deferred compensation liability (3) — — Total liabilities $ $ $ — $ December 31, 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 $ $ $ — $ (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 and time deposit accounts which mature on a daily basis. (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 values of the various funds in which the participants have selected. |
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, 2017 $ Contributions and fair value adjustments Balance at June 30, 2018 $ 6,729 |
Summary of changes in the fair value of the Company's Level 3 liability | Fair Value of Contingent Consideration Liabilities Balance at December 31, 2017 $ Payment of contingent consideration liability Accretion on contingent consideration Balance at June 30, 2018 $ 707 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Stock-Based Compensation | |
Schedule of stock-based compensation expense | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Stock-based compensation expense $ 10,476 $ 7,945 $ 18,971 $ 15,403 Tax effect on stock-based compensation expense (2,650) (2,983) (4,800) (5,784) Net effect on income $ 7,826 $ 4,962 $ 14,171 $ 9,619 |
Schedule of weighted average assumptions used to value options granted | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Grant date fair value of options $ — $ — $ — $ 14.51 Volatility — % — % — % 43.8 % Risk-free interest rate — % — % — % 2.1 % Dividend yield — % — % — % — % Expected term (in years) — — — 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, 2017 2,254,565 $ 19.23 4.3 $ 69,939 Exercised (162,857) 14.76 Forfeited (1,668) 32.46 Outstanding as of March 31, 2018 2,090,040 19.57 4.1 78,859 Granted — — Exercised (12,166) 11.42 Forfeited — — Outstanding as of June 30, 2018 2,077,874 19.62 3.9 73,421 Options exercisable 1,975,716 19.17 3.6 $ 70,703 |
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, 2017 1,766,639 $ 32.48 Granted 925,641 55.21 Vested (503,668) 34.05 Forfeited (27,265) 30.79 Outstanding as of March 31, 2018 2,161,347 41.59 Granted — — Vested (253,279) 31.13 Forfeited (27,324) 39.78 Outstanding as of June 30, 2018 1,880,744 $ 43.36 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Income Taxes | |
Summary of loss before income tax provision (benefit) | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Loss before income tax provision (benefit) $ (5,425) $ (1,626) $ $ (10,463) Income tax provision (benefit) 566 4,844 9,142 Effective tax rate % % % % |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Net Income (Loss) Per Share | |
Schedule of reconciliation of the numerators and denominators used in computing basic and diluted net loss per share attributable to common stockholders | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Basic income (loss) per share calculation: Net income (loss) attributable to Envestnet, Inc. $ $ (6,470) $ 2,578 $ (19,605) Basic number of weighted-average shares outstanding 45,247,331 43,855,479 44,963,735 43,513,074 Basic net income (loss) per share $ $ $ 0.06 $ Diluted income (loss) per share calculation: Net income (loss) attributable to Envestnet, Inc. $ $ (6,470) $ 2,578 $ (19,605) Basic number of weighted-average shares outstanding 45,247,331 43,855,479 44,963,735 43,513,074 Effect of dilutive shares: Options to purchase common stock — — 1,360,300 — Unvested restricted stock units — — 832,170 — Diluted number of weighted-average shares outstanding 45,247,331 43,855,479 47,156,205 43,513,074 Diluted net income (loss) per share $ $ $ 0.05 $ |
Schedule of anti-dilutive securities excluded from computation of diluted earings per share | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Options to purchase common stock 2,077,874 2,804,420 9,045 2,804,420 Unvested restricted stock awards and units 1,880,744 2,023,898 — 2,023,898 Convertible Notes 7,793,826 2,743,321 7,793,826 2,743,321 Total 11,752,444 7,571,639 7,802,871 7,571,639 |
Segment information (Tables)
Segment information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Information | |
Schedule of revenue by segment | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Revenue: Envestnet $ 156,928 $ 129,372 $ 312,916 $ 250,690 Envestnet | Yodlee 44,188 38,045 86,211 74,513 Consolidated revenue $ 201,116 $ 167,417 $ 399,127 $ 325,203 Fidelity revenue as a percentage of Envestnet segment revenue: |
Schedule of income (loss) from operations by segment | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Envestnet $ 16,359 $ 15,811 $ 32,220 $ 29,322 Envestnet | Yodlee (3,296) (5,635) (7,705) (13,343) Total segment income from operations 13,063 10,176 24,515 15,979 Nonsegment operating expenses (13,058) (7,433) (25,248) (16,590) Other expense, net (5,430) (4,369) (10,684) (9,852) Consolidated loss before income tax provision (benefit) (5,425) (1,626) (11,417) (10,463) Income tax provision (benefit) 566 4,844 (13,428) 9,142 Consolidated net income (loss) (5,991) (6,470) 2,011 (19,605) Add: Net loss attributable to non-controlling interest 465 — 567 — Consolidated net income (loss) attributable to Envestnet, Inc. $ (5,526) $ (6,470) $ 2,578 $ (19,605) |
Summary of consolidated total assets, consolidated depreciation and amortization and consolidated capital expenditures | June 30, December 31, 2018 2017 Segment assets: Envestnet $ 650,363 $ 353,048 Envestnet | Yodlee 504,813 509,004 Consolidated total assets $ 1,155,176 $ 862,052 Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Segment depreciation and amortization: Envestnet $ 11,026 $ 6,361 $ 22,499 $ 12,782 Envestnet | Yodlee 8,159 9,104 16,232 18,518 Consolidated depreciation and amortization $ 19,185 $ 15,465 $ 38,731 $ 31,300 Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Segment capital expenditures: Envestnet $ 8,344 $ 7,580 $ 16,536 $ 12,931 Envestnet | Yodlee 2,260 1,154 3,655 1,901 Consolidated capital expenditures $ 10,604 $ 8,734 $ 20,191 $ 14,832 |
Geographical Information (Table
Geographical Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Geographical Information | |
Schedule of property, plant, and equipment, net by geographic area | June 30, December 31, 2018 2017 United States $ 35,812 $ 30,647 India 4,109 4,907 Other 476 355 Total $ 40,397 $ 35,909 |
Organization and Description 47
Organization and Description of Business (Details) | 6 Months Ended |
Jun. 30, 2018stateproductitem | |
Number of RIAs | item | 4 |
Number of states with which the broker-dealer is registered | state | 50 |
Envestnet Enterprise | |
Number of investment products | 18,400 |
Envestnet Portfolio Management Consultants (“PMC”) | |
Number of third party managed account products and portfolio. | 4,900 |
Number of proprietary products | 1,700 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||||
Cash and cash equivalents | $ 134,032 | $ 60,115 | $ 27,730 | |
Restricted cash included in prepaid expenses and other current assets | 228 | 2,000 | 2,000 | |
Total cash, cash equivalents and restricted cash | $ 134,260 | $ 62,115 | $ 29,730 | $ 54,592 |
Business Acquisitions (Details)
Business Acquisitions (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 02, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Consideration transferred in acquisition | ||||||
Cash consideration | $ 445 | |||||
Estimated fair values of the assets acquired and liabilities assumed | ||||||
Goodwill | $ 526,955 | $ 526,955 | $ 432,955 | |||
Pro forma financial information | ||||||
Acquired intangible asset amortization | 13,419 | $ 10,371 | 27,354 | 20,956 | ||
Preliminary Estimate | ||||||
Consideration transferred in acquisition | ||||||
Cash consideration | $ 187,580 | |||||
Purchase consideration liability | 12,297 | |||||
Working capital and other adjustments | (3,893) | |||||
Total | 195,984 | |||||
Estimated fair values of the assets acquired and liabilities assumed | ||||||
Cash and cash equivalents | 4,876 | |||||
Accounts receivable | 4,962 | |||||
Prepaid expenses and other current assets | 1,600 | |||||
Property and equipment, net | 927 | |||||
Other non-current assets | 441 | |||||
Identifiable intangible assets | 117,700 | |||||
Goodwill | 97,248 | |||||
Total assets acquired | 227,754 | |||||
Accounts payable | (5,358) | |||||
Accrued expenses | (7,173) | |||||
Deferred tax liability | (18,245) | |||||
Deferred revenue | (930) | |||||
Other non-current liabilities | (64) | |||||
Total liabilities assumed | (31,770) | |||||
Total net assets acquired | 195,984 | |||||
Intangible assets | ||||||
Intangible assets acquired, Amount | 117,700 | |||||
Measurement Period Adjustments | ||||||
Consideration transferred in acquisition | ||||||
Cash consideration | 12,297 | |||||
Purchase consideration liability | (12,297) | |||||
Working capital and other adjustments | (2,500) | |||||
Total | (2,500) | |||||
Estimated fair values of the assets acquired and liabilities assumed | ||||||
Goodwill | (2,624) | (2,624) | ||||
Total assets acquired | (2,624) | (2,624) | ||||
Deferred revenue | 124 | 124 | ||||
Total liabilities assumed | 124 | 124 | ||||
Total net assets acquired | (2,500) | (2,500) | ||||
Customer lists | Preliminary Estimate | ||||||
Intangible assets | ||||||
Intangible assets acquired, Amount | 95,000 | |||||
Customer lists | Measurement Period Adjustments | ||||||
Intangible assets | ||||||
Intangible assets acquired, Amount | 500 | |||||
Proprietary technologies | Preliminary Estimate | ||||||
Intangible assets | ||||||
Intangible assets acquired, Amount | 18,000 | |||||
Proprietary technologies | Measurement Period Adjustments | ||||||
Intangible assets | ||||||
Intangible assets acquired, Amount | (500) | |||||
Trade names and domains | Preliminary Estimate | ||||||
Intangible assets | ||||||
Intangible assets acquired, Amount | $ 4,700 | |||||
FolioDynamix | ||||||
Consideration transferred in acquisition | ||||||
Cash consideration | 199,877 | |||||
Working capital and other adjustments | (6,393) | |||||
Total | 193,484 | |||||
Estimated fair values of the assets acquired and liabilities assumed | ||||||
Cash and cash equivalents | 4,876 | 4,876 | ||||
Accounts receivable | 4,962 | 4,962 | ||||
Prepaid expenses and other current assets | 1,600 | 1,600 | ||||
Property and equipment, net | 927 | 927 | ||||
Other non-current assets | 441 | 441 | ||||
Identifiable intangible assets | 117,700 | 117,700 | ||||
Goodwill | 94,624 | 94,624 | ||||
Total assets acquired | 225,130 | 225,130 | ||||
Accounts payable | (5,358) | (5,358) | ||||
Accrued expenses | (7,173) | (7,173) | ||||
Deferred tax liability | (18,245) | (18,245) | ||||
Deferred revenue | (806) | (806) | ||||
Other non-current liabilities | (64) | (64) | ||||
Total liabilities assumed | (31,646) | (31,646) | ||||
Total net assets acquired | 193,484 | 193,484 | ||||
Intangible assets | ||||||
Intangible assets acquired, Amount | 117,700 | |||||
Pro forma financial information | ||||||
Revenue since acquisition | 17,346 | 34,800 | ||||
Net income (loss) since acquisition | (3,255) | (7,981) | ||||
Acquired intangible asset amortization | 4,390 | 8,701 | ||||
Acquisition related costs | $ 167 | 594 | ||||
Revenues | 177,297 | 344,514 | ||||
Net loss | $ (12,624) | $ (31,873) | ||||
Basic (in dollars per share) | $ (0.29) | $ (0.73) | ||||
Diluted (in dollars per share) | $ (0.29) | $ (0.73) | ||||
FolioDynamix | Customer lists | ||||||
Intangible assets | ||||||
Intangible assets acquired, Amount | 95,500 | |||||
Intangible assets acquired, Useful Life In Years | 12 years | |||||
FolioDynamix | Proprietary technologies | ||||||
Intangible assets | ||||||
Intangible assets acquired, Amount | 17,500 | |||||
Intangible assets acquired, Useful Life In Years | 5 years | |||||
FolioDynamix | Trade names and domains | ||||||
Intangible assets | ||||||
Intangible assets acquired, Amount | $ 4,700 | |||||
Intangible assets acquired, Useful Life In Years | 6 years |
Revenue (ASC 606) (Details)
Revenue (ASC 606) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Jan. 02, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Assets: | ||||
Other non-current assets | $ 23,907 | $ 22,491 | $ 17,176 | |
Liabilities: | ||||
Deferred revenue, current | 25,739 | 20,124 | $ 20,124 | 21,246 |
Deferred revenue, non-current | 7,929 | 9,267 | $ 9,267 | 12,047 |
Equity: | ||||
Accumulated deficit | (62,059) | $ (64,637) | (73,854) | |
Without Adoption of ASC 606 | ||||
Assets: | ||||
Other non-current assets | 18,145 | |||
Liabilities: | ||||
Deferred revenue, current | 26,720 | |||
Deferred revenue, non-current | 10,654 | |||
Equity: | ||||
Accumulated deficit | (71,527) | |||
Effect of Change Higher/(Lower) | ||||
Assets: | ||||
Other non-current assets | 5,762 | 5,315 | ||
Liabilities: | ||||
Deferred revenue, current | 981 | (1,122) | ||
Deferred revenue, non-current | 2,725 | (2,780) | ||
Equity: | ||||
Accumulated deficit | $ 9,468 | $ 9,217 |
Revenue (Adoption) (Details)
Revenue (Adoption) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 02, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Revenues: | |||||||
Total revenues | $ 201,116 | $ 167,417 | $ 399,127 | $ 325,203 | |||
Operating expenses: | |||||||
Cost of revenues | 67,627 | 55,735 | 130,561 | 104,961 | |||
Compensation and benefits | 80,210 | 163,750 | |||||
Total operating expenses | 201,111 | 164,674 | 399,860 | 325,814 | |||
Income (loss) from operations | 5 | 2,743 | (733) | (611) | |||
Net income | (5,991) | (6,470) | 2,011 | (19,605) | |||
Net income (loss) attributable to Envestnet, Inc. | (5,526) | (6,470) | 2,578 | (19,605) | |||
Current assets: | |||||||
Fees receivable, net | 64,164 | 64,164 | $ 51,522 | ||||
Other non-current assets | 23,907 | 23,907 | $ 22,491 | 17,176 | |||
Liabilities: | |||||||
Accounts payable | 21,133 | 21,133 | 11,097 | ||||
Deferred revenue, current | 25,739 | 25,739 | 20,124 | $ 20,124 | 21,246 | ||
Deferred revenue, non-current | 7,929 | 7,929 | 9,267 | $ 9,267 | 12,047 | ||
Equity: | |||||||
Accumulated deficit | (62,059) | (62,059) | $ (64,637) | (73,854) | |||
Asset-based | |||||||
Revenues: | |||||||
Total revenues | 118,111 | 98,959 | 239,264 | 193,121 | |||
Operating expenses: | |||||||
Cost of revenues | 56,748 | 47,015 | 114,320 | 91,500 | |||
Subscription-based | |||||||
Revenues: | |||||||
Total revenues | 71,779 | 59,802 | 141,474 | 117,712 | |||
Operating expenses: | |||||||
Cost of revenues | 6,213 | 5,142 | 11,439 | 9,756 | |||
Recurring | |||||||
Revenues: | |||||||
Total revenues | 189,890 | 158,761 | 380,738 | 310,833 | |||
Professional services and other revenues | |||||||
Revenues: | |||||||
Total revenues | 11,226 | 8,656 | 18,389 | 14,370 | |||
Operating expenses: | |||||||
Cost of revenues | 4,666 | $ 3,578 | 4,802 | $ 3,705 | |||
Without Adoption of ASC 606 | |||||||
Revenues: | |||||||
Total revenues | 204,810 | 406,458 | |||||
Operating expenses: | |||||||
Cost of revenues | 71,162 | 137,696 | |||||
Compensation and benefits | 80,530 | 164,197 | |||||
Total operating expenses | 204,966 | 407,442 | |||||
Income (loss) from operations | (156) | (984) | |||||
Net income | (6,152) | 1,760 | |||||
Net income (loss) attributable to Envestnet, Inc. | (5,687) | 2,327 | |||||
Current assets: | |||||||
Fees receivable, net | 63,218 | 63,218 | |||||
Other non-current assets | 18,145 | 18,145 | |||||
Liabilities: | |||||||
Accounts payable | 20,187 | 20,187 | |||||
Deferred revenue, current | 26,720 | 26,720 | |||||
Deferred revenue, non-current | 10,654 | 10,654 | |||||
Equity: | |||||||
Accumulated deficit | (71,527) | (71,527) | |||||
Without Adoption of ASC 606 | Asset-based | |||||||
Revenues: | |||||||
Total revenues | 121,646 | 246,399 | |||||
Without Adoption of ASC 606 | Subscription-based | |||||||
Revenues: | |||||||
Total revenues | 71,779 | 141,474 | |||||
Without Adoption of ASC 606 | Recurring | |||||||
Revenues: | |||||||
Total revenues | 193,425 | 387,873 | |||||
Without Adoption of ASC 606 | Professional services and other revenues | |||||||
Revenues: | |||||||
Total revenues | 11,385 | 18,585 | |||||
Effect of Change Higher/(Lower) | |||||||
Revenues: | |||||||
Total revenues | (3,694) | (7,331) | |||||
Operating expenses: | |||||||
Cost of revenues | 3,535 | (7,135) | |||||
Compensation and benefits | (320) | (447) | |||||
Total operating expenses | (3,855) | (7,582) | |||||
Income (loss) from operations | 161 | 251 | |||||
Net income | 161 | 251 | |||||
Net income (loss) attributable to Envestnet, Inc. | 161 | 251 | |||||
Current assets: | |||||||
Fees receivable, net | 946 | 946 | |||||
Other non-current assets | 5,762 | 5,762 | 5,315 | ||||
Liabilities: | |||||||
Accounts payable | 946 | 946 | |||||
Deferred revenue, current | 981 | 981 | (1,122) | ||||
Deferred revenue, non-current | 2,725 | 2,725 | (2,780) | ||||
Equity: | |||||||
Accumulated deficit | 9,468 | 9,468 | $ 9,217 | ||||
Effect of Change Higher/(Lower) | Asset-based | |||||||
Revenues: | |||||||
Total revenues | (3,535) | (7,135) | |||||
Effect of Change Higher/(Lower) | Recurring | |||||||
Revenues: | |||||||
Total revenues | (3,535) | (7,135) | |||||
Effect of Change Higher/(Lower) | Professional services and other revenues | |||||||
Revenues: | |||||||
Total revenues | $ (159) | $ (196) |
Revenue (Disaggregation) (Detai
Revenue (Disaggregation) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Total revenues | $ 201,116 | $ 167,417 | $ 399,127 | $ 325,203 |
United States | ||||
Revenues: | ||||
Total revenues | 193,237 | 151,621 | 381,552 | 293,583 |
International | ||||
Revenues: | ||||
Total revenues | 7,879 | 15,796 | 17,575 | 31,620 |
Asset-based | ||||
Revenues: | ||||
Total revenues | 118,111 | 98,959 | 239,264 | 193,121 |
Subscription-based | ||||
Revenues: | ||||
Total revenues | 71,779 | 59,802 | 141,474 | 117,712 |
Recurring | ||||
Revenues: | ||||
Total revenues | 189,890 | 158,761 | 380,738 | 310,833 |
Professional services and other revenues | ||||
Revenues: | ||||
Total revenues | 11,226 | 8,656 | 18,389 | 14,370 |
Envestnet | ||||
Revenues: | ||||
Total revenues | 156,928 | 129,372 | 312,916 | 250,690 |
Envestnet | Asset-based | ||||
Revenues: | ||||
Total revenues | 118,111 | 98,959 | 239,264 | 193,121 |
Envestnet | Subscription-based | ||||
Revenues: | ||||
Total revenues | 33,023 | 25,471 | 65,608 | 50,708 |
Envestnet | Recurring | ||||
Revenues: | ||||
Total revenues | 151,134 | 124,430 | 304,872 | 243,829 |
Envestnet | Professional services and other revenues | ||||
Revenues: | ||||
Total revenues | 5,794 | 4,942 | 8,044 | 6,861 |
Envestnet | Yodlee | ||||
Revenues: | ||||
Total revenues | 44,188 | 38,045 | 86,211 | 74,513 |
Envestnet | Yodlee | Subscription-based | ||||
Revenues: | ||||
Total revenues | 38,756 | 34,331 | 75,866 | 67,004 |
Envestnet | Yodlee | Recurring | ||||
Revenues: | ||||
Total revenues | 38,756 | 34,331 | 75,866 | 67,004 |
Envestnet | Yodlee | Professional services and other revenues | ||||
Revenues: | ||||
Total revenues | $ 5,432 | $ 3,714 | $ 10,345 | $ 7,509 |
Revenue (Obligation) (Details)
Revenue (Obligation) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Revenue | |
Total | $ 511,163 |
Unsatisfied performance obligations | true |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-07-01 | |
Revenue | |
Total | $ 105,353 |
Remaining Performance Obligations | |
Revenue recognition period | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue | |
Total | $ 164,482 |
Remaining Performance Obligations | |
Revenue recognition period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue | |
Total | $ 92,639 |
Remaining Performance Obligations | |
Revenue recognition period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue | |
Total | $ 53,793 |
Remaining Performance Obligations | |
Revenue recognition period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue | |
Total | $ 54,122 |
Remaining Performance Obligations | |
Revenue recognition period | 1 year |
Revenue (Recognized Deferred) (
Revenue (Recognized Deferred) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 02, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Deferred revenue | ||||||
Receivables, balance | $ 64,164 | $ 64,164 | $ 51,522 | |||
Increase/(decrease), net | 8,204 | $ 5,639 | ||||
Deferred revenue, current, balance | 25,739 | 25,739 | $ 20,124 | $ 20,124 | 21,246 | |
Deferred revenue, current, increase/(decrease), net | 5,615 | |||||
Deferred revenue, non-current, balance | 7,929 | 7,929 | $ 9,267 | 9,267 | $ 12,047 | |
Deferred revenue non-current, increase/(decrease), net | (1,338) | |||||
Recognized deferred revenue | 5,737 | 13,253 | ||||
Fees receivable, net | ||||||
Deferred revenue | ||||||
Receivables, balance | 47,782 | 47,782 | 36,605 | |||
Increase/(decrease), net | 11,177 | |||||
Unbilled receivables, balance | $ 16,382 | 16,382 | $ 13,229 | |||
Unbilled receivables, increase/(decrease), net | $ 3,153 |
Revenue (Capitalized) (Details)
Revenue (Capitalized) (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) | |
Revenue | ||
Amortization period of deferred sales incentive compensation | 5 years | |
Deferred sales incentive compensation | $ 5,762 | $ 5,762 |
Amortization expense for the deferred sales incentive compensation | $ 536 | 1,018 |
Impairment loss for capitalized costs | $ 0 | |
Revenue, practical expedient, incremental cost of obtaining contract | true |
Revenue (Major Customers) (Deta
Revenue (Major Customers) (Details) - customer | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Major Customers | ||||
Revenue as a percentage of the company's total | 21.00% | 20.00% | 21.00% | 20.00% |
Revenues | Customer concentration risk | Fidelity | ||||
Major Customers | ||||
Number of customers accounted for as major customer | 1 | 1 | 1 | 1 |
Revenue as a percentage of the company's total | 16.00% | 16.00% | 16.00% | 16.00% |
Cost of Revenues (Details)
Cost of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Cost of Revenue | $ 67,627 | $ 55,735 | $ 130,561 | $ 104,961 |
Asset-based | ||||
Cost of Revenue | 56,748 | 47,015 | 114,320 | 91,500 |
Subscription-based | ||||
Cost of Revenue | 6,213 | 5,142 | 11,439 | 9,756 |
Professional services and other revenues | ||||
Cost of Revenue | $ 4,666 | $ 3,578 | $ 4,802 | $ 3,705 |
Prepaid Expenses and Other Cu58
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Prepaid Expenses and Other Current Assets | |||
Prepaid technology | $ 7,293 | $ 1,843 | |
Non-income tax receivable | 3,332 | 2,704 | |
Prepaid outside information services | 1,556 | 1,395 | |
Prepaid insurance | 1,355 | 575 | |
Service tax receivable | 1,277 | 1,507 | |
Prepaid rent | 856 | 959 | |
Restricted cash | 228 | 2,000 | $ 2,000 |
Income tax receivable | 1,684 | ||
Other | 6,824 | 6,803 | |
Total prepaid expenses and other current assets | $ 22,721 | $ 19,470 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Property and equipment, cost: | |||||
Property and equipment, gross | $ 99,546 | $ 99,546 | $ 89,546 | ||
Less: accumulated depreciation and amortization | (59,149) | (59,149) | (53,637) | ||
Property and equipment, net | 40,397 | 40,397 | 35,909 | ||
Depreciation and amortization expense | 3,920 | $ 3,853 | $ 7,838 | $ 7,944 | |
Envestnet | |||||
Property and equipment, cost: | |||||
Cost written off | 1,126 | ||||
Envestnet | Yodlee | |||||
Property and equipment, cost: | |||||
Cost written off | 2,525 | ||||
Computer equipment and software | |||||
Property and equipment, cost: | |||||
Estimated Useful Life | 3 years | ||||
Property and equipment, gross | 60,525 | $ 60,525 | 56,192 | ||
Cost written off | 3,651 | 6,738 | |||
Computer equipment and software | Envestnet | |||||
Property and equipment, cost: | |||||
Cost written off | 3,337 | ||||
Computer equipment and software | Envestnet | Yodlee | |||||
Property and equipment, cost: | |||||
Cost written off | 3,401 | ||||
Leasehold improvements | |||||
Property and equipment, cost: | |||||
Property and equipment, gross | 25,448 | 25,448 | 23,192 | ||
Office furniture and fixtures | |||||
Property and equipment, cost: | |||||
Property and equipment, gross | 8,498 | $ 8,498 | 8,110 | ||
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 | $ 5,075 | $ 5,075 | $ 2,052 | ||
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 Software60
Internally Developed Software, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Internally developed software | $ 56,964 | $ 56,964 | $ 46,342 | ||
Less accumulated amortization | (27,707) | (27,707) | (24,168) | ||
Internally developed software, net | 29,257 | 29,257 | $ 22,174 | ||
Amortization expense | $ 1,846 | $ 1,241 | $ 3,539 | $ 2,400 | |
Internally developed software | |||||
Estimated Useful Life | 5 years |
Goodwill & Intangible Assets, N
Goodwill & Intangible Assets, Net (Assets) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Changes in the carrying amount of the Company's goodwill | |||||
Balance | $ 432,955 | ||||
Foreign currency translation | (624) | ||||
Balance | $ 526,955 | 526,955 | |||
Gross Carrying Amount | 470,933 | 470,933 | $ 352,567 | ||
Accumulated Amortization | (157,190) | (157,190) | (129,836) | ||
Net Carrying Amount | 313,743 | 313,743 | 222,731 | ||
Amortization expense | 13,419 | $ 10,371 | 27,354 | $ 20,956 | |
Customer lists | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Gross Carrying Amount | 354,850 | 354,850 | 259,350 | ||
Accumulated Amortization | (96,095) | (96,095) | (78,482) | ||
Net Carrying Amount | 258,755 | $ 258,755 | 180,868 | ||
Customer lists | Minimum | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Estimated Useful Life | 7 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 | 75,543 | $ 75,543 | 57,377 | ||
Accumulated Amortization | (38,411) | (38,411) | (31,067) | ||
Net Carrying Amount | 37,132 | $ 37,132 | 26,310 | ||
Proprietary technologies | Minimum | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Estimated Useful Life | 4 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 | 29,540 | $ 29,540 | 24,840 | ||
Accumulated Amortization | (11,923) | (11,923) | (9,701) | ||
Net Carrying Amount | 17,617 | $ 17,617 | 15,139 | ||
Trade names and domains | Minimum | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Estimated Useful Life | 1 year | ||||
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 | |||||
Gross Carrying Amount | 11,000 | $ 11,000 | 11,000 | ||
Accumulated Amortization | (10,761) | (10,761) | (10,586) | ||
Net Carrying Amount | 239 | $ 239 | $ 414 | ||
Backlog | Maximum | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Estimated Useful Life | 4 years | ||||
FolioDynamix | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Acquisition | $ 94,624 | ||||
Balance | 94,624 | 94,624 | |||
Amortization expense | 4,390 | 8,701 | |||
Envestnet | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Balance | 163,751 | ||||
Balance | 258,375 | 258,375 | |||
Envestnet | FolioDynamix | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Acquisition | 94,624 | ||||
Envestnet | Yodlee | |||||
Changes in the carrying amount of the Company's goodwill | |||||
Balance | 269,204 | ||||
Foreign currency translation | (624) | ||||
Balance | $ 268,580 | $ 268,580 |
Goodwill and Intangible Asset62
Goodwill and Intangible Assets, Net (Future Expense) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Future amortization expense of the intangible assets | ||
Remainder of 2018 | $ 26,051 | |
2,019 | 47,690 | |
2,020 | 43,548 | |
2,021 | 34,762 | |
2,022 | 32,168 | |
Thereafter | 129,524 | |
Total | $ 313,743 | $ 222,731 |
Other Non-Current Assets (Detai
Other Non-Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Jan. 02, 2018 | Dec. 31, 2017 |
Other Non-Current Assets. | |||
Assets to fund deferred compensation liability | $ 6,729 | $ 5,185 | |
Deposits: | |||
Lease | 4,086 | 4,291 | |
Other | 248 | 615 | |
Deferred sales incentive compensation | 5,762 | ||
Unamortized issuance costs on revolving credit facility | 2,679 | 3,106 | |
Investments in private companies | 1,920 | 2,731 | |
Other | 2,483 | 1,248 | |
Total other non-current assets | $ 23,907 | $ 22,491 | $ 17,176 |
Accrued Expenses and Other Li64
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Components of accrued expenses | ||
Accrued investment manager fees | $ 44,154 | $ 39,324 |
Accrued compensation and related taxes | 38,597 | 43,724 |
Sales and use tax payable | 9,408 | 9,037 |
Accrued professional services | 4,432 | 4,985 |
Accrued interest | 864 | |
Definite consideration | 1,250 | |
Other accrued expenses | 12,082 | 7,577 |
Total accrued expenses | $ 109,537 | $ 105,897 |
Debt (Summary) (Details)
Debt (Summary) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 15, 2014 |
Outstanding debt obligations | |||
Unamortized issuance costs on Convertible Notes | $ (2,679) | $ (3,106) | |
Revolving credit facility balance | 81,168 | ||
Convertible Notes due 2019 | |||
Outstanding debt obligations | |||
Face amount | 172,500 | 172,500 | $ 172,500 |
Unaccreted discount on Convertible Notes | (8,832) | (11,677) | |
Unamortized issuance costs on Convertible Notes | (1,369) | (1,833) | |
Convertible Notes carrying value | 162,299 | 158,990 | |
Convertible Notes due 2023 | |||
Outstanding debt obligations | |||
Face amount | 345,000 | ||
Unaccreted discount on Convertible Notes | (47,016) | ||
Unamortized issuance costs on Convertible Notes | (8,422) | ||
Convertible Notes carrying value | $ 289,562 | ||
Credit Agreement | |||
Outstanding debt obligations | |||
Revolving credit facility balance | $ 81,168 |
Debt (Interest) (Details)
Debt (Interest) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Interest expense on convertible debt | ||||
Total interest expense | $ 5,630 | $ 4,853 | ||
Convertible Notes, Credit and Amended and Restated Credit Agreements | ||||
Interest expense on convertible debt | ||||
Interest on revolving credit facility | $ 1,429 | $ 1,110 | 3,994 | 2,455 |
Accretion of debt discount | 2,411 | 1,344 | 3,829 | 2,681 |
Coupon interest | 1,366 | 754 | 2,121 | 1,509 |
Amortization of issuance costs | 621 | 616 | 1,071 | 2,046 |
Undrawn and other fees | 165 | 53 | 213 | 122 |
Total interest expense | $ 5,992 | $ 3,877 | $ 11,228 | $ 8,813 |
Debt (Credit Agreement) (Detail
Debt (Credit Agreement) (Details) - Second Amended and Restated Credit Agreement - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jul. 31, 2017 | |
Debt | ||
Credit facility amount | $ 350,000 | |
Right to increase credit facility, amount | $ 50,000 | |
Minimum | LIBOR | ||
Debt | ||
Spread on variable rate basis (as a percent) | 1.50% | |
Maximum | LIBOR | ||
Debt | ||
Spread on variable rate basis (as a percent) | 3.25% |
Debt (Convertible) (Details)
Debt (Convertible) (Details) $ / shares in Units, $ in Thousands | May 25, 2018USD ($)D$ / shares | Dec. 15, 2014USD ($)$ / shares | Jun. 30, 2018$ / shares | Dec. 31, 2017$ / shares | Jun. 30, 2017 |
Convertible Notes due 2019 | |||||
Debt | |||||
Face amount and over allotments | $ | $ 172,500 | ||||
Interest rate (as a percent) | 1.75% | ||||
Repurchase percentage of principal (as a percent) | 100.00% | ||||
Conversion rate | 15.9022 | ||||
Principal amount | $ 1 | ||||
Conversion price (in dollars per share) | $ 62.88 | $ 62.88 | $ 68.31 | ||
Effective interest rate (as a percent) | 6.00% | 6.00% | |||
Convertible notes due 2023 | |||||
Debt | |||||
Face amount and over allotments | $ | $ 345,000 | ||||
Interest rate (as a percent) | 1.75% | ||||
Repurchase percentage of principal (as a percent) | 100.00% | ||||
Conversion rate | 14.6381 | ||||
Principal amount | $ 1 | ||||
Conversion price (in dollars per share) | $ 68.31 | ||||
Threshold percentage of stock price trigger (as a percent) | 130.00% | ||||
Threshold trading days (in days) | D | 20 | ||||
Consecutive trading days | D | 30 | ||||
Preceding Days | D | 5 | ||||
Effective interest rate (as a percent) | 6.00% |
Other Non-Current Liabilities69
Other Non-Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Other Non-Current Liabilities | ||
Uncertain tax positions | $ 10,827 | $ 10,640 |
Deferred compensation liability | 5,852 | 4,364 |
Other | 65 | 98 |
Other non-current liabilities | $ 16,744 | $ 15,102 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | May 25, 2018 | Dec. 31, 2017 | Dec. 15, 2014 |
Level 1 | Recurring Basis | ||||
Assets | ||||
Total Assets | $ 106,038 | $ 39,400 | ||
Liabilities | ||||
Total liabilities | 5,852 | 4,364 | ||
Level 1 | Recurring Basis | Deferred compensation liability | ||||
Liabilities | ||||
Total liabilities | 5,852 | 4,364 | ||
Level 1 | Recurring Basis | Money market funds and other | ||||
Assets | ||||
Total Assets | 106,038 | 39,400 | ||
Level 3 | Recurring Basis | ||||
Assets | ||||
Total Assets | 6,729 | 5,185 | ||
Liabilities | ||||
Total liabilities | 707 | 2,781 | ||
Level 3 | Recurring Basis | Contingent consideration | ||||
Liabilities | ||||
Total liabilities | 707 | 2,781 | ||
Level 3 | Recurring Basis | Asset to fund deferred compensation liability | ||||
Assets | ||||
Total Assets | 6,729 | 5,185 | ||
Fair Value | Recurring Basis | ||||
Assets | ||||
Total Assets | 112,767 | 44,585 | ||
Liabilities | ||||
Total liabilities | 6,559 | 7,145 | ||
Fair Value | Recurring Basis | Contingent consideration | ||||
Liabilities | ||||
Total liabilities | 707 | 2,781 | ||
Fair Value | Recurring Basis | Deferred compensation liability | ||||
Liabilities | ||||
Total liabilities | 5,852 | 4,364 | ||
Fair Value | Recurring Basis | Money market funds and other | ||||
Assets | ||||
Total Assets | 106,038 | 39,400 | ||
Fair Value | Recurring Basis | Asset to fund deferred compensation liability | ||||
Assets | ||||
Total Assets | 6,729 | 5,185 | ||
Convertible Notes due 2019 | ||||
Fair Value Measurements | ||||
Face amount | 172,500 | 172,500 | $ 172,500 | |
Convertible Debt, Noncurrent | 162,299 | 158,990 | ||
2019 Convertible Notes | ||||
Liabilities | ||||
Total liabilities | 182,333 | 180,180 | ||
2019 Convertible Notes | Carrying Value | ||||
Fair Value Measurements | ||||
Convertible Debt, Noncurrent | 162,299 | 158,990 | ||
2023 Convertible Notes | ||||
Fair Value Measurements | ||||
Face amount | $ 345,000 | |||
2023 Convertible Notes | Carrying Value | ||||
Fair Value Measurements | ||||
Convertible Debt, Noncurrent | 289,562 | |||
Liabilities | ||||
Total liabilities | 356,923 | |||
Revolving credit facility | ||||
Liabilities | ||||
Total liabilities | $ 0 | $ 81,168 |
Fair Value Measurements (Level
Fair Value Measurements (Level III) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Changes in the fair value of Contingent Consideration Liabilities | |
Fair value asset transfers between Levels 1, 2 and 3 | $ 0 |
Recurring Basis | |
Reconciliation of assets to fund deferred compensation liability | |
Balance | 5,185 |
Contributions and fair value adjustments | 1,544 |
Balance | 6,729 |
Changes in the fair value of Contingent Consideration Liabilities | |
Balance | 2,781 |
Payment of contingent consideration liability | (2,193) |
Accretion on contingent consideration | 119 |
Balance | $ 707 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018shares | Mar. 31, 2018shares | Jun. 30, 2018trancheshares | |
Stock-Based compensation | |||
Maximum number of shares available for future issuance | 3,091,345 | 3,091,345 | |
Unvested restricted stock units and awards | |||
Stock-Based compensation | |||
Number of shares vested | 253,279 | 503,668 | |
Performance-based restricted stock unit awards | |||
Stock-Based compensation | |||
Number of shares vested | 26,000 | ||
Threshold percentage of metrics to be achieved | 100.00% | ||
Number of annual tranches | tranche | 3 | ||
Performance-based restricted stock unit awards | Minimum | |||
Stock-Based compensation | |||
Number of shares to vest upon each evaluation date (as a percent) | 50.00% | 50.00% | |
Performance-based restricted stock unit awards | Maximum | |||
Stock-Based compensation | |||
Number of shares to vest upon each evaluation date (as a percent) | 150.00% | 150.00% |
Stock-Based Compensation (Expen
Stock-Based Compensation (Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Summary of employee stock-based compensation expense | ||||
Stock-based compensation expense | $ 10,476 | $ 7,945 | $ 18,971 | $ 15,403 |
Tax effect on stock-based compensation expense | (2,650) | (2,983) | (4,800) | (5,784) |
Net effect on income | $ 7,826 | $ 4,962 | $ 14,171 | $ 9,619 |
Statutory rate (as a percent) | 25.30% | 37.50% | 25.30% | 37.50% |
Tax effect on stock-based compensation expense after valuation allowance | $ 0 | $ 0 |
Stock-Based Compensation (Assum
Stock-Based Compensation (Assumptions) (Details) | 6 Months Ended |
Jun. 30, 2017$ / shares | |
Summary of weighted average assumptions used to value options granted | |
Grant date fair value of options (in dollars per share) | $ 14.51 |
Volatility (as a percent) | 43.80% |
Risk-free interest rate (as a percent) | 2.10% |
Expected term (in years) | 6 years 3 months 18 days |
Stock-Based Compensation (Optio
Stock-Based Compensation (Options) (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Options | ||||
Outstanding at the beginning of the period (in shares) | 2,090,040 | 2,254,565 | 2,254,565 | |
Exercised (in shares) | (12,166) | (162,857) | ||
Forfeited (in shares) | (1,668) | |||
Outstanding at the end of the period (in shares) | 2,077,874 | 2,090,040 | 2,077,874 | 2,254,565 |
Options exercisable (in shares) | 1,975,716 | 1,975,716 | ||
Weighted-Average Exercise Price | ||||
Outstanding at the beginning of the period (in dollars per share) | $ 19.57 | $ 19.23 | $ 19.23 | |
Exercised (in dollars per share) | 11.42 | 14.76 | ||
Forfeited (in dollars per share) | 32.46 | |||
Outstanding at the end of the period (in dollars per share) | 19.62 | $ 19.57 | 19.62 | $ 19.23 |
Options exercisable (in dollars per share) | $ 19.17 | $ 19.17 | ||
Weighted-Average Remaining Contractual Life | ||||
Outstanding | 3 years 10 months 24 days | 4 years 1 month 6 days | 4 years 3 months 18 days | |
Options exercisable | 3 years 7 months 6 days | |||
Aggregate Intrinsic Value | ||||
Outstanding (in dollars) | $ 73,421 | $ 78,859 | $ 73,421 | $ 69,939 |
Options exercisable (in dollars) | 70,703 | 70,703 | ||
Additional disclosures | ||||
Unrecognized stock-based compensation expense related to unvested stock options | $ 1,197 | $ 1,197 | ||
Unrecognized compensation expense weighted-average recognition period | 1 year 4 months 24 days | |||
Minimum | ||||
Additional disclosures | ||||
Exercise prices of stock options outstanding (in dollars per share) | $ 7.15 | $ 7.15 | ||
Maximum | ||||
Additional disclosures | ||||
Exercise prices of stock options outstanding (in dollars per share) | $ 55.29 | $ 55.29 |
Stock-Based Compensation (Restr
Stock-Based Compensation (Restricted Stock) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | |
Unvested restricted stock units and awards | |||
Number of Shares | |||
Balance at the beginning of the period (in shares) | 2,161,347 | 1,766,639 | 1,766,639 |
Granted (in shares) | 925,641 | ||
Vested (in shares) | (253,279) | (503,668) | |
Forfeited (in shares) | (27,324) | (27,265) | |
Balance at the end of the period (in shares) | 1,880,744 | 2,161,347 | 1,880,744 |
Weighted-Average Grant Date Fair Value per Share | |||
Balance at the beginning of the period (in dollars per share) | $ 41.59 | $ 32.48 | $ 32.48 |
Granted (in dollars per share) | 55.21 | ||
Vested (in dollars per share) | 31.13 | 34.05 | |
Forfeited (in dollars per share) | 39.78 | 30.79 | |
Balance at the end of the period (in dollars per share) | $ 43.36 | $ 41.59 | $ 43.36 |
Additional disclosures | |||
Unrecognized compensation expense related to shares | $ 73,482 | $ 73,482 | |
Unrecognized compensation expense weighted-average recognition period | 2 years 2 months 12 days | ||
Stock options | |||
Additional disclosures | |||
Unrecognized compensation expense weighted-average recognition period | 1 year 4 months 24 days | ||
Performance-based restricted stock unit awards | |||
Number of Shares | |||
Vested (in shares) | (26,000) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income tax provision and the effective tax rate | ||||
Loss before income tax provision (benefit) | $ (5,425) | $ (1,626) | $ (11,417) | $ (10,463) |
Income tax provision (benefit) | $ 566 | $ 4,844 | $ (13,428) | $ 9,142 |
Effective tax rate (as a percent) | (10.40%) | (297.90%) | 117.60% | (87.40%) |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Income Taxes | ||
Gross unrecognized tax benefits | $ 18,895 | $ 18,312 |
Unrecognized tax benefits, exclusive of interest and penalties, recorded as a non-current liability | 4,871 | 4,626 |
Unrecognized tax benefits that would impact effective tax rate, if recognized | 10,827 | |
Potential interest and penalties related to unrecognized tax benefits included in income tax expense | 548 | 890 |
Accrued interest and penalties on unrecognized tax benefits | $ 6,566 | $ 6,018 |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 15, 2014 | |
Items included in the computation of diluted loss per share | 0 | 0 | 0 | 0 | ||
Basic income (loss) per share calculation: | ||||||
Net income (loss) attributable to Envestnet, Inc. | $ (5,526) | $ (6,470) | $ 2,578 | $ (19,605) | ||
Basic number of weighted-average shares outstanding | 45,247,331 | 43,855,479 | 44,963,735 | 43,513,074 | ||
Basic net income (loss) per share (in dollars per share) | $ (0.12) | $ (0.15) | $ 0.06 | $ (0.45) | ||
Diluted income (loss) per share calculation: | ||||||
Net income (loss) attributable to Envestnet, Inc. | $ (5,526) | $ (6,470) | $ 2,578 | $ (19,605) | ||
Effect of dilutive shares: | ||||||
Options to purchase common stock (in shares) | 1,360,300 | |||||
Unvested restricted stock units (in shares) | 832,170 | |||||
Diluted number of weighted-average shares outstanding | 45,247,331 | 43,855,479 | 47,156,205 | 43,513,074 | ||
Diluted net income (loss) per share (in dollars per share) | $ (0.12) | $ (0.15) | $ 0.05 | $ (0.45) | ||
Convertible Notes due 2019 | ||||||
Conversion price (in dollars per share) | $ 62.88 | $ 62.88 | $ 68.31 | $ 62.88 |
Net Income (Loss) Per Share (80
Net Income (Loss) Per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
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 loss per share (in shares) | 11,752,444 | 7,571,639 | 7,802,871 | 7,571,639 |
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 loss per share (in shares) | 2,077,874 | 2,804,420 | 9,045 | 2,804,420 |
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 loss per share (in shares) | 1,880,744 | 2,023,898 | 2,023,898 | |
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 loss per share (in shares) | 7,793,826 | 2,743,321 | 7,793,826 | 2,743,321 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018USD ($)item | Dec. 31, 2017USD ($) | |
Number of previous claims experienced | item | 0 | |
Future minimum unconditional purchase obligations | ||
Sales and use tax receivable | $ 3,332 | $ 2,704 |
Prepaid expense and other current assets | ||
Future minimum unconditional purchase obligations | ||
Sales and use tax receivable | 3,413 | |
Net sales and use tax liability | 5,830 | |
Accounts Payable and Accrued Liabilities | ||
Future minimum unconditional purchase obligations | ||
Sales and use tax liability | $ 9,234 |
Commitments and Contingencies82
Commitments and Contingencies (Leases) (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Future annual minimum lease commitments under operating leases | |
Operating leases, future minimum commitments | $ 105,124 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)customer | Jun. 30, 2017USD ($)customer | Jun. 30, 2018USD ($)customer | Jun. 30, 2017USD ($)customer | Dec. 31, 2017USD ($) | |
Segment Information | |||||
Consolidated revenue | $ 201,116 | $ 167,417 | $ 399,127 | $ 325,203 | |
Fidelity revenue as a percentage of Envestnet segment revenue | 21.00% | 20.00% | 21.00% | 20.00% | |
Income (loss) from operations | $ 5 | $ 2,743 | $ (733) | $ (611) | |
Operating expenses | (201,111) | (164,674) | (399,860) | (325,814) | |
Other expense, net | (5,430) | (4,369) | (10,684) | (9,852) | |
Loss before income tax provision (benefit) | (5,425) | (1,626) | (11,417) | (10,463) | |
Income tax provision (benefit) | 566 | 4,844 | (13,428) | 9,142 | |
Net income (loss) | (5,991) | (6,470) | 2,011 | (19,605) | |
Add: Net loss attributable to non-controlling interest | 465 | 567 | |||
Net income (loss) attributable to Envestnet, Inc. | (5,526) | (6,470) | 2,578 | (19,605) | |
Assets | 1,155,176 | 1,155,176 | $ 862,052 | ||
Depreciation and amortization | 19,185 | 15,465 | 38,731 | 31,300 | |
Capital expenditures | 10,604 | 8,734 | 20,191 | 14,832 | |
Operating Segments | |||||
Segment Information | |||||
Income (loss) from operations | 13,063 | 10,176 | 24,515 | 15,979 | |
Segment Reconciling | |||||
Segment Information | |||||
Operating expenses | (13,058) | (7,433) | (25,248) | (16,590) | |
Envestnet | |||||
Segment Information | |||||
Consolidated revenue | 156,928 | 129,372 | 312,916 | 250,690 | |
Assets | 650,363 | 650,363 | 353,048 | ||
Depreciation and amortization | 11,026 | 6,361 | 22,499 | 12,782 | |
Capital expenditures | 8,344 | 7,580 | 16,536 | 12,931 | |
Envestnet | Operating Segments | |||||
Segment Information | |||||
Income (loss) from operations | 16,359 | 15,811 | 32,220 | 29,322 | |
Envestnet | Yodlee | |||||
Segment Information | |||||
Consolidated revenue | 44,188 | 38,045 | 86,211 | 74,513 | |
Assets | 504,813 | 504,813 | $ 509,004 | ||
Depreciation and amortization | 8,159 | 9,104 | 16,232 | 18,518 | |
Capital expenditures | 2,260 | 1,154 | 3,655 | 1,901 | |
Envestnet | Yodlee | Operating Segments | |||||
Segment Information | |||||
Income (loss) from operations | $ (3,296) | $ (5,635) | $ (7,705) | $ (13,343) | |
Revenues | Customer concentration risk | Fidelity | |||||
Segment Information | |||||
Number of customers accounted for as major customer | customer | 1 | 1 | 1 | 1 | |
Fidelity revenue as a percentage of Envestnet segment revenue | 16.00% | 16.00% | 16.00% | 16.00% |
Geographical Information (Detai
Geographical Information (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Geographical Information | ||
Property, Plant and Equipment, Net | $ 40,397 | $ 35,909 |
United States | ||
Geographical Information | ||
Property, Plant and Equipment, Net | 35,812 | 30,647 |
India | ||
Geographical Information | ||
Property, Plant and Equipment, Net | 4,109 | 4,907 |
Other | ||
Geographical Information | ||
Property, Plant and Equipment, Net | $ 476 | $ 355 |