ENV - Earnings call transcript Q2 2020

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Operator

Greetings, and welcome to the Envestnet Second Quarter 2020 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to your host, Mr. Chris Curtis, Division CFO and Head of Investor Relations. Please go ahead, sir.

Chris Curtis

Thank you. afternoon. Good by Crager; today D'Arrigo. CFO, CEO, our joined and Bill Pete I'm

section. earnings and envestnet.com found Relations information release, under Form Investor Our supplemental be associated press X-K can the at

certain During forward-looking guarantees the future therefore, reliance put and should performance, will on call, be them. of information. comments are we Such not not undue you discussing

factors business We be discussing information to required and release press for to also information. certain more refer non-GAAP our call will With will SEC forward-looking to on associated disclosures related risk that, statements, our Bill. and turn non-GAAP information. with over filings financial Please the I

Bill Crager

ones of Thank on help been their much challenging uncertainty this all you, Envestnet, everybody so for with time. well-being. joining health economy, At speak around us their the us. days period with them regarding these our is society, concerned Christopher. about be have millions as families loved good our about worried ever so of of I many to to financial to more than you this busy clients afternoon. have families our Thank we navigate and incredibly us know It depended continue

vision be able it provider to wellness of on our behalf and been incredibly North very of new resilience our Somehow, commitment a their of after vision. been services of We've for and despite time in financial extraordinary and on Envestnet's and been demands successful this to feels our working like amazing adapt and usual, executing new our strategic deliver unusual expanded delivering months proud is of way, is able roadmap. securing the I'm performance business America. relationships, We've solutions in these circumstances. to also solid to the financial clients. and in leading clear: long-term team

our data both such in efforts, partners we on stage in we is a effectively network expanding can and cloud-based they consumers their enable important. leveraging for these doing addressable standard end-to-end that opportunity the recreate infrastructure on It the reliance wellness platform offer driving we for advice is for with accelerating. in are for advisers, are personal in how where been firms, we solutions distribution that new ecosystem it. are essential interact works will we fully increasingly and clients importantly, to deploying consumers. of also and of engaged digital working the financial deploy the is And can digital that have use of our and number take here app set it. become financial ahead A as create an traditionally advantage solutions Envestnet's APIs, of we What deliver platform and evolving to meets configurable sized Given today, capitalize we is model opportunities through solutions. that are what pieces. friction-free what and accelerated headed. Through and our do emerging, to environment, smaller digital we our By will modernization the future. we investing substantial, emerging advice be The market they've clients in the us ways and expectations of with which see delivered Demand is will the initiative

that acquire success. it we as will will enable We sense we customers' and the build, when our partner to, capabilities integrate makes best

see engine engagement oversee and the our been using supported our bit. in roadmap. a provide against the better the in their of Envestnet more platform. is by levers steps continue wealth is we the our business We've very advisers with making XX exceeded execute clients. $X.X even our than and in of Highlighting for for beginning me and accounts this little expanded by that. clients trillion we that, the we progress everything accounts for everything platform. improved. results value land quarter recommendation our steps These financial and wealth our more investments, tested our the has the successful many all let examples solutions the they XX mainly year we of years, integrated foundation details demonstrate one-scale of prescribes financial first, more on and we're business, can With to Today, on first will value world. provide and integrated the provide solutions. expectations, the we're the credit our remainder focus ways In growth. existing XXX,XXX that our second are an This has Data has our for But advice and some informs assets do Ultimately, we outlook have which with part to Pete financial Our other services of across solutions to us expand advisers data-driven plan. technology. adviser clients been as act to more in want a digital Those part virtual includes than investment. how take. financial by advisers in tangible have we doing our wellness of A But immediately, adding advisers important worked elements, served insurance, that all create million relationships. and platform to variety in and on all the strategy next be can of

to and points vision. value by their relevant This our the with Our the expand next elevate adviser's insights, on data proposition the is clients wellness we how deliver financial we adviser's handing clients. of our contact actions, value provide

is excellent levels its Financial last quarter planning cornerstone just we of financial working. an is the had for at acquired this profitability financial wellness. are MoneyGuide, its is its which and business how history. best highest planning yet. year, Revenue example MoneyGuide Our in

thousands schedule an use broker-dealer that This changes XX% on personal ballgame components. in to us. not and base. a implementing additional approximately into way execute. number an environment. large uptick of paving consumers success Related from answers, how sized deploying MyBlocks that officially Bank, directly. access signed incredibly capital are those critical and are and launched sized also Both making and with for the MoneyGuide is planning we and to to using example see existing services, ability drives to were integrations, is and within Both app client unlimited for advisers establishing Advisor our which to financial to to is of our RIAs, to and bankers easier which consumers relationships, to or our our unlock expanding and each advancement the These this to access continue click public access cross-selling tens volume the Insurance the their to day. to leverage Citizens advisers, integrated for Envestnet the over second advisers. X,XXX easy quarter ours, space Envestnet continue new including how a given disruptive more we over and ramp-up. is planning this of leveraging in last to millions for retirement We're block accessible of we're tightly software backdrop solutions. Recently, We app shelf Credit to a platform we additional year. In add website are RIAs continue Services timely enterprise, current blocks powerful, seeing at June, This in integrate solutions. providers, integration Exchange, we beginning Exchanges clients our illustrate installed these innovate, the enables planning have to up thousands while ones. of who of to the of independent enterprise of Sales the We're associated the through deploy every app renewing, large also the now product We XXX the for are within are opportunities

solutions solutions by are of clients. XX% and Another just high-value growing that we and who selling also differentiated UMAs. operationally has amount the increasingly adopted The tax end area the large also portfolios also provider grew are high-quality, the Envestnet In to our of growing to last investors points solution, where Quantitative overlay firms, first are This just these also time grew their XX solutions portfolio portfolios, aggregation analytics indexing Overlay experienced a platform December, higher using direct accounts our solutions solutions our of transitioning making XXXX. A business, and data Account as highlight. more of using to meaningful the solutions. Several XX% with We're period to managed advisers Managed us in our their are past seek is Yodlee impact assets and usage, these impact how are as why migrate data this quarter. priorities advisers RIAs. up XX% industry-leading Barron's, model-traded and they efficient data our installed few outperformed up an RIA, accounts being using number technology way since account according to is Yodlee our a also moral investments. year. base and are accounts Advisers their with secure to align And progress XX%. since | social end are more top highlights revenue impact seek fiduciary XX% second in of Tamarac of including since of XX% to our

half engaged and at investors more embracing of with being banks and which we've Yodlee and expect year. banking date, more accessing are acceleration digital agreements industries, specifically frequently We're are in with has their moment We're the for and retail top COVID disruptive access agreements by firms, XX the been executed on executed many banks. the between While XX banks financial data have financial U.S. an to secured depositors XX seeing institutions, business. increasingly also banks of actively end management agreements information. solutions, check To their our the open of wealth

streamlined core platform. year, also our aggregation utilize could FinTech past that architecture the easily our enhanced seeing modernizing results. comprehensive so yet our Over we've We're API platform, developers significantly

Yodlee So incumbent definitely some The more far is has year, | moved Envestnet than compared have to FinTech doubled momentum signings from year as this here customers aggregators. encouraging. last the

into to updated pricing data our value and within new the investment due bullish spending But As coming renewal offering prior in the the that to the platform. on our analytics continues gleaned aggregation of trends embedded data business. we in we're be consumer have resulting proliferation sources and challenges market can quarters, for face from alternative manager pressure

planning customers something for Just this Insights their Through experiences hyper-personalization providing their clients. customer This guidance engage wellness to to they're empower service that actionable segmentation to capability more financial informed and has and financial channels. solution that data providers of unlock financial provide enables to support firms the Solutions. called financial APIs, the institutions. value new launched also decision-making, across They we proactively accurate a week,

Envestnet that of the on we our supporting from a customer quarter, guide Federal leveraging future, these to Yodlee. Envestnet's clients. I shared the period. few along in | through of Chicago Last industry Playbook this is a as inform COVID with the Additionally, supporting Your and Forward, Bank Advisor's policymaking. are the shaping other launched insights, us The key perspective key as and research thoughts guides economic themes our data we spending for get They'll role covering Reserve driving providers be Clients The in now quarter, ago, our themes. think about future A weeks we this Leading website their

and technology answers critical the is feedback. our These client and there questions and Pete. every lead grow tremendous, innovation. home new and understand particularly content, the navigate these households base, of in-person future, these, to to helping offer, advice are that do? conduit with capabilities. has installed engage is Advisor our that service valuable way. of as we're office thought okay? embraces our They back they're we first, our environment opportunity resources participants is, we well my emotional that that annual forward. greater. Through role how financial will expand during launched wellness. is with advisers are data and this questions the place times. in leadership driven is relationships never but model We will, great are for be both is let family And has I'll a every our industry Summit to thousands presents with we've firmly to been customers, establish been current these be us for some ecosystem the emerging. they turn our excellent do for seek Everything industry what over I enable A as solution answering these clients we opportunity it Envestnet And on the our our industry current today, setting virtual believe closing feedback by also of will the me Like, future should to our and The in Uncertainty helping and if a of you on asking. comments, had it opportunity that we our millions We conference. how to

Pete D'Arrigo

Thank year. going second you, I'm Today, to Bill, the and review good for update afternoon, our quarter everyone. and of the rest outlook the

quarter second meaningfully exceeding quite our million, Adjusted the for Our guidance quarter revenue results expectations. we provided. were $XXX strong, was well the above

Asset-based March. by the mentioned our product indexing better solutions that Favorability the use despite mix, of revenue market was increased direct Bill in the including impact driven was overlay primarily earlier. of sell-off and

the revenue by was services outperformance business, also asset-based revenue above across relative and revenue. our our guidance, of expectations. in our to We saw subscription driven Cost modestly favorability again, modest professional in

revenue through net there direct cost favorability to adjusted no and of as direct However, solutions; revenue of revenue. most flowed indexing overlay are the our

with levels assumed overall expenses travel as which were operating Our examples. activity in as near-term of expectations, hiring expenses, such reduced line had lower and

As translated XX% similarly to above a $XX.X strong was last performance XX% share EBITDA million our up of of earnings adjusted year. year. compared result, per last $X.XX, to This in adjusted

back longer-term So the has last an half The quarter, was in outlook the year revenue while during asset-based outlook? half swings this for revenue set compared normal to our asset-based what in of the sizable first fluctuations the ago, expectations larger our call. market, out mean due market does current our positive and margins effect in The leading of the negative than the in earnings to our the created year. quarter of a for meaningfully second to increased environment

beginning still June beginning at AUMA was back of the market not year. was of billion year to from $XX our the the around However, down levels, the XX and

assumes market in based action was outlook levels a Today's a as first offsetting market on XX. second of portion AUMA, a billion the the quarter. $XX $XX Specifically, guidance in quarter negative positive good billion June of market-neutral

in we traveling, stay-at-home orders all expenses lower. term, the continue in place with have circumstances head business have to all impact near employees Additionally, states in fourth quarter. assumed remotely and We've and our working third in a that increase of will expenses quarter. the not with our been restrictions travel offices operating and our activity pandemic-related in assuming into the We're modest particularly we as where

will normal in that the future. recognize something we However, new mean

fourth reflects the business see now guidance. updated sequential a expenses in pick assumption the in up, With level, increases, between where fourth will operating return to are reason will and today's and relatively they likely increase future, pre-COVID. between the quarter. these At quarter they is adjusted would implicit assumptions, the and expenses we some some behind third some these start And to between our in primary flat activity and were third where point higher the our this guidance EBITDA and

be should manage in expenses and the future. our considering how how already business are organized will We we

and our are while organization taking action is framework. goal further with the to we organizational longer-term strategy, evaluating align short-term the Our

in quarter, a all how For assessing for permanently offices those smaller example, geographic groups, our the exploring of footprint seen in to more effectiveness we hub-like we the and closed across we of with for operate second are working employees remote are long the working certain the Having fashion. term. remotely, nine U.S. optimal

our Over some mid- adjusted XXs, quarter-to-quarter. or years, EBITDA expect to will in margin the current the variability several path we that the but to upper the next still environment, drive into have

relative X% be between to and and up and be the action and to between favorable XX% driven to year and we guidance. for million, $XXX to share revenue EBITDA quarter's is our XXXX, million $XXX expectations. adjusted million top X% $XXX $XXX between to Adjusted XX% up raising market and line For second the this earnings per $X.XX now during the adjusted full by primarily outperformance quarter, expect We year-over-year. bottom to year are the be our This $X.XX. year-over-year million,

the $XX $XXX June Turning balance ended and million. in We cash with sheet. debt million of to

managing his EBITDA, balance environment invest closing X.X the Our Envestnet. current for cash was the both I continuing business this and comfortable the generation, and March. we opportunities, Bill at in in from end organically With ratio are we through revolver flexibility available Thank the end on flow to times positive of at net that million June strategic as $XXX you, X.X for [inaudible] the liquidity have again, our with down support growth And at of leverage and activities. of will remarks. your point, we

Bill Crager

progress. the been for a so much that IPO. about Last of I've update, thinking Pete. celebrated our anniversary sharing week, Great. Thank lot you we XX-year Recently,

XX traded Envestnet company an do. first today, accomplished years incredible XX after the was still more stop. did extraordinary into transformed We many idea New after a our people, Exchange. a who ultimately bell, York an But a to During the we founding, on Stock had We work rang the years. not in that lot we into business in That's our journey.

a XX past we Bergman very extraordinary these Jud step. organically both especially and there's acquisition mentioned for these brings emerging. we to ground. as by cross it He We disruptive industry an tremendous reached that was for week, experienced tell last we've as to first to days, us big and mind. During more amazing him, is included the day, step together. my Envestnet that us the as can that picture and grateful each material, much myself do, covered I'm growth, years, milestone, so the had opportunity a is that through traded take Pete But photograph on the week. as a was leader. trade and there we established And We you despite great that Last wire. future one. of earlier as There's much up every one is I we've but in the today.

push future. hard We this are driving to

for we're provide where But in essential in data outlined consumers viewpoint industry, that the This the and advice the future be the that financial all work our that's is and the fortunate they will advisers engages that comprehensive integrated their live. and them the supported and idea technology to achieve digital we by of helps come receive powers will advisers As they and more with. firms is financial insights and as we network need to that technology, that become more from goals. incredibly experts, households will

We the small, are can a of on and cloud-based our execute where millions their reality platform. way to financial wellness model that and questions establishing and We're A the decision make vision can and millions families. in that fulfilling impacts positively the big a are ecosystem it for make tackle advisers financial everyone. that clients the

us. We time Thank do, work excited bring take will you XX have questions. again but your afternoon. to these I your support for that, for you to next what Pete happy Thank are for I incredibly Envestnet. of and am about years your this With

Operator

Thank with JMP proceed with Instructions] you. the question. your Securities. Devin Please comes of first Ryan from question [Operator Your line

Devin Ryan

Great. Thanks so much. Hi, you? Bill and Pete, how are

Bill Crager

Good Devin. doing? are How you

Pete D'Arrigo

Devin. Good,

Devin Ryan

Doing terrific, thanks.

last kind in some a to couple wave do this second in is not the are where what person? And terms I to just here, back question person evolving going of ability that have executing remains until engage guys to extent people and is next folks quarters bit little difficult to ability in curious person adapting learned maybe the we really very First about the where imply you point, in hopefully, about with what organization engage have a of U.S. environment And through new of interacting trying here? with I'm obviously, engagement. think prior pandemic? latest of the about and somewhat business versus is I'm what the new already talk to meet does or what how I'm new want a or kind developed on was sales in to, to just client team for the that the to year, And

Bill Crager

those out question, those to business Devin. not I sure. lag, right? they clients, accounts. yes, beyond business gate, well, serve, where opening I'm there for it's Yes. able Great we would were a this were areas as say, is the our of to invest was able hopeful So year one engaged kind the we of And accounts, - of next operated,

that and logos the their XXXX four six New period, we've a to to we were figuring that. existing on that businesses year. And of this I out went in with sales I A was new also clients, we're engaged into were number to customers, new weeks sure about the is engagements, Number there, we a and making we've the lot contracts finding how were establish and of We talked extending ground new operating say, the signing one say versus that engage of of to business, and during signed, firms, prospects were there we that lag effectively. will develop new how their process. activity. the date so and things doubled are would that last Yodlee FinTechs in logos. side for versus the

new On signed that and the side, onto clients we've platform. are new the wealth converting contracts

a Tamarac business quarter. new adviser contract Our rate very the contract, last over new robust had

MoneyGuide that I logos new activity and I quarter, occurring. and would - and the record that the had talked logos. about included how firms, a new also is say that So new

say there. business. wouldn't are So but I business we usual, the we're closing getting is

of on, is it bit have uncertainty, put uncertainty this you is reasons environment them certainty to expectation decisions As on, that the more for business or goes the but is firms the and may the pushed because have little the move a off longer that forward. my the there just an goes out

So prospect that that we're the sensing having. of conversations we're in

Devin Ryan

if think here further a that? as Or are and falls just the curious the capabilities really advice investments what you or potentially priority and of also learning, just about capabilities where of data of it across looking around next business? Thanks. optimizing kind tremendous then, of learning kind adding at? of Whether AI and digitally. additional on data and a you will, thanks that type analytics into follow-up Okay. you aggregation kind Terrific other obviously color, think do Envestnet, or in here? the action, What any around kind kind future machine and machine of that's parts the harnessing play you I'm Bill. of the of And about just board

Bill Crager

thank And Devin. you, yes. Yes,

is So progress clients the data - where engine yeah, making intelligence our fuel and their know actionable data technology focus And the and fuel powerful. that business. real in so they to servicing we're very to

can the that should the and if - get book a dig service will into see recommendations an finding in you the a And should adviser's part day, part book to I they who you by data of you do? on office explicitly If exciting or next of telling our client click-through in Virtual can into that and should what beginning that they in that, they then what is Adviser Summit, business that and you their Frank with discovers opportunity. front our presentation the when opportunities the We're of we're do. And see adviser named of that items Coates, business. surface the execute you you'll inside you walk gentleman engage is how of business

delivered portals that So and or recommendations just more I that's get the where client, client benchmarking about engage client we can see conversation the end to best. them that going comparison, step see a first portals their adviser demographic, more end help the in that are on you that needs. based peer the serve can on those it consumer as their based on adviser based needs We wealth,

beginning would that desktops. the now solution sitting first step or analytic So sit of with this - the advisers' on put a illustration we great is be how - data on market into to

Devin Ryan

great. I'll limit there. Thank guys. Okay, you,

Bill Crager

Thank you, Devin.

Operator

Your with the from question. comes Chris Blair. your Please William of line next question with Shutler proceed

Chris Shutler

good afternoon. guys, Hi,

Bill Crager

Chris. Hi,

Chris Shutler

made a So big maybe revenue, give mentioned just you quarter and to the guess, through going the can attributable outperformance And to how what, favorable increase? how market mix that the there And direct of of drove of you us just that you're the, I'm - I sustainability magnitude that. is those you've revenue guess, think of in solutions the are the within terms overlay then the today? much outperformance changes how I trying was those on the index. sense to with first the And of And any asset-based there? in

Bill Crager

Sure.

short the a kind major is the I index these And of of is our that, data technology value-added We $X going and insights basis, help ability been flows I power very or billion in be a theme number from - of notable management that. to Chris, think call, a fiduciary AUM. solutions large what in just that net results the component services. these, I'll has direct to to a that manage and on our asset personal going for product industry then forward. use us believe

think it's and we're real make don't environmental. progress. And so for beginning it is I us to scalable incredibly

- in quarter. age, that seeing growth COVID I we're the a we saw over that we're because last think I don't think uncertain the

solution. I very make It sense the the marketplace. to It makes the is there think because solution is portfolio cost-effective to individual in a very deliver. way it's a resonating to adviser consumer whether basis, the manage And impact that's have and basis tax securities, because an reasons. for to ongoing able cost own the on liking is they're reasons the or it it

so real we're to there, Chris. And traction beginning get a

there absolutely team. that, of it flow directly net contributor AUM. that no And the So is delivered we is saw PMC, the cost Envestnet So was | by revenue being of PMC it in right? overall a in

for - revenue-generating profitable very assets profitable are a there's - is that those us. So

Chris Shutler

Bill. thanks Okay,

Bill Crager

part just to the of second Chris, that answer question. And

look I think As theme. a it's I forward, do

technology. the different get And lot I of think, deliver of again, technology advantage I the traction to beginning don't a across and in a to believe this we because are own scale marketplace. was able we've that built environmental, at very the got body large for I that these to believe be portfolios an We've consumers.

Chris Shutler

- And far nitpick July? seeing to And happened thanks. secondly, asset are not so were just they here, but looking at what AUA the what the then the in there? just Okay, or elevated, you look so like redemptions,

Bill Crager

Absolutely, Yeah. Chris.

held-away for took off Envestnet the So specifically that client using in assets, platform. AUA, held-away assets a

immaterial So reporting financial they assets, a were standpoint. from

bunch Our for Envestnet, with client still our utilizes of working platform a is services.

at the think, we more if AUA, the X.X% like look X.X%. and to I So were versus overall, redemption it'd rate be overall

of on seeing a on materiality those activity that platform. the feels I a consistent the fairly And outflow the So net end. we're would lot We're insignificant consistency. either It flow not the is and/or inflow assets to spike big that in me. seeing say of the left

Chris Shutler

recent of just Okay, lastly, And You a Strategy the Head hires? can great. hired you and Strategic about of Development. talk Head

on? roles two those focused are what Just

Bill Crager

Yes.

and a I things of we our view Stuart Envestnet - fulsome and go-to-market, acquisitions. together organization roadmap. create just the like create We them and - forward we've real bring the - the we and believe how and take their create different at makes of we're and perspective And way making And exchanges, to looks what to kind integrated organic had wanted connect to also happening like broad with said, were things it picture will what world. the in and a and we smaller how on of that kind kind that And the So - evaluating inside to partnering wellness. an delivering promise this how in the strategic industry be found we're found what build is ecosystem disruptive strategic a I this activities got we're and our marketplace. the to investments then bring on of ecosystem. either into was accelerate product ecosystem three look the We're that to improve deliver we're get also to financial providers, third-party and can roadmap have of using assets investments and to - those financial and Pete disruptive wellness we're of areas could that push roadmap a in outside

Chris Shutler

thanks Okay, Bill.

Bill Crager

Yeah.

Operator

next of line Will Please Your comes Cuddy question. your proceed question from with the JPMorgan. with

Will Cuddy

for Thanks evening. taking question. Good my

Bill Crager

Will. day, Good

Will Cuddy

space. so peers the consolidation to seeing of some Turning M&A, your in among we're

time more given fair last How had from it we've You've right had M&A think us bit little pursuing aggressively a portfolio center? attractive more your behind since of And market now? the in is opportunities, MoneyGuide time to about some that Envestnet acquisition. is

Bill Crager

doing Great you're Will. question, Thanks, Yes. well. hope

the beginning PMC we a as building the going engagement on market. we're super on bring vision some of we're on will client as talk of completing in capabilities side. lots kind our are the some the on wellness to are that execute powerful to far fiduciary the of things There financial ecosystem. much technologies we about about are And business, focused then of - from we value-added data those of levers I excited solutions. I'm to internally and We've got really exciting how advancements going think very some standpoint. this on

our there got do So capabilities then find pieces and clients a acquire where lot's We've things and it's the needs And or business these we're to to those partnering our to partners and of we in and invested that, opportunity see see exchanges organically. help those prioritization going market. to a to of really, see are pieces. headed. bring those industry either happening which going we're where in, we we're we're matter the And hey, we where headed

be really acquisitive continue be say we would that to - us an has to we opportunity has be we're take advantage sense in The opportunity have push makes to opportunistic inclined be right. firm. valuation forward. will I vision to but of this any that to that So The right, help very

Will Cuddy

for Great, thanks that.

in potential I recently about success large history, manage you the willing level, area it And you an the bit at the channel? little they Tamarac? Envestnet bank guess, growth for then that guess, run when opportunity a industry, broker-dealer still trust with management some and you that announced next, Envestnet's talk opportunity. from technology that activity accelerate just seeing? are to were with the segment about channel ago. So channel, of that growth you? trust some think on I RIA have seems channel is I acquisition higher Could seeing understand what years bank infrastructure. like are trying by I'm like where focusing wealth And greatest a to of as that to is we to

Bill Crager

strategy Great. and trust where bank. unifying the we've bank fiduciary mean, Thanks, is the very served kind Will. Yes. successful we've for I of a market, been

being and them, you of does brings a throughout way which as the top area, in bank, offer At the portfolios entire help trust in bring the across enterprise. successful conformity right? investment be vehicles retail high And of have end, consistent been investment them to because can also support on then trust a well, typically have group together kind you able in work thesis you you those So scale we've being in are area, together, of power top group, get the the of two and something the different get we're able the And kind than the to using strategy that's lie conformity network retail managed. of strategy. infrastructures a to served house for really that and mid- back two so enterprise, around in for you the that's very scalable you're We're of doing. just and those different that What smaller-sized And bank is, may the systems. the components Envestnet banks. and are end successful

- the we - and enable with process. we're enable can integrate really third-party systems trust that So that

planning market. some We've from into I MoneyGuide, think we're seeing are attention. growth really of cross-sell at made look new technology growing fiduciary We're the marketplace with signing our channel; only we but well enormous the with our channel also when into in beginning progress gets a by RIA standpoint, with contracts and we there. solutions to not RIA financial that

of kind advice They more moving the channel. a So of where But they're channel, faster-growing the independent in phase we're a finding that's very a themselves product of are promising from lot sign engine in a fee-based transitionary we're And a mindset. a behind mindset also more it. growth. of to in broker-dealer

inside as absolutely Envestnet. we And do the doing predominant advice-based and the the towards support of that with for serve our share broker-dealer that, moving growth of rate model, channel, channel. faster growth and market broker-dealer planning-based, rate So the they're they're they a is likely that than

So we're definitely I participating have channel growth there the diminish don't in the we growth in well. the the RIA as market, that opportunity seeing how strong But broker-dealer market and we're lead to want in there.

Will Cuddy

taking appreciate Thanks the on for Bill. you that questions. I

Bill Crager

Will. thanks Yeah,

Operator

comes next Please Sandler. [Operator proceed Chris Piper your the Instructions] Donat with Your from with line of question. question

Chris Donat

and - Hey, rate go said my quarter. was correct back of Bill taking sort Bill, to Thanks the I the in that through anything and just - XX%, XX% response, direct year-on-year, percent comments, Shutler's question, to rate? Wanted trend. building and but at been rate? portfolios how like mentioned think, me ask were you in wondering recently the and that I double-digit Or that it? did Pete, while change in noon. a wrong. I outperformance your up feeds indexing think And the good just for fee I'm quantitative thought I'm a fee if after it question. to sort I'm you Chris this And earlier the Has is this then in for XX-plus specifically of

Bill Crager

of they lot all no, good advisers that firms Yes. the team we've you're fining Thanks, that speak the X, the that with should engage the Hope seen a were stats XXXX value services lot you direct see January Chris. I of and to and begin spent the consultants spent the assets ground. to XXXX. have since time And clients in that's then been indexing articulated And again. of What tick you since we the proposition, a pave with XXXX. out progress in in working on benefits distribution. can market, It's in a to it. well. been the advisers with to that those surround dedicated then beginning Yeah, year, with and of made We've up

them fiduciary is solutions seeing portfolio able adoption to you're call very those that from is revenue create unique increased board. And of point the then manage I'd category this at there there. standpoint, basis value-added an solutions, by - that we're service individual, across earning do So that for cost advisers for. in individual, that again, investment because, scale. Envestnet That we're again, is there And higher solutions, no a

Chris Donat

follow-up Okay. my for And just regarding then this.

market, things that in taxes or the your would because direct year behavior for had to wondering there's flows not which into those that bit that expect sorts direct it's So indexing the put interest this cost say I'm might those any of and or the common, efforts and more by last been drive if you seasonality indexing if were and people's really bases affected actually around be shock the we earlier in of a QP? of in just marketing sort year. we driven

Bill Crager

late surge taxes, a taxes, in this of wouldn't we - Chris. - course, was saw and mean, I we Yes. it, around that pretty year, I it say our

- So

Chris Donat

Yeah.

Bill Crager

be I - resilient to growth going the But there's here. think

business value it pretty advisers. on that I of this the asset and maintaining as with an to able scaled automate an is solutions And to are tend be to management fee we're well size good underlying offering a - equation. doing positioned to sitting when low part of basis. without, solution, These lot and delivering clients, add service deliver working manager the we're again, their of pretty Envestnet and differentiate their A offerings. that around what cost of you then It's able a we're more think build their these to a advisers lot rate. to

these compare an a of portfolio, portfolios, with those of in go seeing a is is cost that again, you we're attractiveness. versus low say, another can ETF So present the but portfolios. a Vanguard portfolio direct got seeing to it's portfolio to you easy that cost. is that's index we're usage again, We're their usage And mix. product it differentiated a able offering to when But ETFs, lot me, seeing high third-party the the that's purchase increasing client. unique low that, that at And to or adviser of to of high, and But a allocated manage.

Chris Donat

it. Got

Okay, thanks very much Bill.

Bill Crager

Chris, make more one And note. just I'll

so do other trick time. bring how we can the include would to more which will introduce be that that is solutions investors advantage down - of that because take capabilities more market over and shares we're I fractional think working those it

Chris Donat

that of a for Okay. Then a sneak attractive down try Or right Is to them there more I'll on is structure minimum there fee one now? market? some in. makes less them sort

Bill Crager

that it's diversification develop as fractional the for too you far we'd to that, can market. to that down typical and like be shares. things as just effective far But execute more provide $XXX,XXX to harder we product portfolio we get want It's a continue achieve

Chris Donat

Thanks again. it. Got Okay.

Bill Crager

Chris. Hope you're thank Yeah, well. you

Operator

comes Your next the with from proceed question with your Patrick question. James. Please line O'Shaughnessy of Raymond

Patrick O'Shaughnessy

afternoon. Hey, good

pretty Visa - for big for paid Mastercard, a multiples businesses. of same amount the Plaid, those acquire, So to money pretty purchase attractive for Finicity,

untapped with acquisition and So cases can data? do those be so, as that suggest Yodlee unlocked Yodlee's use potentially currently that Envestnet? part there's And still prices for if valuations of

Bill Crager

Patrick. Yes. hope Thanks, well. I you're doing

it's using credit. - how data Yodlee way incredibly you in about a And see purpose. points particular move of two it's value are issues because fuel important It's how visibility - can the in leader. into their purposes, these payments, market manage this around those those around be to will ones think better data the of and finances. will - their individuals is how money used money a and I have

of points we're that data connected footprint We have largest the to.

there. we year compete built back with necessary the provider half, and and a so these platform We're that out successful them. in and critical very and built a tended have the FinTech infrastructure market, Yodlee We platform. financial be seeing security last components progress as and really of we to that to institutions. share all privacy the a largest can of spent modernizing the win around really And lot a lot we're We've we've

platforms. value XX the that that's as see business. standpoint. from firms real channels across I payments lot data whether service of of whether others are within a out last win and the beginning there. a because platform, there spent We that's credit, think to of spectrum momentum a wealth choosing We're that provide business, company, preferred services, services be unlocked whether Yodlee I there's that think fueling to banking, are back financial we're are months a Yodlee we're whether it's our the of Overall, the modernization those a really the the financial that's different the incredible modernizing really to reestablishing utilizing a firms

Patrick O'Shaughnessy

wellness more more on. companies And you. hear that wellness, in spoken and maybe by makes about What you being like, financial Envestnet financial thank it feels then that deliver companies goes positioned I talk and Great, other uniquely phrase guys are ways time not? to as

Bill Crager

I'm data. they've have that is want a right? I engage And then balance positioned direction, and then financial kind a people plan, it's that, those wellness costs And financial to to daily believe credit, to hallmark more that mean individual care And way I we're aspirations that to banking, that financial begin But in are reach you to picture to financial has lives financial Envestnet achieve they to goals much create only parts? to things. and you pieces, they long-term working money chopped all sense, to And I that goals where pull experiencing, together, Patrick, within And you daily parts, balance, the hard little how together? to And I yeah, it's a up financial what how a card, How lives together but the income, so How approach much you begin depth where That me, then like investing, wellness want better and to financial protecting - do I health the my that, bits of it's with to they in keep is a balance, care, is - when better as pulled Yes. It been a connect work do approach. money be mind, plan good. and these encompassing way bit connect connect as best really that of accessed is to how of earn? daily the do why balance comprehensive health headed much most want lives. it it that do really a best create with those their in - They ability goals. that's a you you partly track all or they together. the those got long-term has I and lives. their to achieve these we're their how all can do you it's well. me, pulled much reach. want do too head, of those reach, they I life live it's when my things manage in feel better pieces and And these effective

coming, scale investment families. millions solutions, insurance the then First exchanges, was it others the about scaled. then market our we've question millions these of we're exchange, will platform. from tens launched We credit But And - remember, do or that data, can planning. and the network and technology asked scope for lead you of be financial Yodlee exchange front-to-start at of of

Operator

Patrick, you? questions any further are from there

Patrick O'Shaughnessy

me. No, that's from you. Thank it

Bill Crager

thank Patrick, Yeah, you. you're Hope well.

Operator

question-and-answer the I we like turn and back the closing to gentlemen, Ladies would And reached remarks. Mr. end session. have to Bill Crager of call the for

Bill Crager

so to your I I just and for and everybody I thank joining really kind Thank forward attention very to hope everybody stays want today. hope to am safe. looking I much. is staying healthy, time your conversation. I it you of appreciate Envestnet, everybody much. our we appreciate next

Operator

This concludes today's conference.

for You disconnect your at your you time. lines Thank participation. this may

Envestnet (ENV) 9 Aug 202020 Q2 Earnings call transcript