ENV - Earnings call transcript Q2 2021

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Envestnet Second Quarter 2021 Earnings Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. now Head turn of would to conference I Shipman, Brian Investor Instructions] like the to over [Operator Relations. Please go ahead.

Brian Shipman

Thank you for quarter afternoon everyone. on good second call. XXXX you today’s earnings joining and us Thank

available being we replay our press supplemental one be website This earnings for found at I that X-K Investor will the is associated release, like point envestnet.com. presentation to Before our out webcast begin, on Relations a our website. under Form be and live and can would month section call of

During forward-looking commentary the are a future discussing material call, we we will reflect nor to information, guarantee be certain performance our not which developments. is update subsequent obligated to of

X our Before customary results, can found Further our I be we information on disclosures. the our discuss slides filings. X regular and SEC in to for you review encourage cautionary statement

in is to reconciliation measures, most please which refer of In website. Investor to non-GAAP Relations the directly measures our a addition, slide the also Envestnet the to appendix presentation – for GAAP posted comparable our

me well the XXXX Bill After provide Chief questions. company Pete our as remarks, Officer; and open Pete overview an Chief Crager, the quarter Bill a are on company’s today’s Executive D’Arrigo, will Financial will we the update Envestnet company’s Officer. Joining second of as call and to prepared results. call

question follow-up. one to plus During one the yourself please Q&A, limit

now that, back get the I’ll With may into over You turn questions. to you the if additional call queue Bill. have

Bill Crager

the providing is quarter from quarter. I I’m to second excited Thanks highlights good results. speak and today by start report so to much, Brian. with It everyone will our some

growth our clients serve given clients and with those ecosystem in are ever of achieved financial that also review and of our revenue Our and offerings. most ways quarter the market strong and strong of industry. powers before I a will XX% our performance leadership, Envestnet progress than breadth relevance more where us essential technology engaging wellness strategy we toward and the solutions the data, adjusted XX% of year-to-date. is more reflection comprehensive creating impactful our in and

reflects we number This half as guidance with market is position forward. the is note, enabled plan have and XXXX. improved position this well second up of growth unique XX ability believe new continue XXX,XXX creates I we scale, in Our and than the on the we expected our as to our accounts market now outlook expand. important was of a and almost of to for as half drive million trillion that leading platform Envestnet strategic The achieved to by leverage this scale for year stronger the an the position first make create advisors our Envestnet assets. $X.X is

day. Our accounts XXX business million aggregated over aggregation each data serves

the to continues while the leader. services planning business Envestnet market leader Our MoneyGuide in podium as stands TAMP also financial industry market the be atop the

have We services, solutions third-party of options to our continue clients. we these and grow providers and the for largest network

several faster are averaging than Securian. new such new notable week. firms customers and XX,XXX every are accounts at added more the well opened including accounts a We being New quarter during second pace we as

RIA add existing As clients, more rolled to adding seeing we activating financial in momentum and are business a more managed to add our today, we’ve are the of continues exchanges planning to our also firms accounts out we we continue number serve to to advisors, new growing services and firms. exciting our features

advisor advisor, footprint accounts such as to revenue well. per assets we grow, at operating meaningful scale per While our total as are per adjusted and advisor, metrics significant continues

million requests. million XX and During service X.X trades the second quarter, we serviced almost completed

recommendations X to serve better of clients connect and their than generating million clients. also data all day better our more a driven We’re for

million recommendations very proof by our enables points Envestnet’s we I XX brighter Day, to Investor for growth position on indicators billion year-end day mentioned XXXX. vision are calls. advance over us a and we and it’s to As leading a are market and unique a than These to way pursue day to are we and our by the future clear continue been. discussed on execute strategy the have as Envestnet these believe we is ever on earlier

of our and several driving are have that and industry. one out base it powers and financial growing and have achieving opportunity the cloud-based significant a data drive our platform, This position ecosystem and mission that past laid for opens stated differentiator the infrastructure straightforward Over combined its leading leadership company our we set and position the towards scale has unparalleled our continue us. we and the enabling months, goals. positioning a towards progress executable up and solution strength No we to is Envestnet user strategy with

a to together important their intelligent the making the of much powerful view much offerings are and in more ecosystem, We them in access place the our the and that frictionless, one a help in have their progress completely. entirety same of clients sees our customers while advisor and the bringing clearer money pieces so easier at serve more consumer connected time, to

benefit we from. the will here, Our the most company. engaged how they lead we our Digital trends virtuous capturing clients platform their standard into a and ecosystem And opens advisors macro for create the and by is more future. is industry of digitally and standard with clients the it more transformation for serve their opportunity be environment today how powerful the several that for

industry accounts and personalization power In digital faster direct like services to trends. several that overlay and growth These the impact hyper of the and the tax continue include advice, indexing, we addition to of managed is even transformation occurring, fee-based benefit growth growth of investing. important from also

strategy, $X.X revenue base. we market across a given XX This that serve in our average As to you increase these assets, our significant strong XX% given and we we XX% to that executing leadership focus are and trends, of asset the opportunity, identifying, advanced this that growth. mind, points engaging increasingly is revenue on laser significant given roughly has and trends capabilities our position With grow given overlay revenue believe macro opportunity of sharp three market on in trillion on. creates these we which will the team business key our have. we And today, can by which engagement drivers continue basis a current on growing our

is our of sitting it data to We the us. more will directly and This comprehensive is capture in large platform front addressable supercharging solutions our by existing market and opportunity set. of leverage

migration, extending Envestnet to opening lastly, Next, leading are truly the customer cloud-based we which our connect experience. a expansion. And are us digital platform engagement for seamless marketplace best by of the we allows and for modernizing the

all ultimately capturing users see. to and given existing environments. usage Our ecosystem XXX of of and very XXXX% more addressable has which third-party market I and will FinTechs third-party the by the developer are to opening beginning beginning APIs, we grown providers, accelerating for drive to This we growth portal double-click the why revenue our since that are enables of leverage capabilities on progress time, engagement opportunity. XXXX. and we’re Envestnet’s into over their At more want January same our early confident data our the embedding

Envestnet, large, have and opportunity and the model. we by we the addressable which a the our for understanding also data advisors given relationships see, have that identifiable, differentiated visibility prioritizes pools strategy use You between is of clients. their that deepen target This engagement powered cases

We solutions have to available the our broadest number advisors. of

data and we increased data adoption make. drive and adoption, more that – Our solutions recommendations driven to recommendations the increased provide increased improve

our ecosystem solutions. in and data We adding the growth advisors and for solutions tasks required our removing and utilizing are access the use accelerating are from the to we friction to

positive. During the to individual the advisor that to build new consumer. the ultimately portal several feedback been to has customers introduced new several second continue and We’ve we been quarter, our and client with out offering early large the products piloting incredibly

with also and added iCapital credit digital set real exchange services tremendous which July, exchange, our residential in opportunity such its We better UBS a investments investment via charting advancing in to estate clients between launched delivered for the of and alternatives recently we as collaboration for industry a launched consumers. our a XXXX alternative represents curated Envestnet course Envestnet end-to-end platform. the serve

future, our the and sustained position a efforts accelerated we taking in of this. have, that we catalyst organization for and this apply on the executing moment the advantage is growth. that locked a We and us is for strategy and have opportunity this and to for Envestnet are created on

back Let me call then through turn comments the before closing take Pete, some our will with results, who you taking questions. financial be your I’ll over and to

Pete D’Arrigo

second Today, the you, third update going full guidance Thank year. to results our and the quarter then quarter I’m review for revised an Bill. our on provide and

the of the fourth business the XX% second our are demonstrate second carry million to $X.XX. grew per Our reflected quarter second to positive grew million our the share the to continue full to which XX% Adjusted the we of $XX quarter dynamics compared EBITDA year. for third model, from first-half quarter outlook. strengths year results updated into expect Adjusted and quarter earnings quarter, was to second in in to last revenues compared Adjusted $XXX year. of last year the

debt approximately to in maturing Turning cash in convertible our of ended million. $XXX The June sheet; XXXX million of with outstanding we consists and and debt XXXX. balance the notes $XXX

end X.X leverage revolving ratio times our was June credit facility net undrawn as EBITDA. June $XXX million of Our XX, the making at of

reiterate our our expectations. to initiatives, Turning to I want investment

expect million We continue for $XX during to the investments the of operating to year. roughly account expense

which progress We the our hiring updated are of making is front, the impact guidance. in on good reflected

investments operating of of and million a year XXXX approximately $XX of half the to the annualizing at expenses same run the growing expect the impact rate XXXX, ramp $XX most to with million thereafter. throughout of in rate in We second up the to

existing to more expands begin as in growth ecosystem, continue a market. we we elevates total streamlined generate our to value and Additionally, proposition create clients XXXX better to addressable to faster our expect which revenue

a earnings year compared up our third XX% up quarter EPS asset quarter we expect further our based to supplement, between as in to the be EBITDA you for and third to $XX million between share. XX we investments, to and XXXX $X.XX to the ramp guidance full third Adjusted the and the XX% and quarter, adjusted $XX per items $XXX complete find be on release June levels. highlight but can outlook, revenues $XXX in and to the be earnings few to Turning of million, million

full year. the are strength outlook year, first of half For of the the to raising again reflect we our the

the $X.XXX full $XXX be and between XX.X% second we growth we revenues Adjusted XXXX. $X.XX and growth year, is than expect drivers between Adding revenue EBITDA original to X% to the to the some of to $X.XXX year, and February. representing of be which our higher revenue million for and the For $XXX year million, half be some billion for in full between $X.XX, about our the billion, $X.XX up back guidance of to of the XX% X% adjusted outlook detail to highlight EPS compared to gave trends.

wealth business performed our well First, has increasingly year-to-date.

the model. an pricing completed relationship clients During two-like moving we second merger the of to asset significant based assets subscription-based from a quarter,

hit have quarter revenue doesn’t adding quarter the past, was our of from of flows favorable in is base forecast adjusted second markets reclassification. the it net existing significant business. this the we first capital If our of this, asset While from ahead Further, way to benefited effect an reclassifications in growth. reported terms for new the we even of

first-half data of in the of the segment grown has last revenue subscription around X% the compared Second, year analytics first-half year. our to and

to business the revenue of see the We this growth expect year. improving second-half in

growth the attain to years more investments continue for identified, on the remarks. revenue our closing capture turn support we were from longer-term again now, Thank to mid-teens and and Bill by your begin back opportunity of in to in the EBITDA Envestnet. now, to our targets XX% it of I we’ve benefit of will of coming for we And positioning XXXX. us strategy margin adjusted As you execute will making his

Bill Crager

Thanks so much, Pete.

management connects progress life is data, the leader powers strategy. opportunity financial The ecosystem of and with to on industry. the The making a that differentiated and provider open architecture, of execution as from technology wealth pleased the connected, the intelligent ecosystem fully and are we’re other enable be solutions the the our to hyper-personalized We platform. every that are focused

As from we continue leader, enable need the the transformation that clients to will industry us. our digital

clear. very is roadmap Our

of the opportunity market solutions. with data our We are more in our capturing addressable

to digital modernizing and land and friction engagement to We accelerate opening the reduce clients our are platform more we’re marketplace growth. up

questions. now We Envestnet. it will We’ll you greater our on continue execute to that will and every to in support for to value create up continue roadmap for your your open it one each stakeholders. and of Thank

Operator

Thank you.

We Please begin question-and-answer ahead. The from now Securities. will Devin the with go session. question first comes Ryan Instructions] [Operator JMP

Bill Crager

How are Devin. you? Hey,

Devin Ryan

guys Hi, today, it’s bit Bill, the Bill. Hi, a it something quite you wanted good. Day is, more. to spoke but Investor first guess in referenced dig question just I’m a then, you on about I bit Pete. and Hey, again little

recommendation adding we for that XXXX, And As in removing friction, about million a XX lot from to growth of in that. obviously, in that’s today think kind you’re by the up essentially customer, you’re daily over you’re firm penetration. optimizing billion, tremendous value more the obviously end moving

the I it, just to ability monetize few think if about the by like step-up about more And So that. to a next if that? will looks able you occur a that little and just over call to better just more like can would that monetize in, talk we’re value-add help achieve what you love bit material doing can years how us that

Bill Crager

Yes. are we’re data firm several intelligent then recommendations to to and overall that much. looking you to that the be of can And that ways firm. Devin, sort monetize great data There the our the more very clients back our question. provide us strategy provides, Thank more

areas platform, more each highest to them, we with license third-party be is the that data Data areas our the power and feature action issues. become data of underpinning that managers – their also how advisor basis to basis across and or clients and more them, security on for Envestnet the in data, engage best our is we their to risk providers Envestnet will third-party back informed providing data, business. asset these help of the advisor, on tasks, reconcile manage our their strategy, the their other top are also then help across promote more a more It understand then Devin, opportunity back data to of recommendations and call with how working firms to create highest platform. strategy intelligence, compliance on their also ongoing help recommendations So Data Intelligence. current far protect data an service level an will environment asset opportunities next with on And the help appropriate Intelligence of it we’ll managers providers our about EDI Envestnet the do towards

Devin Ryan

tax discussed just the even of over give the the on all? next environment what’s couple maybe just of a quarters here, and Okay. a follow-up, Really little accelerate a want detail just appreciate is potential also overlay, could or how macro about being or And Helpful. kind bit roadmap kind if I doing can if about more you’re that, taxes changes more then Bill. affecting, touch more to D.C. just help what around at of in you progress in to even the either

Bill Crager

been today going use phenomenal. the were to Great, analytics your Yes. the I’m just in And add that around Devin. question, has that data get providing to the and feedback of quickly first we the client

we’re for on and time advisors – helping in cutting the just We’re opportunity. administration down really zero of lots

days the delivering high clients. been to market we’ve being early value our is recognized as the by this So,

and there been a I Similarly, very add So that of legislation gains one would that we for number of has also to when advisors. gains interest a standpoint advisors. of as but new would embedded interest, friendly there their wanted from clearly be This with the just some overlay, with more have impact that. return the created has idea be has and tax discussions fiduciary the over tax then time, list period may with market this lot capital course on been more

moment. overlay, derived client, to on it’s ETF of voice when hard expand from over From quarter, at growing standpoint. also a also a tax push they’re again offer, we will securities we the treat tax portfolio, ultimately, continue the can standpoint the probably development really in that a we individually that overlay Today, see standpoint, mind will a in next one our we base from portfolios, include technology Envestnet is engagement fully field and is end to Strategist the a integrated It that and tax, us its standpoint that and that advisors’ advisory capabilities Mutual the item can marketing the raising standpoint benefits where next an tax fiduciary next we’re communication the course very by then is delivering that the Fund comes on overlay. be in it Strategist the release reporting. or substantial number marketplace held which for are from and the will asset You release after-tax we’ll

what solution the of the by for the So execution and that’s to as benefit the will the proposal that, clients. end that the from completes then being of the do to it client derived lifecycle

have more the and accounts to increased driving program. We seen that sustained who assets more advisors opening that more tax are overlay by is solution usage and more into

is very seeing So days very we’re days is it of the that encouraging. in focused early something campaign again these on but that tax data verbally, our early

Devin Ryan

leave sounds interesting. Okay, really great. I’ll but it there, it

So, appreciate queue. the it, back guys. in I’ll hop

Operator

The go with Truist Young ahead. Securities. next Michael from Please question comes

Michael Young

for thank of Summit I maybe that question Hey, more taking you the coming you off off a questions. have with to the Bill, Advisor July. in start hosted qualitative just of wanted

from sort be conversations outlook and adoption on helpful. any of with would the clients and early for Just anything takeaways there

Bill Crager

Absolutely, you’re Michael. Hope well. doing

conferences, attendance hire higher for then year-over-year, than the XXXX. the benchmark and Summit off So virtual substantially our Advisor was in-person from up

pleased. very So

the growth conference. was it attendees think at over in I XX% the

that audience, bullseye. the have had in we the across feedback is the the the and center So – I are I’ve The conversations board gotten roadmap engaged of big audience. here pursuing

digital the more direction serve to do a model the their more to with standpoint. in fully of digital headed and integrated So – engagement clients this advisory firms their from are advice

pieces those bringing together. We’re

we the that encouraged feedback we were from very the So received by conference.

idea being a Envestnet the think and ecosystem financial is an I financial echoed life back enables that wellness is us. to intelligent

the not but kind conference direction at we’re they’re evident messaging, becoming making. very is introducing It’s kind it. our in the the that actions exceptional. headed because and that side, product and that progress in getting to showing capabilities client being portal we’re the I we’re in the think we’re clients, of our Note, feedback the beta, just on successful only you’re was in of the

finding positive, fully pretty is that And that Now the I client data, data it, that with and feedback. how is client out this environment roll affirm in may portal, we’re the would portal investment I attracts the get is more it environment. that really what’s very intelligent happening it beta can integrated and the in be so not can there make across a consistently remarkable, resident to I say when

has a will been So said Intelligence to that Data opportunity think And and Envestnet I again that lead we more what Devin, group. to very more for positive.

that feedback So gotten clients. and our that conference the have we’ve early had and both again, we’ve in been very with very, the then meetings also follow-up on from then trading positive, designs the platform at

Michael Young

are, right; may if the sort assumptions missed on that That’s think is and additional curious; XX% I theXX revenue the if or you beta on, sort bps then assets, there think I really are numbers that informed of running other those the and underlie far that think I so they that you’re by of data? of pilot Okay. A, X program And specifics are B, I was of exact in was helpful. can have trillion but you it drive

Pete D’Arrigo

addressable the at assets of and into we they So, move much are like about And market This pricing Those that looking newer of some numbers initiatives if those about. overlay. we’re how sort could on of these what would talking incremental Michael. the Thanks, is then yes, numbers captive are capture. we’re tax Pete. those the be talking

So the to that’s Bill where we points. the on talk come an about XX with pricing. up basis average, let I’ll

Bill Crager

Yes.

we size on today. that include again. base asset tax yes, on Michael, market spoke we accounts those program XX and it that that of of in that So, and product, out but across think Impact substantial penetrate brokerage $X.X use that, XX% overlay, other addressable basis our we blend as those we about index will the just XX call. the managed cases, can by all types assets back include beginning a moving looked $X.X give opportunities points that We serve of series the to of account program, in those numbers our in to with blended you across cited programs XX% have direct that. to I will it Each trillion that a on that points roughly to at of like trillion the basis

Michael Young

I’ll back. you. Thank step great. Okay,

Bill Crager

Thanks, Michael. right. All

Operator

next question UBS. with from The Kramm Please go comes Alex ahead.

Alex Kramm

Yes, hi, good evening.

so clearly, at to you when here Just cost back better the you well. guidance maybe a I for going the cost looks side your line could own guidance and beat on look on it outlook, second, in the in the quarter the EBITDA just the – particular, as

come this here expansion isn’t talk what just there this delta that seems So this so about in mean curious or you what as changes spending about the your mean flows few next relative are was wondering maybe said does then guidance expansion? XXXX through for talked Any as to, spending can just that gave moved And no for to us margin when next reiterated happened higher. margins maybe for Pete just your you here. does happened expected margin for What year but between had year like year, your already? year obviously as you It update. you has you last as outlook fast, the up, what coming the weeks I ago for in

Pete D’Arrigo

Yes.

Thanks, there. two So Alex. parts

we have of first we piece – are initiatives. progress The on making that the

that the there has mostly had rest coming less a coming hiring from maybe the continue we in We we so define thought back were in more that initiatives as some are we as amount back a We COVID, travel number I would come where on that lines. of sort quickly on throughout expenses so in base reiterating existing the what of not and quite expect had on were characterize significant beat again in year. and would an because both to it have there and things of of as personnel costs operating sort and the of we there. did

So core expense that better-than-expected of in business. performance operating there kind was

So the the one two hand elements, it when initiatives of and the our at look continuation you on other. there the is those in on – performance

As we look margins, little we to giving it’s out flat don’t little I was about when so XXXX, a expected say start on to this guidance are but know would that year. margins to want turning were I talked XXXX, bit I having lower be they early, a to be than

XX as statement, that investments, we I XX talked that because is when sure going remarks. exactly about for estimated not made the just throw to these but before I’m in XX.X more we it’s annualize I that to XXXX to would in out So range, it on in about with were guidance we where and where the quite make it or yet, so, at likely prepared that estimate

Alex Kramm

before ask as basis didn’t XXXX? perspective, fee the that others how but great. from maybe you question do outlook? And still, point not color with asking things obviously comfortable and obviously is about see basis a Investor for to great talks in thanks who because you No, portfolios on you is actually are a about erosion wanted is XX XX the everywhere in obviously, you overlay XX just in Okay. ETF too, would that And as to the question you So, basis of TAM standing any a tax other have probably get And and excited Day I’m be market. how think something multi-year just or color. management points chance. can But I this particular, this, really at points and think the the about addressable kind back coming the are much the one asset you only not obtain in something space you’re and

Bill Crager

Yes.

difference more as things. see overall outlook a of outlook, Alex, – lot a in we around are have there’ll competition the Envestnet address, already earlier asset really In is Direct to the we you. the we Clearly have this and The incorporated have be given to of wanted it’s have the make people Impact investing, $X.X management. that view we speak clear space think developing the I accounts. little trillion space, matures Indexing insight characteristics that you’ll we’ve these spaces for and a identifiable very think that validates for Bill. the interesting I services scale, Good the with overall pretty opportunities I more have and we

account that that account in another that can insights outcome beneficial a we have engage just we effective So a way drive to party more than that the because, much that through advisor.

the XX% points we be stated, points. so, And expectations going given have basis we’re again range we penetrate talking that XX that the basis And net-net, the revenue that we to XX% is that asset that our the given to us base. the tools drive of will which will base of help drive on of about, consistent really penetration will the asset – quality we services, we’ve roughly believe

Alex Kramm

Okay.

helpful. That’s again. Thanks Now.

Operator

D.A. with The next question go Heckmann comes Davidson. from ahead. Peter Please

Bill Crager

Peter. Hi,

Peter Heckmann

that for Hey, bit fixed from your income of talk kind may have demand fixed iCapital that the company. think vision are afternoon. Good alternative investments afternoon, Could increased – was you mentioned everyone. private investment And there’s I you But there assets in made about also a demand equity, you little seeing both income, partnership? for good alternative an advisers?

Bill Crager

Peter. you, thank Yes,

and there will value net shift that platform We the it allocation and iCapital the investments. becoming when will funds, that supporting out alternative investments. asset of managers class but space UBS exchange net brought significant. So platform access in people and hedge they it vehicles rapid And add grow investments, of return are believe a category with other worth private over an does looking believe the our to more toward our primarily the people fantastic that environment for partners. class We is aware exceptional that it for are that just too, in down equity and high clearly two We the in curate then for is the of on think to aware of more time the RIA comes We a and and to administration that leader and and introducing portfolios provide to kind be the access identifying worth that asset more pretty gate. UBS, more, job those – to alternative iCapital, which partnership will interested don’t the time. is more over helping together equity greater and inside private us, execution alternative is alternatives with the clients that is chain

So, we take long build, we it now based exchanges, in the to we’ve a only that platform, ultimately model well, constructed investment credit, or we’re Peter. component integrated adding and some there here. as that to on is healthcare think insurance, trust, to options alternative the is market think significant but the our time a great investments platform will

Peter Heckmann

And it. investment that’s Got any fairly material? Envestnet from

Bill Crager

partnership All again chip UBS investment. No, no with iCapital, in partners. and with tremendous blue

Peter Heckmann

that or targeting thinking that markets are here? context? internal like know additional after are So acquisition upsell about one and you’re going on, solutions? you about to M&A, of then And Okay. follow-up. in there’s How a development through this go you there some how niche some providing capabilities, thinking you’d I just when is lot but

Pete D’Arrigo

at of Yes, what have I broadest in the when you Envestnet platform breadth back this today, we you look step is doing mean, the and space. Envestnet, the

done exchange. we’ve through invested that We’ve credit the ways invested investments, the that so insurance to partner exchange. demonstrating and to create we’re we’ve to launch Now,

partnering build to We’re alternatives the exchange.

exchange in cetera we the a deploy strategy what is commercial market and again but financial growth platform the There like invest of be in us of kind get further focused chip platform the no ambition individuals acquire, partner do complete families it will to the with and things that insurance continue comes three-prong partners. offering to and there we’re blue sooner lives inorganic growth today, really will to partnerships to or then, will that’s we et partnership of on. integrates glaring when We will hole a is our that to

Peter Heckmann

it. Got

in I’ll get so much. the thanks Okay, back queue.

Pete D’Arrigo

Thanks much, so Peter.

Operator

Please comes question with Ryan go Bailey ahead. Sachs. next The from Goldman

Bill Crager

Ryan. Hey,

Ryan Bailey

Bill, evening, Hi, Brian. Good Pete and

we you view would a Say, way XQ XX% question. were penetration view as different now what way XXXX you a XX% disappointing? results. it would like, view solutions roll acceptable asset-based the or in to you of year forward again once to What the if kind from back coming reporting would to level want on as and to of you of Sort

Bill Crager

Yes.

Ryan, think really is I we here significant. have continue momentum to So, our early pretty

period has we year-over-year, an the So, and ultimate year, look an do impact rate as programs run what in the of generate over these product go-forward you look advisor, XXX%, at revenue the the a last grew And utilizing you if year, would back who revenue able of if – I advisors they an run to on standpoint and time. to going of you then kind advisor, you’re from a add account rate revenue for been they’re a grow basis. how

significant and Impact again, then continue overlay more So and of platform, to et run more I XXXX. utilizing very, use think going of we to them. we you momentum, are more Direct cetera, they’re year-over-year, And XXXX platform tax and the that or being continue generate and if advisors are numbers revenue if We to say, add those all the more want our from added program that utilizing the advisor open accounts rate in to, that are Index continue service that very momentum. that over can a

of getting advisors, focused deeper into engagement that that’s those been to business open advisors those through process we’re go accounts, is activating book on advisor what getting our supporting that and model, and go-to-market our to and their So experience. then

want So activated have advisors, at I in will drive opened success I the to numbers next when I account for us. continued that momentum their first look who because see ultimately year towards think headed

Ryan Bailey

it. Got

the of I’m another on XQ maybe just I Okay. just for about and what Pete. guidance us to so far. year right, given and sure the make on want to happened full thinking you’ve sort and question of what And it based sort

make implication get the at XX% anything of about think sure for XQ I want I I’m to EBITDA high not is missing wrong. thinking just the that you that end, margin. can

Pete D’Arrigo

XQ? For

Ryan Bailey

XQ Just year first out for if backed out missing unless high of of EBITDA back guide high I the I’m I’m if I for took think revenues the the something offline, we implication which and And and and margin the is connect for guide, sort wrong. something. I’m pretty for end half, of that to I XQ, running I happy the know, full

Pete D’Arrigo

way over to The know. down I half don’t is back initiatives I of the think margin going the have we coming up, ramping Yes, EBITDA be year. the

Ryan Bailey

Okay. I wrong. something calculating must be

Pete D’Arrigo

Yes, maybe we should take We’ll it Brian. offline. with follow-up

Brian Shipman

offline, to chat Happy Yes. right.

Ryan Bailey

Thank you.

Operator

comes The Please Donat Piper ahead. Sandler. from with Chris next question go

Chris Donat

is fee or I coming bounce is one notable I there sort points, any anything than at of guidance doubt typical a just X.X early the just wanted of your Anything on there? rate around the little had of like on or Hey, implied? check mix the basis better pedestrian good two just but quarter second that in everyone. points, asset XX either in which what you going questions, to if basis really sign sort afternoon,

Pete D’Arrigo

a it’s Well, of couple things. – well,

is there mix happened would dramatically the that other than about. I nothing you So, say, no, talked that

higher it’s when on say switch AUM. a the moving benefits we here. we’re that of the I strategies implementing some when see of say we hard a bit flip kind We’re little of would start also to to

fact will about. And but five-year the are a that see talking AUM to the that result benefit, the continue, initiatives starting way, so so a the more in think of period that we seeing much is we’re I dramatic over we’re we higher Yes.

Chris Donat

of, side? three on had of I severance before, personnel or anything of going on it elevated And Is think severance notable it call some quarters addressed it, is changes hiring of the and this Okay. five on just just side then anyway. severance, the one sort sort there you’ve on you’re or but I’ll

Bill Crager

Yes. is Hope Thanks, doing Chris. This you’re Bill. well.

as we did an company. organization. the – business we focused now integration got as aligned, were really started organization we’re project the to We So unit into move a of integrated we on the

As really but who sure part in then retirement program, have us to and been that the opted have we employees an of move organization that seeing a early can treated people we going with the of drive space did into integrated so tail which an forward. make to that that process, you’re way, cleared forward process, end we really supported

company done that. lots as bringing of So we’ve company we’ve of momentum, the of lots in energy the together, had success lots inside

Chris Donat

it. got Okay,

tail So more nothing end new. it’s and

Bill Crager

Nothing new.

Chris Donat

Okay. Thanks, Bill.

Operator

comes The Jefferies. with Surinder go from Thind next question Please ahead.

Bill Crager

Surinder. Hey,

Surinder Thind

question. with question that think my how any in start Thank to assets. trillion you than XX% the in think the Hi, roughly of it when that where a provide the color the of on terms versus on there subscription $X in picture for are I’d I bulk asset business you kind perhaps like XX about guys. about of the big taking subscription the you XX% AUM/A Is of to basis on XX%. through about can licensing greater and points sits

segments? split those how two we where be between revenues think the So incremental about should would

Bill Crager

Yes. Primarily, even predominantly, segment we’re asset-based assets on subs base, driving the focused Surinder. based to in in asset

in our of rate that account. to flow understand client one build examples number XXX% subs the been account we from quarter. pilot of brokerage managed might noted so bank the And the how call another. is program then would the to – great moving there in on. well partner for of was over base, assets the that. And from a one from a how we’ve before with a I ours is accounts We started be of are very into last that a assets transitioning doing broker that program moving again, that And it itself and report accounts substantial of it managed brokerage with and that that we sustained in very client dealer transition successful program higher brokerage can to that benefit

over So, now experience us. of it six been months for has live for

will predominantly the provide need the we’re into client focused fiduciary and to you on. value a and a on you is advisor asset-based assets moving focused based areas end need that’s it the why from value, value, So to asset sub pricing service we’re that

Surinder Thind

pretty you were subscription them then provide helpful. strong. client sounds a you subscription-based net quarter that It Any model, to And the if as two that client things is converted for there? sounds a can that the adjust I it then That’s in you correct? think in clients, the of one and follow-up, of the over was, mentioned like flows demerger the acquired like color AUM-based

Pete D’Arrigo

That’s Yes. correct.

know I from And clear with if the asset enough was based a from change subs it remarks, as so, prepared we’ve the to but like, the client. typically the relationship goes in defined don’t reclassification in I

with presentation client, that’s but bit differently, wanted to in so definition what the And so, client didn’t quite the up this which one again was a little hit moving Yes. another that, consistent happened. from one be showed we basically to

Surinder Thind

Got it.

SME? And the the so what size was of

Pete D’Arrigo

clients, moved to the about would want individual don’t have I specifics it flows. give but

higher look So in in been we or flows, saw out it QX, conversions even you net would net and have excluding conversions. at than you in new QX, take when both QX QX assets when

significant have very inflows We second AUM/A. quarter in

Surinder Thind

AUA was that’s number flat, AUM very the was. assuming because where Yes, it. the Got strong, number but was I’m delta the so

Bill Crager

That’s exactly right.

Pete D’Arrigo

it. that’s Yes,

Surinder Thind

you. thank Okay,

Bill Crager

you. Good with Great. speaking

Operator

from with go next Kramm Instructions] ahead. [Operator comes Please Alex UBS. The question

Bill Crager

Hey, Alex.

Alex Kramm

again. hello Hey,

to in wanted Just couple of squeeze follow-ups. a

the give numbers. think sizable shows side, latest I of always virtually to us really On but nothing I number it, can pretty slide terms the Impact in because dollar cetera. almost that growth have gone asset you that’s that Maybe the missed you in a et billions, portfolios from

dollar, remind portfolios or of actual just quarters be couple in that the us those can products your or of you proprietary a If couple new over in helpful. in general the years would about numbers asset last

Sorry if them. I missed

Pete D’Arrigo

the each Yes, my exact do don’t but Impact, been finger follow-up, Alex. programs, mean dollar we numbers I have Direct in could Yes, a have Indexing Overlay, tip. at of in it those services, significant I percentages but

Bill Crager

question. sure, and I’m that at slide entirely it’s Slide I see is we Otherwise, in think if follow-up. look Take answers that the your X, Alex. a can There not a supplement,

Alex Kramm

Yes.

still growth that quick prepared but give working, there, business in again. what’s the that to subscription us update segment was a correct the and data since segment, wrong, just secondly, nobody down, percentages X, then I right, Slide analytics but about anyways. working I’m think returning so your And I’m path comments think just I not some about remarks you numbers, talked the quarter-over-quarter again has if only dollar what’s to not has made and slightly maybe growth maybe in your

Bill Crager

the signs analytics you, business. very Alex. to make seems It Thank and data encouraging in

couple going Our the – much a rate, been second its dynamics. is business more has into organic growth, to we restoring the part driven we’re of growth that in be we’re year growth half better been of year. the first It’s half the driven analytics low-single beginning by in growth a by of percentage but rate. a turn so couple digits, one Number to the that is is of modestly a positive think, business,

institution financial to business be strong. Our continues

de-emphasize professional certifying That for are those successful new unless our In return to and firms paid in and on rate our in for were encouraging clients. revenue as The ours, users, again, many competitive sign our has engagement portfolio engagements banking, been typically couldn’t international. contracts growth. drive more but those primarily firms slowed road. costs beginning in The been things continue of as we signed open quarter. FinTech decreasing aggregate that revenue of has users. intentional restore we is the us, of get for to FinTech more are We continues they to pipeline FinTechs. to that International then the unless to those we’re growth in international, certified. that continues the down kind we’ve each FinTech UK market one – or for really But over line Those really services very screenscrape firms this last be the that a and

Alex Kramm

Yes, the update. for Thanks excellent.

Bill Crager

Alex. Thank Great. you,

Operator

turn the question-and-answer any for I Crager, to Bill the remarks. to would conference session. like concludes closing This back over CEO,

Bill Crager

to so forward the organization next and our quarter is for quarter. the power much. this the your want thank the look team successful call to Thanks in everybody for much. to again of Envestnet. a you to you industry. I everybody Thank support very ecosystem thank and joining work that this I speaking you very doing for Thank for Envestnet evening

Operator

today’s concludes call. This conference

a for Thank lines. day. pleasant and may You you your have participating disconnect

Envestnet (ENV) 8 Aug 212021 Q2 Earnings call transcript