Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the Envestnet Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. CFO. D'Arrigo, Pete Mr. begin. may D'Arrigo, you

Pete D'Arrigo

Good afternoon, second us today's for Thank XXXX earnings you quarter joining call. on everyone.

well. Before our we webcast one XX-Q Investor begin, Earnings I'd This available section like to point for at website a website Supplemental under Investor section Envestnet.com. and Relations replay of found be our Press is out the Presentation Associated and be month Form being as under can call the of Relations live, Release that our will

factors the be expressed our cause This expectations guarantee from our that to differ During X found will cautionary information slides the can and is by results encourage and a statements information. could potential the we of presentation other for actual those certain forward-looking the supplemental X I statements. SEC call, filings. in the discussing be not to performance. based Further current forward-looking regular of review on you information and on risks, future is uncertainties,

During for measures. presentation Please comparable the measures. this the directly certain non-GAAP these supplemental to our be financial will most appendix in reconciliation financial call, measures refer of GAAP non-GAAP to to a referring we

call Officer. as provide today's remarks, questions. will Crager, on me results. our the XXXX I After to overview Chief a open call Executive prepared company's we Bill Joining of 's Bill company Envestnet an update is the well will and as second quarter

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

get you additional may have questions. You into the back if queue

call Bill. over to that, With will turn the I

Bill Crager

customers EBITDA In we set adjusted industry-leading operating and efficiency. sustained its differentiated shareholders of $XX.X expansion. EPS revenue on for of we for forth growth million, second $X.XX on value $XXX.X adjusted Pete, to quarter, tonight. and is us value posted million, and margin revenue strategic of scale and and executing the with adjusted drive the continue that driving We're path you, our you long-term plan everyone creates for will joining Thank thank for our That

so ecosystem. We with the our have of seeing the Pete business. are bottom integrated our our our This is today our go relationships of greater the deepened scaling will detail deepened into and are in his clients and intentionally and future partners, our has invested, investments we line. competitive advantage, the remarks, benefit capture It let Envestnet the curve we, our WealthTech moments in the WealthTech, in player more and seeing a rapidly economic scale has moving, the spend me and of ahead the and within few on been to of the environment as opportunity. what investing are necessary largest-scaled market business. market in The is in

exactly right been and their We're becoming in ecosystem while growth distance productivity and We've broadest technology, competitors. networked more our modernizing of the integrated partners, of set our of to our more and from intelligent creating to data, our driving solutions. expanding essential focus

consultant out playing close. else of and is it benefit of clients made people Envestnet anybody and will I'd it how is together the our industry bringing an is Investment all Brockenstein like finally strides to like in major has share how the challenging As Joel in underestimate something and think Envestnet their told example don't to News , this future. in silos. market I how build May, shareholders

before in of value into technologies, Envestnet clients with of services, opportunity financial pieces has our of solutions. and platforms by go environment, all XX% created ecosystem example of technology, uptake group, that revenue fiduciary A factoring is our of broker-dealer, ours, assets network with and great related complete contracted together our suite of the This which Envestnet additional about solutions advisors, asset investment hundreds client and expands and and financial data solutions. and a of use of analytics, the management platform includes and to planning our This broader a XX of of integrated all independent and has the entirety our billion an exchanges. it us our the putting by of our

challenging of not market. made. Envestnet business. types growing and solution, that these DNA every for the with revenue flow are our environment, in stronger of a restoration use the more the The is and and engaging while pipeline. us. path neutralized has QX investments to every by our are share providing will but Sure, We're continued benefit engagements significant client faced renewal But but business benefiting are for more this getting opportunities and Envestnet our capabilities, in on from stabilization research overall we've industry accelerated we We're was deeply market headwinds, leveraging more headline we market net

to facing talk we're trajectory is in making coming Tonight, growth what the and importantly, through we'll to explain We're bottom productivity and time the we'll how will progress investments are we spend DNA time discuss and our managing focused margin expenses. XXXX we'll industry on remarks months, cash and business prepared market business on the to to our line, We'll and greater as challenges flow, over for exit very our scale, and profitability restore the driving dynamics, of and flow on revenue the focus in spend terms resulting expansion means and why it of the the about optimistic context the business. growth we

from share flows, an is asset wealth headwind environment over carried in a Our of low stubbornly building XXXX. industry that's business net

that predicted. in we data areas pressure we we just us the we the like to that problems as position others while ahead We doing to solve continue we're putting on and impact, real execute, intelligence, significant of space are said of are do, today into wealth had other integrated market us. for There's accelerates what would scaled trying as areas in move advantage a powerful to participants more this environment

market growth from of the and and advice, we financial independent powering are quarters that based drives In and accounts direction. industry the growth demand industry. more channels, tailwinds strong in and and insights, Increasing is ahead. of fee moving which the advisor are all Envestnet offerings secular for includes the years benefit more UMAs, also managed industry in data segments, for our the engines enabled utilization technology and and industry these

We rate share. asset flows the organic are capitalizing X%. billion, of net These flows the XX of the growth second quarter, representing very our especially an AUM&A from In context broader by gaining industry. in were are healthy,

investors. firms trend seemed term again most buying low mutual example, once ETF ceiling industry long activity seeing pronounced multiple the a other investor worth given among high reported were overhang flat the For that fund QX flows across and in wealth factors, and debt essentially and net

rates public was have that far, so X% X% for companies X% compared and Looking our the growth reported growth. average at growth organic our annualized between organic to

flows think at for added I it's term trends some longer look useful regarding perspective. very to

our the Looking combined few in AUM&A of to of to at AUM&A The In more per accounts times years. of Compared indicators flows business. flows activity X% of the been the to the account the managed flows grew traded dollars our industry services. our the gained of outperformance number seven compared the tampers, on AUM growth in net year-over-year three share those our quarter, are platform million, utilizing industry over of advisor. our last second the year-over-year accounts and advisors last overall, get larger platform leading in flows in our than basis and more points their XX publicly we've XX.X of by types years. about activity reflected have X% on These flows grew more

XX high over indexing, our grown the and these up margin XX% XX% by solutions. the all last couple we CAGR over the of for these in and and assets, months. XX% XX% higher gross profit tax, last accounts, Over a In the Active solutions. is years, net have projected direct advisors to to tandem, from expect selling XX%, advisors few are worth solutions years, next grow

share important and asset for cross flows growth. and story of translate account, margin advisor industry dynamic enable will revenue data in growth The an technology to grounded normalize, adoption accelerated revenue gains, and solutions, for As these sell. higher Envestnet The play is there's and us.

rates cross Over see as more we solutions. time, fee we sell expanding

leading in The higher the of business solutions. and few it promise examples data a a to differentiator, drives share of paying margin term for a me is this is capability longer Let wealth off. flows It practice. in us,

reporting both into meaningfully wide millions accounts XX while two launching held this and has generates over its collectively. billion and which enterprise opportunities, them away managed firms double with digit Our quarter solution, into aggregates increased assets of pipeline

data be managed offering provides our assets industry value wealth has The Envestnet across taken assets. The that to visibility notice. creating will more ultimately more platform tremendous use by

through the an for of billion inside one best awards. of platform was case who the the the plans in by AI share financial important our to clients leading services the Our named XXX based assets is use year. breakthrough platform engine off additional AI An solution end data at

and manager a We're of assets to identifies teams opportunities. allows trillion X for engagement working opportunities more manage platform. over opportunity. This manager financial portfolio to closely more our working Envestnet outcomes. engine we million asset a $X an partners a represents these fee. assets drive strategies and distribution six on with this assuming as client insights our beneficial their partners roughly convert Envestnet cross consolidate basis opportunity sell gross standpoint, profit net point , We're XX% also to every From mutually drive for and with advisor of The to maximize brokerage

gross flows, manage profit to roughly Envestnet billion , six XXX point assuming million of every that basis to For net XX of to a equates fee. brokerage

platform. innovate Envestnet We use and to our for productivity together the drive advisors pieces continue greater of connect the firms to growth and all who and

portfolios that more modernized overlay have prior solutions, This of to solutions tax has see these this our Our analytics. the more year on client the and opportunities and versus of ecosystem including year. and is PMC and to opened proposal firms tool we and turned services, connected FSP entire more exchanges, XX% connected

our We shareholders. a fills for make and it FNZ. creates and and a will long option on clients our more the this through an economics partnership our and cash the with partnership for custody We benefit options gap continue a about with through capturing provide Envestnet this term lot environment benefit to we've progress a digital of unique talked had

the we've and Envestnet it is value accelerating As for integrated our and clients driving pipeline, ecosystem, . bundling opportunities pricing our for creating

and the more sell We've cross seamless of driven marketplace. productive, solutions It with and assets the working operating which is the is our more digital in platform. execution, the on them helping importantly be strategy, data increasing tools. to and drives set created Our Envestnet system, engagement, client engagement network broadest more most

Now, the let's spend a and data moments few on analytics business.

As created the serve we as about foundational the a wealth unique, being we in market to moments and few adopted term well received industry. ago, just is advantage is is spoke and competitively long have what I the

business, have we data That participants This delivered and the build our coupled market of able us, our long in we that in we While quality sets continue other dataset with an to parts greater has to of in customers, revenue insights headwind this in decline the to configurability, challenges to business. out competitive figure wealth move and the resilient been are said, of a vast the pressured research set in business drive users the for work for to particularly non see quarters. increasingly AI space for data has adoption at scale solutions. in driven feature that several things our our

the We coming stabilization of the experience year. the half first with in in indicated XXXX half we weakness second would of

been have datasets. our restoring on focused purposeful We and

quality, of the good the significant and that that and be datasets have to seen. testing progress business best of of year. and production have the are this and end business the feel strength Those back We leading higher revenue XXXX remainder a position to are in will by year with best will live data the we and renewals we will this made should be promising in ever and of clients in in the The bookings point stronger stabilizing we that with why of This beyond. have is interest is we for restoration pricing. quantity

initiatives. XXXX, In margin XX to and of reiterate like a provide first XXXX, expanded in adjusted half would some was margin expenses conviction EBITDA achieving around margin adjusted in I XX% points our our the to XXXX. basis compared EBITDA the performance In our to In XX.X%. the we thoughts even we Next, back by by has expect discipline stronger macro first a made platform. XXXX, to helped half driven headwinds. by combination of investments have This of margin efficiency XXXX and been half the expansion, modernize we of drive expense incremental despite

at XXXX, year the basis we For around the guidance to is full are the for year. XX.X% generate of putting midpoint now us margin points expecting of range, XXX of which our at expansion

we that G&A managing is personnel, takeaway vendors, which costs. key exited are the expenses side, have and on the expense focused the On include investment cycle all

product commitments. key our wavering client initiatives, While not from delivery support strategic and

here are and will investments expense our we enact. actions take specific continue As taken root, have the to

is to headcount year X%. date by Our onshore lower

taken been very hires. As work combining we now the noted that restructuring last done have quarter, joined we action we we have by have unified teams judicious by and selected about technology

reduced the target Both and half XX% efficiently for analytics have estate and half We second the the spend occupancy use in XX% targeted by efforts. year. data as we efficiency first additional our areas by real to more are marketing of

of In X% the reductions with down targeted second X% year. total, in the adjusted year-over-year the are half XXXX expenses first half in of

with making while X% aligned company. our year The drivers of the adjusted this managing needs entire to equates our year-over-year. financial are and excluding All full results being priorities of is revenue focused the fully on clients expenses expenses down our of organization sure of for costs

there additional to via and solutions flows. acceleration normalized XXXX, are room expand in margins confident revenue is beyond and Looking industry growth more our we

the Despite non-wealth and adjusted in in we EBITDA to continue and our challenges progress market on plan to make margins our in committed XX% DNA remain considerable segments, XXXX. the

clients. our modernized , Envestnet the our of solutions, have pieces platform, greater and engagement drive our We adoption expanded connected from

areas we our the As operate our we core on while non-core cycle, this continue that we business. focus review in stage to strategy of are to

accelerate We the cash capital allocation in free are our earnings and in quarters. disciplined and expense to coming flow our

Pete our the for this details I the now of call like outlook provide on rest and to will performance year. turn quarter's the over to who

Pete D'Arrigo

Bill. you Thank

progressing Our second investments. is evidence this of phase through of results provide the business how our quarter

are are seeing XXXX expected, we while effectively to As margins compared expand we our managing expenses.

in the dampen the continued performed While remained this while recovery. during advisors and to quarter, experience industry the well cautious wealth macroeconomy firms flows

described, was execution result for see expectations are signs growth that expansion year in anticipated delivery future revenue to the with we Further, Bill of we of and for margin are continuing Our demonstrating. to which one were be the XXXX as segments. both positive

quarter, our of the For end guidance low in came revenue the range. second at

EBITDA was adjusted of revenue $XXX.X Adjusted range. $XX.X was EBITDA above million. the high $X.XX. EPS million was Adjusted Adjusted was the end while approximately

and release year and guidance and the full earnings continued segments the out our prospective clients QX Our presentation. is present clients both well as the of revenue. for in for laid for environment impacting business Overall, in in subscription QX and supplemental to asset-based the challenges as both

flows wealth industry-wide our continued for segment experience in favorable remain not to flows products, net been although While rate. pressure, flows our average asset-based positive under our has the mix fee as of

QX assumptions the Our for and mix what the flows the increases. year reduces these offsetting guidance for At revenue updated previously net this of had of expected. we from are the year for higher markets point, rest rest from capital our outlook

tech data of still wealth expect channel is upper smaller bank is We signs a and revenue segment subscription XXXX. showing with as to The clients. for segment well analytics wealth as organically positive relatively in segment. challenges grow but The at the part that to had in research mid digits delays single emerging

lowered While client bookings DNA are rest our XXXX, of pipeline. we the positive there signs the for have segment's in and forecast

For adjusted be and $XXX the and be adjusted quarter, between million, $XXX be $X.XX. third EPS to adjusted and EBITDA revenues $X.XX to between million, we and $XX expect between $XX to

between be $X,XXX $XXX $X,XXX EPS adjusted of adjusted are guidance $X.XX. million, For to $XXX modifying and million, a range EBITDA of million revenue the adjusted to $X.XX we year, and our full and and

end from on June always of based capital Our XX. levels assume market markets changes any is guidance does in prior quarter not and as the as

with our EBITDA. leverage we revolving net below adjusted our on notes just of debt times to down convertible Turning June, paid $XXX balance cash X.X March making million in our $XX XXXX million we remaining ratio million, and the facility. credit sheet, In ended the $XX using outstanding

As revolver, June million July. that XXth, of drawn down been only remained has the in on paid million $XX and $XX

be March end by leverage ratio X.X the for the dropping of point year. year, high of EBITDA the this times our expect to We below XXst

and with to to going sheet reduce growing forward. continue leverage expect We EBITDA balance improve our ratio our

quarterly going taxes an XXXX. effective is the change of payment up expectation million in tax estimated taxes expect to of $X quarterly in change year this to to forward legislative and and we immediate $X in over higher near note, from for our than related expect related an recent for paid the XXXX. We'll have $XX the the future. to see near that to cash to to in research We point deductibility around go last term. XXXX expenses $X $X approximately Again, all legislative million of million, quarterly years, increase we QX One eliminating to cash paid development which

you And Envestnet turn for back up remarks. before we his for I'll again . for your Thank support Q&A, final Bill it of to open it

Bill Crager

plan. Envestnet the and on revenue for engagement while is path a forth Thank our marketplace. greater on significant we Pete. growth our you, clients and competitive the We're executing strategic creating margin and set in from demand advantage driving expansion, sustained

continue leading and are the share addressing challenges in gain data We to business. research with flows industry the

to our We expenses technology. of laser solutions, focused confidence continue our network have on upside in and the data, be through will revenue and

team. the better is a day every are And drive put always, are outcomes to to you've work, in growth hallmarks and we our clients, what Hard your clients, your partnership extraordinary for you the innovation, for greater clients. dedication these our As for the trust It member great us thank together. to for industry and your business of the and doing like appreciative organization, every of leading excellence. thank to I'd Envestnet I'm

hand questions. the I'll it back to for Now operator

Operator

Thank you.

session. first Cho And with proceed answer Instructions] and the line now Please our be Thank your a JPMorgan. from comes Michael We with question. question question [Operator will of conducting you.

Michael Cho

here. highlighted, thanks Good question, to Pete. flow I first and that and question My you for touch of kind my Bill. Bill the industry taking just on evening, wanted trends Hi,

AUM bleeding advisor as space from really mean and does well in talked from think your carrying investment here, that terms industry XXXX. and what on it into You and flows, about and In your well, friction as mind? in sentiment causes seat, of what for kind of that normalize mind, from the normalize really is what do in and prolonging investment to your and you

Bill Crager

capital been narrow alternative a and the use Yes. of in half it and you year first back, It healthier the case openings, of lot first stubborn doing income, it's remarks, hasn't time. increased I participated pretty We has whether very well. that narrow, Hope higher clearly because assets, the spend a think the group. that been cash, with along fixed been a healthy stubborn, increased we've And are whenever what's my been that stubborn, focused the had a in you're Michael. market, alternative of right? dynamic. yield that correlates broader there's really tells rate. a And Thank prepared the goes this half market really yields been interest time that's I a it you, think not there, for yes, the out and market And the it as, are data. interesting, account industry but higher of to flows, with are an has on and has markets, a so the word the been that So stocks concentrated I very leaders it's couple

management of data, particularly or market, and negative Then high surprising QX, deeply and suppressed. ICI, of dig that's look asset lot worth at the that even firm, mutual surveys the been whether you which you're in, and of comps the net wealth around health have kind growth the you we returns look QX, a given overall whether an the in management or then of the negative. in at firm, some rates market. or overall that's those ETF a study, data, category, we more survey we And really dig public fund, of is

issue. issue, not an an investment is it's this industry So

Michael, is firms, leaders catalyst? that asset there turns, a debt there, okay, begin to of in and management How I rubbing it rate broaden firms, the out the what the quarter. issue in participation overall management the speak wealth lot the some on I as head turn? you to there's they're business, think does it whether government's was in and leading out market, the overhangs there

certain to there's so an that got You've for cash, the out continue you market about, and to recessionary the got to the need off, this participation flows respond. a banks in alternative overhang and talk broaden in risk you've

the meeting performed, months All really direct dig doing XX% the growth our year-to-date and at of I close growth firm XX in I really any solutions, take look at We're number these of a we're overall in we're I'm index or at, at of active of that's is XX% last growth so capabilities, particularly the XX% away. restoration not these that market organic would have accounts, capability, enrolled that to look look and of We've said, in towards we as at rates, assets, XX% for services, when and over thought chipping upper investment is we're looking the doing. tier in which if I what and be expectation in there. year-over-year well doing impressive, and rate, of to advisors advisors, and some how of instance, a higher or then turn our they're each but look these using advisors what I in we a growth value quicker flows, types yes, began that

that across compared performed on asset what flows upper basis returning of at think in the industry, the we're hopeful. different the opportunities types have those It's of Envestnet were to the the top community. I not of It's points that conversations industry, well. asset for manager the doing comparative into of us, partners basis coming a at probably we has look feedback distribution actual that we the distribute the with the a tier environments are wealth or we're on the is who to growth with lot continue in at lead. the flow I back manager they When to rates tier and

began the a restoration of you'd As flows. to restore, market see

Michael Cho

I on business, it side on commentary clients well. just you're through. sentiment Bill. business, as just that, product what for you clients of purchasing near-term takes what in you curious, some the other Thank guess walk all the just I'm for my of follow-up, curious switch puts the appreciate and the of I Great. gears there your and DNA just and hearing a your Is really is I'm kind pipeline? delaying or hearing matter of it from for again, decisions from investments there you're terms products. from of seat clients

Bill Crager

firms Great. a Thanks, wealth kind with minute firm's growers bookings, of us. of moving at are beginning particularly to broadest the looking DNA the there's are kind of brokerage where those a deep through we're into adopting, of Michael. In on spend walk what and there's good for more top manage demand, move I'll we're firms that tier assets I'll our this managed seeing. product, in there's to set assets kind pipeline, market really data environments, business good adoption, and account and we're high the there's data wealth into

the are are an Say, firms faster having effect rate. at to that effect marketplace. is back hey, It's data return to that great growing a using and this

driving goes we're reiterate that I'd Here numbers a are as is faster very it result is clients. up strong And for are the our and bookings bullish there. pipeline The strong. and again, usage some the so

of had the and tough, difficult of deployment half a which outlook in an rest delays And a fintech client market, that's on and utilize business, that's also type larger year. some impacted rest enthusiastic very particularly impacts know, of year. we're very had the then wealth for impact you fintech the bank there's our and the particular companies first year. about the our market, lower data So verification our There's has the the outlook The offering. the volume for as

with of And share though, and real But asset We activity business, activity circle universe leader that look sets. that momentum in at data over useful generic been We I'll from, something what put we're we, a help do company. is underlying of consumer competition. managers to we research innovated research or years, and particular The space. a business. the who separated for a we into data. de-identify utilize kind that separated in that the that very around space really understand a a capability that in there's been It's challenge,

It last make-up competition make-up the our were set able the data degrading with couple we so That and of and fact, clients. said, years utilize our began to given, our match And to been the the characteristic set that data research in a data was over and, share that's ours. set to create A to was than overnight. That of again set to can't what and restore a it that was focus of the has data ours improve been of competitive and that characteristic kind focus once more over happen or, in happens unique quarters. marketplace. preferenced

value of many, we geographic the enhanced because beginning end our be with shared has of able that been year characteristics users data processed research for high versus of quantity watermark to because real have of the believe, that I to is the many, be to when would data we'll in the quality reasons. demographic contracted of now, share clients. our And and door, set the and the clients watermark it year that I we're our of able millions And of profoundly for the many is that research get year, the reasons, research high clients this provide many, to tell data with you and a millions that to to the many beginning as data many, we being in

that to and the business, year the to the of clients, last couple a that the that earnings that start will faced but that restoration that doesn't business that to level and got and to be weak research a that's end the we'll I'm the we'd of hope year. I with be research the reiterating solve first as going stabilization is we over to half we beginning that So of calls, was, half we that revenue the half half that year, research year. I've the outlook, first as challenge begin helpful. revenue of see our back headwind see in that data that believe, in called now, first was the short-term, of for I of towards believe stabilized the that acquired, share processed, restoration of we've, business. the out

Michael Cho

Appreciate Thanks. Thanks, Bill. it.

Operator

Thank Ryan is your Security. with from question. you. question Please with our next Devin And proceed JMP

Bill Crager

how are you? Devin, Hey,

Devin Ryan

think Pete. Very the I like of expenses. kind fourth How good, at first to just, EPS. the $X.XX quarter, question the the quarter, for on quarter And I I hitting Bill. it fourth something third look Hey, guidance implies $X.XX you? for are if guess for

And step the so third in nice from it implied pretty EPS up quarter.

primarily. sounds driven it that's so And like expense

And so the parts think just trying about there. moving I some to of

you given jumping there's expense the And kind XXXX, of end there's on about also kind a said. to are I'm or timing bit seasonal driving, on. for year, going two level of that the of think things then at but but things a of just better a some the expenses just So trying little the dynamics. about of think these obviously based thinking just point focus. bit are to earlier, getting I a then to efficiencies off pieces maybe There's in to little

Pete D’Arrigo

Yes.

Pete. is Devin. this Thanks, So

comes on bit what that of trajectory, not activities pulled the mentioned things. highlights Bill It's It's a our compared side. But meet the entirely that a And There's be a the the little is in things growth probably of is XXXX. yes, a significantly run side, our we've couple You've And is little little coming where the caught driven. that rate lower. expectations of revenue kind still going kind fourth then kind prior run expense from QX a see been aspect of lower we that down our rate. obviously but that where some growth general on assumptions typically seasonality bit to expense then going higher, it's in quarter were. bit we have to sort to ongoing expense of there lower although in

into the level get higher Bill let I'll So that. of strategy

Bill Crager

Yes.

right. are You

kind of are it's It's the just for flow things not kind the fee begin there our revenue real opportunities couple the you and and between we know, notable rates. asset rate, so pulling the closely to that as in additional the come the interesting the to flow really we're flow partnering to of managers are business Devin, how little now So that they're revenue, year. high a begin will have Included a with And into. year. we're and we to the factoring across will XQ. as in are quarter where year, the will end the as to coming modified from that of And the of span rest rate. that in overall fruition coming kind generate kind of them of of more revenue engagement the we've happen fourth to our generate, that get solutions of assets guidance margin a to we dynamic what bit strategy of, get that But and that

begins empower towards the other for to as our the retirement partnership XQ of business year. will the with get we the end The dynamic on be side revenue

some But then the end highlight the or then as flows line other coming modify much the revenue make are where be of sure to into roll that year. those when of with of see want And kind a is 'XX. headwinds to we're marketplace. assumption And to whenever we'll out and of health of half say, do some And on before very factoring the experienced overall we'll that we opportunities transition. in begins we first I flow the of this begins be of that that ongoing of don't our to ahead we're restoration industry going the we that We're to want So the year. these guide we've are in call be in dynamics the the observers are that pluses hey, happen.

clients. injected that the On couple the done our advantage that into of data market, things. expense environment side, focused we we've deeply look, growth a this competitive we've organization. establishing very the work to on of efficiency power and a given wealth is are and integration One We're we how help that focused the is believe a the

that's big a So deal.

and the growth. advantage creates material grow. to win We'll long-term we share our market, to for And on wealth the continue focus so power continue think, Envestnet to and competitive

It's focus solutions. industry industry A a of a important, the the they're set of where that we're expenses. on in on very and what is more is really utilizing and of Connected data the holistic our we important important, holistic connection focus where that's to more couple to and a a is said technology exactly to headed. ago, this is And Clients are it reflecting the environment and broader our margin But execution strategy. clients. delivering years us to that us integrated, is headed way. and is wealth back utilizing exactly

focused. we're so And

is we That's But Our roll on making priority sustain that the this believe to progress expenses XX% managing every make make going to pretty pretty progress we to progress. firm, are list sure the look progress. mark then position we're when deliver We'll that year adjusted XXXX. EBITDA make that in important a standpoint. And delivering of as And 'XX in corner a from going that profitability we're despite XXXX. We're tight. on that It's make we sharp. strong into it. we we're to headwinds. can by high-water some well in We're a going around to

Devin Ryan

ultimately you some just and as of you. about and it you follow-up like then guys clients Obviously, the cross-sell seem differentiated win-win insights lot a a both for terrific, Okay, and a engine does a been thank on and advisors well. offering And talking of have opportunities.

the understand there do like they I at and just of of just get education how capability? But traction Because getting that time, front in to same about it would really, making an another sure to kind sell just aspect to I'm seems step accelerate do so more Is it the it accelerate the growth And it again, ability know, you cross-sell the of folks get higher, think to don't will? how you more opportunity. and you itself. if function trying

Bill Crager

was firms marketing story It's usage faster The data, and And interest engine it. fact-based of business. up, usage Devin. in data growing there when a some utilizing High degree one. other are you an awesome, return And really than picking is insight said up. strong. is There's bookings important usage the I to, beginning just about are and great it's the as picks there the that talking data-based. are that's Yes, great I it pipeline is The get firms. meaning strong.

And so we're excited about that.

is data on One and will and contracts, for from standpoint an another contracts engine our see ours, And forward of licensing in of the we which those licensing a that as you we this in increased with also, things move bundled connected clients focus renewals insight the the important, is to pricing. are fee renewals. on

is base that And our what it's et products, so into bundling trading, we're cetera. rebalancing, reporting, data doing whether we're

kind data substrate. drive value there add real of of us and will more to platform, provide. that for of value and But And the drive solutions higher the more is of more adoption more higher objective which incremental fiduciary we kind is usage these the

pricing. is platform. It's our to it So go-to-market. going our in embedded It's embedded strategy. in the in in It's embedded embedded the be

Devin Ryan

color. Okay. the Thanks. Appreciate

Bill Crager

Devin. you, right. Thank All

Operator

proceed is from next Pete Thank you. Davidson. your question And with DA question. our Please with Heckmann

Bill Crager

How Pete. you? Hi, are

Pete Heckmann

help getting bit that. a opportunity. interest. getting you're most getting how looks incremental of just for see Thanks on feedback of roll wanted of little margins from the And custody the and it kind might handicap clients, us of if to closer you if maybe up possible, Listen, like to I the kind the just amount Good. or taking to size to involved. start wanted We're where that question. Good. you're terms can on revenue I the my follow the in and opportunity and what

Bill Crager

leaned on it's continuing to Thank Great. I been, Peter. so in and, talked no, about we're you, be Yes, focused priorities.

going I've in work focuses FNZ, on integration about with and clearly work the those spoken past. which of the is One have that we

completely FNZ is those not custody for firm new with A you a speed, we're partnering to the at who a more really have entrant. creating done for of work up environment a great U.S. them. Just are business global digital and

So of the option account but and trade, Peter, out those. connected it's the the of real-time FNZ digital, a past. it in fully be opening, economics industry participate able we're custodian to to exchange another data of clients garner to relationship there because we utilize is or in works real-time that an Today industry, our the FNZ we we'll right? is as option interesting to trust to are system every process, that how not is have with much In able option, batch able versus been that's today. sort which

custody sets from, feature and a they're from are a come that other custody but Those along offering. management with standpoint, also cash

to past, been be very I've good revenue model, and our serve in for is I past that or, very position. business about away been the has you hey, If to this not feel that ecosystem. net good to moved heel kind generator become our outside that we look, have in feel served that of able this are assets a dollars Achilles' that'll us the invest about look cash net very, at, the is, invest but of, I said and resolve going versus the

would believe earnings this think of on it that So maybe other has that in I I firms say, and bring case. the I've what the good is marketplace opportunity said doing calls, will nature prior is the also us. and along is digital FNZ for I a been

lean and FNZ, the world custodians strong as to streamline connect figure very in cetera. net and out with we other invest with with have So to working the account custodians to opening, the partnerships we et digitally administration, very to deep other how

platform. TAMRAC convert I to between generate, able XXX billion would that if that TAMRAC $XX dollars If platform. a be dollars then net of flow those that, on $XX at the platform of of gross net the the look think net the XXX core million is economics about on invest there. trillion to the of would I and invest number revenue the been XX% of really million platform assets, running the at the think the to you a run that sale it's very that, rate interesting able with be engage think work about we're we're to all, those a course partners. of and about billion, between you're talking invest kind it's to during and platform the We, a gross the way year, excited

meaningful. it's So

high really service accounts has ways It's the say to got one real our interest. is these of the lot advice I been different a industry that turnkey. opening of been market, challenges It's before. This purely promise also the to a as has would margin, in successful It's very In hey, digital. industry there. and And world of presented we're is, there's I've And that's multi-custody it's more perspective a servicing, or not operate administrating. time. a

lot We'll in XXXX. of a interest. successes have there's early so And

beginning a we'll get XXXX. So story, business in not And story. 'XX going, there's there build to a definitely 'XX

Pete Heckmann

but assume Great, is you you're helpful. can of just of the about I to how custody thinking some then, And returning these of hitting XXX XXXX? high that like by think XXX, buckets, us buckets one great. I XX% I something points. That's of controls, think in how you remind of larger guess, goal? versus incremental about, basis margins reductions do that's expense terms And, revenue EBITDA expense

Bill Crager

Yes.

market some the We're degree share. we environment than wealth share into normalization higher is restoration of to and percentage There's lot work. or a the these cash There's as money more the be invest be, standpoint, that of a gaining it'll net will waiting into more get carry driving And be we're in markets, competing to kind there. of solutions. sideline. flows platforms. lot of a a us. So a likely for put value on gross net to be That high Those from of

So very to kind put made about of we've advantaged value of motivate couple work higher more solutions. easier adoption and next There'll that and the the good done platform, the we've open we more these has using here, accounts that position towards data of be in feel it because to years. to the the really insights those them. we're drive over And ourselves

our the And cycle that restoration, cycle. market meantime, we're a that line. a meaningfully with In operations we'll created term, over in of be ahead created long drop the We've and we're grow the more market. back a in believe the So time to of will in our Why? efficiency and modernization from amount market. grower, going away to bottom strong will investment ahead growth idea tremendous not teens' Because normalized we'll growth the of this we be a in

in largest head quarters a significant. or our so. are as I'll an And one And add count we Last quarter, count. flat our had, example. five the top history, you exactly that any very volumes traders. trading give did we of Didn't XX% with we head had fewer

normalized on scale what doing it we're doing. head growing. is lower And So The we're we're count the doing across business.

in it effectively. can And we're trading. doing more it see you our that, And

focus, it with of fewer our, administrative able thing that work just the is in more spending You on prioritization do because and focus personnel cloud focus the to that said of business, across a can see the AI be on I part And the We'll where we're before, our which money. costs will serve last drive we've then it and say done business. the I'd is to higher margin. focus,

teams. modernization the the our We three need don't platform environments. connected of We has teams. need operating again, performance don't trading three reporting And

that groups that, to investment consolidate into best and You get can real scale known quality for. start industry the and is the in talent best, those

to as where markets, there So we're going is, we EBITDA the be the normalize of grow company, that'll delivered. profitability and

will the come EBITDA And matter no the I adjusted does. will that line what XX% reiterate top

commitment on deliver will that We to investors.

it. and We flexibility work the room don't that want the doing. is we're so there disrupt to And do to

committed the on very XX% we're very focused to executing also we're EBITDA. So adjusted But it. on

Pete Heckmann

Okay.

to Okay, hear the Bill. seeing confidence Good. forward and great look you. we'll Well, that progress. thank It's to

Operator

Jefferies. Instructions] line proceed Surinder question. of your comes from with next the question you. [Operator with The Thank Please Thind

Bill Crager

Surrender. Hi,

Surinder Thind

I trying sense get on exited for Bill. the focused a cycle you're Hi. the managing now about and guess you Hi, to question, having just talked of the expenses. investment first I'm

just to, at where a it want macro a of issue? versus that trying in hand-holding where that's the Is forward clients? to value be? sell about dynamic currently of think should move high with is of you you fiduciary bit as we at more required a it kind solutions, stage the bit your it there's How is So this of more growth

Bill Crager

Surrender. market-related, very it's Yes,

headline The returns right? 'XX, said, it's market very narrow. positive. healthier you've It's exiting standpoint. I from a a are So green, got, But as

in advisors And so at concentration. it thinking look about not portfolios a way and holistic diversification at when and they're

the a a plan, to when you're so advice financial have automatically financial thinking you posture. how it conservative about ties reasonably and And

the On got you've alternatives hand, now. other

You've And a got for decade. much cash income more yielding, that yields fixed of you've that are, higher other they're been pretty are also they've got steady, safer. than than kind

that to broadens They're and so are market advisors catalyst. money moment work. the for waiting out the waiting put And they for where that

said, index advisor growth, that of we're which new advisors all up couple you statistics. growing Account up we're going usage, XX%. Now, industry, give of in And In one direct assets, I'm significantly a are that business, the year-over-year to advisors our using year-over-year. XX%. XX% platform, leaders are numbers the

So chip continue away. in to the environment, we market

We've headed. the year-over-year. that market broadened you're how and access the accelerated high-value there. see I of catalyst personalized benefit, these our particularly with the all an positioned platform, going occurs, the where using is is ourselves. to solutions, benefit the when footprint firms And more more set product. But that's opportunity And by we've to which XX% contracting account exactly across flow isn't think Advisors in advisors are our it,

Surinder Thind

part helpful. I That's you comment. of then it. caught And also only a made

business. please? about a you heard the Can question areas of I So here. non-core you apologies if clarification that, on something But mention it's just reviewing elaborate

Bill Crager

We're and focused the That focused Sure. exert we're company on in. delivering invested focused tuned on. that got And together use the to. what focus. I'd And we've the to into the the really Surinder. on competitive tuned bringing advantage parts Thank on we've you, what that wealth word our business we're of is and market. is,

evaluations So focus, where it aligned an okay, contribute really closely outside long-term that to what built what really, of a not the those from the are enough adds cycle, as are and not doing advantage is the word we've participate might and what is. really moment, stage from we be wealth what not be And that, again, go to that that get is focused investment at adjacency to competitive start investing be exactly those standpoint what and you through, mission exactly through and on, areas in, what that of we're core to to focus. to core. thinking areas of an that's this you the build to And markets that's and

Surinder Thind

you. Thank it for That's me.

Bill Crager

Surinder. Great. Thank you,

Operator

are you. would closing further this Crager, Thank no CEO There Mr. the over to turn I questions Bill back floor time. for to like comments. at

Bill Crager

Thank you, Camilla.

my want thank we As again, just up, to, of colleagues at all . I wrap Envestnet

clients millions work your I to your to commitment wanted for partners, to next Thank forward seeing way You changing customers households. shareholders do looking is an extraordinary we're making advice of difference. We're quarter. job and all Thank the thank also and to talking offered is and thank the you partnership you. Envestnet that doing our together. a our our you to I'm for millions and and

Operator

concludes today's This teleconference.

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

Envestnet (ENV) 3 Aug 232023 Q2 Earnings call transcript