Envestnet(US:ENV)2024-11-08 21:01Financial Performance - Envestnet reported a non-cash impairment charge to goodwill of $96.3 million due to a strategic shift in the Envestnet Data & Analytics segment as of June 30, 2024[108]. - The company recognized a $19.5 million non-cash gain from the deconsolidation of a private company's assets and liabilities effective April 1, 2024[109]. - Envestnet's asset-based recurring revenue has been steadily increasing since the three months ended March 31, 2023, following a downturn in 2022[113]. - The company incurred $14.2 million in write-offs of net capitalized internally developed software costs during the nine months ended September 30, 2024[110]. - Envestnet has experienced losses from operations in every quarter since December 31, 2021, except for September 30, 2023, March 31, 2024, and September 30, 2024[112]. - Net income attributable to Envestnet, Inc. for the three months ended September 30, 2024 was a loss of $1,661 thousand, compared to a profit of $7,091 thousand in the same period last year, representing a decline of 123%[126]. - Net loss attributable to Envestnet, Inc. was $78.3 million for the nine months ended September 30, 2024, compared to a net loss of $55.6 million in the same period of 2023, representing a 41% increase in loss[1]. - The total income (loss) from operations for the nine months ended September 30, 2024, was $(59,833), compared to $(25,768) for the same period in 2023, reflecting a decline in profitability[227]. Revenue and Growth - Total revenue for the three months ended September 30, 2024, was $345.9 million, a 9% increase from $316.8 million in the same period of 2023[127]. - Total recurring revenue for Envestnet Wealth Solutions was $307,697 thousand for the three months ended September 30, 2024, a 12% increase from $274,901 thousand in the same period last year[126]. - Total recurring revenue for the nine months ended September 30, 2024, was $997.9 million, a 10% increase from $903.6 million in the same period of 2023[1]. - Total AUM/A reached $495,995 million as of September 30, 2024, up from $430,846 million at the end of December 2023, reflecting a growth of 15.1%[123]. - Subscription conversions for the three months ended September 30, 2024 totaled $76.2 billion, including $13.6 billion in new client conversions[122]. - Asset-based recurring revenue increased by $31.1 million, or 16%, reaching $225.0 million, primarily due to an increase in asset values[128]. - Total AUM/A reached $1,006,448 million as of September 30, 2024, up from $846,847 million at the end of December 2023, marking an 18.8% increase[123]. Operating Expenses - Total operating expenses increased by $22.7 million, or 7%, totaling $338.9 million, driven by higher general and administrative expenses[127]. - Employee compensation decreased by $9.8 million, or 9%, to $103.5 million, mainly due to reductions in severance and payroll-related expenses[135]. - General and administrative expenses rose by $13.3 million, or 27%, primarily due to merger-related costs and other charges[137]. - Total operating expenses increased by $125.2 million, or 13%, for the nine months ended September 30, 2024, compared to the same period in 2023[1]. - Employee compensation decreased by $33.4 million, or 10%, for the nine months ended September 30, 2024, primarily due to reductions in severance and salaries[150]. Strategic Initiatives - The merger with Bain Capital Private Equity is expected to close in the fourth quarter of 2024, with shareholders approving the merger on September 24, 2024[107]. - Envestnet's strategic initiatives aim to reshape the organization and reduce future operating expenses, despite negatively impacting short-term results[114]. - The company has changed its reportable segments as of October 1, 2023, to better reflect its operational structure[119]. Cash Flow and Liquidity - Free cash flow for the three months ended September 30, 2024, was $123.343 million, a significant improvement from a negative free cash flow of $(15.626) million in the same period of 2023[224]. - Net cash provided by operating activities for the three months ended September 30, 2024, was $186.409 million, compared to $73.766 million for the same period in 2023, indicating a substantial increase of 152.5%[224]. - The company plans to actively manage cash balances to ensure liquidity requirements are met for both short and long-term operations[231]. - As of September 30, 2024, the Company had total cash and cash equivalents of $193.4 million, with no amounts outstanding under the Revolving Credit Facility and $500.0 million available to borrow[234]. Impairment and Non-Cash Charges - Goodwill impairment increased by $96.3 million, or 100%, for the nine months ended September 30, 2024, due to a non-cash impairment charge recognized in the Envestnet Data & Analytics segment[154]. - The company reported a goodwill impairment of $96.269 million for the nine months ended September 30, 2024, with no such impairment reported for the same period in 2023[222]. - Non-cash compensation expenses for the nine months ended September 30, 2024, totaled $53,204, compared to $58,141 for the same period in 2023, showing a decrease of approximately 8.3%[227][228].