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 Envestnet Reports Fourth Quarter 2014 Financial Results
   Thursday, February 26, 2015 4:01:18 PM ET

Envestnet (ENV ), a leading provider of unified wealth management technology and services to financial advisors, today reported financial results for its fourth quarter and full year ended December 31, 2014.

Key Financial Metrics                            Fourth Quarter                  %                    Full Year                     %
(in millions except per share data)     2014      2013     Change                        2014       2013      Change
----------------------------------- -------------------- ---------------------------- ---------------------------- --------                     ----------------------------- ----------------------------- --------
                                                                                                                                       
Adjusted Revenues(1)                                      $ 96.8                       $ 74.4                       30 %                         $ 348.7                       $ 242.7                       44 %
Adjusted EBITDA(1)                                        $ 16.6                       $ 11.0                       50 %                         $  55.9                       $  38.6                       45 %
Adjusted Net Income per Share(1)                          $ 0.23                       $ 0.15                       53 %                         $  0.80                       $  0.54                       48 %
 

Financial Results for the Fourth Quarter of 2014 Compared to the Fourth Quarter of 2013:

-- Adjusted Revenues(1) increased 30% to $96.8 million for the fourth quarter of 2014 from $74.4 million for the fourth quarter of 2013.

-- Revenues from assets under management (AUM) or assets under administration (AUA) increased 29% to $81.5 million for the fourth quarter of 2014 from $63.4 million for the fourth quarter of 2013; total revenues, which include licensing and professional services fees, increased 30% to $96.8 million for the fourth quarter of 2014 from $74.4 million for the fourth quarter of 2013.

-- Adjusted EBITDA(1) increased 50% to $16.6 million for the fourth quarter of 2014 compared to $11.0 million for the fourth quarter of 2013.

-- Adjusted Net Income(1) was $8.6 million, or $0.23 per diluted share, for the fourth quarter of 2014 compared to $5.4 million, or $0.15 per diluted share, for the fourth quarter of 2013.

-- Net income attributable to Envestnet, Inc. was $3.7 million, or $0.10 per diluted share, for the fourth quarter of 2014 compared to $0.7 million, or $0.02 per diluted share, for the fourth quarter of 2013.

Financial Results for the Full Year of 2014 Compared to the Full Year of 2013:

-- Adjusted Revenues(1), increased 44% to $348.7 million for 2014 from $242.7 million for 2013.

-- Revenues from AUM or AUA increased 47% to $294.2 million for 2014 from $200.6 million for 2013; total revenues, which include licensing and professional services fees, increased 44% to $348.7 million for 2014 from $242.5 million for 2013.

-- Adjusted EBITDA(1) increased 45% to $55.9 million for 2014 compared to $38.6 million for 2013.

-- Adjusted Net Income(1) was $29.5 million, or $0.80 per diluted share, for 2014 compared to $19.1 million, or $0.54 per diluted share, for 2013.

-- Net income attributable to Envestnet, Inc. was $14.2 million, or $0.38 per diluted share, for 2014 compared to $3.7 million, or $0.10 per diluted share, for 2013.

"During the fourth quarter, Envestnet surpassed two notable milestones - more than $700 billion of platform assets and more than 40,000 advisors served - as we empower excellence in wealth management with our industry-leading solutions," said Jud Bergman, Chairman and CEO.

"We accomplished a great deal in 2014, including the onboarding of nearly $100 billion in new client conversions, the acquisition of Placemark and a successful capital raise. As we execute on our multi-channel and multi-portal strategy, Envestnet is well-positioned to continue delivering strong top and bottom-line growth in 2015 and beyond," concluded Mr. Bergman.

Key Operating Metrics (AUM/A Only) as of and for the Quarter and Year Ended December 31, 2014:

-- Assets: $246.4 billion, up 38% from December 31, 2013

-- Accounts: 977,625, up 33% from December 31, 2013

-- Advisors: 28,605, up 25% from December 31, 2013

-- Gross sales - fourth quarter 2014: $24.1 billion, resulting in net flows of $9.9 billion

-- Gross sales - full year 2014: $99.9 billion, resulting in net flows of $50.0 billion

The following table summarizes the changes in AUM and AUA for the quarter ended December 31, 2014:

In Millions Except Accounts                               9/30/14                                           Placemark                                            Gross                                     Redemp-                                     Net                                              Market                                            12/31/14
                                                                                                                                                                                                                          Sales                                                         tions                                                        Flows                                                                Impact
---------------------------------                      -----------------------------------------------                        ----------------------------------------------                        ----------------------------------------------   -------------------- -----------------------------   -------------------- ----------------------------------------------                        ---------------------------------------------                        -----------------------------------------------
                                                                                                                                                                                                                                                                                        
Assets under Management (AUM)                                             $  54,935                                           $ 15,404                                           $  5,846                                           $  (4,371 )                                          $  1,475                                           $   306                                           $  72,120  
Assets under Administration (AUA)                        164,639                               -                          18,280        (9,861 )       8,419                          1,191                          174,249  
                                                       -------------------- ------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ -------------------- -------------------- -------------------- ------- -- -------------------- -------------------- ------ --------------------                      -------------------- ----- --------------------                      -------------------- ------- --------------------
    Total AUM/A                                                           $ 219,574                                           $ 15,404                                           $ 24,126                        $ (14,232 )                       $  9,894                                           $ 1,497                                           $ 246,369  
                                                       ==================== ======= ====================                      ==================== ====== ====================                      ==================== ====== ==================== ==================== ==================== ======= == ==================== ==================== ====== ====================                      ==================== ===== ====================                      ==================== ======= ====================
        Fee-Based Accounts                                                  897,551                                                                45,187                                                                                                                                                                                           34,887                                                                                                                                     977,625
 

The above AUM/A gross sales figures include $5.0 billion in new client conversions. The Company onboarded an additional $8.9 billion in licensing conversions during the fourth quarter, bringing total conversions for the quarter to $13.9 billion.

The following table summarizes the changes in AUM and AUA for the year ended December 31, 2014:

In Millions Except Accounts                              12/31/13                                           Placemark                                            Gross                                     Redemp-                                      Net                                              Market                                  Reclass to                                   12/31/14
                                                                                                                                                                                                                          Sales                                                         tions                                                         Flows                                                                Impact                                                      Licensing
---------------------------------                      -----------------------------------------------                        ----------------------------------------------                        ----------------------------------------------   -------------------- -----------------------------   -------------------- -----------------------------------------------                        ---------------------------------------------                        ------------------------------                        -----------------------------------------------
                                                                                                                                                                                                                                                                                        
Assets under Management (AUM)                                             $  45,706                                           $ 15,404                                           $ 22,355                                           $ (12,414 )                                          $   9,941                                           $ 1,069                                           $       -                                             $  72,120  
Assets under Administration (AUA)                        132,215                               -                          77,514       (37,424 )       40,090                          5,102        (3,158 )                          174,249  
                                                       -------------------- ------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ -------------------- -------------------- -------------------- ------- -- -------------------- -------------------- ------- --------------------                      -------------------- ----- --------------------                      -------------------- ------- ---                      -------------------- ------- --------------------
    Total AUM/A                                                           $ 177,921                                           $ 15,404                                           $ 99,869                        $ (49,838 )                       $  50,031                                           $ 6,171                                           $  (3,158 )                                           $ 246,369  
                                                       ==================== ======= ====================                      ==================== ====== ====================                      ==================== ====== ==================== ==================== ==================== ======= == ==================== ==================== ======= ====================                      ==================== ===== ====================                      ==================== ======= ===                      ==================== ======= ====================
        Fee-Based Accounts                                                  735,845                                                                45,187                                                                                                                                                                                           220,003                                                                                                                                     (23,410 )                                             977,625
 

The above AUM/A gross sales figures include $28.2 billion in new client conversions. The Company onboarded an additional $66.9 billion in licensing conversions during 2014, bringing total conversions for the year to $95.1 billion.

Review of Fourth Quarter 2014 Financial Results

Adjusted Revenues(1) increased 30% to $96.8 million for the fourth quarter of 2014 from $74.4 million for the fourth quarter of 2013. The increase was primarily due to a 29% increase in revenues from AUM or AUA to $81.5 million from $63.4 million in the prior year period. Revenue from Placemark, acquired by the Company on October 1, 2014, is included for the entire fourth quarter.

Total operating expenses increased 23% to $89.7 million in the fourth quarter of 2014 from $73.0 million in the fourth quarter of 2013. Cost of revenues increased 19% to $38.6 million in the fourth quarter of 2014 from $32.4 million in the fourth quarter of 2013 due to the increase in revenue from AUM or AUA, partially offset by Placemark revenue which is recognized net of manager fees. Compensation and benefits increased 37% to $30.0 million in the fourth quarter of 2014 from $22.0 million in the prior year period primarily due to the inclusion of Placemark and an increase in headcount to support growth in the business. General and administration expenses increased 13% to $15.8 million in the fourth quarter of 2014 from $14.0 million in the prior year period, partly due to the inclusion of Placemark.

Income from operations was $7.1 million for the fourth quarter of 2014 compared to $1.4 million for the fourth quarter of 2013. Net income attributable to Envestnet, Inc. was $3.7 million, or $0.10 per diluted share, for the fourth quarter of 2014 compared to $0.7 million, or $0.02 per diluted share, for the fourth quarter of 2013. Adjusted EBITDA(1) in the fourth quarter of 2014 was $16.6 million, compared to $11.0 million in the fourth quarter of 2013. Adjusted Net Income(1) was $8.6 million, compared to $5.4 million in the fourth quarter of 2013. Adjusted Net Income Per Share(1) was $0.23, compared to $0.15 in the fourth quarter of 2013.

In December 2014, Envestnet completed a $172.5 million convertible bond offering. At December 31, 2014, Envestnet had $209.8 million in cash and cash equivalents, and its revolving credit facility was undrawn with $100 million available.

Conference Call

Envestnet will host a conference call to discuss fourth quarter 2014 financial results today at 5:00 p.m. ET. The live webcast can be accessed from Envestnet’s investor relations website at http://ir.envestnet.com/ . The call can also be accessed live over the phone by dialing (800) 967-7187, or for international callers (719) 457-2644. A replay will be available one hour after the call and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the conference ID is 5939718. The dial-in replay will be available for one week and the webcast replay will be available for one month following the date of the conference call.

About Envestnet

Envestnet, Inc. (ENV ) is a leading provider of unified wealth management technology and services to investment advisors. Our open-architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective and fully-aligned standard of care, and empower advisors to deliver better results.

Envestnet’s Advisor Suite(R) software empowers financial advisors to better manage client outcomes and strengthen their practice. Envestnet provides institutional-quality research and advanced portfolio solutions through our Portfolio Management Consultants group, Envestnet | PMC(R). Envestnet | Tamarac provides leading rebalancing, reporting and practice management software.

(1) Non-GAAP Financial Measures

"Adjusted revenues" exclude the effect of purchase accounting on the fair value of acquired deferred revenue. Under United States generally accepted accounting principles (GAAP), we record at fair value the acquired deferred revenue for contracts in effect at the time the entities were acquired. Consequently, revenue related to acquired entities for periods subsequent to the acquisition does not reflect the full amount of revenue that would have been recorded by these entities had they remained stand-alone entities.

"Adjusted EBITDA" represents net income before deferred revenue fair value adjustment, interest income, interest expense, imputed interest on contingent consideration, income tax provision, depreciation and amortization, non-cash compensation expense, restructuring charges and transaction costs, re-audit related expenses, severance, fair market value adjustment on contingent consideration, litigation related expense, other income and pre-tax loss attributable to non-controlling interest.

"Adjusted net income" represents net income before deferred revenue fair value adjustment, non-cash interest expense, non-cash compensation expense, restructuring charges and transaction costs, re-audit related expenses, severance, amortization of acquired intangibles, imputed interest on contingent consideration, fair market value adjustment on contingent consideration, litigation related expense, other income and net loss attributable to non-controlling interest. Reconciling items are tax effected using the income tax rates noted in the reconciliation table found in this release.

"Adjusted net income per share" represents adjusted net income divided by the diluted number of weighted-average shares outstanding.

See reconciliation of Non-GAAP Financial Measures at the end of this press release. These measures should not be viewed as a substitute for revenues, net income or net income per share determined in accordance with GAAP.

Cautionary Statement Regarding Forward-Looking Statements

The forward-looking statements made in this press release and its attachments concerning, among other things, Envestnet, Inc.’s (the "Company") expected financial performance and outlook, its strategic operational plans and growth strategy are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties and the Company’s actual results could differ materially from the results expressed or implied by such forward-looking statements. Furthermore, reported results should not be considered as an indication of future performance. The potential risks, uncertainties and other factors that could cause actual results to differ from those expressed by the forward-looking statements in this press release include, but are not limited to, difficulty in sustaining rapid revenue growth, which may place significant demands on the Company’s administrative, operational and financial resources, fluctuations in the Company’s revenue, the concentration of nearly all of the Company’s revenues from the delivery of investment solutions and services to clients in the financial advisory industry, the Company’s reliance on a limited number of clients for a material portion of its revenue, the renegotiation of fee percentages or termination of the Company’s services by its clients, the Company’s ability to identify potential acquisition candidates, complete acquisitions and successfully integrate acquired companies, the impact of market and economic conditions on the Company’s revenues, compliance failures, regulatory actions against the Company, the failure to protect the Company’s intellectual property rights, the Company’s inability to successfully execute the conversion of its clients’ assets from their technology platform to the Company’s technology platform in a timely and accurate manner, general economic conditions, changes to the Company’s previously reported financial information as a result of political and regulatory conditions, as well as management’s response to these factors. More information regarding these and other risks, uncertainties and factors is contained in the Company’s filings with the Securities and Exchange Commission ("SEC") which are available on the SEC’s website at www.sec.gov or the Company’s Investor Relations website at http://ir.envestnet.com/ . You are cautioned not to unduly rely on these forward-looking statements, which speak only as of the date of this press release. All information in this press release and its attachments is as of February 26, 2015 and, unless required by law, the Company undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this press release or to report the occurrence of unanticipated events.

                                                                                       Envestnet, Inc.
                                                                            Condensed Consolidated Balance Sheets
                                                                                       (in thousands)
                                                                                         (unaudited)
 
                                                                   December 31,                                        December 31,
                                                                                          2014                                                                   2013
                                                                   --------------------------------------------------                     --------------------------------------------------
Assets
Current assets:
    Cash and cash equivalents                                                         $ 209,754                                           $  49,942  
    Fees and other receivables, net                                                      20,345                                                                 19,848
    Deferred tax assets, net                                                              4,654                                                                  2,462
    Prepaid expenses and other current assets                          7,242                            7,155  
                                                                   -------------------- ------- --------------------                      -------------------- ------- --------------------
        Total current assets                                         241,995                           79,407  
                                                                   -------------------- ------- --------------------                      -------------------- ------- --------------------
                                                                                                                                           
Property and equipment, net                                                              16,629                                                                 12,766
Internally developed software, net                                                        7,023                                                                  5,740
Intangible assets, net                                                                   58,654                                                                 35,698
Goodwill                                                                                104,976                                                                 74,335
Deferred tax assets, net                                                                    565                                                                  8,367
Other non-current assets                                               9,516                            4,929  
                                                                   -------------------- ------- --------------------                      -------------------- ------- --------------------
        Total assets                                                                  $ 439,358                                           $ 221,242  
                                                                   ==================== ======= ====================                      ==================== ======= ====================
                                                                                                                                           
Liabilities and Equity
Current liabilities:
    Accrued expenses                                                                  $  48,247                                                              $  35,242
    Accounts payable                                                                      4,869                                                                  5,528
    Contingent consideration                                                              6,405                                                                  6,008
    Deferred revenue                                                   5,159                            6,245  
                                                                   -------------------- ------- --------------------                      -------------------- ------- --------------------
        Total current liabilities                                     64,680                           53,023  
                                                                   -------------------- ------- --------------------                      -------------------- ------- --------------------
                                                                                                                                           
Convertible notes, less discount                                                        145,203                                                                      -
Contingent consideration                                                                  7,462                                                                 11,297
Deferred revenue                                                                          6,954                                                                  1,148
Deferred rent                                                                             3,588                                                                  2,051
Lease incentive                                                                           5,550                                                                  3,547
Other non-current liabilities                                          2,430                            2,404  
                                                                   -------------------- ------- --------------------                      -------------------- ------- --------------------
        Total liabilities                                            235,867                           73,470  
                                                                   -------------------- ------- --------------------                      -------------------- ------- --------------------
                                                                                                                                           
Redeemable units in ERS, LLC                                                              1,500                                                                      -
                                                                                                                                           
Equity:
Stockholders’ equity                                                                    201,435                                                                147,772
Non-controlling interest                                                 556                                -  
                                                                   -------------------- ------- --------------------                      -------------------- ------- --------------------
        Total liabilities and equity                                                  $ 439,358                                           $ 221,242  
                                                                   ==================== ======= ====================                      ==================== ======= ====================
 
                                                                                                                                                                        Envestnet, Inc.
                                                                                                                                                        Condensed Consolidated Statements of Operations
                                                                                                                                                    (in thousands, except share and per share information)
                                                                                                                                                                          (unaudited)
 
                                                                                                               Three Months Ended                                                                                                               Twelve Months Ended
                                                                                                                                     December 31,                                                                                                                                        December 31,
                                                                            -------------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------------
                                                                                                    2014                                                   2013                                                                      2014                                                   2013
                                                                            -----------------------------------------------------                     -----------------------------------------------------                     -----------------------------------------------------                     -----------------------------------------------------
                                                                                                                                                                                                                                                                                                           
Revenues:
    Assets under management or administration                                                  $     81,516                                                              $     63,418                                                              $    294,223                                                              $    200,568  
    Licensing and professional services                                           15,287                              10,980                              54,525                              41,967  
                                                                            -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
        Total revenues                                                            96,803                              74,398                             348,748                             242,535  
                                                                            -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                           
Operating expenses:
    Cost of revenues                                                                                 38,564                                                                    32,370                                                                   150,067                                                                    98,970
    Compensation and benefits                                                                        30,008                                                                    21,967                                                                   104,457                                                                    77,442
    General and administration                                                                       15,807                                                                    13,968                                                                    54,321                                                                    44,808
    Depreciation and amortization                                                                     5,361                                                                     4,663                                                                    18,651                                                                    15,329
    Restructuring charges                                                              -                                   -                                   -                                 474  
                                                                            -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
        Total operating expenses                                                  89,740                              72,968                             327,496                             237,023  
                                                                            -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                           
        Income from operations                                                                        7,063                                                                     1,430                                                                    21,252                                                                     5,512
Other income (expense):
    Interest income                                                                                      38                                                                         5                                                                       139                                                                        18
    Interest expense                                                                                   (604 )                                                                       -                                                                      (626 )                                                                       -
    Other income (expense), net                                                      (88 )                                                    -                               1,742                                 182  
                                                                            -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
        Total other income (expense)                                                (654 )                                                    5                               1,255                                 200  
                                                                            -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                           
        Income before income tax provision                                                            6,409                                                                     1,435                                                                    22,507                                                                     5,712
Income tax provision                                                               2,716                                 740                               8,528                               2,052  
                                                                            -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                           
        Net and comprehensive income                                                                  3,693                                                                       695                                                                    13,979                                                                     3,660
Add: Net loss attributable to non-controlling interest                                 -                                   -                                 195                                   -  
                                                                            -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
        Net income attributable to Envestnet, Inc.                                             $      3,693                                           $        695                                           $     14,174                                           $      3,660  
                                                                            ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                           
Net income per share attributable to Envestnet, Inc.:
                                                                                                                                                                                                                                                                                                           
    Basic                                                                                      $       0.11                                           $       0.02                                           $       0.41                                           $       0.11  
                                                                            ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                           
    Diluted                                                                                    $       0.10                                           $       0.02                                           $       0.38                                           $       0.10  
                                                                            ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                           
Weighted average common shares outstanding:
    Basic                                                                     34,890,566                          34,001,055                          34,559,558                          33,191,088  
                                                                            ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                           
    Diluted                                                                   37,242,598                          36,339,851                          36,877,599                          35,666,575  
                                                                            ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
 
                                                                                                    Envestnet, Inc.
                                                                                    Condensed Consolidated Statements of Cash Flows
                                                                                                      (unaudited)
                                                                                                    (in thousands)
 
                                                                                                                             Twelve Months Ended
                                                                                                                                                   December 31,
                                                                                             -------------------------------------------------------------------------------------------------------------------------
                                                                                                                    2014                                                2013
                                                                                             --------------------------------------------------                     --------------------------------------------------
OPERATING ACTIVITIES:
    Net income                                                                                                  $  13,979                                                              $   3,660
    Adjustments to reconcile net income to net cash provided by
    operating activities:
        Depreciation and amortization                                                                              18,651                                                                 15,329
        Deferred rent and lease incentive                                                                             275                                                                   (483 )
        Provision for doubtful accounts                                                                                15                                                                    203
        Impairment of long-lived assets                                                                                 -                                                                    330
        Deferred income taxes                                                                                      (4,640 )                                                               (2,546 )
        Stock-based compensation expense                                                                           11,423                                                                  8,738
        Excess tax benefits from stock-based compensation expense                                                  (8,848 )                                                               (3,579 )
        Interest expense                                                                                              626                                                                      -
        Imputed interest expense                                                                                    1,472                                                                    787
        Fair market value adjustment on contingent consideration                                                   (1,432 )                                                                  501
        Changes in operating assets and liabilities:
            Fees and other receivables, net                                                                         1,788                                                                 (9,566 )
            Prepaid expenses and other current assets                                                               9,733                                                                 (1,075 )
            Other non-current assets                                                                                 (873 )                                                               (1,444 )
            Accrued expenses                                                                                        9,784                                                                 12,389
            Accounts payable                                                                                         (659 )                                                                2,914
            Deferred revenue                                                                                        4,677                                                                  1,625
            Other non-current liabilities                                                           26                            1,074  
                                                                                             -------------------- ------- --------------------                      -------------------- ------- --------------------
Net cash provided by operating activities                                                       55,997                           28,857  
                                                                                             -------------------- ------- --------------------                      -------------------- ------- --------------------
                                                                                                                                                                     
INVESTING ACTIVITIES:
    Purchase of property and equipment                                                                             (6,177 )                                                               (6,125 )
    Capitalization of internally developed software                                                                (3,382 )                                                               (3,143 )
    Acquisition of businesses, net of cash acquired                                            (59,570 )                                            (8,992 )
                                                                                             -------------------- ------- --------------------                      -------------------- ------- --------------------
Net cash used in investing activities                                                          (69,129 )                                           (18,260 )
                                                                                             -------------------- ------- --------------------                      -------------------- ------- --------------------
                                                                                                                                                                     
FINANCING ACTIVITIES:
    Proceeds from issuance of convertible notes                                                                   172,500                                                                      -
    Convertible notes issuance costs                                                                               (5,533 )                                                                    -
    Proceeds from bank indebtedness                                                                                30,000                                                                      -
    Payment of bank indebtedness                                                                                  (30,000 )                                                                    -
    Payment of contingent consideration                                                                            (6,000 )                                                                    -
    Payment of promissory note                                                                                     (1,500 )                                                                    -
    Issuance of ERS, LLC redeemable units                                                                           1,500                                                                      -
    Proceeds from exercise of stock options                                                                         5,190                                                                  6,400
    Excess tax benefits from stock-based compensation expense                                                       8,848                                                                  3,579
    Purchase of treasury stock for stock-based minimum tax withholdings                                            (2,062 )                                                                 (622 )
    Issuance of restricted stock                                                                                        1                                                                      1
    Proceeds from exercise of warrants                                                               -                                4  
                                                                                             -------------------- ------- --------------------                      -------------------- ------- --------------------
Net cash provided by financing activities                                                      172,944                            9,362  
                                                                                             -------------------- ------- --------------------                      -------------------- ------- --------------------
                                                                                                                                                                     
INCREASE IN CASH AND CASH EQUIVALENTS                                                          159,812                           19,959  
                                                                                             -------------------- ------- --------------------                      -------------------- ------- --------------------
                                                                                                                                                                     
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                                     49,942                                                                 29,983
                                                                                                                                                  
                                                                                             --------------------------------------------------                     --------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                                                        $ 209,754                                           $  49,942  
                                                                                             ==================== ======= ====================                      ==================== ======= ====================
 
                                                                                                                                                                           Envestnet, Inc.
                                                                                                                                                            Reconciliation of Non-GAAP Financial Measures
                                                                                                                                                       (in thousands, except share and per share information)
                                                                                                                                                                             (unaudited)
 
                                                                                                                     Three Months Ended                                                                                                               Twelve Months Ended
                                                                                                                                           December 31,                                                                                                                                        December 31,
                                                                                  -------------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------------
                                                                                                          2014                                                   2013                                                                      2014                                                   2013
                                                                                  -----------------------------------------------------                     -----------------------------------------------------                     -----------------------------------------------------                     -----------------------------------------------------
                                                                                                                                                                                                                                                                                                                 
Revenues                                                                                             $     96,803                                                              $     74,398                                                              $    348,748                                                              $    242,535
    Deferred revenue fair value adjustment                                                   -                                   -                                   -                                 160  
                                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Adjusted revenues                                                                                    $     96,803                                           $     74,398                                           $    348,748                                           $    242,695  
                                                                                  ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                 
Net income                                                                                           $      3,693                                                              $        695                                                              $     13,979                                                              $      3,660
Add (deduct):
    Deferred revenue fair value adjustment                                                                      -                                                                         -                                                                         -                                                                       160
    Interest income                                                                                           (38 )                                                                      (5 )                                                                    (139 )                                                                     (18 )
    Interest expense                                                                                          604                                                                         -                                                                       626                                                                         -
    Income tax provision                                                                                    2,716                                                                       740                                                                     8,528                                                                     2,052
    Depreciation and amortization                                                                           5,361                                                                     4,663                                                                    18,651                                                                    15,329
    Non-cash compensation expense                                                                           2,980                                                                     2,457                                                                    11,423                                                                     8,919
    Restructuring charges and transaction costs                                                             1,008                                                                     1,124                                                                     2,672                                                                     3,297
    Re-audit related expenses                                                                                   -                                                                       105                                                                         -                                                                     3,110
    Severance                                                                                                 717                                                                       365                                                                       735                                                                       790
    Imputed interest expense on contingent consideration                                                      363                                                                       395                                                                     1,472                                                                       787
    Fair market value adjustment on contingent consideration                                               (1,090 )                                                                     501                                                                    (1,432 )                                                                     501
    Litigation related expense                                                                                  -                                                                         -                                                                        18                                                                         7
    Other income                                                                                                -                                                                         -                                                                    (1,825 )                                                                       -
    Pre-tax loss attributable to non-controlling interest                                  295                                   -                               1,230                                   -  
                                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Adjusted EBITDA                                                                                      $     16,609                                           $     11,040                                           $     55,938                                           $     38,594  
                                                                                  ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                 
Net income                                                                                           $      3,693                                                              $        695                                                              $     13,979                                                              $      3,660
Add (deduct):
    Deferred revenue fair value adjustment                                                                      -                                                                         -                                                                         -                                                                        93
    Non-cash interest expense                                                                                 195                                                                         -                                                                       195                                                                         -
    Non-cash compensation expense                                                                           1,788                                                                     1,425                                                                     6,854                                                                     5,173
    Restructuring charges and transaction costs                                                               777                                                                       991                                                                     2,025                                                                     2,252
    Re-audit related expenses                                                                                   -                                                                        62                                                                         -                                                                     1,804
    Severance                                                                                                 430                                                                       211                                                                       440                                                                       458
    Amortization of acquired intangibles                                                                    2,013                                                                     1,537                                                                     6,385                                                                     4,903
    Imputed interest expense on contingent consideration                                                      218                                                                       229                                                                       883                                                                       456
    Fair market value adjustment on contingent consideration                                                 (655 )                                                                     291                                                                      (859 )                                                                     291
    Litigation related expense                                                                                  -                                                                         -                                                                        11                                                                         4
    Other income                                                                                                -                                                                         -                                                                    (1,095 )                                                                       -
    Net loss attributable to non-controlling interest                                      177                                   -                                 719                                   -  
                                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
Adjusted net income                                                                                  $      8,636                                           $      5,441                                           $     29,537                                           $     19,094  
                                                                                  ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                 
Diluted number of weighted-average shares outstanding                               37,242,598                          36,339,851                          36,877,599                          35,666,575  
                                                                                  ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                 
Adjusted net income per share - diluted                                                              $       0.23                                           $       0.15                                           $       0.80                                           $       0.54  
                                                                                  ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== ========== ====================
Note:    Adjustments, excluding non-deductible transaction costs, are tax
                            effected using an income tax rate of 40.0% and 42.0% for 2014 and
                            2013, respectively. Pre-tax loss attributable to non-controlling
                            interest assumes losses are allocated to Envestnet Retirement
                            Solutions, LLC members pro-rata based on ownership percentage.
 
                                                                                                                                                                                                  Envestnet, Inc.
                                                                                                                                                                                     Historical Assets, Accounts and Advisors
                                                                                                                                                                                    (in millions, except accounts and advisors)
                                                                                                                                                                                                    (unaudited)
 
                                                                                                                                                                                                                  As of
                                                           ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               December 31,                                            March 31,                                             June 30,                                            September 30,                                         December 31,
                                                                                   2013                                                  2014                                                  2014                                                  2014                                                  2014
                                                           -------------------------------------------------   -------------------- -------------------------------------------------   -------------------- -------------------------------------------------   -------------------- -------------------------------------------------   -------------------- -------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                
Platform Assets
    Assets Under Management (AUM)                                             $    45,706                                           $    49,383                                           $    53,063                                           $    54,935                                           $    72,120  
    Assets Under Administration (AUA)                          132,215         146,748         156,723         164,639         174,249  
                                                           -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
        Subtotal AUM/A                                                            177,921                                                                  196,131                                                                  209,786                                                                  219,574                                                                  246,369
    Licensing                                                  358,919         376,341         412,141         448,169         466,982  
                                                           -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Total Platform Assets                                                         $   536,840                        $   572,472                        $   621,927                        $   667,743                        $   713,351  
                                                           ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                                
Platform Accounts
    AUM                                                                           211,039                                                                  226,452                                                                  239,367                                                                  255,359                                                                  310,351
    AUA                                                        524,806         566,139         596,886         642,192         667,274  
                                                           -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
        Subtotal AUM/A                                                            735,845                                                                  792,591                                                                  836,253                                                                  897,551                                                                  977,625
    Licensing                                                1,508,254       1,559,188       1,659,313       1,830,678       1,881,352  
                                                           -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Total Platform Accounts                                      2,244,099       2,351,779       2,495,566       2,728,229       2,858,977  
                                                           ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                                
Advisors
    AUM/A                                                                          22,838                                                                   24,369                                                                   24,945                                                                   24,887                                                                   28,605
    Licensing                                                    7,794           8,025           8,583          11,266          11,632  
                                                           -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Total Advisors                                                  30,632          32,394          33,528          36,153          40,237  
                                                           ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ====================
Notes:
 
(1)      During the third quarter of 2014, approximately $3.2 billion in
                            assets, 23,000 accounts and 1,100 advisors were reclassified from
                            AUA to Licensing in connection with client conversion activity.
 
(2)                         Metrics as of December 31, 2014 include Placemark, which added
                            approximately $15.4 billion in AUM, 45,000 accounts and 3,400
                            advisors as of October 1, 2014.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20150226006593r1&sid=cmtx6&distro=nx&lang=en

SOURCE: Envestnet, Inc.

Envestnet, Inc. 
Investor Relations 
investor.relations@envestnet.com 
312-827-3940 
or 
Media Relations 
mediarelations@envestnet.com


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