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 Envestnet Reports First Quarter 2017 Financial Results
   Wednesday, May 10, 2017 4:05:02 PM ET

Envestnet (ENV ), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for its first quarter ended March 31, 2017.

                                                                                                                                                                                            
                                                                                                                                                 Three Months Ended
Key Financial Metrics                                                                                                                                 March 31,                                                                                                                    %
(in millions except per share data)               2017          2016              Change
------------------------------------------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- --------------------
GAAP:                                                                                                                                   
  Total Revenues                                                                                        $ 157.8                                                                                   $ 131.8                                                                         20%
  Net Loss                                                                                                (13.1 )                                                                                   (11.0 )                                                                       n/m
  Net Loss per Diluted Share                                                                            $ (0.30 )                                                                                 $ (0.26 )                                                                       n/m
     n/m = not meaningful
                                                                                                                                                                                                                                                                          
Non-GAAP:
  Adjusted Revenues(1)                                                                                  $ 157.8                                                                                   $ 132.0                                                                         20%
  Adjusted EBITDA(1)                                                                                       25.8                                                                                      19.2                                                                         35%
  Adjusted Net Income(1)                                                                                   11.5                                                                                       7.8                                                                         48%
  Adjusted Net Income per Diluted Share(1)                                                              $  0.25                                                                                   $  0.18                                                                         39%
                                                                                                                                                                                                                                                                          

"Envestnet is off to a solid start in 2017," said Jud Bergman, Chairman and CEO. "We are focused on growing our business organically and gaining adoption of our unified wealth management technology, our fiduciary services, and our data aggregation and analytics offerings."

"Our intelligent systems for wealth management and financial wellness, showcased at last week’s Advisor Summit, empower our enterprise and advisor partners to deliver better financial outcomes for their clients," concluded Mr. Bergman.

Financial Results for the First Quarter of 2017 Compared to the First Quarter of 2016:

Total revenues increased 20% to $157.8 million for the first quarter of 2017 from $131.8 million for the first quarter of 2016. Asset-based revenues, which were 60% and 63% of total revenues for the first quarter of 2017 and 2016, respectively, increased 14% from the prior year period. Subscription and licensing revenues increased 33% from the prior year period.

Total operating expenses for the first quarter of 2017 increased 11% to $161.1 million from $144.6 million in the prior year period. Cost of revenues increased 23% to $49.2 million for the first quarter of 2017 from $40.2 million for the first quarter of 2016. Compensation and benefits increased 5% to $65.5 million for the first quarter of 2017 from $62.6 million for the prior year period. General and administration expenses increased 19% to $30.5 million for the first quarter of 2017 from $25.7 million for the prior year period.

Loss from operations was $3.4 million for the first quarter of 2017 compared to a loss of $12.8 million for the first quarter of 2016. Net loss attributable to Envestnet, Inc. was $13.1 million, or a loss of $0.30 per diluted share, for the first quarter of 2017 compared to loss of $11.0 million, or a loss of $0.26 per diluted share, for the first quarter of 2016.

Adjusted Revenues for the first quarter of 2017 increased 20% to $157.8 million from $132.0 for the prior year period. Adjusted EBITDA(1) for the first quarter of 2017 increased 35% to $25.8 million from $19.2 million for the prior year period. Adjusted Net Income(1) increased 48% for the first quarter of 2017 to $11.5 million from $7.8 million for the prior year period. Adjusted Net Income Per Share(1) was $0.25, compared to $0.18 in the first quarter of 2016.

Outlook

The Company provided the following outlook for the second quarter ended June 30, 2017 and full year ended December 31, 2017.

In Millions Except Adjusted EPS                                                                     2Q 2017                                                                                             FY 2017
------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------                                          ------------------------------------------------------------------------
GAAP:                                                                                                                                                                             
  AUM/A revenue                                                                                        $  96.5                      -                                         $  97.0                                                                      -
  Subscription and licensing revenue                                                                      57.8                      -                                            58.8                                                                      -
  Professional services and other revenue                                               8.5   -       9.0                                                                      -
                                                                                    -------------------- ----- -------------------- - -------------------- -------------------- -----
  Revenues                                                                                             $ 162.8                      -                                         $ 164.8                                           $ 654                      -                               $        663
                                                                                                                                                                                                                                                                                   
  Cost of revenues                                                                                     $  53.0                      -                                         $  53.5                                                                      -
  Net Income                                                                                                                        -                                                                                                                      -
                                                                                                                                                                                                                                                                                   
  Diluted shares outstanding                                                                                                       46.0                                                                                                                    -
  Net Income per Diluted Share                                                                                                      -                                                                                                                      -
                                                                                                                                                                                                                                                                                   
Non-GAAP:
  Adjusted Revenues(1)                                                                                 $ 163.0                      -                                         $ 165.0                                           $ 655                      -                               $        664
  Adjusted EBITDA(1)                                                                                   $  27.5                      -                                         $  28.5                                           $ 122                      -                               $        127
  Adjusted Net Income per Diluted Share(1)                                                                                         $0.27                                                                                                                   -
                                                                                                                                                                                                                                                                                   

Included in the second quarter and full year 2017 adjusted revenue guidance is an expected deferred revenue fair value adjustment of approximately $0.2 million and $0.8 million, respectively. The Company does not forecast net income or net income per share due to the unpredictable nature of various items adjusted for non-GAAP disclosure purposes, including the periodic GAAP income tax provision.

Conference Call

Envestnet will host a conference call to discuss first quarter 2017 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 (888) 438-5519, or for international callers (719) 325-2328. A replay will be available one hour after the call and can be accessed by dialing (844) 512-2921 or (412) 317-6671 for international callers; the conference ID is 8105840. 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 intelligent systems for wealth management and financial wellness. Envestnet’s unified technology enhances advisor productivity and strengthens the wealth management process. Envestnet empowers enterprises and advisors to more fully understand their clients and deliver better outcomes.

Envestnet enables financial advisors to better manage client outcomes and strengthen their practices. Institutional-quality research and advanced portfolio solutions are provided through Envestnet | PMC, our Portfolio Management Consultants group. Envestnet | Yodlee is a leading data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services. Envestnet | Tamarac provides leading rebalancing, reporting, and practice management software for advisors. Envestnet | Retirement Solutions provides an integrated platform that combines leading practice management technology, research, data aggregation, and fiduciary managed account solutions.

More than 55,000 advisors and 2,500 companies including: 16 of the 20 largest U.S. banks, 38 of the 50 largest wealth management and brokerage firms, over 500 of the largest Registered Investment Advisers, and hundreds of Internet services companies, leverage Envestnet technology and services. Envestnet solutions enhance knowledge of the client, accelerate client on-boarding, improve client digital experiences, and help drive better outcomes for enterprises, advisors, and their clients.

For more information on Envestnet, please visit www.envestnet.com and follow @ENVintel.

(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, accretion on contingent consideration, income tax provision (benefit), depreciation and amortization, non-cash compensation expense, restructuring charges and transaction costs, severance, fair market value adjustment on contingent consideration, litigation related expense, foreign currency and related hedging activity, non-income tax expense adjustment, loss allocation from equity method investment and loss attributable to non-controlling interest.

"Adjusted net income" represents net income before deferred revenue fair value adjustment, accretion on contingent consideration, non-cash interest expense, non-cash compensation expense, restructuring charges and transaction costs, severance, amortization of acquired intangibles, fair market value adjustment on contingent consideration, litigation related expense, foreign currency and related hedging activity, non-income tax expense adjustment, loss allocation from equity method investment and loss attributable to non-controlling interest. Reconciling items are presented gross of tax, and a normalized tax rate is applied to the total of all reconciling items to arrive at adjusted net income.

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

See reconciliation of Non-GAAP Financial Measures on pages 8 and 9 of this press release. Reconciliations are not provided for guidance on such measures as the Company is unable to predict the amounts to be adjusted, such as the GAAP tax provision. The Company’s Non-GAAP Financial 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 for the second quarter and full year of 2017, 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, potential exposure to state and local non-income tax obligations, the Company’s ability to remediate material weaknesses in internal controls over financial reporting and associated costs, 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 services industry, the impact of market and economic conditions on revenues, 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 conditions on the Company’s ability to issue additional debt and equity to fund acquisitions, compliance failures, regulatory or third-party 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, political and regulatory conditions, the impact of fluctuations in interest rates on the Company’s business, ability to expand our relationships with existing customers, grow the number of customers and derive revenue from new offerings such as our data analytic solutions and market research services and premium FinApps, the results of our investments in research and development, our data center and other infrastructure, our ability to realize operating efficiencies, the advantages of our solutions as compared to those of others, our ability to retain and hire necessary employees and appropriately staff our operations, in particular our India operations, and 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 May 10, 2017 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)
                                                                                                                                                              
                                                                                                March 31,                                                                   December 31,
                                                                                                  2017                                                                          2016
                                                                                      -----------------------------                                          ------------------------------------------
Assets
Current assets:
  Cash and cash equivalents                                                                              $  39,479                                                              $               52,592
  Fees and other receivables, net                                                                           44,731                                                                              44,268
  Prepaid expenses and other current assets                                              20,156                                                           16,224
                                                                                      -------------------- -------                                           -------------------- --------------------
       Total current assets                                                             104,366                                                          113,084
                                                                                      -------------------- -------                                           -------------------- --------------------
                                                                                                                                                              
Property and equipment, net                                                                                 33,540                                                                              33,000
Internally developed software, net                                                                          15,792                                                                              14,860
Intangible assets, net                                                                                     254,973                                                                             265,558
Goodwill                                                                                                   432,339                                                                             431,936
Other non-current assets                                                                 13,135                                                           13,963
                                                                                      -------------------- -------                                           -------------------- --------------------
       Total assets                                                                                      $ 854,145                                                              $              872,401
                                                                                      ==================== =======                                           ==================== ====================
                                                                                                                                                              
Liabilities and Equity
Current liabilities:
  Accrued expenses and other liabilities                                                                 $  79,272                                                              $               87,763
  Accounts payable                                                                                          12,618                                                                              11,480
  Current portion of debt                                                                                   60,221                                                                              37,926
  Contingent consideration                                                                                       -                                                                               2,286
  Deferred revenue                                                                       19,591                                                           16,499
                                                                                      -------------------- -------                                           -------------------- --------------------
       Total current liabilities                                                        171,702                                                          155,954
                                                                                      -------------------- -------                                           -------------------- --------------------
                                                                                                                                                              
Convertible Notes                                                                                          154,146                                                                             152,575
Term Notes                                                                                                  70,448                                                                             100,409
Contingent consideration                                                                                     2,700                                                                               2,582
Deferred revenue                                                                                            15,170                                                                              15,643
Deferred rent and lease incentive                                                                           12,327                                                                              12,060
Deferred tax liabilities, net                                                                                8,239                                                                               5,555
Other non-current liabilities                                                            14,614                                                           13,436
                                                                                      -------------------- -------                                           -------------------- --------------------
       Total liabilities                                                                449,346                                                          458,214
                                                                                      -------------------- -------                                           -------------------- --------------------
                                                                                                                                                              
Redeemable units in ERS                                                                                        900                                                                                 900
                                                                                                                                                              
Equity:
  Stockholders’ equity                                                                                     403,501                                                                             412,889
  Non-controlling interest                                                                  398                                                              398
                                                                                      -------------------- -------                                           -------------------- --------------------
       Total liabilities and equity                                                                      $ 854,145                                                              $              872,401
                                                                                      ==================== =======                                           ==================== ====================
                                                                                                                                                                                   
                                                                                                                             
                                                                                                                             Envestnet, Inc.
                                                                                                             Condensed Consolidated Statements of Operations
                                                                                                         (in thousands, except share and per share information)
                                                                                                                               (unaudited)
                                                                                                                                                                                                           
                                                                                                                                                                            Three Months Ended
                                                                                                                                                                                 March 31,
                                                                                                 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           2017                                                               2016          
                                                                                                 -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------
                                                                                                                                                                                                           
Revenues:
  Assets under management or administration                                                                         $               94,162                                                                                   $               82,871
  Subscription and licensing                                                                                                        57,910                                                                                                   43,620
  Professional services and other                                                                                 5,714                                                              5,330  
                                                                                                 -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------
         Total revenues                                                                                         157,786                                                            131,821  
                                                                                                 -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------
                                                                                                                                                                                            
Operating expenses:
  Cost of revenues                                                                                                                  49,226                                                                                                   40,158
  Compensation and benefits                                                                                                         65,532                                                                                                   62,616
  General and administration                                                                                                        30,547                                                                                                   25,727
  Depreciation and amortization                                                                                  15,835                                                             16,080  
                                                                                                 -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------
         Total operating expenses                                                                               161,140                                                            144,581  
                                                                                                 -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------
         Loss from operations                                                                                                       (3,354 )                                                                                                (12,760 )
Other expense, net                                                                                               (5,483 )                                                                              (3,949 )
                                                                                                 -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------
         Loss before income tax provision                                                                                           (8,837 )                                                                                                (16,709 )
Income tax provision (benefit)                                                                                    4,298                                                             (5,716 )
                                                                                                 -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------
                                                                                                                                   (13,135 )                                                                                                (10,993 )
         Net loss
Add: Net loss attributable to non-controlling interest                                                                -                                                                  -  
                                                                                                 -------------------- -------------------- --------------------                                           -------------------- -------------------- --------------------
         Net loss attributable to Envestnet, Inc.                                                                   $              (13,135 )                                                                                 $              (10,993 )
                                                                                                 ==================== ==================== ====================                                           ==================== ==================== ====================
                                                                                                                                                                                                           
Net loss per share attributable to Envestnet, Inc.:
  Basic                                                                                                             $                (0.30 )                                                                                 $                (0.26 )
                                                                                                 ==================== ==================== ====================                                           ==================== ==================== ====================
  Diluted                                                                                                           $                (0.30 )                                                                                 $                (0.26 )
                                                                                                 ==================== ==================== ====================                                           ==================== ==================== ====================
                                                                                                                                                                                                           
Weighted average common shares outstanding:
  Basic                                                                                                      43,362,037                                                         42,506,557  
                                                                                                 ==================== ==================== ====================                                           ==================== ==================== ====================
  Diluted                                                                                                    43,362,037                                                         42,506,557  
                                                                                                 ==================== ==================== ====================                                           ==================== ==================== ====================
                                                                                                                                                                                                                                                     
                                                                                                                               
                                                                                                                        Envestnet, Inc.
                                                                                                        Condensed Consolidated Statements of Cash Flows
                                                                                                                        (in thousands)
                                                                                                                          (unaudited)
                                                                                                                                                                                                             
                                                                                                                                                                              Three Months Ended
                                                                                                                                                                                   March 31,
                                                                                                                ----------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    2017                                                  2016   
                                                                                                                -------------------- ------- --------------------                                           -------------------- ------- --------------------
OPERATING ACTIVITIES:
  Net loss                                                                                                                         $ (13,135 )                                                                                 $ (10,993 )
  Adjustments to reconcile net loss to net cash provided by operating
  activities:
    Depreciation and amortization                                                                                                     15,835                                                                                      16,080
    Deferred rent and lease incentive                                                                                                    182                                                                                        (171 )
    Provision for doubtful accounts                                                                                                       82                                                                                          23
    Deferred income taxes                                                                                                              2,684                                                                                       3,599
    Stock-based compensation expense                                                                                                   7,458                                                                                      11,615
    Non-cash interest expense                                                                                                          3,522                                                                                       2,013
    Accretion on contingent consideration and purchase liability                                                                         156                                                                                          62
    Fair market value adjustment on contingent consideration                                                                               -                                                                                          50
    Loss allocation from equity method investment                                                                                        285                                                                                           -
    Changes in operating assets and liabilities, net of acquisitions:
      Fees and other receivables                                                                                                        (545 )                                                                                    11,278
      Prepaid expenses and other current assets                                                                                       (3,932 )                                                                                    (9,780 )
      Other non-current assets                                                                                                           543                                                                                      (1,556 )
      Accrued expenses and other liabilities                                                                                          (8,758 )                                                                                   (11,335 )
      Accounts payable                                                                                                                   865                                                                                          32
      Deferred revenue                                                                                                                 2,619                                                                                       2,181
      Other non-current liabilities                                                                                 1,140                                                   418  
                                                                                                                -------------------- ------- --------------------                                           -------------------- ------- --------------------
Net cash provided by operating activities                                                                           9,001                                                13,516  
                                                                                                                -------------------- ------- --------------------                                           -------------------- ------- --------------------
                                                                                                                                                                                                             
INVESTING ACTIVITIES:
  Purchase of property and equipment                                                                                                  (4,007 )                                                                                    (1,811 )
  Capitalization of internally developed software                                                                                     (2,091 )                                                                                    (1,388 )
  Purchase of ERS units                                                                                                                    -                                                                                      (1,500 )
  Acquisition of businesses, net of cash acquired                                                                       -                                               (18,125 )
                                                                                                                -------------------- ------- --------------------                                           -------------------- ------- --------------------
Net cash used in investing activities                                                                              (6,098 )                                                                (22,824 )
                                                                                                                -------------------- ------- --------------------                                           -------------------- ------- --------------------
                                                                                                                                                                                                             
FINANCING ACTIVITIES:
  Proceeds from borrowings on revolving credit facility                                                                               25,000                                                                                      15,000
  Payments on revolving credit facility                                                                                                    -                                                                                     (13,000 )
  Payments of contingent consideration                                                                                                (2,286 )                                                                                         -
  Payments of definite consideration                                                                                                    (445 )                                                                                         -
  Payment of Term Notes                                                                                                              (33,862 )                                                                                    (2,000 )
  Proceeds from exercise of stock options                                                                                              1,900                                                                                       1,207
  Purchase of treasury stock for stock-based minimum tax withholdings                                                                 (6,650 )                                                                                    (7,071 )
  Issuance of restricted stock                                                                                          3                                                     4  
                                                                                                                -------------------- ------- --------------------                                           -------------------- ------- --------------------
Net cash used in financing activities                                                                             (16,340 )                                                                 (5,860 )
                                                                                                                -------------------- ------- --------------------                                           -------------------- ------- --------------------
                                                                                                                                                                                                             
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                                                                  324                                                                                           -
                                                                                                                                                                                                             
DECREASE IN CASH AND CASH EQUIVALENTS                                                                             (13,113 )                                                                (15,168 )
                                                                                                                -------------------- ------- --------------------                                           -------------------- ------- --------------------
                                                                                                                                                                                                             
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                                                        52,592                                                                                      51,718
                                                                                                                                                                                          
                                                                                                                --------------------------------------------------                                          --------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                                                                           $  39,479                                                                $  36,550  
                                                                                                                ==================== ======= ====================                                           ==================== ======= ====================
                                                                                                                                                                                                                                          
                                                                                                                           
                                                                                                                       Envestnet, Inc.
                                                                                                        Reconciliation of Non-GAAP Financial Measures
                                                                                                   (in thousands, except share and per share information)
                                                                                                                         (unaudited)
                                                                                                                                                                                                         
                                                                                                                                                                          Three Months Ended
                                                                                                                                                                               March 31,
                                                                                                         ----------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              2017                                                     2016     
                                                                                                         -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
                                                                                                                                                                                                         
Revenues                                                                                                                    $    157,786                                                                                   $    131,821
  Deferred revenue fair value adjustment                                                                           53                                                      211  
                                                                                                         -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
Adjusted revenues                                                                                                           $    157,839                                                                $    132,032  
                                                                                                         ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                         
Net loss                                                                                                                    $    (13,135 )                                                                                 $    (10,993 )
Add (deduct):
  Deferred revenue fair value adjustment                                                                                              53                                                                                            211
  Interest income                                                                                                                    (21 )                                                                                          (14 )
  Interest expense                                                                                                                 4,936                                                                                          4,092
  Accretion on contingent consideration and purchase liability                                                                       156                                                                                             62
  Income tax provision (benefit)                                                                                                   4,298                                                                                         (5,716 )
  Depreciation and amortization                                                                                                   15,835                                                                                         16,080
  Non-cash compensation expense                                                                                                    7,458                                                                                         11,491
  Restructuring charges and transaction costs                                                                                      3,378                                                                                          2,329
  Severance                                                                                                                          325                                                                                            627
  Fair market value adjustment on contingent consideration                                                                             -                                                                                             50
  Litigation related expense                                                                                                         981                                                                                            499
  Foreign currency and related hedging activity                                                                                      290                                                                                           (162 )
  Non-income tax expense adjustment                                                                                                  749                                                                                              -
  Loss allocation from equity method investment                                                                                      285                                                                                             43
  Loss attributable to non-controlling interest                                                                   250                                                      594  
                                                                                                         -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
Adjusted EBITDA                                                                                                             $     25,838                                                                $     19,193  
                                                                                                         ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                         
Net loss                                                                                                                    $    (13,135 )                                                                                 $    (10,993 )
Income tax provision (benefit) (1)                                                                              4,298                                                   (5,716 )
                                                                                                         -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
Loss before income tax provision                                                                                            $     (8,837 )                                                                                 $    (16,709 )
Add (deduct):
  Deferred revenue fair value adjustment                                                                                              53                                                                                            211
  Accretion on contingent consideration and purchase liability                                                                       156                                                                                             62
  Non-cash interest expense                                                                                                        3,522                                                                                          2,013
  Non-cash compensation expense                                                                                                    7,458                                                                                         11,491
  Restructuring charges and transaction costs                                                                                      3,378                                                                                          2,329
  Severance                                                                                                                          325                                                                                            627
  Amortization of acquired intangibles                                                                                            10,585                                                                                         11,926
  Fair market value adjustment on contingent consideration                                                                             -                                                                                             50
  Litigation related expense                                                                                                         981                                                                                            499
  Foreign currency and related hedging activity                                                                                      290                                                                                           (162 )
  Non-income tax expense adjustment                                                                                                  749                                                                                              -
  Loss allocation from equity method investment                                                                                      285                                                                                             43
  Loss attributable to non-controlling interest                                                                   250                                                      594  
                                                                                                         -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
Adjusted net income before income tax effect                                                                                      19,195                                                                                         12,974
Income tax effect (2)                                                                                          (7,678 )                                                                    (5,190 )
                                                                                                         -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
Adjusted net income                                                                                                         $     11,517                                                                $      7,784  
                                                                                                         ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                         
Basic number of weighted-average shares outstanding                                                                           43,362,037                                                                                     42,506,557
Effect of dilutive shares:
  Options to purchase common stock                                                                                             1,744,020                                                                                      1,209,397
  Unvested restricted stock units                                                                             582,641                                                   76,357  
                                                                                                         -------------------- ---------- --------------------                                           -------------------- ---------- --------------------
Diluted number of weighted-average shares outstanding                                                      45,688,698                                               43,792,311  
                                                                                                         ==================== ========== ====================                                           ==================== ========== ====================
                                                                                                                                                                                                         
Adjusted net income per share - diluted                                                                                     $       0.25                                                                $       0.18  
                                                                                                         ==================== ========== ====================                                           ==================== ========== ====================

(1) For the three months ended March 31, 2017 and 2016, the effective tax (benefit) rate computed in accordance with US GAAP equaled 48.6% and (34.2%), respectively.

(2) An estimated normalized effective tax rate of 40% has been used to compute adjusted net income.

                                                                                                                                                                                                                                     
                                                                                                                                                                                                                          Envestnet, Inc.
                                                                                                                                                                                                           Reconciliation of Non-GAAP Financial Measures
                                                                                                                                                                                                                        Segment Information
                                                                                                                                                                                                                          (in thousands)
                                                                                                                                                                                                                            (unaudited)
                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                  For the Three Months Ended March 31, 2017
                                                                                                         ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                              Envestnet                                                                              Envestnet | Yodlee                                                                             Non-Segment                                                                                                         Total
                                                                                                         --------------------------------------------------                                          --------------------------------------------------                                          -------------------------------------------------                                                               --------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                  
Revenues                                                                                                                    $ 121,318                                                                                   $  36,468                                                                                   $      -                                                                                                        $ 157,786
  Deferred revenue fair value adjustment                                                                        29                                                    24                                                    -                                                                         53  
                                                                                                         -------------------- ------- --------------------                                           -------------------- ------- --------------------                                           -------------------- ------ --------------------                                                                -------------------- ------- --------------------
Adjusted revenues                                                                                                           $ 121,347                                                                $  36,492                                                                $      -                                                                                     $ 157,839  
                                                                                                         ==================== ======= ====================                                           ==================== ======= ====================                                           ==================== ====== ====================                                                                ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                  
Income (loss) from operations                                                                                               $  13,511                                                                                   $  (7,708 )                                                                                 $ (9,157 )                                                                                                      $  (3,354 )
Add (deduct):
  Deferred revenue fair value adjustment                                                                                           29                                                                                          24                                                                                          -                                                                                                               53
  Accretion on contingent consideration and purchase liability                                                                    156                                                                                           -                                                                                          -                                                                                                              156
  Depreciation and amortization                                                                                                 6,421                                                                                       9,414                                                                                          -                                                                                                           15,835
  Non-cash compensation expense                                                                                                 3,674                                                                                       2,741                                                                                      1,043                                                                                                            7,458
  Restructuring charges and transaction costs                                                                                      95                                                                                           -                                                                                      3,283                                                                                                            3,378
  Non-income tax expense adjustment                                                                                               749                                                                                           -                                                                                          -                                                                                                              749
  Severance                                                                                                                       116                                                                                         209                                                                                          -                                                                                                              325
  Fair market value adjustment on contingent consideration                                                                          -                                                                                           -                                                                                          -                                                                                                                -
  Litigation related expense                                                                                                        -                                                                                         981                                                                                          -                                                                                                              981
  Other loss                                                                                                                        -                                                                                           -                                                                                          7                                                                                                                7
  Loss attributable to non-controlling interest                                                                250                                                     -                                                    -                                                                        250  
                                                                                                         -------------------- ------- --------------------                                           -------------------- ------- --------------------                                           -------------------- ------ --------------------                                                                -------------------- ------- --------------------
Adjusted EBITDA                                                                                                             $  25,001                                                                $   5,661                                                                $ (4,824 )                                                                                                      $  25,838  
                                                                                                         ==================== ======= ====================                                           ==================== ======= ====================                                           ==================== ====== ====================                                                                ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                  For the Three Months Ended March 31, 2016
                                                                                                         ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                              Envestnet                                                                              Envestnet | Yodlee                                                                             Non-Segment                                                                                                         Total
                                                                                                         --------------------------------------------------                                          --------------------------------------------------                                          -------------------------------------------------                                                               --------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                  
Revenues                                                                                                                    $ 103,190                                                                                   $  28,631                                                                                   $      -                                                                                                        $ 131,821
  Deferred revenue fair value adjustment                                                                       (11 )                                                                    222                                                    -                                                                        211  
                                                                                                         -------------------- ------- --------------------                                           -------------------- ------- --------------------                                           -------------------- ------ --------------------                                                                -------------------- ------- --------------------
Adjusted revenues                                                                                                           $ 103,179                                                                $  28,853                                                                $      -                                                                                     $ 132,032  
                                                                                                         ==================== ======= ====================                                           ==================== ======= ====================                                           ==================== ====== ====================                                                                ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                  
Income (loss) from operations                                                                                               $   9,574                                                                                   $ (14,041 )                                                                                 $ (8,293 )                                                                                                      $ (12,760 )
Add (deduct):
  Deferred revenue fair value adjustment                                                                                          (11 )                                                                                       222                                                                                          -                                                                                                              211
  Accretion on contingent consideration and purchase liability                                                                     62                                                                                           -                                                                                          -                                                                                                               62
  Depreciation and amortization                                                                                                 6,065                                                                                      10,015                                                                                          -                                                                                                           16,080
  Non-cash compensation expense                                                                                                 3,215                                                                                       6,025                                                                                      2,251                                                                                                           11,491
  Restructuring charges and transaction costs                                                                                      87                                                                                           4                                                                                      2,238                                                                                                            2,329
  Severance                                                                                                                         -                                                                                         309                                                                                        318                                                                                                              627
  Fair market value adjustment on contingent consideration                                                                          -                                                                                           -                                                                                         50                                                                                                               50
  Litigation related expense                                                                                                        -                                                                                         499                                                                                          -                                                                                                              499
  Other loss                                                                                                                        -                                                                                           -                                                                                         10                                                                                                               10
  Loss attributable to non-controlling interest                                                                594                                                     -                                                    -                                                                        594  
                                                                                                         -------------------- ------- --------------------                                           -------------------- ------- --------------------                                           -------------------- ------ --------------------                                                                -------------------- ------- --------------------
Adjusted EBITDA                                                                                                             $  19,586                                                                $   3,033                                                                $ (3,426 )                                                                                                      $  19,193  
                                                                                                         ==================== ======= ====================                                           ==================== ======= ====================                                           ==================== ====== ====================                                                                ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                   
                                                                                                                                                                                                       Envestnet, Inc.
                                                                                                                                                                                          Historical Assets, Accounts and Advisors
                                                                                                                                                                                         (in millions, except accounts and advisors)
                                                                                                                                                                                                         (unaudited)
                                                                                                                                                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                   As of
                                                                              ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         March 31,                                                                June 30,                                                               September 30,                                                            December 31,                                                                     March 31,
                                                                                           2016                               2016                               2016                               2016                                     2017
                                                                              --------------------------------------------------- -------------------- --------------------------------------------------- -------------------- --------------------------------------------------- -------------------- --------------------------------------------------- -------------------- ------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                   
Platform Assets
  Assets Under Management (AUM)                                                                  $    95,489                                                              $    96,700                                                              $   101,924                                                              $   105,178                                                              $              113,544
  Assets Under Administration (AUA)                                               207,537         220,690         231,831         241,682                    248,445
                                                                              -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------------------
    Subtotal AUM/A                                                                                   303,026                                                                  317,390                                                                  333,755                                                                  346,860                                                                             361,989
  Licensing                                                                       576,988         685,952         721,690         748,125                    763,372
                                                                              -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------------------
Total Platform Assets                                                                            $   880,014                        $ 1,003,342                        $ 1,055,445                        $ 1,094,985                        $            1,125,361
                                                                              ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ====================
                                                                                                                                                                                                                                                                                                                                                                                   
Platform Accounts
  AUM                                                                                                498,449                                                                  503,147                                                                  519,717                                                                  545,130                                                                             574,132
  AUA                                                                             904,373         935,870         961,590         994,583                    986,554
                                                                              -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------------------
    Subtotal AUM/A                                                                                 1,402,822                                                                1,439,017                                                                1,481,307                                                                1,539,713                                                                           1,560,686
  Licensing                                                                     2,237,427       4,304,645       4,394,670       4,558,883                  4,263,002
                                                                              -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------------------
Total Platform Accounts                                                         3,640,249       5,743,662       5,875,977       6,098,596                  5,823,688
                                                                              ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ====================
                                                                                                                                                                                                                                                                                                                                                                                   
Advisors
  AUM/A                                                                                               35,718                                                                   35,067                                                                   35,861                                                                   36,483                                                                              36,985
  Licensing                                                                        13,675          16,081          16,191          17,852                     18,159
                                                                              -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------------------
Total Advisors                                                                     49,393          51,148          52,052          54,335                     55,144
                                                                              ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ====================
                                                                                                                                                                                                                                                                                                                                                                                                        

The following tables summarize the changes in AUM and AUA for the three months ended March 31, 2017:

                                                                  Gross                            Redemp-                             Net                           Market                          Reclass to               
                                                                                      12/31/2016                                                                 Sales                             tions                             Flows                                                                Impact                                                                 Licensing                                                                  3/31/2017
 In Millions Except Accounts
---------------------------------                                           -----------------------------                                            --------------------------  -------------------- -------------------- -----------------------------   -------------------- -------------------- --------------------------                                            --------------------------                                            ------------------------------                                             ------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
Assets under Management (AUM)                                                                  $   105,178                                                              $ 11,838                                                              $  (7,489 )                                                               $  4,349                                                              $  4,017                                                              $       -                                                                  $    113,544
Assets under Administration (AUA)                                               241,682                                             19,483       (16,718 )         2,765                                              8,889                                              (4,891 )                                                  248,445
                                                                            -------------------- ---------                                           -------------------- ------ -------------------- -------------------- -------------------- ------- -- -------------------- -------------------- -------------------- ------                                           -------------------- ------                                           -------------------- ------- ---                                           -------------------- ----------
  Total AUM/A                                                                                  $   346,860                                                              $ 31,321                        $ (24,207 )                         $  7,114                                           $ 12,906                                                              $  (4,891 )                                                                $    361,989
                                                                            ==================== =========                                           ==================== ====== ==================== ==================== ==================== ======= == ==================== ==================== ==================== ======                                           ==================== ======                                           ==================== ======= ===                                           ==================== ==========
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
     Fee-Based Accounts                                                                          1,539,713                                                                                                                                                                                                                43,737                                                                                                                                      (22,764 )                                                                   1,560,686
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

The above AUM/A gross sales figures include $0.3 billion in new client conversions. The Company onboarded an additional $13.3 billion in licensing conversions during the first quarter, bringing total conversions for the quarter to $13.6 billion.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170510006275r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170510006275/en/

SOURCE: Envestnet

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


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