Envestnet teases ‘game changing’ new tech for advisors during Q1 earnings call

Envestnet teases ‘game-changing’ new tech for advisors, hypes upcoming conference during earnings call

May 6, 2022 12:41 PM

Bill Crager at MarketCounsel 1219.jpg — Envestnet CEO Bill Crager, right, speaks to MarketCounsel CEO Brian Hamburger at MarketCounsel Summit 2019.

Envestnet CEO Bill Crager said he spent a lot of his time in the first quarter of 2022 on the road, traveling to speak with clients and partners about how they view the future of financial services.

The leader of the Chicago-based tech firm and turnkey program said every company he spoke with is accelerating digital transformation. He told those who joined him on a Thursday evening quarterly earnings call that “there is no mistaking the transformation that is coming.”

“And what was so gratifying really is that Envestnet is delivering on it. Our clients are focused first and foremost on meeting their customers' digital expectations,” Crager said during the call, according to a Motley Fool transcript. “Financial planning remains core, but it's shifting from a stand-alone offering to a fully integrated experience. This experience leads to answers that are executed to achieve a person's financial plan. It's a breakthrough that each and every one of the clients I spoke with this quarter are looking for.”

That’s why Crager, who called Q1 2022 “a case study of when financial advice and access to financial information matters the most,” is so excited about what’s next.

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Before getting to the fact that Envestnet saw its revenue increase by 17%; its assets increase by 14.5%; and the number of accounts it serves increase by 29% year over year, the CEO hyped next week’s Envestnet Advisor Summit in Charlotte, North Carolina.

In prepared remarks, he teased that Envestnet will lift the curtain on a number of projects that will have a major impact on advisors and their clients. Among the unveilings on display will be the newly launched Envestnet client portal. Crager described it as a “game-changing” framework that connects all the parts of a consumer's financial life.

Meanwhile, Envestnet’s data and analytics business will spotlight the upcoming launch of Envestnet’s cloud-based data intelligence solution for wealth advisory firms, and the company will introduce technology that is specifically designed to help advisors build their businesses.

“This is the first of its kind and an indication of how the connected parts of Envestnet are creating transformational progress for our clients,” Crager said. “And finally, on display will be a host of exciting enhancements of our fiduciary offerings.

“Really, I can't wait to get there. But what's really great is that our team will showcase the exact implementation strategy we've highlighted for you over these last quarters because it will be very evident that we are doing these things. We are going deeper in our existing client base with value-added solutions. We are modernizing the digital marketplace and paving the way for the future.”

To see the key takeaways from the company’s first-quarter results, scroll down our slideshow. For previous coverage of Envestnet’s earnings, click here.

By the numbers

Envestnet posted revenue of $321.4 million in the period, up 17% year over year, but short of Zacks Equity Research consensus estimates of $322.5 million. On a per-share basis, the company posted a loss of 25 cents. Earnings, adjusted for one-time gains and costs, came to 47 cents per share, better than Zacks estimates of 45 cents per share.

For the current quarter ending in July, Envestnet expects per-share earnings to range from 45 cents to 46 cents. Revenue in the range of $324 million to $326 million is expected for Q2. Envestnet expects full-year earnings in the range of $2.17 to $2.23 per share, with revenue ranging from $1.33 billion to $1.34 billion.

Revenue

Envestnet reported a 27% year-over-year increase in asset-based recurring revenues, which represented 63% of total revenues for the first quarter of 2022, but from 58% of total revenues for Q1 2021. Subscription-based recurring revenues, which represented 36% of total revenues, were up 4%. Professional services and other non-recurring revenues plummeted 34% from the prior-year period.

Losses

Loss from operations was $6.7 million for the first quarter compared to income of $16.8 million for Q1 2021. The company posted a net loss of $14.7 million for the first quarter, a much different result than the net income of $14.9 million for the first quarter of 2021. Net loss per diluted share attributable to Envestnet was 25 cents, down from 27 cents last year.

Adjusted revenue

Adjusted revenue for the first quarter of 2022 grew by 17% to $321.4 million compared to $275.2 million one year ago. But adjusted EBITDA for the first quarter of 2022 dropped 18% year over year to $55.7 million, down from $68.3 million. Adjusted net income decreased 26% to $31 million, and adjusted net income per diluted share decreased 27% to 47 cents from 64 cents in the first quarter of 2021.

Remarks

In his closing remarks, Crager said transformation in the industry demands talented people, driving new technology, new data and new ideas. He believes Envestnet is delivering on all fronts.

“The feedback we are hearing is incredibly validating. The results we've been focused on are moving the needle, and they will accelerate. What's made it possible is the work we have done to bring the parts of Envestnet together. And what it creates is access to the power of an interconnected ecosystem that is fueled by the largest data set in the industry, carrying the broadest most intelligent technology platform in the industry that is network to the most comprehensive marketplace of solutions and partners in the industry.”