Envestnet (NYSE:ENV), a leading provider of intelligent systems for wealth management and financial wellness, today reported financial results for the three and six months ended June 30, 2024.

	Three months ended								Six months ended
Key Financial Metrics	June 30,						%		June 30,						%
(in millions, except per share data)		2024			2023		Change			2024			2023		Change
GAAP:
Total revenue	$	348.3		$	312.4		11	%	$	673.2		$	611.1		10	%
Net loss attributable to Envestnet, Inc.	$	(79.2	)	$	(21.4	)		*	$	(76.7	)	$	(62.6	)	(22	)%
Net loss attributable to Envestnet, Inc. per diluted share	$	(1.44	)	$	(0.39	)		*	$	(1.39	)	$	(1.15	)	(21	)%

Non-GAAP:
Adjusted EBITDA⁽¹⁾	$	77.8		$	56.0		39	%	$	148.2		$	110.0		35	%
Adjusted net income⁽¹⁾	$	36.4		$	30.4		20	%	$	75.8		$	60.5		25	%
Adjusted net income per diluted share⁽¹⁾	$	0.55		$	0.46		20	%	$	1.14		$	0.91		25	%
Free cash flow⁽¹⁾	$	67.0		$	36.7		83	%	$	47.1		$	(25.1	)		*

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*Not meaningful

Jim Fox, Board Chair and Interim CEO, said: "We look forward to the successful completion of our pending transaction with Bain Capital and the value it will deliver to our shareholders. We remain committed to maintaining our leading position, which is based on executing on what our clients need and deepening our relationships with them."

Financial Results for the Second Quarter 2024 Compared to the Second Quarter 2023

Total revenue increased 11% to $348.3 million for the second quarter of 2024 from $312.4 million for the second quarter of 2023. Asset-based recurring revenue increased 18% and represented 63% of total revenue for the second quarter of 2024, compared to 59% of total revenue for the second quarter of 2023. Subscription-based recurring revenue increased 3% and represented 34% of total revenue for the second quarter of 2024, compared to 37% of total revenue for the second quarter of 2023. Professional services and other non-recurring revenue decreased 8% for the second quarter of 2024 from the second quarter of 2023.

Total operating expenses increased 29% to $423.8 million for the second quarter of 2024 from $327.7 million for the second quarter of 2023. Direct expense increased 16% to $144.4 million for the second quarter of 2024 from $124.2 million for the second quarter of 2023. Employee compensation decreased 11% to $104.1 million for the second quarter of 2024 from $117.1 million for the second quarter of 2023. Employee compensation was 30% of total revenue for the second quarter of 2024, compared to 37% of total revenue for the second quarter of 2023. General and administrative expense decreased 3% to $52.9 million for the second quarter of 2024 from $54.4 million for the second quarter of 2023. General and administrative expense was 15% of total revenue for the second quarter of 2024, compared to 17% of total revenue for the second quarter of 2023. A non-cash goodwill impairment charge of $96.3 million and a non-cash gain on deconsolidation of non-controlling interest of $19.5 million were recognized during the second quarter of 2024.

Loss from operations was $75.5 million for the second quarter of 2024 compared to a loss from operations of $15.3 million for the second quarter of 2023. Net loss attributable to Envestnet, Inc. was $79.2 million, or $1.44 per diluted share, for the second quarter of 2024 compared to a net loss attributable to Envestnet, Inc. of $21.4 million, or $0.39 per diluted share, for the second quarter of 2023.

Adjusted EBITDA⁽¹⁾ increased 39% to $77.8 million for the second quarter of 2024 from $56.0 million for the second quarter of 2023. Adjusted net income⁽¹⁾ increased 20% to $36.4 million, or $0.55 per diluted share, for the second quarter of 2024 from $30.4 million, or $0.46 per diluted share, for the second quarter of 2023. Free cash flow⁽¹⁾ increased 83%, to $67.0 for the second quarter of 2024 from $36.7 for the second quarter of 2023.

Balance Sheet and Liquidity

As of June 30, 2024, Envestnet had $122.0 million in cash and cash equivalents and $892.5 million in outstanding debt. Debt as of June 30, 2024 consisted of $317.5 million in convertible notes maturing in 2025 and $575.0 million in convertible notes maturing in 2027. Envestnet's $500.0 million revolving credit facility was undrawn as of June 30, 2024.

Segment Reporting

On October 1, 2023, the Company changed the composition of its reportable segments to reflect the way that the Company's chief operating decision maker reviews the operating results, assesses performance and allocates resources. All segment information presented within this Exhibit 99.1 for the three and six months ended June 30, 2024 is presented in conjunction with the current organizational structure, with prior periods adjusted accordingly.

Correction of Immaterial Errors

In July 2024, the Company identified that as a result of a clerical error an event of default had occurred pursuant to the indenture under which the Convertible Notes due 2025 had been issued, and therefore the Convertible Notes due 2025 should have been classified as current debt instead of as non-current debt as previously recorded in the condensed consolidated balance sheets. Upon identification, the Company promptly cured the technical default. Upon analysis, the Company concluded that the classification error was immaterial in prior period financial statements as the event of default was caused by a clerical error and was not reflective of noncompliance with any factors impacting the Company's liquidity or financial covenants. If the Company had identified the technical default in the prior period and classified the debt as current, the matter would have been disclosed and promptly resolved. Therefore, amendment of previously filed reports was not required. However, the Company corrected this immaterial error in the prior year reported within this press release.

During the fourth quarter of 2023, the Company identified that the arrangement with a third-party for the use of cloud hosted virtual servers which was previously accounted for as a finance lease transaction and included as a component of property and equipment, net in the condensed consolidated balance sheets should have been recognized as a prepayment included within prepaid expenses and other current assets and other assets in the condensed consolidated balance sheets. The Company concluded that the classification of these transactions was immaterial in prior period financial statements and that amendment of previously filed reports was not required. However, the Company corrected this immaterial error in the prior periods reported within this press release.

Conference Call

Envestnet will host a conference call to discuss second quarter 2024 financial results on August 12, 2024 at 5:00 p.m. ET. The live webcast and accompanying presentation can be accessed from Envestnet's investor relations website at http://investor.envestnet.com/. A replay of the webcast will be available on the investor relations website following the call.

About Envestnet

Envestnet, Inc. (NYSE:ENV) is transforming the way financial advice and insight are delivered. Our mission is to empower financial advisors and service providers with innovative technology, solutions and intelligence. Envestnet's clients include more than 110,000 advisors, 17 of the 20 largest U.S. banks, 48 of the 50 largest wealth management and brokerage firms, over 500 of the largest RIAs and hundreds of FinTech companies, all of which leverage Envestnet technology and services that help drive better outcomes for enterprises, advisors and their clients.

For more information on Envestnet, please visit http://www.envestnet.com and follow us on Twitter @ENVintel.

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(1) Non-GAAP Financial Measures

"Adjusted EBITDA" represents net income (loss) before deferred revenue fair value adjustment, interest income, interest expense, income tax provision (benefit), depreciation and amortization, goodwill impairment, gain on deconsolidation, non‑cash compensation expense, restructuring charges and transaction costs, severance expense, litigation, regulatory and other governance related expenses, foreign currency, non-income tax expense adjustment, fair market value adjustments to investments in private companies, (gain) loss from equity method investments and loss attributable to non‑controlling interest.

"Adjusted net income" represents net income (loss) before income tax provision (benefit), gain (loss) from equity method investments, deferred revenue fair value adjustment, non‑cash interest expense, cash interest on our Convertible Notes, amortization of acquired intangibles, goodwill impairment, gain on deconsolidation, non‑cash compensation expense, restructuring charges and transaction costs, severance expense, litigation, regulatory and other governance related expenses, foreign currency, non-income tax expense adjustment, fair market value adjustments to investments in private companies 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. The normalized tax rate is based solely on the estimated blended statutory income tax rates in the jurisdictions in which we operate. We monitor the normalized tax rate based on events or trends that could materially impact the rate, including tax legislation changes and changes in the geographic mix of our operations.

"Adjusted net income per diluted share" represents adjusted net income attributable to common stockholders divided by the diluted number of weighted average shares outstanding. For purposes of the adjusted net income per share calculation, we assume all potential shares to be issued in connection with our convertible notes are dilutive.

"Free cash flow" represents net cash provided by (used in) operating activities less purchases of property and equipment and capitalization of internally developed software.

For further information see reconciliations of Non-GAAP Financial Measures on pages 9-15 of this press release, and the section entitled "Non-GAAP Financial Measures" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") which are available on the SEC's website at http://www.sec.gov or our Investor Relations website at http://investor.envestnet.com/. 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 revenue, net income (loss), net income (loss) per share or net cash provided by (used in) operating activities determined in accordance with GAAP.

Cautionary Statement Regarding Forward-Looking Statements

The forward-looking statements made in this press release and its attachments concerning its strategic and operational plans and growth strategy are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, any statements that refer to our pending merger with affiliates of vehicles managed or advised by Bain Capital Private Equity, LP. (the "Merger"), projections of our future financial performance, our anticipated growth and trends in our business and other characteristics of future events or circumstances are forward-looking statements. These statements involve risks and uncertainties and our 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, the risk that the Merger may not be completed on the anticipated terms in a timely manner or at all, which may adversely affect our business and the price of our common stock; the failure to satisfy any of the conditions to the consummation of the Merger, including the receipt of certain regulatory approvals and the approval of the holders in a majority of the voting power of our common stock; the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the merger agreement, including in circumstances requiring us to pay a termination fee; the effect of the announcement or pendency of the Merger on our business relationships, operating results and business relationships, operating results and business generally; risks that the Merger disrupts our current plans and operations (including the ability of certain customers to terminate or amend contracts upon a change of control); our ability to retain, hire and integrate skilled personnel, including our senior management team and maintain relationships with key business partners and customers, and others with whom we do business, in light of the Merger; risks related to diverting management's attention from our ongoing business operations; unexpected costs, charges or expenses resulting from the Merger; the ability to obtain the necessary financing arrangements set forth in the commitment letters received in connection with the Merger; potential litigation relating to the Merger that could be instituted against the parties to the merger agreement or their respective directors, managers or officers; the effects of any outcomes related thereto; certain restrictions during the pendency of the Merger that may impact our ability to pursue certain business opportunities or strategic transactions; uncertainty as to timing of completion of the Merger; risks that the benefits of the Merger are not realized when and as expected; adverse economic or global market conditions, including periods of rising inflation and market interest rates, and governmental responses to such conditions; the conflicts in the Middle East and between Russia and Ukraine, including related sanctions and their impact on the global economy and capital markets; the concentration of our revenue from the delivery of our solutions and services to clients in the financial services industry; our reliance on a limited number of clients for a material portion of our revenue; the renegotiation of fees by our clients; changes in the estimates of fair value of reporting units or of long-lived assets, particularly goodwill and intangible assets; the amount of our debt, our ability to service our debt and risks associated with derivative transactions associated with our debt; limitations on our ability to access information from third parties or charges for accessing such information; the targeting of some of our sales efforts at large financial institutions and large financial technology companies which prolongs sales cycles, requires substantial upfront sales costs and results in less predictability in completing some of our sales; changes in investing patterns on the assets on which we derive revenue and the freedom of investors to redeem or withdraw investments generally at any time; the impact of fluctuations in market conditions and interest rates on the demand for our products and services and the value of assets under management or administration; increased geopolitical unrest and other events outside of our control that could adversely affect the global economy or specific international, regional and domestic markets; our ability to keep up with rapid technological change, evolving industry standards or changing requirements of clients; risks associated with our international operations; the competitiveness of our solutions and services as compared to those of others; liabilities associated with potential, perceived or actual breaches of fiduciary duties and/or conflicts of interest; harm to our reputation; the failure to protect our intellectual property rights; our reliance on outsourcing arrangements; activist shareholders hindering the execution of our business strategy, diverting board and management attention and resources and causing us to incur substantial expenses; public health crises, pandemics or similar events; our ability to successfully identify potential acquisition candidates, complete acquisitions and successfully integrate acquired companies; our ability to successfully execute the conversion of clients' assets from their technology platform to our technology platforms in a timely and accurate manner; our ability to introduce new solutions and services and enhancements; regulatory compliance failures; our ability to maintain the security and integrity of our systems and facilities and to maintain the privacy of personal information and potential liabilities for cybersecurity breaches; the effect of privacy laws and regulations, industry standards and contractual obligations and changes to these laws, regulations, standards and obligations on how we operate our business and the negative effects of failure to comply with these requirements; failure by our customers to obtain proper permissions or waivers for our use of disclosure of information; adverse judicial or regulatory proceedings against us; failure of our solutions, services or systems, or those of third parties on which we rely, to work properly; potential liability for use of inaccurate information by third parties provided by us; the occurrence of a deemed "change of control"; the uncertainty of the application and interpretation of certain tax laws; issuances of additional shares of common stock or issuances of shares of preferred stock or convertible securities on our existing stockholders; general economic, political and regulatory conditions; global events, natural disasters, environmental disasters, terrorist attacks and pandemics, including their impact on the economy and trading markets; and management's response to these factors. More information regarding these and other risks, uncertainties and factors is contained in our filings with the SEC which are available on the SEC's website at http://www.sec.gov or our Investor Relations website at http://investor.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 August 9, 2024 and, unless required by law, we undertake 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)

	June 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	121,967	$	91,378
Fees receivable, net		129,252		120,958
Prepaid expenses and other current assets		57,899		51,472
Total current assets		309,118		263,808
Property and equipment, net		45,641		48,223
Internally developed software, net		205,090		224,713
Intangible assets, net		311,868		338,068
Goodwill		690,885		806,563
Operating lease right-of-use assets, net		65,257		69,154
Investments in unconsolidated entities		96,755		56,292
Other assets		70,358		70,431
Total assets	$	1,794,972	$	1,877,252

Liabilities and equity
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	$	225,508	$	241,424
Operating lease liabilities		12,149		12,909
Deferred revenue		34,567		38,201
Current portion of debt		—		314,532
Total current liabilities		272,224		607,066
Debt, net of current portion		879,079		562,080
Operating lease liabilities, net of current portion		95,294		100,830
Deferred tax liabilities, net		15,208		16,568
Other liabilities		16,820		16,202
Total liabilities		1,278,625		1,302,746

Equity:
Total stockholders' equity attributable to Envestnet, Inc.		516,347		568,191
Non-controlling interest		—		6,315
Total liabilities and equity	$	1,794,972	$	1,877,252

Envestnet, Inc. Condensed Consolidated Statements of Operations (in thousands, except share and per share information) (unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2024			2023			2024			2023
Revenue:
Asset-based	$	219,485		$	185,762		$	422,101		$	362,694
Subscription-based		117,988			114,959			235,450			232,038
Total recurring revenue		337,473			300,721			657,551			594,732
Professional services and other revenue		10,800			11,713			15,672			16,409
Total revenue		348,273			312,434			673,223			611,141

Operating expenses:
Direct expense		144,351			124,209			270,984			233,888
Employee compensation		104,066			117,097			207,718			231,312
General and administrative		52,924			54,375			104,989			108,725
Depreciation and amortization		45,733			32,065			79,625			63,585
Goodwill impairment		96,269			—			96,269			—
Gain on deconsolidation		(19,523	)		—			(19,523	)		—
Total operating expenses		423,820			327,746			740,062			637,510

Loss from operations		(75,547	)		(15,312	)		(66,839	)		(26,369	)
Other expense, net		(4,788	)		(5,016	)		(9,169	)		(10,011	)
Loss before income tax provision (benefit) and equity method investments		(80,335	)		(20,328	)		(76,008	)		(36,380	)
Income tax provision (benefit)		(652	)		418			853			24,187
Gain (loss) from equity method investments		482			(2,386	)		(1,801	)		(5,326	)
Net loss		(79,201	)		(23,132	)		(78,662	)		(65,893	)
Add: Net loss attributable to non-controlling interest		—			1,716			1,974			3,249
Net loss attributable to Envestnet, Inc.	$	(79,201	)	$	(21,416	)	$	(76,688	)	$	(62,644	)

Net loss attributable to Envestnet, Inc. per share:
Basic and diluted	$	(1.44	)	$	(0.39	)	$	(1.39	)	$	(1.15	)
Weighted average common shares outstanding:
Basic and diluted		55,143,013			54,439,733			55,013,544			54,289,443

Envestnet, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)

	Six Months Ended
	June 30,
		2024			2023
Cash flows from operating activities:
Net loss	$	(78,662	)	$	(65,893	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		79,625			63,585
Non-cash compensation expense		36,720			40,843
Non-cash interest expense		2,817			2,251
Non-cash goodwill impairment		96,269			—
Non-cash gain on deconsolidation		(19,523	)		—
Loss from equity method investments		1,801			5,326
Lease related impairments		—			2,483
Other		2,120			(218	)
Changes in operating assets and liabilities:
Fees receivable, net		(12,813	)		(22,357	)
Prepaid expenses and other assets		(5,745	)		(6,762	)
Accounts payable, accrued expenses and other liabilities		(14,049	)		20,070
Deferred revenue		2,494			(852	)
Net cash provided by operating activities		91,054			38,476
Cash flows from investing activities:
Purchases of property and equipment		(5,172	)		(16,735	)
Capitalization of internally developed software		(38,751	)		(46,801	)
Deconsolidation of non-controlling interest		(11,073	)		—
Investments in private companies		(3,055	)		(1,450	)
Acquisition of proprietary technology		(3,000	)		(12,000	)
Issuance of loan receivable to private company		—			(20,000	)
Other		—			319
Net cash used in investing activities		(61,051	)		(96,667	)
Cash flows from financing activities:
Proceeds from borrowings on Revolving Credit Facility		—			40,000
Payments related to Revolving Credit Facility		—			(20,000	)
Payments related to Convertible Notes		—			(45,000	)
Proceeds from exercise of stock options		724			472
Payments related to tax withholdings for stock-based compensation		(12,155	)		(13,774	)
Payments related to share repurchases		—			(9,289	)
Proceeds from capital contributions received by non-controlling interest		12,012			—
Purchase of non-controlling units from third-party shareholders		—			(1,008	)
Other		3			3
Net cash provided by (used in) financing activities		584			(48,596	)
Effect of exchange rate on changes on cash and cash equivalents		2			3,633
Net change in cash and cash equivalents		30,589			(103,154	)
Cash and cash equivalents, beginning of period		91,378			162,173
Cash and cash equivalents, end of period	$	121,967		$	59,019

Envestnet, Inc. Reconciliation of Non-GAAP Financial Measures (in thousands) (unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2024			2023			2024			2023
Net loss	$	(79,201	)	$	(23,132	)	$	(78,662	)	$	(65,893	)
Add (deduct):
Deferred revenue fair value adjustment ^(a)		—			17			—			69
Interest income ^(b)		(2,588	)		(1,656	)		(4,571	)		(3,014	)
Interest expense ^(b)		6,097			6,531			12,186			12,851
Income tax provision (benefit)		(652	)		418			853			24,187
Depreciation and amortization		45,733			32,065			79,625			63,585
Goodwill impairment		96,269			—			96,269			—
Gain on deconsolidation		(19,523	)		—			(19,523	)		—
Non-cash compensation expense ^(d)		17,822			21,390			36,720			40,843
Restructuring charges and transaction costs ^(e)		8,405			6,508			10,461			10,671
Severance expense ^(d)		669			8,234			4,094			14,422
Litigation, regulatory and other governance related expenses ^(c)		4,020			2,145			6,308			5,219
Foreign currency ^(b)		(229	)		74			46			107
Non-income tax expense adjustment ^(c)		(39	)		(30	)		(88	)		(198	)
Fair market value adjustments to investments in private companies ^(b)		1,508			67			1,508			67
(Gain) loss from equity method investments		(482	)		2,386			1,801			5,326
Loss attributable to non-controlling interest		—			1,027			1,160			1,805
Adjusted EBITDA	$	77,809		$	56,044		$	148,187		$	110,047

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(a)	Included within subscription-based revenue in the condensed consolidated statements of operations.
(b)	Included within other expense, net in the condensed consolidated statements of operations.
(c)	Included within general and administrative expense in the condensed consolidated statements of operations.
(d)	Included within employee compensation expense in the condensed consolidated statements of operations.
(e)	For the three months ended June 30, 2024 and 2023, $6.7 million and $5.0 million, respectively, were included within general and administrative expense and $1.7 million and $1.5 million, respectively, were included within employee compensation expense in the condensed consolidated statements of operations. For the six months ended June 30, 2024 and 2023, $9.2 million and $9.1 million, respectively, were included within general and administrative expense and $1.3 million and $1.6 million, respectively, were included within employee compensation expense in the condensed consolidated statements of operations.

Envestnet, Inc. Reconciliation of Non-GAAP Financial Measures (in thousands, except share and per share information) (unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2024			2023			2024			2023
Net loss	$	(79,201	)	$	(23,132	)	$	(78,662	)	$	(65,893	)
Income tax provision (benefit) ^(a)		(652	)		418			853			24,187
Gain (loss) from equity method investments		482			(2,386	)		(1,801	)		(5,326	)
Loss before income tax provision (benefit) and equity method investments		(80,335	)		(20,328	)		(76,008	)		(36,380	)
Add (deduct):
Deferred revenue fair value adjustment ^(b)		—			17			—			69
Non-cash interest expense ^(d)		1,412			1,427			2,817			2,869
Cash interest - Convertible Notes ^(d)		4,369			4,543			8,738			9,108
Amortization of acquired intangibles ^(e)		14,457			15,720			29,199			32,660
Goodwill impairment		96,269			—			96,269			—
Gain on deconsolidation		(19,523	)		—			(19,523	)		—
Non-cash compensation expense ^(f)		17,822			21,390			36,720			40,843
Restructuring charges and transaction costs ^(g)		8,405			6,508			10,461			10,671
Severance expense ^(f)		669			8,234			4,094			14,422
Litigation, regulatory and other governance related expenses ^(c)		4,020			2,145			6,308			5,219
Foreign currency ^(d)		(229	)		74			46			107
Non-income tax expense adjustment ^(c)		(39	)		(30	)		(88	)		(198	)
Fair market value adjustments to investments in private companies ^(d)		1,508			67			1,508			67
Loss attributable to non-controlling interest		—			1,027			1,160			1,805
Adjusted net income before income tax effect		48,805			40,794			101,701			81,262
Income tax effect ^(h)		(12,445	)		(10,403	)		(25,934	)		(20,722	)
Adjusted net income	$	36,360		$	30,391		$	75,767		$	60,540

Basic number of weighted average shares outstanding		55,143,013			54,439,733			55,013,544			54,289,443
Effect of dilutive shares:
Convertible Notes		10,811,884			11,253,471			10,811,884			11,361,458
Non-vested RSUs and PSUs		590,918			316,758			527,360			445,323
Options to purchase common stock		49,692			57,902			38,996			73,271
Diluted number of weighted average shares outstanding		66,595,507			66,067,864			66,391,784			66,169,495

Adjusted net income per diluted share	$	0.55		$	0.46		$	1.14		$	0.91

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(a)	For the three months ended June 30, 2024 and 2023, the effective tax rate computed in accordance with GAAP equaled 0.8% and (1.8)%, respectively. For the six months ended June 30, 2024 and 2023, the effective tax rate computed in accordance with GAAP equaled (1.1)% and (58.0)%, respectively.
(b)	Included within subscription-based revenue in the condensed consolidated statements of operations.
(c)	Included within general and administrative expense in the condensed consolidated statements of operations.
(d)	Included within other expense, net in the condensed consolidated statements of operations.
(e)	Included within depreciation and amortization expense in the condensed consolidated statements of operations.
(f)	Included within employee compensation expense in the condensed consolidated statements of operations.
(g)	For the three months ended June 30, 2024 and 2023, $6.7 million and $5.0 million, respectively, were included within general and administrative expense and $1.7 million and $1.5 million, respectively, were included within employee compensation expense in the condensed consolidated statements of operations. For the six months ended June 30, 2024 and 2023, $9.2 million and $9.1 million, respectively, were included within general and administrative expense and $1.3 million and $1.6 million, respectively, were included within employee compensation expense in the condensed consolidated statements of operations.
(h)	An estimated normalized tax rate of 25.5% has been used to compute adjusted net income for the three and six months ended June 30, 2024 and 2023.

Envestnet, Inc. Reconciliation of Non-GAAP Financial Measures (in thousands) (unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2024			2023			2024			2023
Net cash provided by operating activities	$	89,110		$	72,149		$	91,054		$	38,476
Less: Purchases of property and equipment		(3,272	)		(12,333	)		(5,172	)		(16,735	)
Less: Capitalization of internally developed software		(18,798	)		(23,137	)		(38,751	)		(46,801	)
Free cash flow	$	67,040		$	36,679		$	47,131		$	(25,060	)

Envestnet, Inc. Reconciliation of Non-GAAP Financial Measures Segment Information (in thousands) (unaudited)

	Three Months Ended June 30, 2024
	Envestnet Wealth Solutions			Envestnet Data & Analytics			Nonsegment			Total
Revenue:
Asset-based	$	219,485		$	—		$	—		$	219,485
Subscription-based		84,734			33,254			—			117,988
Total recurring revenue		304,219			33,254			—			337,473
Professional services and other revenue		7,889			2,911			—			10,800
Total revenue		312,108			36,165			—			348,273

Operating expenses:
Direct expense
Asset-based		130,116			—			—			130,116
Subscription-based		1,474			7,174			—			8,648
Professional services and other		5,587			—			—			5,587
Total direct expense		137,177			7,174			—			144,351
Employee compensation		77,210			11,872			14,984			104,066
General and administrative		25,698			15,270			11,956			52,924
Depreciation and amortization		38,375			7,358			—			45,733
Goodwill impairment		—			96,269			—			96,269
Gain on deconsolidation		(19,523	)		—			—			(19,523	)
Total operating expenses		258,937			137,943			26,940			423,820

Income (loss) from operations		53,171			(101,778	)		(26,940	)		(75,547	)
Add (deduct):
Depreciation and amortization		38,375			7,358			—			45,733
Goodwill impairment		—			96,269			—			96,269
Gain on deconsolidation		(19,523	)		—			—			(19,523	)
Non-cash compensation expense ^(b)		11,360			1,904			4,558			17,822
Restructuring charges and transaction costs ^(c)		2,063			60			6,282			8,405
Severance expense ^(b)		632			—			37			669
Litigation, regulatory and other governance related expenses ^(a)		—			4,020			—			4,020
Non-income tax expense adjustment ^(a)		(39	)		—			—			(39	)
Adjusted EBITDA	$	86,039		$	7,833		$	(16,063	)	$	77,809

__________________________________________________________

(a)	Included within general and administrative expense in the condensed consolidated statements of operations.
(b)	Included within employee compensation expense in the condensed consolidated statements of operations.
(c)	$6.7 million was included within general and administrative expense and $1.7 million was included within employee compensation expense in the condensed consolidated statements of operations.

Envestnet, Inc. Reconciliation of Non-GAAP Financial Measures Segment Information (in thousands) (unaudited)

	Six Months Ended June 30, 2024
	Envestnet Wealth Solutions			Envestnet Data & Analytics			Nonsegment			Total
Revenue:
Asset-based	$	422,101		$	—		$	—		$	422,101
Subscription-based		168,902			66,548			—			235,450
Total recurring revenue		591,003			66,548			—			657,551
Professional services and other revenue		10,915			4,757			—			15,672
Total revenue		601,918			71,305			—			673,223

Operating expenses:
Direct expense:
Asset-based		248,519			—			—			248,519
Subscription-based		2,905			13,973			—			16,878
Professional services and other		5,587			—			—			5,587
Total direct expense		257,011			13,973			—			270,984
Employee compensation		152,406			23,564			31,748			207,718
General and administrative		54,730			30,584			19,675			104,989
Depreciation and amortization		65,193			14,432			—			79,625
Goodwill impairment		—			96,269			—			96,269
Gain on deconsolidation		(19,523	)		—			—			(19,523	)
Total operating expenses		509,817			178,822			51,423			740,062

Income (loss) from operations		92,101			(107,517	)		(51,423	)		(66,839	)
Add (deduct):
Depreciation and amortization		65,193			14,432			—			79,625
Goodwill impairment		—			96,269			—			96,269
Gain on deconsolidation		(19,523	)		—			—			(19,523	)
Non-cash compensation expense ^(b)		22,747			3,768			10,205			36,720
Restructuring charges and transaction costs ^(c)		2,106			739			7,616			10,461
Severance expense ^(b)		2,436			13			1,645			4,094
Litigation, regulatory and other governance related expenses ^(a)		—			6,308			—			6,308
Non-income tax expense adjustment ^(a)		(88	)		—			—			(88	)
Loss attributable to non-controlling interest		1,160			—			—			1,160
Adjusted EBITDA	$	166,132		$	14,012		$	(31,957	)	$	148,187

__________________________________________________________

(a)	Included within general and administrative expense in the condensed consolidated statements of operations.
(b)	Included within employee compensation expense in the condensed consolidated statements of operations.
(c)	$9.2 million was included within general and administrative expense and $1.3 million was included within employee compensation expense in the condensed consolidated statements of operations.

Envestnet, Inc. Reconciliation of Non-GAAP Financial Measures Segment Information (continued) (in thousands) (unaudited)

	Three months ended June 30, 2023
	Envestnet Wealth Solutions			Envestnet Data & Analytics			Nonsegment			Total
Revenue:
Asset-based	$	185,762		$	—		$	—		$	185,762
Subscription-based		79,744			35,215			—			114,959
Total recurring revenue		265,506			35,215			—			300,721
Professional services and other revenue		10,318			1,395			—			11,713
Total revenue		275,824			36,610			—			312,434

Operating expenses:
Direct expense:
Asset-based		108,532			—			—			108,532
Subscription-based		1,857			5,788			—			7,645
Professional services and other		8,032			—			—			8,032
Total direct expense		118,421			5,788			—			124,209
Employee compensation		77,898			19,839			19,360			117,097
General and administrative		31,225			14,792			8,358			54,375
Depreciation and amortization		25,575			6,490			—			32,065
Total operating expenses		253,119			46,909			27,718			327,746

Income (loss) from operations		22,705			(10,299	)		(27,718	)		(15,312	)
Add (deduct):
Deferred revenue fair value adjustment ^(a)		17			—			—			17
Depreciation and amortization		25,575			6,490			—			32,065
Non-cash compensation expense ^(c)		12,325			2,445			6,620			21,390
Restructuring charges and transaction costs ^(d)		5,414			69			1,025			6,508
Severance expense ^(c)		1,853			3,120			3,261			8,234
Litigation, regulatory and other governance related expenses ^(b)		—			2,210			(65	)		2,145
Non-income tax expense adjustment ^(b)		(25	)		(5	)		—			(30	)
Loss attributable to non-controlling interest		1,027			—			—			1,027
Adjusted EBITDA	$	68,891		$	4,030		$	(16,877	)	$	56,044

__________________________________________________________

(a)	Included within subscription-based revenue in the condensed consolidated statements of operations.
(b)	Included within general and administrative expense in the condensed consolidated statements of operations.
(c)	Included within employee compensation expense in the condensed consolidated statements of operations.
(d)	$5.0 million was included within general and administrative expense and $1.5 million was included within employee compensation expense in the condensed consolidated statements of operations.

Envestnet, Inc. Reconciliation of Non-GAAP Financial Measures Segment Information (in thousands) (unaudited)

	Six months ended June 30, 2023
	Envestnet Wealth Solutions			Envestnet Data & Analytics			Nonsegment			Total
Revenue:
Asset-based	$	362,694		$	—		$	—		$	362,694
Subscription-based		160,214			71,824			—			232,038
Total recurring revenue		522,908			71,824			—			594,732
Professional services and other revenue		13,565			2,844			—			16,409
Total revenue		536,473			74,668			—			611,141

Operating expenses:
Direct expense:
Asset-based		211,155			—			—			211,155
Subscription-based		3,635			11,062			—			14,697
Professional services and other		8,036			—			—			8,036
Total direct expense		222,826			11,062			—			233,888
Employee compensation		156,945			39,081			35,286			231,312
General and administrative		60,332			29,221			19,172			108,725
Depreciation and amortization		51,067			12,518			—			63,585
Total operating expenses		491,170			91,882			54,458			637,510

Income (loss) from operations		45,303			(17,214	)		(54,458	)		(26,369	)
Add (deduct):
Deferred revenue fair value adjustment ^(a)		69			—			—			69
Depreciation and amortization		51,067			12,518			—			63,585
Non-cash compensation expense ^(c)		23,792			4,882			12,169			40,843
Restructuring charges and transaction costs ^(d)		6,553			312			3,806			10,671
Severance expense ^(c)		5,652			5,325			3,445			14,422
Litigation, regulatory and other governance related expenses ^(b)		—			3,534			1,685			5,219
Non-income tax expense adjustment ^(b)		(127	)		(71	)		—			(198	)
Loss attributable to non-controlling interest		1,805			—			—			1,805
Adjusted EBITDA	$	134,114		$	9,286		$	(33,353	)	$	110,047

__________________________________________________________

(a)	Included within subscription-based revenue in the condensed consolidated statements of operations.
(b)	Included within general and administrative expense in the condensed consolidated statements of operations.
(c)	Included within employee compensation expense in the condensed consolidated statements of operations.
(d)	$9.1 million was included within general and administrative expense and $1.6 million was included within employee compensation expense in the condensed consolidated statements of operations.

Envestnet, Inc.

Key Metrics

(in millions, except accounts, advisors and firms data)

(unaudited)

Envestnet Wealth Solutions Segment

The following table provides information regarding the amount of assets and number of accounts and advisors supported by the Envestnet Wealth Solutions platform:

	As of
	June 30,		September 30,		December 31,		March 31,		June 30,
	2023		2023		2023		2024		2024
Platform Assets
Assets under Management ("AUM")	$	384,773	$	375,408	$	416,001	$	452,464	$	471,978
Assets under Administration ("AUA")		394,078		398,082		430,846		471,401		471,479
Total AUM/A		778,851		773,490		846,847		923,865		943,457
Subscription		4,643,313		4,579,248		4,959,514		5,158,180		5,327,939
Total Platform Assets	$	5,422,164	$	5,352,738	$	5,806,361	$	6,082,045	$	6,271,396
Platform Accounts
AUM		1,609,677		1,614,873		1,640,879		1,688,044		1,752,768
AUA		1,144,375		1,257,094		1,254,962		1,315,442		1,325,370
Total AUM/A		2,754,052		2,871,967		2,895,841		3,003,486		3,078,138
Subscription		15,916,955		16,072,848		16,248,598		16,641,631		16,364,088
Total Platform Accounts		18,671,007		18,944,815		19,144,439		19,645,117		19,442,226
Advisors
AUM/A		38,809		38,078		38,697		38,814		38,484
Subscription		68,439		69,318		69,973		70,262		71,568
Total Advisors		107,248		107,396		108,670		109,076		110,052

The following tables summarize the changes in the amount of AUM/A assets and number of AUM/A accounts:

	Asset Rollforward - Three Months Ended June 30, 2024
	As of March 31,		Gross					Net		Market				As of June 30,
	2024		Sales		Redemptions			Flows		Impact		Reclassifications		2024
	(in millions, except account data)
AUM	$	452,464	$	32,468	$	(18,900	)	$	13,568	$	4,186	$	1,760	$	471,978
AUA		471,401		32,847