Financial Results

Revenues Rise At Envestnet, Operating Expenses Soar From Acquisitions

Eliane Chavagnon Reporter 17 May 2013

Revenues Rise At Envestnet, Operating Expenses Soar From Acquisitions

Revenues from assets under management/administration at Envestnet rose 29 per cent year-over-year to $36.3 million for the first quarter of 2013, while total revenues (including licensing and professional services fees) soared 43 per cent to $46.6 million.

Net income fell however, from $0.7 million in the first quarter of 2012 to $0.5 million (or $0.02 per diluted share) at the end of March 2013.  

Total operating expenses in the first quarter of 2013 increased 47 per cent to $46 million, from $31.4 million a year earlier, as cost of revenues also grew 46 per cent to $16.8 million during the year. This was due to the increase in revenue from AuM or AuA, and additional cost from acquired businesses, the New York-listed wealth management firm said.

Meanwhile, compensation and benefits shot up 61 per cent year-on-year to $17.2 million in the first quarter of 2013, due to higher personnel cost from completed acquisitions, as well as higher non-cash compensation expense, according to the firm’s latest earnings release.   

The firm reported that general and administration expenses rose 31 per cent during the year to $8.9 million in the first quarter of 2013. This was primarily due to $1.3 million in re-audit related professional fees and ongoing expense from the acquired companies, it said.

Last month, Envestnet entered into a definitive agreement to acquire all of the assets of Prudential Investments’ Wealth Management Solutions division, for a cash sum of $10 million, plus contingent consideration of up to $23 million to be paid over three years.

Envestnet also completed its acquisition of Tamarac, a provider of portfolio management technology for RIAs, in May last year, with the aim of combining the firms’ technology, products and back office. Additionally, it acquired Denver, CO-based Prima Capital in 2012 to boost its research services for advisors.

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