Envestnet Inc (ENV) 2024 Q2 法說會逐字稿

Hello, and welcome to the Envestnet second quarter 2024 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded. There will be no Q&A session following prepared remarks.

大家好，歡迎參加 Envestnet 2024 年第二季財報電話會議。（操作說明）提醒各位，本次會議正在錄音。發言結束後將不設問答環節。

It is now my pleasure to introduce Josh Warren, Chief Financial Officer. Thank you, sir. You may begin.

現在我榮幸地向大家介紹財務長喬許‧沃倫。謝謝您，先生。你可以開始了。

Good afternoon, everyone. I'm Josh Warren, Chief Financial Officer of Envestnet, thank you for joining us on today's second quarter 2024 earnings call. Before we begin, I'd like to point out that our earnings press release, supplemental presentation and associated Form 10-Q can be found under the Investor Relations section of our website at envestnet.com. This call is being webcast live and a replay will be available for one month under the Investor Relations section of our website as well.

大家下午好。我是 Envestnet 的財務長 Josh Warren，感謝您參加今天舉行的 2024 年第二季財報電話會議。在會議開始之前，我想指出，您可以在我們網站 envestnet.com 的「投資者關係」欄位下找到我們的獲利新聞稿、補充簡報以及相關的 10-Q 表格。本次電話會議將進行網路直播，回放也將在我們網站的「投資者關係」欄位下提供一個月。

During the call, we will be discussing certain forward-looking information. This information is based on our current expectations and is not a guarantee of future performance. I encourage you to review the cautionary statements on slides 2 and 3 of the supplemental presentation for the potential risks, uncertainties and other factors that could cause actual results to differ from those expressed by the forward-looking statements.

通話期間，我們將討論一些前瞻性資訊。此資訊是基於我們目前的預期，並不能保證未來的業績。我建議您查看補充簡報第 2 頁和第 3 頁的警示性聲明，以了解可能導致實際結果與前瞻性聲明中所表達的結果差異的潛在風險、不確定性和其他因素。

Further information can be found in our regular SEC filings. During this call, we will be referring to certain as adjusted financial measures. Please refer to the appendix in our supplemental presentation for a reconciliation of these adjusted financial measures to the most directly comparable GAAP measures.

更多資訊請參閱我們定期向美國證券交易委員會提交的文件。在本次電話會議中，我們將提及一些經過調整的財務指標。有關這些調整後的財務指標與最直接可比較的 GAAP 指標的調整表，請參閱我們的補充簡報中的附錄。

Joining me on today's call is Jim Fox, our Board Chair and Interim CEO. On our call this afternoon will provide a company update as well as an overview of the company's results during the second quarter. Due to our pending transaction with Bain Capital. We will not be taking questions on today's call and will not be providing guidance for the third quarter.

今天和我一起參加電話會議的還有我們的董事會主席兼臨時執行長吉姆福克斯。在今天下午的電話會議上，我們將提供公司最新情況介紹以及公司第二季業績概述。由於我們與貝恩資本的交易尚未完成。在今天的電話會議上，我們將不接受提問，也不會提供第三季的業績指引。

I'll now turn it over to Jim.

現在我把麥克風交給吉姆。

Thanks, Josh. As you know, on July 11, the company announced that we have entered into a definitive agreement to be acquired by Bain Capital and related parties. Earlier today, Envestnet filed its preliminary proxy statement relating to this pending transaction. It includes comprehensive details of the process conducted by our Board, and we encourage you to read the filing for further information.

謝謝你，喬希。如您所知，7月11日，本公司宣布已與貝恩資本及其關聯方達成最終收購協議。今天早些時候，Envestnet提交了與這筆待決交易相關的初步委託書。其中包含了我們董事會開展的整個過程的詳細信息，我們鼓勵您閱讀該文件以獲取更多資訊。

As noted in the proxy, the Board and the company's senior management team regularly reviews company's business and operations competitive position, historical performance, future prospects and long term strategic plan with the goal of maximizing stockholder value. As part of these ongoing evaluations, we have from time to time considered various strategic alternatives, including the execution of the company's strategy as a stand-alone public company or the possible sale of the company to or in combination of the company with a third party.

如同委託書中所述，董事會和公司高階管理團隊定期審查公司的業務和營運競爭地位、歷史績效、未來前景和長期策略計劃，以最大限度地提高股東價值。作為這些持續評估的一部分，我們不時會考慮各種策略選擇，包括將公司策略作為獨立的上市公司來執行，或將公司出售給第三方或與第三方合併。

This transaction is the result of a thorough process by the Envestnet Board and our advisers and provides certain and immediate value for our shareholders. Our Board unanimously concluded that transaction is in the best interest of the company and our shareholders. We remain on track to close the transaction in the fourth quarter, subject to customary closing conditions, including obtaining approval from Envestnet shareholders and receiving the necessary regulatory clearances.

這項交易是 Envestnet 董事會和我們的顧問經過全面流程後做出的決定，並為我們的股東帶來了確定且即時的價值。董事會一致認為，該交易符合公司和股東的最佳利益。我們仍有望在第四季度完成交易，但需滿足慣例成交條件，包括獲得 Envestnet 股東的批准和必要的監管許可。

We look forward to engaging with our shareholders in the days ahead. The road ahead is incredibly bright for our clients, our partners, and our associates. As a private company and with the support of Bain Capital, we expect to continue executing our strategy through organic and inorganic initiatives and investing in our platform to make it more customized connected and intelligent.

我們期待在未來幾天與股東們進行交流。對於我們的客戶、合作夥伴和同事來說，未來的道路無比光明。作為一家私人公司，在貝恩資本的支持下，我們期望繼續透過有機成長和無機成長舉措來執行我們的策略，並投資於我們的平台，使其更加客製化、互聯化和智慧化。

Before handing it back to Josh, I'll turn to this quarter's results, which reflect our commitment to deep client relationships. Our Q2 revenue was $348 million, representing 11% growth over Q2 2023 and above the high end of our range. Our adjusted EBITDA was $78 million, also above the high end of our range, representing a 22% adjusted EBITDA margin and nearly 450 basis points of margin expansion compared to Q2 2023. Our adjusted EPS was $0.55 lower than our guidance in connection with certain noncash charges that Josh will detail, but nevertheless, up 20% from the $0.46 reported in Q2 2023.

在把發言權交還給喬希之前，我將談談本季的業績，這反映了我們對與客戶建立深厚關係的承諾。我們第二季的營收為 3.48 億美元，比 2023 年第二季成長了 11%，高於我們預期範圍的上限。我們調整後的 EBITDA 為 7,800 萬美元，也高於我們預期範圍的上限，調整後的 EBITDA 利潤率為 22%，與 2023 年第二季相比，利潤率提高了近 450 個基點。由於某些非現金支出（Josh 將詳細說明），我們調整後的每股收益比預期低 0.55 美元，但儘管如此，仍比 2023 年第二季報告的 0.46 美元增長了 20%。

With that, I'll turn it back to Josh.

這樣，我就把麥克風交還給喬希了。

Thanks, Jim. At our annual investment elevate client conference in May, nearly 2000 advisers and professionals experienced firsthand the growth and productivity made possible by our leading wealth management platform. Consistent with other second quarters, this conference caused slightly higher professional services revenue, which offset the associated direct expenses incurred.

謝謝你，吉姆。在五月舉行的年度投資提升客戶大會上，近 2000 名顧問和專業人士親身體驗了我們領先的財富管理平台所帶來的成長和生產力。與往年第二季度的情況一致，本次會議帶來了略高的專業服務收入，抵消了相關的直接支出。

During Q2 2024, our advisor count increased to over 110,000, representing 3% growth year-over-year. We reported 4% account growth compared to Q2 2023. Accounts on our platform declined during Q2 to over $19.4 million, driven by a programmatic effort to reduce unfunded dormant accounts among certain clients that won't have a meaningful revenue impact.

2024 年第二季度，我們的顧問人數增加到 11 萬多人，年增 3%。與 2023 年第二季相比，我們的帳戶成長了 4%。第二季度，我們平台上的帳戶數量下降至 1,940 萬美元以上，這是由於我們採取了一項程序化措施，減少某些客戶中未註資的休眠帳戶，這些帳戶不會對收入產生實質影響。

In our Wealth Solutions segment across diversified client channels. The extent of our platform and both asset and subscription-based pricing constructs provide the breadth of solutions to fit the industry's needs. Traditionally, we've defined asset-based revenues as primarily consisting of variable fees for providing access to our platforms.

在我們的財富解決方案業務板塊，我們面向多元化的客戶管道。我們的平台覆蓋範圍廣，同時提供基於資產和訂閱的定價模式，能夠提供滿足產業需求的各種解決方案。傳統上，我們將基於資產的收入定義為主要包括提供平台存取權限而收取的可變費用。

Our asset-based revenues include both fiduciary and technology services and our offerings range from consolidated performance reporting to higher touch tailored solutions such as full discretionary portfolio management that blends traditional indexing with the customization of managed accounts to improve after-tax and risk-adjusted results.

我們的資產收入包括信託服務和技術服務，我們的產品範圍從綜合業績報告到更個性化的解決方案，例如全權委託投資組合管理，將傳統指數化與管理帳戶的定制相結合，以提高稅後和風險調整後的結果。

We have experienced structural inflows into wealth solutions asset asset-based revenue account. During Q2, our total inflows of nearly $11 billion reflects expanded relationships with existing clients. While there are always specific events in any quarter that impact flows strong and consistent growth with our clients is at the center of our strategy.

我們已經經歷了財富解決方案資產基礎收入帳戶的結構性資金流入。第二季度，我們近 110 億美元的總流入資金反映了我們與現有客戶關係的擴大。雖然每季總是會有一些特定事件影響資金流動，但與客戶共同實現強勁而持續的成長始終是我們策略的核心。

We delivered over $13 billion of AUM flows in Q2. Our $26 billion of AUM flows during the first half of 2024 compares to approximately $30 billion of AUM flows for all of 2023. During Q2 2024 total asset base, revenue generated by Wealth Solutions was over $219 million, an 18% increase from Q2 2023, supported by improving market conditions.

第二季度，我們的資產管理規模流入超過 130 億美元。2024 年上半年，我們的資產管理規模 (AUM) 流量為 260 億美元，而 2023 年全年的資產管理規模約為 300 億美元。2024 年第二季度，財富解決方案的總資產基礎產生的收入超過 2.19 億美元，比 2023 年第二季度增長 18%，這得益於市場狀況的改善。

Our subscription based revenue represents our software as a service oriented offerings. During Q2, we delivered well solutions subscription based revenue of over $84 million, representing 6% growth over Q2 2023. During Q2, we deconsolidated FedEx from our results in connection with the recent funding round led by insurance company partners and investment clients.

我們的訂閱收入代表了我們以軟體即服務為導向的產品的收入。第二季度，我們實現了超過 8,400 萬美元的油井解決方案訂閱收入，比 2023 年第二季度成長了 6%。第二季度，由於保險公司合作夥伴和投資客戶最近牽頭的融資輪，我們將 FedEx 從我們的業績中剔除。

During 2023, FedEx contributed approximately $9 million of consolidated revenue to investment with approximately 90% of this contribution in subscription revenue. Envestnet is the largest shareholder in FedEx, despite not participating in this funding round. In total Wealth Solutions segment revenue grew to over $312 million during Q2, representing 13% growth over Q2 2023.

2023 年，聯邦快遞向投資貢獻了約 900 萬美元的合併收入，其中約 90% 的貢獻來自訂閱收入。儘管 Envestnet 沒有參與本輪融資，但它仍然是 FedEx 的最大股東。第二季財富解決方案部門總營收成長超過 3.12 億美元，比 2023 年第二季成長 13%。

Turning to our data and analytics business, which generates subscription-based revenues across open banking and alternative data offerings. During Q2, our DNA revenue was $36.2 million, representing a 1% decline from Q2 2023. Q2 revenue represented a 3% revenue increase from Q1 with professional services as the primary driver.

接下來談談我們的數據和分析業務，該業務透過開放銀行和另類數據產品產生訂閱收入。第二季度，我們的 DNA 收入為 3,620 萬美元，比 2023 年第二季度下降了 1%。第二季營收較第一季成長 3%，其中專業服務為主要驅動力。

Our recurring subscription revenue of $33 million has been approximately flat during the last four quarters, consistent with our stabilization efforts. In connection with business conditions, we recorded a noncash impairment charge of $96 million during Q2 writing off the remaining goodwill related to the DNA business created by Envestnet's 2015 acquisition of [yodlee].

過去四個季度，我們的經常性訂閱收入為 3,300 萬美元，基本上保持穩定，這與我們的穩定措施相符。鑑於業務狀況，我們在第二季提列了9,600萬美元的非現金減損支出，用於沖銷Envestnet在2015年收購DNA業務後產生的剩餘商譽。[yodlee]

Now moving on to expenses. As previously detailed Envestnet's costs consist of a combination of non-controllable and manageable expenses. Our non-controllable expenses include asset base payments to third parties common in the wealth industry that move in tandem with revenue growth. Our Q2 direct expenses of $144 million included $130 million of these asset base costs. Our manageable costs fall into three general categories, compensation related, non-compensation expenses and capital expenditures.

接下來討論費用問題。如前所述，Envestnet 的成本包括不可控費用和可控費用。我們的不可控支出包括向財富管理行業常見的第三方支付的資產基礎款項，這些款項與收入成長同步成長。我們第二季的直接支出為 1.44 億美元，其中包括 1.3 億美元的資產基礎成本。我們可控制的成本分為三大類：薪資相關費用、非薪資費用、資本支出。

Regarding compensation expenses. As a reminder, during 2023, investment reduced its headcount by 10%, consistent with the conclusion of a period of elevated platform infrastructure investments. We expect our headcount to be roughly flat during 2024. As discussed on previous calls, despite increased variable compensation in connection with improved results, we expect a decline in total compensation related costs, which include all salary, benefits, stock-based compensation and severance, regardless of accounting treatment regarding software development.

關於賠償費用。需要提醒的是，2023 年，投資部門減少了 10% 的員工人數，這與平台基礎設施投資高峰期的結束一致。我們預計2024年員工人數將基本維持不變。正如先前電話會議中所討論的，儘管業績改善導致可變薪酬增加，但我們預計與薪酬相關的總成本將會下降，其中包括所有工資、福利、股票期權和遣散費，無論軟體開發方面的會計處理如何。

The second major area of total costs is non-compensation expenses, which encompasses all other operating expenses, including capitalizable software development consistent with our focus on free cash flow. As discussed on prior calls, despite inflationary headwinds, we continue to anticipate our non-compensation costs will be modestly lower versus 2023 given our scale.

總成本的第二大領域是非薪酬支出，其中包括所有其他營運支出，包括與我們關注自由現金流一致的可資本化的軟體開發支出。正如先前電話會議中所討論的，儘管面臨通膨不利因素，但鑑於我們的規模，我們仍然預計我們的非補償成本將比 2023 年略有下降。

Finally, CapEx was $3 million for Q2, consistent with our annual planning cycle. Our free cash flow during Q2 2024 was $67 million, a sequential improvement from negative $20 million during Q1 and up from $37 million during Q2 2023. During the first half of 2024, investment generated approximately $47 million of free cash flow, more than it generated in all of 2023.

最後，第二季資本支出為 300 萬美元，與我們的年度計畫週期一致。2024 年第二季我們的自由現金流為 6,700 萬美元，較第一季的負 2,000 萬美元有所改善，也高於 2023 年第二季的 3,700 萬美元。2024 年上半年，投資產生了約 4,700 萬美元的自由現金流，超過了 2023 年全年產生的自由現金流。

Cash on our balance sheet increased to $122 million, driven by our improved free cash flow generation efficiency and conversion. As of the end of Q2, our leverage ratio, defined as total debt less cash over trailing adjusted EBITDA was approximately 2.7 times, representing more than a full turn of leverage reduction relative to a year ago.

由於我們自由現金流產生效率和轉換率的提高，我們資產負債表上的現金增加至 1.22 億美元。截至第二季末，我們的槓桿率（定義為總債務減去現金除以過去調整後的 EBITDA）約為 2.7 倍，與一年前相比，槓桿率下降了一倍多。

In addition to our previously described impairment charge during Q2, our financial results were impacted by non-cash items in connection with our continued efforts to enhance our operations. These include accounting gains from our minority investments of $20 million, primarily related to the FedEx deconsolidation. These gains are partially offset by losses of $13 million from writing off previously capitalized software development. In connection with streamlining our platform accounting efforts. There is no cash or cash flow impact from these items.

除了我們之前描述的第二季減損支出外，我們的財務表現也受到與我們持續改善營運相關的非現金項目的影響。其中包括我們從少數股權投資中獲得的 2,000 萬美元會計收益，主要與 FedEx 的剝離有關。這些收益部分被沖銷先前資本化的軟體開發項目造成的 1,300 萬美元損失所抵銷。為了簡化我們的平台會計工作。這些項目不會對現金或現金流產生影響。

Before closing, I'd like to convey a sincere thank you to all our stakeholders, particularly our clients, our employees, and our shareholders. Investment has been on an incredible journey during the last 25 years. We're pleased to have announced this transaction with Bain, and we look forward to embarking on this new chapter. We are confident that our firm's best days are ahead as we continue to grow and evolve the company and capitalize on the substantial opportunities for our industry. Thank you for your interest in Envestnet.

在結束發言之前，我謹向所有利害關係人，特別是我們的客戶、員工和股東，致以誠摯的謝意。過去25年，投資業經歷了令人難以置信的發展歷程。我們很高興宣布與貝恩達成這項交易，並期待開啟新的篇章。我們相信，隨著公司不斷發展壯大，並充分利用產業內的巨大機遇，公司最好的日子還在後頭。感謝您對 Envestnet 的關注。

Thank you. And with that, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

謝謝。今天的電話會議到此結束。您可以在此時斷開線路。感謝您的參與。