ENVESTNET, INC. - Annual Report: 2019 (Form 10-K)

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•	difficulty in sustaining rapid revenue growth, which may place significant demands on our administrative, operational and financial resources;

•	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;

•	the amount of our debt and our ability to service our debt;

•	the variability of our revenue from period to period;

•	the targeting of some of our sales efforts at large financial institutions and large internet services companies which prolongs sales cycles, requires substantial upfront sales costs and results in less predictability in completing some of our sales;

•	the deployment of our solutions by customers and potential delays and risks inherent in the process;

•	the competitiveness of our solutions and services as compared to those of others;

•	the concentration of our revenues 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 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;

•	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 renegotiation of fees by our clients;

•	our ability to keep up with rapid technological change, evolving industry standards or changing requirements of clients;

•	our ability to introduce new solutions and services and enhancements;

•	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 data security 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;

•	liabilities associated with potential, perceived or actual breaches of fiduciary duties and/or conflicts of interest;

•	failure of our solutions, services or systems, or those of third parties on which we rely, to work properly;

•	harm to our reputation;

•	our failure to process transactions effectively or fail to adequately protect against disputed or potential fraudulent activities;

•	our inability to maintain our payment network with third-party service providers, or difficulties encountered by our disbursement partners;

•	limitations on our ability to access information from third parties or charges for accessing such information;

•	failure by our customers to obtain proper permissions or waivers for our use of disclosure of information;

•	potential liability for use of inaccurate information by third parties provided by us;

•	the failure of our insurance to adequately protect us;

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•	our dependence on our senior management team;

•	our ability to recruit and retain qualified employees;

•	regulatory compliance failures;

•	changes in laws and regulations, including tax laws and regulations, or the inability to continue to rely on exemptions from the applicability of certain laws or regulations;

•	the occurrence of a deemed “change of control”;

•	adverse judicial or regulatory proceedings against us;

•	the failure to protect our intellectual property rights;

•	potential claims by third parties for infringement or their intellectual property rights;

•	our use of open source coding;

•	protection of trade secrets and other proprietary information;

•	risks associated with our international operations;

•	the impact of fluctuations in foreign currency exchange rates;

•	the uncertainty of the application and interpretation of certain tax laws;

•	changes in accounting principles and standards;

•	changes in the estimates of fair value of reporting units or of long-lived assets;

•	issuances of additional shares of common stock or issuances of shares of preferred stock or convertible securities on our existing stockholders;

•	general economic conditions, 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.

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•	Envestnet Wealth Solutions – a leading provider of unified wealth management software and services to empower financial advisors and institutions.

•	Envestnet Data & Analytics – a leading data aggregation and data intelligence platform powering dynamic, cloud-based innovation for digital financial services.

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Envestnet | Enterprise – provides an end-to-end open architecture wealth management platform, through which advisors can construct portfolios for clients. It begins with aggregated household data which then leads to a financial plan, asset allocation, investment strategy, portfolio management, rebalancing and performance reporting. Advisors have access to over 20,000 investment products. Envestnet | Enterprise also offers data aggregation and reporting, data analytics and digital advice capabilities to customers.

•	Envestnet | Tamarac™ provides leading trading, rebalancing, portfolio accounting, performance reporting and client relationship management software, principally to high‑end RIAs.

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•	Envestnet | MoneyGuide provides leading goals-based financial planning solutions to the financial services industry. The highly adaptable software helps financial advisors add significant value for their clients using best-in-class technology with enhanced integrations to generate financial plans.

•	Envestnet | Retirement Solutions (“ERS”) offers a comprehensive suite of services for advisor-sold retirement plans. Leveraging integrated technology, ERS addresses the regulatory, data, and investment needs of retirement plans and delivers the information holistically.

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Envestnet | PMC®, or Portfolio Management Consultants (“PMC”) – provides research and consulting services to assist advisors in creating investment solutions for their clients. These solutions include nearly 4,500 vetted third party managed account products, multi-manager portfolios, fund strategist portfolios, as well as over 1,000 proprietary products, such as quantitative portfolios and fund strategist portfolios. PMC also offers portfolio overlay and tax optimization services.

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The Financial Institutions group provides customers with secure access to open APIs, end-user facing applications powered by our platform and APIs (“FinApps”), and reports. Customers receive end user-permissioned transaction data elements that we aggregate and cleanse. Envestnet Data & Analytics also enables customers to develop their own applications through its open APIs, which deliver secure data, money movement solutions, and other functionality. FinApps can be subscribed to individually or in combinations that include personal financial management, wealth management, credit card, payments and small-medium business solutions. They are targeted at the retail financial, wealth management, small business, credit card, lenders, and other financial services sectors. These FinApps help consumers and small businesses simplify and manage their finances, review their financial accounts, track their spending, calculate their net worth, and perform a variety of other activities. For example, Yodlee Expense and Income Analysis FinApp helps consumers track their spending, and a Payroll FinApp from a third party helps small businesses process their payroll. The suite of reports is designed to supplement traditional credit reports by utilizing consumer permissioned aggregated data from over 21,000 sources, including banking, investment, loan, and credit card information.

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The Yodlee Interactive group enables customers to develop new applications and enhance existing solutions. These customers operate in a number of sub-vertical markets, including wealth management, personal financial management, small business accounting, small business lending and authentication. They use the Envestnet Data & Analytics platform to build solutions that leverage our open APIs and provide access to a large end user base. In addition to aggregated transaction-level account data elements, we provide YI customers with secure access to account verification, money movement and risk assessment tools via our APIs. We play a critical role in transferring innovation from financial technology innovators to financial institutions. For example, YI customers use Envestnet Data & Analytics applications to provide working capital to small businesses online; personalized financial management, planning and advisory services; e-commerce payment solutions; and online accounting systems for small businesses. We provide access to our solutions across multiple channels, including web, tablet and mobile.

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•	Wealth management continues to evolve as discount brokers and robo-advisors try to move ‘up market’ into financial advice and private banks try to move ‘down market’ from the ultra-high-net-worth, setting their sights on a broader swath of the end-consumer market.

•	Fee pressure, digital advice and regulations (including Regulation Best Interest) add to the burden advisors and firms have to be profitable and maintain profit margins.

•	While the future of financial advice grows more dependent on technology, investors want technology to complement, not replace, human advisors. According to studies from the Million Dollar Round Table and the Money Management Institute, the vast majority prefer working with a human advisor to build a trusting relationship.

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Advisors who use an integrated, all-in-one solution reported higher satisfaction with technology than advisory firms that are on open-architecture platforms or those that select individual pieces of technology. According to the 2019 InvestmentNews Advisor Technology Study, top-performing advice firms evaluate their technology more frequently and focus more on the impact that technology has on productivity and profitability. These firms place greater importance on technology that improves client experiences through more personalized advice, better outcomes and more effective marketing efforts.

•	Favorable trends with respect to growth in fee-based assets and need for advanced technology;

•	Recurring and resilient revenue base; and

•	Strong customer retention.

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•	Add new enterprise clients;

•	Increase our advisor base;

•	Extend the account base within a given advisor relationship;

•	Expand the services utilized by each advisor or enterprise client, including the cross selling of services across Envestnet’s business lines where applicable;

•	Continue to invest in our technology platforms and data analytics capabilities; and

•	Continue to pursue strategic transactions and other relationships.

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Financial advisors that are working alone or as part of financial advisory firms. Our principal value proposition aimed at financial advisors working alone or as part of financial advisory firms is that our technology platforms allow them to compete effectively with financial advisors employed by large financial institutions. Envestnet can provide these advisors with access to as many or more of the investment solutions and services that are typically available to financial advisors working at the largest firms.

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Enterprise clients in wealth management. We provide enterprise clients with customized, private‑labeled technology platforms that enable them to support their affiliated financial advisors with a broad range of investment solutions and services. Our contracts with enterprise clients establish the applicable terms and conditions, including pricing terms, service level agreements and basic platform configurations.

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Financial institutions. We serve global banks through financial applications. Envestnet Data & Analytics Retail Banking solution is a set of innovative FinApps providing consumers with a clear picture and greater insight into their financial lives. It enables customers to consolidate all their financial account information in one place, giving them a better handle on their money. Personalized tools allow them to manage, and meet their financial goals – which in turn makes them more engaged and more loyal customers.

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•	Other financial technology providers. We work with a variety of firms who provide technology to the financial services industry. We provide FinApps, personal financial management tools and data aggregation capabilities to companies in online lending, e-commerce and payments, digital advice and wealth management and other web development firms.

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Our advisor-facing sales teams are field sales professionals supported by internal consultants, organized regionally, responsible for supporting firms and investment advisors who are customers of Envestnet. They help advisors create investment proposals, navigate Envestnet’s wealth management platform and facilitate new business. Our Platform Consulting Group helps advisors utilize Envestnet’s wealth management platform effectively and efficiently. They are subject matter experts on advisor managed programs, unified managed accounts (“UMA”), proposal guidance and site navigation. They provide consulting services to a number of large clients. Envestnet’s PMC Consulting team of investment professionals provide a variety of portfolio and investment management consulting services to RIAs and broker-dealer advisors using Envestnet’s wealth management platform.

•	Enterprise Consultants are the main point of contact for enterprise clients with respect to day-to-day platform matters as well as contractual and pricing efforts. This includes support for advisors and firm management with regard to the overall relationship. The enterprise consultant is essentially the client’s relationship manager who serves as the liaison between the firm and Envestnet.

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We have a direct sales and pre-sales team servicing the leading global financial institutions. The FI sales team is divided geographically. Each regional sales and pre-sales team is responsible for acquiring new FI customers. Within the North America region, direct sales and pre-sales representatives are further divided into teams that focus on specific accounts, on a named-account basis, depending on size, location, product specialization and/or brand. These sales teams are supported by customer advocacy teams who specialize in customer account management and expansion. Together, sales, pre-sales and customer advocacy representatives are responsible for growing our customer relationships in terms of account penetration (cross-selling additional products and services into the same or additional groups within a FI) and expanding use of existing products and services (increasing usage).

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We have a direct sales and technical pre-sales team covering financial technology providers in each region. Each regional sales and technical pre-sales team is responsible for acquiring new customers and channel partners. From time to time, we assign specific accounts based upon sales or domain expertise. These teams are supported by a customer success and developer relations team who specialize in customer API integration, and account management and expansion, including services to our channel partners. Together, sales, technical pre-sales, customer success and developer relations representatives are responsible for growing our direct customer and channel partner relationships in terms of account penetration and API usage.

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•	The breadth and quality of investment solutions and services to which we provide access through our technology platform;

•	The number of custodians that are connected through our technology platforms;

•	The price of our investment solutions and services;

•	The ease of use of our technology platforms; and

•	The nature and scope of investment solutions and services that each wealth management provider believes are necessary to address their needs.

•	Reputation;

•	Cloud-based delivery model;

•	Data aggregation capability;

•	Access to data through direct structured data feeds to FI’s;

•	Scale (size of customer base and level of user adoption);

•	Security;

•	Time to market;

•	Breadth and depth of application functionality user experience;

•	Access to third-party applications;

•	Ease of use, ease of integration, flexibility and configurability; and

•	Competitive pricing.

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•	Separately managed accounts;

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•	Unified managed account portfolios;

•	Mutual fund portfolios and exchange-traded fund portfolios; and

•	Advisor as portfolio manager.

•	Each client account is managed on the basis of the client’s financial situation, investment objectives and reasonable client-imposed investment restrictions;

•	At the opening of the account, the client’s financial advisor obtains information from the client and provides us with the client’s financial situation, investment objectives and reasonable restrictions;

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On no less than an annual basis, the client’s financial advisor contacts the client to determine whether there have been any changes in the client’s financial situation or investment objectives, and whether the client wishes to impose any reasonable restrictions on the management of the account or reasonably modify existing restrictions. This information is communicated to us and reflected in our management of client accounts;

•	On a quarterly basis, we or another designated person (in most cases this will be the client’s financial advisor) notify the client to contact us or another designated person if there have been any changes to the client’s financial position or investment objectives or if the client wishes to impose any reasonable restrictions on the management of the account;

•	We, the client’s financial advisor and the manager of the client’s account, all of whom are knowledgeable about the account and its management, are reasonably available to the client for consultation;

•	All of the programs allow each client to impose reasonable restrictions on the management of his or her account;

•	On at least a quarterly basis, the client is provided with a statement containing a description of all activity in the client’s account during the preceding period, including all transactions made on behalf of the account, all contributions and withdrawals made by the client, all fees and expenses charged to the account and the value of the account at the beginning and end of the period; and

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For all of the programs, each client retains, with respect to all securities and funds in the client’s account, the right to withdraw securities or cash, vote securities, or delegate the authority to vote securities to another person, receive written confirmation or other notification of each securities transaction by the client’s independent custodian and proceed directly as a security holder against the issuer of any security in the client’s account without the obligation to include us or any other client of the program in any such action as a condition precedent to initiating such proceeding.

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•	recruiting, training and retaining sufficiently skilled technical, marketing, sales and management personnel;

•	preserving our culture, values and entrepreneurial environment;

•	successfully expanding the range of investment solutions and services offered to our clients;

•	developing and improving our internal administrative infrastructure, particularly our financial, operational, compliance, record‑keeping, communications and other internal systems; and

•	maintaining high levels of satisfaction with our investment solutions and services among clients.

•	incorrect assumptions regarding the future results of acquired operations or assets or expected cost reductions or other synergies expected to be realized as a result of acquiring operations or assets;

•	failure to integrate the operations or management of any acquired operations or assets successfully and on a timely and cost effective basis;

•	insufficient knowledge of the operations and markets of acquired businesses;

•	loss of key personnel;

•	failure to obtain necessary customer consents or retain key customers;

•	diversion of management’s attention from existing operations or other priorities;

•	increased costs or liabilities as a result of historical, undetected or undisclosed legal, regulatory or financial issues related to acquired operations or assets; and

•	inability to secure, on terms we find acceptable, sufficient financing that may be required for any such acquisition or investment.

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•	a decline or slowdown of the growth in the value of financial market assets, which may reduce the value of assets under management and administration and therefore our revenues and cash flows;

•	negative public perception and reputation of the financial services industry, which would reduce demand for our investment solutions and services;

•	unanticipated changes to economic terms in contracts with clients, including renegotiations;

•	downward pressure on fees we charge our clients, which would therefore reduce our revenue;

•	changes in laws or regulations that could impact our ability to offer investment solutions and services;

•	failure to obtain new clients;

•	cancellation or non‑renewal of existing contracts with clients;

•	failure to protect our proprietary technology and intellectual property rights;

•	unanticipated delays in connection with the conversion of client assets onto our technology platforms;

•	changes to or a reduction in the suite of investment solutions and services we provide to, or used by, existing clients;

•	changes in our pricing policies or the pricing policies of our competitors to which we have to adapt;

•	adverse effects from actual or perceived errors, breaches of contract, confidentiality, privacy, or fiduciary obligations;

•	fluctuations in currency exchange rates; and

•	general economic and political conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers operate.

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•	continue to develop our technology expertise;

•	recruit and retain skilled technology professionals;

•	enhance our current investment solutions and services;

•	develop new investment solutions and services that meet changing client needs;

•	implement changes to our investment solutions and services to meet changing regulatory requirements;

•	advertise and market our investment solutions and services;

•	protect our proprietary technology and intellectual property rights; and

•	influence and respond to emerging industry standards and other technological changes.

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•	our intellectual property rights will provide competitive advantages to us;

•	our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties;

•	our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak;

•	any of the trademarks, copyrights, trade secrets or other intellectual property rights that we presently employ in our business will not lapse or be invalidated, circumvented, challenged or abandoned;

•	our trademark applications will lead to registered trademarks;

•	competitors will not design around our intellectual property rights or develop similar technologies, investment solutions or products; or that we will not lose the ability to assert our intellectual property rights against others; or

•	Our ability to identify and police any misappropriation and protect our proprietary technology will be sufficient.

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•	the burdens of complying with a wide variety of foreign regulations, laws and legal standards, including privacy, data security, tax and employment, some of which may be materially different or  more stringent than those of the United States;

•	regional data privacy laws that apply to the transmission of data across international borders;

•	lack of familiarity with, and unexpected changes in, foreign regulatory requirements;

•	customers’ unfamiliarity with and concerns regarding laws and regulations of the United States that may impact our business operations in their jurisdictions;

•	negative, local perception of industries and customers that we may pursue;

•	laws and business practices favoring local competitors;

•	localization of our solutions, including unanticipated costs related to translation into foreign languages and adaptation for local practices and regulatory requirements;

•	different pricing environments and longer sales cycles;

•	longer accounts receivable payment cycles and difficulties in collecting accounts receivable;

•	difficulties in managing and staffing international operations;

•	reduced or varied protection for intellectual property rights in some countries;

•	compliance with laws and regulations for foreign operations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell our solutions in certain foreign markets, and the risks and costs of compliance;

•	fluctuations in currency exchange rates;

•	potentially adverse tax consequences, including the complexities of foreign value added tax systems, difficulty in interpreting international tax laws and restrictions on the repatriation of earnings;

•	increased financial accounting and reporting burdens and complexities; and

•	political, social and economic instability abroad, terrorist attacks and security concerns in general.

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•	make it difficult for us to pay other obligations;

•	make it difficult to obtain favorable terms for any necessary future financing for working capital, capital expenditures, debt service requirements or other purposes;

•	require us to dedicate a substantial portion of our cash flow from operations to service the indebtedness, reducing the amount of cash flow available for other purposes; and

•	limit our flexibility in planning for and reacting to changes in our business.

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(1)	Includes long-term debt of $565,513, $294,725, $240,158, $252,984 and $284,753 as of December 31, 2019, 2018, 2017, 2016 and 2015, respectively.

(2)	Includes non-current operating lease liabilities of $88,365 resulting from the adoption of ASU 2016-02, “Leases” on January 1, 2019. See Part II, Item 8, “Note 10—Leases” for more information.

(3)	In May 2018, we issued $345,000 of Convertible Notes. Net proceeds from the offering were $335,018. Also, in December 2018, we issued and sold shares of our common stock in a private placement for approximately $122,788.

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•	fixed assets, including land, building and building improvements, computer equipment and software, leasehold improvements, office furniture and fixtures and office equipment and other;

•	internally developed software; and

•	intangible assets, primarily related to customer lists, backlog, proprietary technology and trade names, the value of which are capitalized in connection with our acquisitions.

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*	Not meaningful

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*	Not meaningful

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•	As measures of operating performance;

•	For planning purposes, including the preparation of annual budgets;

•	To allocate resources to enhance the financial performance of our business;

•	To evaluate the effectiveness of our business strategies; and

•	In communications with our Board of Directors concerning our financial performance.

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•	Adjusted revenues, adjusted net revenues, adjusted EBITDA, adjusted net income and adjusted net income per share do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

•	Adjusted revenues, adjusted net revenues, adjusted EBITDA, adjusted net income and adjusted net income per share do not reflect changes in, or cash requirements for, our working capital needs;

•	Adjusted revenues, adjusted net revenues, adjusted EBITDA, adjusted net income and adjusted net income per share do not reflect non‑cash components of employee compensation;

•	Although depreciation and amortization are non‑cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and adjusted EBITDA does not reflect any cash requirements for such replacements;

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Due to either net losses before income tax expense or the use of federal and state net operating loss carryforwards, we paid net cash of $8,119, $5,531, and $3,261 in the years ended December 31, 2019, 2018 and 2017, respectively. In the event that we begin to generate taxable income and our existing net operating loss carryforwards for federal and state income taxes have been fully utilized or have expired, income tax payments will be higher; and

•	Other companies in our industry may calculate adjusted revenues, adjusted net revenues, adjusted EBITDA, adjusted net income and adjusted net income per share differently than we do, limiting their usefulness as a comparative measure.

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(1)	For the years ended December 31, 2019, 2018 and 2017, the effective tax rate computed in accordance with GAAP equaled 64.2%, 143.8% and (94.2)%, respectively.

(2)	Estimated normalized effective tax rates of 25.5%, 27.0% and 40.0%, respectively, have been used to compute adjusted net income for the years ended December 31, 2019, 2018 and 2017, respectively.

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(1)

As of December 31, 2019, we have $260,000 of borrowings under our Revolving Credit Facility. The amounts included within the table assume that repayment of these borrowings does not occur until September 27, 2024, the date on which the Revolving Credit Facility matures. Included within this line item are estimated annual interest payments based on this amount of borrowings at an annual rate of 4%.

(2)	We lease facilities under non‑cancellable operating leases expiring at various dates through 2030.

(3)	The Company granted membership interests in certain of the Company's equity method investments to two legacy PIEtech executives with an estimated grant date fair market value of $8,900. These membership interests will vest on May 1, 2020 and become exercisable on May 1, 2022, with the option to put the membership interests to the Company.

•	Amounts estimated for uncertain tax positions as the timing and likelihood of such payments cannot be reasonably estimated.

•	Voluntary employer matching contributions to our defined contribution benefit plans since the amount cannot be reasonably estimated. For the years ended December 31, 2019, 2018 and 2017, we made voluntary employer matching contributions of $6,044, $4,778 and $4,038, respectively.

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•	assessing the selection of the valuation methodology,

•	assessing the Company’s estimated discount rate by comparing it against a discount rate that was independently developed using publicly available market data along with data from comparable companies, and

•	developing an estimate for the acquisition-date fair value of the customer lists using the Company’s cash flow forecasts and an independently developed discount rate, and comparing the result to the Company’s fair value estimate.

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1.	Organization and Description of Business

•	Envestnet Wealth Solutions – a leading provider of unified wealth management software and services to empower financial advisors and institutions.

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Envestnet | Enterprise provides an end-to-end open architecture wealth management platform, through which advisors can construct portfolios for clients. It begins with aggregated household data which then leads to a financial plan, asset allocation, investment strategy, portfolio management, rebalancing and performance reporting. Advisors have access to over 20,000 investment products. Envestnet | Enterprise also offers data aggregation and reporting, data analytics and digital advice capabilities to customers.

•	Envestnet | Tamarac™ provides leading trading, rebalancing, portfolio accounting, performance reporting and client relationship management software, principally to high‑end registered investment advisers (“RIAs”).

•	Envestnet | MoneyGuide provides leading goals-based financial planning solutions to the financial services industry. The highly adaptable software helps financial advisors add significant value for their clients using best-in-class technology with enhanced integrations to generate financial plans.

•	Envestnet | Retirement Solutions (“ERS”) offers a comprehensive suite of services for advisor-sold retirement plans. Leveraging integrated technology, ERS addresses the regulatory, data and investment needs of retirement plans and delivers the information holistically.

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Envestnet | PMC®, or Portfolio Management Consultants (“PMC”) provides research and consulting services to assist advisors in creating investment solutions for their clients. These solutions include over 4,500 vetted third party managed account products, multi-manager portfolios, fund strategist portfolios, as well as over 1,000 proprietary products, such as quantitative portfolios and fund strategist portfolios. PMC also offers portfolio overlay and tax optimization services.

•	Envestnet Data & Analytics – a leading data aggregation and data intelligence platform powering dynamic, cloud-based innovation for digital financial services, and includes product offerings from Envestnet | Yodlee and Envestnet | Analytics.

2.	Summary of Significant Accounting Policies

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3.	Business Acquisitions

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4.	Prepaid Expenses and Other Current Assets

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5.	Property and Equipment

6.	Internally Developed Software

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7.	Goodwill and Intangible Assets

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8.	Accrued Expenses and Other Liabilities

9.	Debt

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10.	Leases

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11.	Stockholders’ Equity

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12.	Fair Value Measurements

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13.	Revenue

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(1)	As noted above, prior period amounts have not been adjusted under the modified retrospective method.

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(1)	As previously noted, prior period amounts have not been adjusted under the modified retrospective method.

(2)	No foreign country accounted for more than 10% of total revenues.

(3)	In 2018, upon adoption of ASU 2014-09, gross revenue recognition changed to net revenue recognition for one customer.

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14.	Cost of Revenues

15.	Stock-Based Compensation

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16.	Benefit Plan

17.	Income Taxes

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18.	Net Income (Loss) Per Share

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(1)	For 2019, this amount does not include 2,743,321 of potential common shares related to the Convertible Notes due 2019 as they were settled in cash at maturity in December 2019.

19.	Segment Information

•	Envestnet Wealth Solutions – a leading provider of unified wealth management software and services to empower financial advisors and institutions.

•	Envestnet Data & Analytics – leading data aggregation and data analytics platform powering dynamic, cloud-based innovation for digital financial services.

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20.	Geographical Information

21.	Commitments and Contingencies

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22.	Quarterly Financial Data (Unaudited)

(1)	Quarterly values may not sum to annual values due to rounding.

(2)	Quarterly values may not sum to annual values due to differences in quarterly dilution compared to year to date dilution.

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