Envestnet, Inc.

Envestnet reported Q2 revenue of $348 million, up 11% year over year, adjusted EBITDA of $78 million, and a 22% adjusted EBITDA margin, up nearly 450 basis points versus Q2 2023. Adjusted EPS was $0.55, up 20% from $0.46 in Q2 2023, though below guidance due to certain non-cash charges. Wealth Solutions revenue was over $312 million, up 13%, while D&A revenue was $36.2 million, down 1%; the company also recorded a $96 million non-cash impairment charge related to D&A goodwill. The company did not provide third-quarter guidance due to the pending transaction with Bain Capital.

Jim Fox framed the quarter and the Bain Capital deal as evidence of long-term value creation, saying the transaction came from a thorough board process and provides certain and immediate value for shareholders. He said the board unanimously concluded the deal is in the best interest of the company and shareholders, and said the company expects to keep investing in its platform to make it more customized, connected and intelligent if the transaction closes. His tone was upbeat and confident, emphasizing that the company’s 'best days are ahead.'

Josh Warren focused on operating performance, client growth, and cash generation. He said advisor count rose to over 110,000, accounts grew 4%, and total inflows were nearly $11 billion, with over $13 billion of AUM flows in the quarter. On costs and cash, he highlighted $144 million of direct expenses including $130 million of asset-based costs, CapEx of $3 million, free cash flow of $67 million, first-half free cash flow of about $47 million, cash of $122 million, and leverage of approximately 2.7x; he also noted the quarter included a $96 million goodwill impairment, $20 million of accounting gains, and $13 million of software write-offs, all non-cash.

There was no Q&A session. Management instead preemptively addressed the main investor issue: the pending Bain Capital acquisition. They said the deal is expected to close in the fourth quarter, subject to shareholder approval and regulatory clearances, and they explicitly said they would not provide Q3 guidance while the transaction is pending.