Q4 2023 Envestnet Inc Earnings Call
Operator: Before we begin, I'd like to point out that our earnings press release, supplemental presentation, and associated Form 10-K can be found in the Investor Relations section of our website at investnet.com. This call is being webcast live, and a replay will be available for one month in the Investor Relations section of our website as well.
Things press release supplemental presentation and associated Form 10-K can be found under the Investor Relations section of our web site and invest net dot com. This.
This call is being webcast live in a replay will be available for one month under the Investor Relations section of our website as well.
Operator: 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 statement on slides 2 and 3 of the supplemental presentation regarding the potential risks, uncertainties, and other factors that could cause actual results to differ from those expressed by the forward-looking statement.
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 statement on slides two and three 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.
Operator: Further information can be found in our regular SEC filing. 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 as-adjusted financial measures to the most directly comparable gap measures.
Further information can be found in our regular SEC filings.
During this call will be referring to certain as adjusted financial measures. Please refer to the appendix in our supplemental presentation for a reconciliation of these as adjusted financial measures to the most directly comparable GAAP measures.
Operator: Joining me on today's call are Bill Crager, Envestnet's Chief Executive Officer, and Tom Sipp, Executive Vice President for Business Line. On our call this afternoon, we will provide a company update, as well as an overview of the company's fourth quarter and full year 2023 results. After our prepared remarks, we will open the call to questions. During the Q&A, please limit yourself to one question plus one follow-up. You may get back into the queue if you have additional questions.
Joining me on today's call, our Bill Krager investments, Chief Executive Officer, and Tomset Executive Vice President for business lines on.
William C. Crager: On our call. This afternoon, we will provide accompany update as well as an overview of the company's fourth quarter and full year 2023 results.
William C. Crager: After our prepared remarks, we will open the call to questions. During the Q&A. Please limit yourself to one question plus one follow up you may get back into the queue. If you have additional questions.
Operator: I'd like to start the call today with a review of our Q4 and full year 2023 results. Our results in Q4, each of which were above the high end of our range, represent our focus on disciplined execution. Q4 revenue was $317.6 million, representing 8% growth over Q4 2022. Adjusted EBITDA was $75.5 million, representing a 24% adjusted EBITDA margin and nearly 600 basis points of margin expansion when compared to Q4 2022. Our adjusted EPS for Q4 was $0.65, up 44% from the $0.45 we reported in Q4 2022. For the full year 2023, our revenue was $1,246,000,000. Adjusted EBITDA was $251 million, representing a 20% overall adjusted EBITDA margin.
Speaker Change: I'd like to start the call today with the review of our queue for in full year 2000 twenty-three results.
Speaker Change: Ours are results in queue for each of which were above the high end of our range represent our focus on disciplined execution.
Speaker Change: Q for revenue was $317 $6 million, representing 8% growth over Q4 2022.
Speaker Change: Adjusted EBITDA was $75.5 million, representing a 24% adjusted EBITDA margin and nearly 600 basis points of margin expansion when compared to Q4 2022.
Speaker Change: Are adjusted EPS for Q4, with 65 cents up 44% from the 45 cents, we reported in Q4 2022.
Speaker Change: For the full year 2023, our revenue was $1 billion $246 million adjusted.
Speaker Change: Suggested EBITDA was $251 million, representing a 20% overall adjusted EBITDA margin and are adjusted EPS was $2.12.
William C. Crager: And our adjusted EPS was $2.12. As we enter 2024 and the next chapter at Envestnet, we have a set of strong fundamentals that we will discuss on today's call that position us well. I'd now like to turn the call over to Chief Executive Officer Bill Crager.
Speaker Change: As we enter 2024 and the next chapter at Envestnet, we have a set of strong fundamentals that we will discuss on today's call that position as well I'd now like to turn the call over to Chief Executive Officer, Bill Krieger Bill. Thank you Josh.
William C. Crager: Thank you, Josh. As you know, this will be my final earnings call as Chief Executive Officer of Envestnet. For 25 years, it has been a privilege to be part of the amazing journey that is our company. From an idea and a good dose of courage, by applying a lot of resilience and creativity, we built something extraordinary. I am proud of what we've accomplished.
William C. Crager: You know this will be my final earnings call as Chief Executive Officer of investment.
William C. Crager: For 25 years, it has been a privilege to be part of the amazing journey that is our company from.
William C. Crager: From an idea and a good dose of courage by applying a lot of resilience and creativity, we've built something that is <unk>.
William C. Crager: Extraordinary.
William C. Crager: I am proud of what we've accomplished and perhaps most proud of this envestnet is foundational to the financial guidance that advisers deliver to enhance the lives of millions and millions of families.
William C. Crager: And perhaps most proud of this, Envestnet is foundational to the financial guidance that advisors deliver to enhance the lives of millions and millions of families. Over the last couple of years, we've worked effectively to make Envestnet even better, taking the necessary steps to bring the company together to enable a highly connected, highly technology-driven, highly data-driven platform to serve the wealth management industry. Today, Envestnet is in a very strong position because of the work that we've done. The company is the industry leader by assets, advisors, accounts, market share leader across financial planning, our turnkey asset management offering, and the data insights that we generate and offer to our clients. We are embedded with a great roster of clients and partners, driving an industry ecosystem that powers growth and delivers value.
William C. Crager: Over the last couple of years, we've worked effectively make envestnet, even better taking the necessary steps to bring the company together to enable a highly connected highly technology driven highly data driven platform to serve the wealth management industry. Today Envestnet is in a very strong position because of the.
William C. Crager: That we've done.
William C. Crager: The company is the industry leader by assets advisers accounts market share leader across financial planning are turnkey asset management offering and the data insights that we generate an offer to our clients.
William C. Crager: We are embedded with a great roster of clients and partners driving in the industry ecosystem that powers growth and delivers value.
William C. Crager: And we have an exceptionally talented and aligned leadership team to deliver the next phase of Envestnet. The Envestnet strategy is aligned to our clients' needs to drive the growth and productivity of advisors by providing the most comprehensive and capable wealth management platform for our industry. We've created scale and competitive advantage with technology, data, and solutions. We've connected the pieces, and we are able to serve all client workflows and business models.
William C. Crager: And we have an exceptionally talented and aligned leadership team to deliver the next phase of investment.
William C. Crager: The investment strategy is aligned to our clients needs to drive the growth and productivity of advisors by providing the most comprehensive and capable wealth management platform for our industry, we've created scale and competitive advantage with technology data and solutions, we've connected the pieces and we're able to serve all.
William C. Crager: Workflows and business models.
William C. Crager: Doing this serves investors by delivering revenue growth, operating leverage, and improving free cash flow conversion. I look forward to helping Envestnet continue its leadership while advocating for our industry, roadmapping the future of financial advice and the essential impact that it has while deepening relationships with our clients and our partners. I now want to turn the call over to Tom Sip, who leads Envestnet's business lines, for an overview of the drivers of our business, and I'll be back at the end of the call for some closing comments. Thank you, Bill. It has been an honor and one of the great experiences of my career to work alongside you. I am excited about the place we are in and where we are going.
William C. Crager: Doing this serves investors by delivering revenue growth.
William C. Crager: Operating leverage and improving free cash flow conversion.
William C. Crager: I look forward to helping investment continue its leadership, while advocating for our industry roadmap in the future of financial advice and the essential impact that it has while deepening relationships with our clients and our partners and.
William C. Crager: And now I want to turn the call over to Tom Sip, who leaves investments business lines for an overview of the drivers of our business and I'll be back at the end of the call for some closing comments palm.
Tom Sip: Thank you Bill.
Tom Sip: It has been an honor and one of the great experiences of my career to work alongside you.
Tom Sip: I'm excited about the place, we're in and where we're going.
Tom Sip: I'd like to spend our time today discussing four important topics: the market context and themes driving our business. Our position and how it is translating into key metrics and financial results, recent proof points of our strategy winning with clients. And finally, the key growth initiatives that will drive us ahead in the medium and long term. First, the market context. Envestnet is uniquely positioned to serve every type of advisory business model across the industry, from standalone REA to large institutional broker-dealer or bank. We understand better than anyone the themes driving the overall industry, the themes that shape our technology offering, and how we bring solutions to market.
Tom Sip: I would like to spend our time today discussing for important topics.
Tom Sip: The market context and themes driving our business.
Tom Sip: Our position and how it is translating into key metrics and financial results.
Tom Sip: Recent proof points of our strategy winning with clients.
Tom Sip: And finally, the key growth initiatives that drive US ahead in the medium and long term.
Tom Sip: First the market context.
Tom Sip: Invest that is uniquely positioned to serve every type of advisory business model across the industry.
Tom Sip: From stand alone <unk>, two large institutional broker dealer or bank.
Tom Sip: We understand better than anyone the themes driving the overall industry the themes that shape, our technology offering and how we bring solutions to market.
Tom Sip: First there.
Tom Sip: There's a greater push to achieve platform scale for both the advisor and for the firms that support them. Integrated technology and service are keys to greater efficiency. Another key trend is personalization of portfolio management, investments, and the digital experience. This is more important than ever.
Tom Sip: There is a greater push to achieve platform scale for both the adviser and for the firms that support them.
Tom Sip: Integrated technology and service are keys to greater efficiency.
Tom Sip: Another key trend is personalization of portfolio management investments and the digital experience.
Tom Sip: This is more important than ever.
Tom Sip: Personalization is driven by the fusion of data and insights, as well as robust investment options and technology capability. Next, our research shows that 60% of advisors in firms prefer to buy WealthTech from a single provider. Streamlining technology and maximizing the benefits of an end-to-end platform is imperative to a successful strategy and ultimately drives customers to consolidate providers. And finally, there's a continued evolution toward a more holistic view of advice, powered by data and planning capabilities that serve all client types, which is then delivered through seamless connections to solutions. We've been at the forefront of these trends with the scale and scope of our technology and solutions in the market for years. Our competitors often talk about their vision or product roadmaps, as demonstrated through static screenshots.
Tom Sip: Personalization is driven by the fusion of data and insights.
Tom Sip: Robust investment options and technology capabilities.
Tom Sip: Next our research shows that 60% of advisers and firms prefer to buy wealth tech from a single provider.
Tom Sip: Streamlining technology and maximizing the benefits of an end to end platform is imperative to a successful strategy and ultimately drives customers to consolidate providers.
Tom Sip: And finally, there is a continued evolution toward a more holistic view of advice.
Tom Sip: Powered by data and planning capabilities that serves all client types, which has been delivered through seamless connections to solutions.
Tom Sip: We've been at the forefront of these trends with the scale and scope of our technology and solutions in the market for years.
Tom Sip: Our competitors often talk about their vision or product roadmaps as demonstrated through static screenshots.
Tom Sip: Meanwhile, our platform is live, battle-tested, and handling billions of dollars across millions of accounts every day, with the most robust features, and we are not standing still. We've rolled out a continuous series of enhancements to our platform with true open architecture, both within the connectivity and integration of our native modern experience and as part of our rich API and data library. We are enhancing, connecting, and delivering to the market. This has been our work over the last few years, and it will continue to drive competitive advantage. Here's how that translates into key metrics and financial results. First and most importantly, our wealth business delivered Q4 revenue growth of 11% versus Q4 2022. Second, over the last two years, Envestnet delivered $116 billion in AUMA net inflows, representing an average growth rate of 8%. We have delivered more than four times the net inflows of the second and third largest TAMPs combined. Accounts grew 4% year over year, while AUMA accounts grew 8%. Our gross fee rate in Q4 was approximately $9.8 million.
Tom Sip: Meanwhile, our platform is life battle tested and handling billions of dollars across millions of accounts every day.
Tom Sip: With the most robust features.
Tom Sip: And we are not standing still.
Tom Sip: We've rolled out a continuous series of enhancements to our platform with true open architecture.
Tom Sip: Both within the connectivity and integration of our native modern experience.
Tom Sip: And as part of our rich API and data library.
Tom Sip: We are enhancing connecting and delivering into the market.
Tom Sip: This has been our work over the last few years and it will continue to drive competitive advantages.
Tom Sip: Here's how that translates into key metrics and financial results.
Tom Sip: First and most importantly, our wealth business delivered Q for revenue growth of 11% versus Q4 2022.
Tom Sip: Second over the last two years invest that delivered 116 billion of Ohmae net inflows.
Tom Sip: Representing an average growth rate of 8%.
Tom Sip: We have delivered more than four times, the net inflows of the second and third largest tamps combined.
Tom Sip: Accounts grew 4% year over year, while Ohmae accounts grew 8%.
Tom Sip: Our gross fee right in Q4 was approximately 9.8.
Tom Sip: It's been stable between 9.5 and 10.5 with lots of short-term variables across millions of accounts. Finally, our client-servant scores have gone from the low 40s to the mid 60s over the last two years. Our leadership with a strong and stable client base is another competitive advantage. We have over 4,500 clients in the broker-dealer and REA channels, including 48 of the 50 largest wealth management and brokerage firms. Our top 25 clients have been with us for an average of 15 years.
Tom Sip: It's been stable between nine five to 10.5 with lots of short term variables across millions of accounts.
Tom Sip: Finally, our client server scores have gone from the low forties to mid sixties over the last two years.
Tom Sip: Our leadership with a strong and stable client basis, another competitive advantage.
Tom Sip: We have over 4500 clients and the broker dealer NRA channels, including.
Tom Sip: Including 48 of the 50 largest wealth management and brokerage firms.
Tom Sip: Our top 25 clients had been with us for an average of 15 years.
Tom Sip: We have made fundamental improvements in both the technology and the service and delivery our clients experience with us. That puts us in a position to capitalize on the trend of vendor consolidation. I will provide you with a couple of specific proof points.
Tom Sip: We have made fundamental improvements in both the technology and the service and delivery our clients experience with us.
Tom Sip: That puts us in a position to capitalize on the trend of vendor consolidation.
Tom Sip: I will provide you a couple of specific proof points.
Tom Sip: A large regional broker dealer with over 50 billion in assets started to transition away from our platform but is now coming back because the promise of a custom platform with a fully integrated advisor ecosystem could not be delivered. Only Envestnet has the solution live and in market with the scale and maturity that can be relied upon. A $15 billion REA and long-time client recently adopted our managed account capabilities in Q4, moved 400 million assets onto the platform, including a majority in overlay services or direct index. As a result, the recurring revenues from this client have more than tripled, with potential for significant growth. So we're very focused on our clients, delivering a platform that helps them grow. This is a better position than where we were a few years ago and one that we are leveraging to further our leading position.
Tom Sip: A large regional broker dealer with over 50 billion of assets started to transition away from our platform, but is now coming back.
Tom Sip: Because the promise of accustomed platform with a fully integrated advisor ecosystem could not be delivered.
Tom Sip: Only invest that had the solution live in in market with the scale and maturity that can be relied upon.
Tom Sip: A $15 billion.
Tom Sip: And longtime client recently adopted our manager Cal capabilities in queue for move $400 million of assets onto the platform, including a majority and overly services or direct indexing.
Tom Sip: As a result, the recurring revenues from this client has more than tripled with potential for significant growth.
Tom Sip: So we're very focused on our clients delivering the platform that helps them grow.
Tom Sip: This is a better position than where we were a few years ago and one that we're leveraging to further our leading position.
Tom Sip: Before we move on, I'd like to address the impact of M&A across the industry. Typically, Envestnet has been a net beneficiary as our extensive client footprint with both REA aggregators and enterprise clients has supported additional growth. However, consolidation over the last year or so has resulted in a negative impact on our wealth growth rate.
Speaker Change: Before we move on I would like to address the impact of M&A across the industry.
Speaker Change: Typically invest that has been a net beneficiary as our extensive client footprint with both already Aggregators and enterprise clients has supported additional growth.
Speaker Change: However, consolidation over the last year or so has resulted in a negative impact to our wealth growth rate.
Tom Sip: Finally, I'd like to spotlight some of the important initiatives that will contribute to revenue growth over the medium term. Some of these are further along and are included in our outlook. Others are underway and will start to contribute to our growth in 2025 and beyond. First, we have achieved robust year-over-year growth across several of our solutions business lines where personalization and technology drive differentiation, including High Net Worth, Direct Indexing, Tax Overlay, and Managed Accounts to REAs. We believe these accelerated growth rates will continue for an extended period.
Speaker Change: Finally, I would like to spotlight some of the important initiatives that will contribute to revenue growth over the medium term.
Speaker Change: Some of these are further along and included in our outlook others are underway and will start to contribute to our growth in 2025 and beyond.
Speaker Change: First we have achieved robust year over year growth across several of our solutions business lines.
Speaker Change: Where personalization and technology drive differentiation.
Speaker Change: Including high net worth direct indexing tax overlay and managed accounts to <unk>.
Speaker Change: We believe these accelerated growth rates will continue for an extended period.
Speaker Change: Second try.
Tom Sip: Pricing initiatives are accelerating. Specific progress in the RA channel, where we package our technology with a broad set of fiduciary solutions, analytics, and planning, deepening our client relationships. However, enterprise pricing initiatives will take longer due to the long-term nature of our contract.
Speaker Change: Pricing initiatives are accelerating.
Speaker Change: With specific progress in the channel, where we package our technology with a broad set of fiduciary solutions.
Speaker Change: Political and planning.
Speaker Change: <unk> our client relationships.
Speaker Change: Enterprise pricing ish initiatives will take longer due to the long term nature of our contracts.
Speaker Change: Third.
Tom Sip: Our strategy to deliver deeply integrated custody capabilities completes a missing piece in the fully digital and connected advisor and client experience. We are delivering the account opening, funding, and servicing workflows between our wealth management platform and custody back office functions in one single experience. We will launch this solution, as previously announced with FNZ,
Speaker Change: Our strategy to deliver deeply integrated customer capabilities complete a missing piece in the fully digital and connected adviser and client experience.
Speaker Change: We are delivering the account opening funding and servicing workflows between our wealth management platform in custody back office functions in one single experience.
Speaker Change: We will launch this solution as previously announced with F N Z.
Tom Sip: Finally, our retirement business continues to gain momentum. The team is focused on efficiently delivering retirement solutions to wealth advisors using the best products, technology, and user experience in the marketplace, essentially providing the easy button for wealth advisors.
Speaker Change: Finally, our retirement business continues to gain momentum.
Speaker Change: The team is focused on efficiently delivering retirement solutions to wealth advisers utilizing the best products technology and user experience in the marketplace.
Speaker Change: Essentially providing the easy button for wealth advisers.
Tom Sip: This business will then scale by leveraging distribution partnerships with retirement and asset management industry leaders. What we have in the marketplace is meaningful for our clients and driving results; continuous delivery of enhancements to our technology, tools, solutions, and service drives discrete revenue opportunities and furthers our competitively advantaged platform. We've connected the components to meet client needs and drive deeper relationships. That underpins our 2024 wealth revenue growth guidance of mid to high single digits. Thank you, and I'd like to turn the call back over to Josh.
Speaker Change: This business will then scale by leveraging distribution partnerships with retirement and asset management industry leaders.
Speaker Change: What we have in the marketplace is meaningful for our clients and driving results.
Speaker Change: The continuous delivery of enhancements.
Speaker Change: Of our technology tools solutions and service drive discreet revenue opportunities and furthers, our competitively advantaged platform.
Speaker Change: We've connected the components to meet client needs and drive deeper relationships.
Speaker Change: That underpins, our 2024 wealth revenue growth guidance of mid to high single digits.
Speaker Change: Thank you and I'd like to turn the call back over to Josh.
Josh: Thank you, Tom. I'll spend a few minutes discussing three things. First, our results; second, our balance sheet; and third, our outlook and focus. As we enter 2024 and a new chapter of Envestnet, we look forward to continuing to deliver our connected ecosystem and our unique capabilities. Our model supports our attractive growth algorithm and enables operating leverage and free cash flow generation. As of the end of 2023, Envestnet served over 108,000 advisor
Speaker Change: Utahn.
Josh: I'll spend a few minutes discussing three things first our results second our balance sheet and third our outlook and focus.
Josh: As we enter 2024 and a new chapter of investment we look forward to continuing continuing to deliver are connected ecosystem and our unique capabilities.
Josh: Our model supports are attractive growth algorithm and enables operating leverage and free cash flow generation.
Josh: As of the end of 2023 investment served over 108000 advisors and those advisers are doing more business with Envestnet. During 2023, while our total number of advisers grew by nearly 3% or number of accounts grew by over 4% to over $19 million evidence sing higher adoption.
Josh: And those advisors are doing more business with Envestnet. During 2023, while our total number of advisors grew by nearly 3%, our number of accounts grew by over 4% to over 19 million, demonstrating higher adoption. Taking a longer view, demonstrating the scalability of our platform, the number of accounts per advisor on Envestnet has grown approximately 50% between the start of 2020 and the end of 2023. While historically, Envestnet expected to grow costs in line with accounts, the completion of our platform infrastructure investments means that account growth becomes increasingly beneficial to our ability to expand profitability and generate consistent operating leverage to deliver growing and robust free cash flow. To achieve this framework, we'll focus on revenue growth across both of our segments and disciplined expense management. First, let me focus on our recurring revenue dynamic. As a reminder, our Wealth Solutions segment generates both asset-based and subscription-based revenues, while our Data & Analytics segment generates subscription-based revenues only.
Josh: Taking a longer view demonstrating the scalability of our platform. The number of accounts per advisor Uninvested has grown approximately 50% between the start of 2020 at the end of 2023.
Josh: While historically invest that expected to grow costs in line with accounts. The completion of our platform infrastructure investments means that account growth becomes increasingly beneficial to our ability to expand profitability and to generate consistent operating leverage to deliver growing and robust free cash flow to.
Josh: To achieve this framework, we will focus on both revenue growth across both of our segments and disciplined expense management.
Josh: First let me focus on a recurring revenue dynamics.
Josh: As a reminder, or wealth solutions segment generates both asset based and subscription based revenues, while our data and analytics segment generate subscription based revenues only.
Josh: In Wealth Solutions, asset-based and subscription-based pricing constructs provide the breadth of solutions to fit the industry and enable Envestnet growth. I'll start by reviewing the asset-based revenues of our Wealth Solutions segment. During Q4, Envestnet recorded net inflows of $7.9 billion into AOMA accounts.
Josh: In wealth solutions asset based in subscription based pricing construct provide the breadth of solutions to fit the industry and enable envestnet growth.
Josh: I'll start by reviewing the asset based revenues of our wealth solutions segment.
Josh: Q for investment recorded net inflows of $7.9 billion into Ohmae accounts for the full year investment generated $58 $5 billion in net flows into AOA accounts, representing 8% organic asset growth.
Josh: For the full year, Envestnet generated $58.5 billion in net flows into AOMA accounts, representing 8% organic asset growth. We believe consistent net flows are one of the most enduring attributes of our business. Envestnet has not had an outflow quarter since going public in July 2010, meaning that Q4 2023 was the 54th consecutive quarter of inflows. This is because flows on the Envestnet platform are among products within a portfolio and are underpinned by multi-year contracts. Amidst this backdrop of strong and consistent asset growth, Envestnet has faced some headwinds from clients allocating more of their portfolios to cash due to the inverted yield curve environment. Investors have responded to higher short-term rates by holding more of their money in deposit accounts outside Envestnet or in retail money market funds.
Josh: We believe consistent net flows are one of the most enduring attribute of our business.
Josh: Envestnet has not had an outflow quarters since going public in July 2010, meaning that Q4 2023 was the 54th quarter of inflows consecutively.
Josh: This is because flows on the investment platform are among products within a portfolio and are underpinned by multiyear contracts.
Josh: Amidst this backdrop of strong and consistent asset growth invest that has faced some headwinds from clients allocating more of their portfolios to cash due to the inverted yield curve environment <unk>.
Josh: Investors have responded to higher short term rates by holding more of their money and deposit accounts outside envestnet or in retail money market funds naturally. This has affected our results. We expect money invested in the dead for equity markets to produce a higher fee mix.
Josh: Naturally, this has affected our results. However, we expect money invested in the debt or equity markets to produce a higher fee mix. During 2023, total asset-based revenue generated by Wealth Solutions was $745 million, representing a 1% increase over 2022. Our growth accelerated in the second half of the year. This was particularly pronounced during Q4 2023, when asset-based revenue grew 13% compared to Q4 2022 to nearly $189 million. The subscription-based revenues of our Wealth Solutions segments are generated by our software-as-a-service offerings, which primarily serve RIAs, and financial planning tools. First, I'd like to cover one reporting item.
Josh: During 2023 total asset based revenue generated by well solutions with $745 million, representing a 1% increase over 2022 or.
Josh: Growth accelerated in the second half of the year. This was particularly pronounced during Q4 2023 when asset based revenue grew 13% compared to Q4 2022 to nearly $189 million.
Josh: The subscription based revenues of our wealth solutions segments are generated by our software as a service offerings, which primarily serve ria's and financial planning tools.
Speaker Change: First I'd like to cover one reporting item.
Josh: As announced on our last earnings call, to align our reporting with how we manage our business, we transferred our Wealth Analytics business, which generated about $4 million of revenue each quarter of 2023, to our Wealth Solutions segment. This contribution to the Wealth Solutions subscription business is reflected in the Q4 numbers provided. To facilitate comparability, I'll be describing our segment results on a recast basis, and historical financial information is available in our earnings supplement.
Speaker Change: As announced on our last earnings call to align our reporting with how we manage our business, we transferred our wealth analytics business, which generated about $4 million of revenue each quarter of 2023 to our wealth solutions segment.
Speaker Change: This contribution to wealth solutions, the wealth solutions subscription business is reflected in the queue for numbers provided to facilitate comparability I'll be describing our segment results on a recast basis and historical financial information is available in our earning supplement.
Josh: In 2023, subscription-based revenue in wealth solutions outgrew asset-based revenue, increasing 5% on a pro forma basis to $325 million. During Q4, our Wealth Solutions subscription-based revenue of over $84 million grew 4% on a pro forma basis over Q4 2022. On an overall basis, Wealth Solutions revenue grew by 3% during 2023.
Speaker Change: In 2023 subscription based revenue in our wealth and wealth solutions outgrew acid based revenue, increasing 5% on a pro forma basis to $325 million.
Speaker Change: During Q for our wealth solutions subscription based revenue of over $84 million grew 4% on a pro forma basis over Q4 2022.
Speaker Change: On an overall basis, well solutions revenue grew by 3% during 2023.
Josh: During Q4 2023, our Wealth Solutions revenue of $279 million represented 11% growth over Q4 2022. As we look ahead, while double-digit growth remains our goal, we expect to deliver a growth rate in the mid to high single digits for the full year 2024. This growth outlook is premised on a flat market for the full year.
Speaker Change: During Q4, 2000 twenty-three our wealth solutions revenue of $279 million represented 11% growth over Q4 2022.
Speaker Change: As we look ahead, while double digit growth remains our goal, we expect to deliver a wealth solutions growth rate in the mid to high single digits for the full year 2024.
Speaker Change: This growth outlook is premised on a flat market for the full year.
Josh: As demonstrated by the margin expansion delivered during 2023, we believe we can continue to drive margins in 2024 as we leverage the investments we have made in our platform. Now, turning to our data and analytics business, which generates subscription-based revenues. In Q4, our revenue was $38.6 million. On a like-for-like basis, Q4 DNA revenue declined by 7% compared to Q4 2022 but was 3% higher sequentially versus Q3 2023. For the full year, our DNA segment generated over $150 million of revenue, declining by 14% on a pro forma basis.
Speaker Change: As demonstrated by the margin expansion delivered during 2023, we believe we can continue to drive margins in 2024, as we leveraged the investments we've made in our platform.
Speaker Change: Turning to our data and analytics business, which generates subscription based revenues in.
Speaker Change: In queue for our revenue was $38.6 million on a like for like basis Q for DNA revenue declined by 7% compared to Q4, 2022, but was 3% higher sequentially versus Q3 2023.
Speaker Change: For the full year, our DNA segment generated over $150 million of revenue declining by 14% on a pro forma basis.
Josh: In connection with this performance, we are taking a non-cash impairment charge of approximately $192 million during Q4 based on a re-evaluation of Envestnet's goodwill related to the DNA segment. 2023 had several commercialization challenges for this segment, including banking turmoil and client delinquencies. While performance was less than investment had anticipated, there are a variety of strategic and operational initiatives in process that we believe will position the business well going forward. We believe the sequential results in Q4 provide early evidence of the returns on these initiatives. Now, moving to expenses.
Speaker Change: In connection with this performance, we're taking a non-cash impairment charge of approximately $192 million during Q for based on a reevaluation of investments goodwill related to the DNA segment.
Speaker Change: 2023 had several commercialization challenges for this segment, including banking turmoil and climbed delinquencies.
Speaker Change: While performance was less than investment had anticipated there are a variety of strategic and operational initiatives in process that we believe will position the business while going forward.
Speaker Change: We believe the sequential results in queue for provide early evidence of the returns on these initiatives.
Speaker Change: Now moving to expenses.
Josh: The platform infrastructure investments we've made over the last few years enable us to achieve operating leverage by growing revenues ahead of costs to expand our profitability and grow our free cash flow. As announced on our November call, we have successfully reduced our annual expense run rate by $60 million across compensation-related, non-compensation expenses, and CapEx since the start of 2023. We consider our costs to be manageable as those three general categories constitute the majority of our total cost base. Envestnet also has certain non-controllable expenses which are common in the industry, consisting of payments to third parties for investment management, clearing, custody, and brokerage services.
Speaker Change: The platform infrastructure investments, we've made over the last few years enable us to achieve operating leverage by growing revenues ahead of costs to expand our profitability and grow our free cash flow.
Speaker Change: Has announced on our November call, we have successfully reduced our annual expense run rate by 60 million across compensation related noncompensation expenses in capex since the start of 2023.
Speaker Change: We consider our costs to be manageable as those three general categories constitute the majority of our total cost base.
Speaker Change: Invest net also has certain noncontrollable expenses, which are common in the industry consistent with payments to third parties for investment management clearing custody and brokerage services.
Josh: As of Q4 2023, we expanded Adjusted EBITDA margins by nearly 600 basis points from Q4 2022 and nearly 700 basis points from our Q1 2022 margin. We expect to continue to expand margins and improve free cash flow generation in 2024. I'll note that we revised our accounting treatment of certain cloud hosting arrangements with third-party infrastructure providers to be operating expenses and not capitalizable. There is, of course, no cash impact from this adjustment, and our historical reporting has been revised to reflect this change. In addition to adjusted EBITDA, as defined by our credit agreements, we're committed to providing greater transparency regarding our free cash flow. First, severance expenses of $35 million.
Speaker Change: As a Q4 2023, we expanded adjusted EBITDA margins nearly 600 basis points from Q4, 2022, and nearly 700 basis points from our Q1 2022 margin.
Speaker Change: We expect to continue to expand margins and improve free cash flow generation in 2024.
Speaker Change: I'll note that we revised our accounting treatment of certain cloud hosting arrangements with third party infrastructure providers to be operating expenses and not capitalizable.
Speaker Change: There is of course, no cash impact from this adjustments and our historical reporting has been revised to reflect this change.
Speaker Change: In addition to adjusted EBITDA as defined by our credit agreements, we're committed to providing greater transparency regarding our free cash flow.
Speaker Change: Three items that are not included in our 2023 adjusted EBITDA, but did impact free cash flow were first severance expenses of $35 million.
Josh: Although we will continue to look for ways to optimize our organization, we do not anticipate these 2023 severance figures to be appropriate run rates going forward. Second, capitalized software development of $94 million. In aggregate, we expensed or capitalized $234 million of total technology development in 2023, including stock-based compensation.
Speaker Change: Although we will continue to look for ways to optimize our organization. We do not anticipate these 2023 severance figures to be appropriate run rates going forward.
Speaker Change: Second capitalized software development of $94 million.
Speaker Change: In aggregate, we expend stir capitalized $234 million of total technology development in 2023, including stock based compensation. We expect this overall total technology development spending to reduce in the mid to high single digits year over year because of the investments already made but will remain <unk>.
Josh: We expect this overall total technology development spending to reduce in the mid to high single digits year over year because of the investments already made, but it will remain significant as part of our continued commitment to drive scale and ensure client success. Third, our 2023 CapEx was $19 million. CapEx for 2024 is expected to be approximately $10 million. When taken together, our free cash flow for Q4 2023 was $57 million, reflecting our strong performance and some working capital benefits. Investments free cash flow during the first three quarters was negative.
Speaker Change: <unk> is part of our continued commitment to drive scale and ensure client success.
Speaker Change: Third or 2000 twenty-three capex was 19 million.
Speaker Change: Capex for 2024 is expected to be approximately $10 million.
Speaker Change: When taken together are free cash flow for Q4, 2023 was $57 million, reflecting our strong performance and some working capital benefits.
Speaker Change: Investments free cash flow during the first three quarters was negative.
Speaker Change: Following Q4 I'm pleased to report that for 2023 free cash flow was positive at $42 million.
Speaker Change: Our focus will be unimproved this number in 2024.
Speaker Change: Turning to our balance sheet cash on hand increased nearly $50 million during Q4 to $91 million.
Josh: Following Q4, I'm pleased to report that for 2023, free cash flow was positive at $42 million. Our focus will be on improving this number in 2024. Turning to our balance sheet, cash on hand increased nearly $50 million during Q4 to $91 million.
Speaker Change: Similar to the seasonality observed in previous years, we expect cash to decrease in the first quarter of 2024.
Speaker Change: Our first tranche of convertible debt, which we pay 75 basis points of interest on is due in Q3 of 2025.
Speaker Change: As of December 31, or leverage ratio defined as our total debt less cash over trailing adjusted EBITDA has been reduced to below 3.2 times.
Josh: Similar to the seasonality observed in previous years, we expect cash to decrease in the first quarter of 2024. Our first tranche of convertible debt, which we pay 75 basis points of interest on, is due in Q3 of 2025. As of December 31st, our leverage ratio, defined as our total debt less cash over trailing adjusted EBITDA, has been reduced to below 3.2 times.
Speaker Change: In total we believe our liquidity position gives us flexibility we.
Speaker Change: We expect to continue to be disciplined and prudent with our capital allocation as we look to further reduce our leverage ratio during 2024.
Speaker Change: Looking ahead to the first quarter of 2024 consistent with how we've provided information previously we expect revenues to be between 320 and $326 million, representing 8% growth over Q1 2023, assuming the mid point of the range.
Josh: In total, we believe our liquidity position gives us flexibility. We expect to continue to be disciplined and prudent with our capital allocation as we look to further reduce our leverage ratio during 2024. Looking ahead to the first quarter of 2024, consistent with how we've provided information previously, we expect revenues to be between $320 and $326 million, representing 8% growth over Q1 2023, assuming the midpoint of the range. Adjusted EBITDA is expected to be between $64 million and $69 million.
Speaker Change: Adjusted EBITDA to be between 64 and $69 million.
Speaker Change: Using the midpoint of the range. This represents approximately 250 basis points of margin improvement over Q1 2023.
Speaker Change: And adjusted EPS to be between 52 and 57 cents.
Speaker Change: As we enter a new chapter I'd invest net we have three areas of focus first our clients our clients are our compass and our commitment is unwavering <unk>.
Speaker Change: Second we are committed to a growth algorithm for delivering more value to those clients and investment.
Speaker Change: And finally operating leverage where we can optimally balanced revenue and profitability supporting execution excellence with scale. So when we grow we will generate compounding free cash flow per share, which can be utilized to drive even greater shareholder value.
Josh: Using the midpoint of the range, this represents approximately 250 basis points of margin improvement over Q1 2023 and Adjusted EPS of between 52 and 57 cents. As we enter a new chapter at Envestnet, we have three areas of focus. First, our clients. Our clients are our compass, and our commitment is unwavering. Second, we are committed to a growth algorithm for delivering more value to those clients and Envestnet. And finally, Operation Leverage, where we can optimally balance revenue and profitability, supporting execution excellence with scale, so when we grow, we will generate compounding free cash flow per share, which can be utilized to drive even greater shareholder value. I'd now like to turn the call back to Bill for his closing remarks. Thank you, Josh.
Speaker Change: I'd now like to turn the call back to Bill for closing remarks.
Bill: Thank you Josh.
Bill: The decisions that we've made the work we have done over the last years to expand and connect the ecosystem to align the organization is put invest net and a very strong position. We sit at the center of the wealth industry, creating unique opportunities for our clients are partners and for our company to drive value and to grow.
Bill: The bedrock of that position is the client relationships that we have these are tenured these are aligned and they're very deep relationships.
Bill: Does it because envestnet is built around our clients needs to drive the growth and productivity of advisors by providing the leading wealth platform in the industry. It creates a competitive advantage through connected technology data and solutions.
William C. Crager: The decisions that we've made, and the work that we have done over the last years to expand and connect the ecosystem to align the organization, have put Envestnet in a very strong position. We sit at the center of the wealth industry, creating unique opportunities for our clients, our partners, and for our company to drive value and grow. The bedrock of that position is the client relationships that we have. These are tenured, these are aligned, and they're very deep relationships. This is because Envestnet is built around our clients' needs to drive the growth and productivity of advisors by providing the leading wealth platform in the industry. It creates a competitive advantage through connected technology, data, and solutions.
Bill: As we deliver like.
Bill: Like we have for the industry it enhances the strategic.
Bill: Economic profile of the company by.
Bill: By increasing revenue growth operating leverage and improving the free cash flow conversion.
Speaker Change: I'm incredibly thankful to all those who've been partners in my friends over this incredible journey that has been the history of Envestnet.
Bill: Thank you to our clients, who have supported us and have grown with us.
Bill: To our partners, who strengthen the ecosystem to investors, we've had long term conviction in us and particularly to my colleagues that investment.
Bill: Who have done such extraordinary work it made such a profound impact on our industry.
Bill: I will say this such a profound impact on me.
William C. Crager: As we deliver. Like we have for the industry, it enhances the strategic and economic profile of the company by increasing revenue growth, operating leverage, and improving free cash flow conversion. I'm incredibly thankful to all those who have been partners and my friends over this incredible journey that has been the history of Envestnet. Thank you to our clients who have supported us and grown with us, to our partners who strengthen the ecosystem, to investors who have had long-term conviction in us, and particularly to my colleagues at Envestnet, the thousands who have done such extraordinary work and made such a profound impact on our industry. And I will say this: it had such a profound impact on me.
Bill: It has meant so much and I have nothing but gratitude and immense pride.
Bill: A 25 year journey.
Bill: How can an idea and effort become something so substantial.
Bill: Has been the blessing of my professional life has been an extraordinary ride and I am incredibly grateful.
Bill: I will now turn it over to Josh and Tom and our operator Camilla.
Josh: For the Q&A session. Thank you very much.
Josh: Thank you.
Josh: Now be conducting a question and answer session.
Speaker Change: He would like to ask a question. Please press one.
Speaker Change: On your telephone keypad.
Speaker Change: I want to keep that you're lying as in the question.
Speaker Change: And you May press start to.
Speaker Change: Of your questions.
Speaker Change: A participant.
Speaker Change: And may be more.
Speaker Change: Sorry to pick up your handset before pressing his donkey.
Speaker Change: One moment please.
Speaker Change: <unk>.
Speaker Change: Thank you.
Speaker Change: Our first question comes from the line of Michael J P. Morgan. Please proceed with your question.
Speaker Change: Hi, Good afternoon. Thanks for taking my question Bill first it's been a pleasure interacting with you and always appreciated your insights. It's just the thing. Thanks for your question for Ya Yep, just the Big picture question for you on your on your final earnings call here.
William C. Crager: It has meant so much, and I have nothing but gratitude and immense pride. A 25-year journey. How can an idea, an effort, become something so substantial?
Speaker Change: Yeah. If you look at your own transition as you mentioned and after 25 years with Envestnet enrolled.
Bill: And they're all bad that's been implemented for Envestnet ahead, and what what did you think the next leadership. The next <unk> that could be of most value in most impactful.
William C. Crager: It has been the blessing of my professional life, it has been an extraordinary ride, and I am incredibly grateful. I'll now turn it over to Josh and Tom and our operator, Camilla, for the Q&A session. Thank you very much.
Bill: For the company in the years ahead, yes.
Speaker Change: Yes. Thank you Michael and just appreciate your coverage in your support over the years.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone. For more information, come on in to keep your line is in the question, and you may press star 2 if you would like to remove your question from the line. For participants using speaker equipment, it may be necessary to pick up your handset before pressing this button.
Speaker Change: Very much.
Speaker Change: I think Michael My perspective is that we've built such an extraordinary position in the market and as the most flexible scaled operating environment tied to now a broad network of solutions.
Speaker Change: Company has invested to become in this position to deliver on the holistic advice model and so when I thought about my transition I really thought about a transition point of time and is on the on the heels of the investment cycle. This became a pretty clear moment as we as.
Michael Cho: One moment, please, while we pull for questions. Your first question comes from the line of Michael Cho with J.P. Morgan. Hi, good afternoon, guys.
Michael Cho: Thanks for taking my questions. Bill, first, it's been a pleasure interacting with you and I have always appreciated your insights. It's just a big picture question for you. Yes.
Speaker Change: Flip the page into into the next year and so I think what we have ahead of us is incredibly well positioned.
William C. Crager: Just a big picture question for you on your final earnings call here. You know, as you look at your own transition, as you mentioned, after 25 years with Envestnet and the roadmap that's been implemented for Envestnet ahead, I mean, where do you think the next leadership, the next CEO of Envestnet, could be of most value and most impactful for the company in the years ahead? Thank you, Michael, and I just appreciate your coverage and your support over the years very much. You know, my perspective is that we've built such an extraordinary position in the market and as the most flexible, scaled, operating environment tied to now a broad network of solutions. The company has invested to become in this position to deliver on the holistic advice model. And so when I thought about my transition, I really thought about a transition point in time.
Speaker Change: Company that has a very strong and deep and tenured client base with the solutions and the capabilities that we need to be successful, it's all about execution from here.
Speaker Change: Great. Thank you and.
Speaker Change: Just a follow up for documents and Tom.
Speaker Change: I think on the <unk>.
Speaker Change: 24 died I think I heard mid single is the highest singles on the wealth solutions.
Speaker Change: In terms of revenue growth can you just talk through some underlying assumptions that you're embedding in there in terms of maybe its pillows and the rate transit. Thank you pop through some puts and pay cause I was hoping you could fly.
Speaker Change: Some of that out in the context, hopefully your expectations. Thank you yeah.
Speaker Change: Thank you Michael This is this is Tom I think the the fee rates as I said in my comments the gross fee rate.
William C. Crager: And on the heels of the investment cycle, this became a pretty clear moment as we flipped the page into the next year. And so I think what we have ahead of us is an incredibly well-positioned company that has a very strong, deep, and tenured client base with the solutions and the capabilities that we need to be successful. It's all about execution from here.
Tom Sip: Has been between nine and a half and 10 and a half and it's been relatively stable in that range and we think that will persist through 2024, and then from here you know what we really are flows expect particularly our AUN flows. We did about 30 billion in AUN flows in 2023.
Tom Sip: Great, thank you. And just a follow-up for Josh and Tom, I think on the, I think I heard mid-singles to high-singles on the wealth solutions in terms of revenue growth. Can you just talk through some underlying assumptions that you're embedding in there in terms of maybe flows and fee rate trends? I think you've talked through some puts and takes. I was hoping you could flush some of that out in the context of your expectations. Yeah, thank you, Michael. This is Tom.
Speaker Change: We think AUN is gaining traction in those growth rates will persist.
Speaker Change: And they will deliver it at a much higher average fee right and then our AOA flows we did about 28 billion evaluate a.
Speaker Change: <unk> last year, we think that we've got some good momentum there as well that will be impacted by one off conversions or M&A activity as the as the year progresses.
Tom Sip: I think the fee rates, as I said in my comments, the gross fee rate has been between nine and a half and ten and a half. And, you know, it's been relatively stable in that range. And we think that will, you know, persist through 2024. And then, you know, from here on in, what we, it's really our flows, particularly our AUM flows. You know, we did about $30 billion in AUM flows in 2023. We think AUM is gaining traction, and you know, those growth rates will persist. And, you know, they'll deliver on a much higher average fee rate.
Speaker Change: But the overall kind of underlying health at the individual firm level or at the per account level are gross flows are very very persistent.
Speaker Change: So that will help drive that growth and then you look at all the other cross selling our solutions that continues we've got a lot of good progress with <unk>.
Speaker Change: Taking up managed accounts solutions, we've got continued growth with our money guide planning capabilities were cross selling analytics and insights to <unk>. So that will start to come through the wealth Yo growth rate.
Speaker Change: Next year.
Speaker Change: The retirement progress that I mentioned in the partnership within power, that's going to start to kick in as we scale up those efforts.
Tom Sip: And then our AUA flows, we did about $28 billion in AUA flows last year. We think that, you know, we've got some good momentum there as well. That will be impacted by, you know, one-off conversions or M&A activity as the year progresses. But the overall kind of underlying health at the individual firm level or at the per account level, growth flows are very, very persistent.
Speaker Change: So it's really you know continued progress across the client base strong overflows up later in the year, you're going to see us get the market with our custody solution that we've been working on and it's continued to drive the overall ecosystem that will drive that growth rate throughout the year.
Speaker Change: Great. Thanks, Tom.
Tom Sip: So that will help drive that growth. And then you look at all the other, you know, cross-selling our solutions, that continues. We've made a lot of good progress with REAs taking up managed account solutions. We've got continued growth with our money guide, you know, planning capabilities. We're cross-selling analytics and insights to REAs, you know, so that will start to come through, you know, the wealth, you know, growth rate, you know, next year. The retirement progress that I mentioned, you know, and the partnership within power, that's going to start to kick in as we scale up those efforts. So it's really, you know, continued progress across the client base, and strong AUM flows. Later in the year, you're going to see us go to market with our custody solution that we've been working on. And it's continued to drive the overall ecosystem that will drive that growth rate, you know, throughout the year. Great. Thanks, Tom. Thank you, Michael. Our next question comes from the line of Devin Ryan with JMS News. Please proceed with your question. Thanks so much.
Michael Morgan: Thank you Michael.
Speaker Change: Our next question comes from the lineup.
JMP: JMP. Please proceed with your question.
JMP: Thanks, So much good afternoon, Bill, Josh and Tom and will that go there.
JMP: Remarks, Bill really been a pleasure working with you and just want to wish you the best of your going forward.
Deb: Thank you Deb.
JMP: We appreciate you.
Speaker Change: Yeah. Thank you. So I guess first question just to appreciate the the.
Speaker Change: The guidance and you know a little bit of a different structure here than we've seen in so I guess you want to understand is this Josh is more just how you're going to be framing things moving forward and so we're not gonna have kind of a full year guide or is that something maybe for the incoming CEO. So just tactically how to think about that and then if it's possible.
Speaker Change: Yeah, just given some of the puts and takes you guys just outlined in kind of gross commentary for 2024 is there a way to bridge to 2025, I know that's quite a ways out, but just you guys should put out obviously some growth targets and adjusted EBITDA margin targets and some people are you still curious about how you are thinking about those so is it possible.
Devin Ryan: Good afternoon, Bill, Josh, and Tom, and I would echo the remarks. Bill, it has really been a pleasure working with you and I just want to wish you the best here going forward. Thank you, Dev.
Speaker Change: All that kind of hit on any of that yet.
Speaker Change: And at least how you're thinking about kind of going for where we are today to something in 2025. Thanks.
William C. Crager: I really appreciate you. Thank you. So, I guess, first question, just to appreciate the guidance and, you know, a little bit of a different structure here than we've seen, and so I guess just want to understand, is this, Josh, more just how you're going to be framing things moving forward, and so we won't have kind of a full year guide, or is that something, you know, maybe for the incoming CEO, so just kind of tactically I know that's quite a ways out, but just, you guys had put out, obviously, some growth targets and adjusted EBITDA margin targets, and some people are still curious about how you're thinking about those, so is it possible to kind of hit on any of that yet, and at least how you're thinking about kind of going from where we are today to something in 2025? Thanks. Sure. Devin, this is Josh.
Speaker Change: Sure Devon This is Josh happy to happy to take that one.
Josh: We believe this is more appropriate with regard to full year guidance based on the nature of our business as you know envestnet well <unk>.
Josh: Most of investments revenue is market driven.
Josh: To go a step further one thing we wanted to make sure that we did was for Q1 to provide guidance. The same way investment had historically done it same format a pricing model based format, but for the full year, we're providing are expected growth rate for well solutions premised on a flat market.
Josh: And that is the medallion single digits growth rate.
Josh: With regard to the questions about 2025.
Josh: Long way to go and as you know it's difficult to speculated about the macro particularly in an election year with an election in the second half of the year, but.
Josh: But we believe our client foundation is strong the flows as Tom outlined may be seasonal maybe episodic may have a little bit of volatility, but we believe investment as a structural grower and we think we're incredibly well positioned to capitalize on that yeah.
Speaker Change: I would just add Devon, you look at the progress we've made over the past couple of years from a margin progression prospective we've gone from.
Josh: Happy to take the one. I mean, look, we believe this is more appropriate with regard to full-year guidance based on the nature of our business. As you know, you know Envestnet well; most of Envestnet's revenue is market-driven. To go a step further, you know, one thing we wanted to make sure that we did was for Q1 to provide guidance the same way Envestnet had historically done it, same format, a pricing model-based format. But for the full year, we're providing our expected growth rate for wealth solutions premised on a flat market, and that is the mid-size single-digit growth rate. With regard to the questions about 2025, a long way to go, and, you know, as you know, it's difficult to speculate about the macro, particularly in an election year, with an election in the second half of the year.
Josh: 17% to 20% to 23% in queue for that did have some one time benefits, but it's definitely a lot higher than the 20, and we're delivering more and more operating leverage as we grow.
Josh: And we think the margins will continue to expand you know and it'll lead into more free cash flow you know as Josh Josh outlined so I think we've got we've made a ton of progress we brought the company together.
Josh: Integrated the farm and the client feedback is really positive from all that work and.
Josh: And I would expect our margins to continue.
Josh: Continue to expand from here.
Speaker Change: And may maybe one just to just to be Super Super clear on the point.
Josh: Devon to answer your question with.
Josh: But this time as Tom mentioned, we're continuing to make progress on our margin expansion.
Josh: But we believe our client foundation is strong. You know, the flows, as Tom outlined, may be seasonal, may be episodic, may have a little bit of volatility, but we believe Envestnet is a structural growth company, and we think we're incredibly well-positioned to capitalize on that. Yeah, I would just add, Devin, you look at the progress we've made over the past couple of years, you know, from a margin progression perspective, we've gone from, you know, 17% to 20% to 23% in Q4, and that did have some one-time benefits, but you know, it's definitely a lot higher than the 20. And, you know, we're delivering more and more operating leverage, you know, And we think the margins will continue to expand, you know, and it'll lead to more free cash flow, as Josh outlined.
Josh: Including our EBITDA margins Q4 was a strong free cash flow results and I don't know if we would I would not expect that quite that level to continue in Q1, given some of the seasonality.
Josh: But but the adjusted EBITDA targets, that's a milestone that's a milestone on a journey to durable and robust free cash flow generation not a destination not an ultimate goal.
Josh: We intend to continue to grow our margins and we believe what we've done in 2000 2023 has demonstrated our ability to do that.
Josh: Got it understood appreciate all that color just as a follow up on flows.
Josh:
Josh: Clearly you guys are outperforming kind of broader industry as you mentioned like four times.
Josh: Pier camps, but at the same time, there's some environmental headwinds and so I'd love to just maybe think about if possible. If it if there's a way to quantify the effect of whether it's M&A in the dynamic you you mentioned or just.
Tom Sip: So I think we've got, we made a ton of progress, we brought the company together, you know, we integrated the firm, and the client feedback is really positive from all that work. And I would expect our margins to, you know, you know, continue to expand from here. And maybe one just to be, you know, super, super clear on the point, Devin, to answer your question. Look, as Tom mentioned, we're continuing to make progress on our margin expansion, including our EBITDA margins. Q4 was a strong free cash flow result, and I don't know if we would, or I would not expect that, quite that level to continue in Q1, given some of the seasonality.
Josh: Interest rates and to the extent interest rates start to move lower how much of a tailwind that could create just trying to think about that because there's a core piece of investment and there's a lot of positive momentum and irons in the fire around new growth at the same time environmental headwind. So just trying to think about the effects of those environmental headwinds that hopefully do reverse here are some.
Josh: Yeah, I think to start with a cash point, you know that that that that has been a headwind over the past couple of years for us with it with higher rates the as more as rates come down and is more money moves back into the market equity fixed income products, we realize how much higher fee right on those.
Josh: But the adjusted EBITDA targets, you know, that's a milestone. That's a milestone on a journey to durable and robust free cash flow generation, not a destination, not an ultimate goal. You know, we intend to continue to grow our margins, and we believe what we did in 2023 has demonstrated our ability to do that. Got it. Understand. Appreciate all that color.
Josh: Assets.
Josh: And a lot of those assets don't even sit on the invest that platform. They may be off platform today, and we will come on.
Josh: As rates come down so I think it from here. It can only help would be would be our perspective.
Josh: As they move into more active products. So I think that that will be a tailwind at some point as we go forward and then I think the the headwind around you know M&A you know.
Devin Ryan: Just as a follow-up on flows. Clearly, you guys are outperforming the broader industry, as you mentioned, I think, four times, the peer camps. But at the same time, there's some environmental headwinds. And so I'd love to just maybe think about, if possible, if there's a way to quantify the effect of whether it's M&A and the dynamic you mentioned, Tom, or just interest rates, and to the extent interest rates start to move lower, how much of a tailwind that could create, just trying to think about that, because there's the core piece So just trying to think about the effect of those environmental headwinds that hopefully will reverse here at some point.
Josh: We historically this has been an advantage because our footprint is so large we have such great relationships you know.
Josh: With already Aggregators with enterprise clients and we've been a net beneficiary. It just so happens right now we've got some deal activity that's away from us and that will affect our growth rate, but let me be clear you know.
Josh: That M&A activity. These clients that were affected or very very happy clients. They were doing a lot with us.
Josh: Because we're really well positioned the feedback from our clients is really never been better and it's all off the back of the work we've done over the past couple of years. So the M&A activity the recent activity.
Josh: Will be dilutive to that growth rate, but you know the the medium term prospects for the business. You know are very very positive from our perspective.
Tom Sip: Yeah, I think to start with the cash point, you know, that has been a headwind over the past couple of years for us with higher rates. As rates come down and as more money moves back into the markets, equity, fixed income products, we realize a much higher fee rate on those assets. And a lot of those assets don't even sit on the Envestnet platform.
Speaker Change: Okay. Thanks, so much.
Speaker Change: Our next question comes from the line.
Josh: Jeffrey Please proceed with your question.
Jeffrey: Thank you like everyone else spelled definitely echo that it's been a pleasure working with you. So wishing you all the best here.
Tom Sip: Thank you surrender.
Speaker Change: Thank you very much.
Tom Sip: Right Okay.
Speaker Change: From my perspective, I I'd like to just take a step back and big picture here.
Speaker Change: One of the the I think the pillars that you guys talked about was just kind of the growth algorithm any just kind of color and how you're thinking about the.
Tom Sip: They may be off platform today and will come on, you know, as rates come down. So I think from here, it can only help our perspective, you know, as they move into more active products. So I think that will be a tailwind at some point, you know, as we go forward. And then I think the headwind around, you know, M&A, you know, we, you know, historically this has been an advantage because our footprint is so large, we have such great relationships, you know, with RA aggregators, with enterprise clients, and, you know, we've been a net beneficiary. It just so happens right now, you know, we've got, you know, some deal activity that's away from us, and that will affect our growth rate. But let me be clear, you know, that M&A activity, these clients that were affected were very, very happy clients. They were doing a lot with us because we're really well-positioned.
Tom Sip: The team is thinking about the growth algorithm on a on a go forward basis is this driving more flows into the wall solutions business.
Tom Sip: Is it more about the first party managed assets and trying to get the fee right up.
Speaker Change: Should be we think about the the various drivers just from a big picture perspective.
Speaker Change: Sure <unk>.
Tom Sip: It's Joshua.
William C. Crager: The growth algorithm.
Tom Sip: It's fairly simple after all investment is you know it's a it's a relatively simple business.
Tom Sip: At at the Foundation.
Tom Sip: Our wealth business is going to benefit from the combination of of market appreciation and secular flows.
Tom Sip: Into the independent space on top of that are.
Tom Sip: Growth is built on our industry leadership.
Speaker Change: As Tom talked about clients wanted to go deeper with a fewer number of trusted partners.
Speaker Change: That's a trend that should benefit as well as the industry leader and the way in which we capitalize on this growth opportunity through broke through both of our pricing con shrugs or acid based and subscription based pricing models help fit the needs of the industry and provide compounded growth for investment.
Tom Sip: You know, the feedback from our clients has really never been better, and it's all on the back of the work we've done over the past couple years. So the M&A activity, you know, the recent activity, will be dilutive to that growth rate, but, you know, the medium-term prospects for the business are very, very positive from our perspective. Okay, thanks so much.
Speaker Change: Yeah, let let let me add surrender I'll I'll add a couple examples. So you look at what we're doing with our as often or Tamarac platform was trading reporting CRM. We've invested a lot to connect that platform to our managed account infrastructure. So really cross selling you know our fiduciary.
Surinder Thind: Our next question comes from the line of Surinder Thind with Jeff. Please proceed with your, Thank you. Like everyone else, Bill, I definitely echo that it's been a pleasure working with you, so wishing you all the best here. Thank you, Surinder. Thank you very much.
Surinder Thind: <unk> solutions and that is really starting to take try to get to get real traction and then <unk> as we establish that fiduciary relationship. They then start to buy tax overlay services directed indexing services and then we're going in our bundling and cross selling data and analytics and when they start to use those data Nana.
William C. Crager: Um, from my perspective, I'd like to just take a step back and look at the bigger picture here. One of the, I think the pillars that you guys talked about was just kind of the growth algorithm. Any kind of color and how you're thinking about the...
William C. Crager: <unk>, especially through our client portal that we're rolling out that will lead to further adoption of those solutions. So so.
Surinder Thind: The team is thinking about the growth algorithm on a go-forward basis. Is this driving more flows into the Wealth Solutions business? Is it more about the first party managed assets and trying to get the fee rate up? How should we think about the various drivers just from a big picture perspective? Sure. Hey Surinder, it's Josh. I mean, the growth algorithm...
Josh: The way it'll be evidence there would be more AUN.
Josh: The especially one that.
Josh: Requires personalization, so think of high net worth solutions direct indexing.
Devin Ryan: Tax overlay and then what we're doing is partnering more and more with the biggest asset management partners.
Josh: It's fairly simple, after all, Envestnet, as you know, it's a relatively simple business. At the foundation, our wealth business is going to benefit from the combination of market appreciation and secular flows into the independent space. On top of that, our growth is built on our industry leadership. As Tom talked about, clients want to go deeper with a fewer number of trusted partners.
Tom Sip: Where we're going to integrate their products in a unique way to deliver that personalization and then there you know.
Josh: Their sales teams or distribution effort their marketing efforts will lean in to help drive overall growth of the platform. The Ah So cross L. A U M. A bundle it expand the relationship and then more personalization the products, where we are personalization are really growing at a very very high growth rate and.
Josh: That's a trend that should benefit us well as the industry leader. The way in which we capitalize on this growth opportunity through both of our pricing constructs, our asset-based and subscription-based pricing models, help fit the needs of the industry and provide compounded growth for Envestnet. Yeah, let me add, Surinder. I'll add a couple examples.
Josh: We think that will persist for a long time period.
Surinder Thind: Got it and.
Speaker Change: And then I guess.
Speaker Change: Just as a point of clarification there so.
Speaker Change: Think about what you're capable of and positioning is it that you want to grow a certain base.
Speaker Change: Basis points above the market or how would you guys assessing I guess that that was kind of what I was trying to get at it in terms, but do you think about what you're trying to do and what you're trying to accomplish here.
Tom Sip: So you look at what we're doing with REAs, you know, off of our Tamarack platform, which is trading, reporting, and CRM. We've invested a lot to connect that platform to our managed account infrastructure. So really cross-selling, you know, fiduciary solutions, and that is really starting to take track, you know, to get real traction. And then as the REA, as we establish that fiduciary relationship, they then start to buy tax overlay services, and direct indexing services.
Speaker Change: Sure. So surrender I would say double digit growth is our goal.
Tom Sip: And that comes from a combination of market growth plus.
Tom Sip: Simply delivering an integrated firm delivering an integrated firm that's not possible for us to show up as <unk> and get the benefit of clients just wanting to go deeper do more with us clients that we already have we don't have to go out and win new clients that we will continue to strive to but we just have to go deeper with those clients that we have <unk>.
Tom Sip: And then we're going, and now we're bundling and cross-selling data and analytics. And when they start to use those data and analytics, especially through our, you know, client portal that we're rolling out, that will lead to further adoption of those solutions. So the way it'll be evidenced, it will be more AUM, especially AUM that, you know, requires personalization.
Tom Sip: <unk> and.
Tom Sip: And serve our advisers more effectively and more capably. So for us it's grow with the market and then add on top of that.
Speaker Change: Got it that's helpful. And then just as it hopefully as a quick follow up just the outlook for the data and analytics business over the next year.
Speaker Change: Sure. So I think look for data and analytics.
Speaker Change: A couple of thoughts.
Tom Sip: So think of high network solutions, direct indexing, tax overlay. And then what we're doing is partnering more and more with the biggest asset management partners, where we're going to integrate their products in a unique way, you know, to deliver that personalization, and then their, you know, sales teams, their distribution efforts, their marketing efforts will lean in, you know, to help drive overall growth of the platform. Then, so cross-sell AUM, bundle it, expand the relationship, and then add more personalization.
Tom Sip: The first is as you know that businesses had a lot of challenges in 2023.
Tom Sip: A combination of the banking turmoil in March of 2023.
Tom Sip: It is also had some idiosyncratic issues with regard to a data loss, which we have now restored.
Tom Sip: We believe that there's a tremendous amount of.
Tom Sip:
Tom Sip: We believe some of these initiatives that we've put in place are going to bear fruit and actually the queue for sequential results are early evidence of that but our plan is to keep you updated on how those initiatives are going to play out.
Tom Sip: The products where we have personalization are really growing at a very, very high growth rate, and we think that will persist for a long time. Got it. And then I guess just as a point of clarification there, so if you think about what you're capable of in positioning, is it that you want to grow a certain number of basis points above the market? Or how are you guys assessing that? I guess that was kind of what I was trying to get at in terms of as you think about what you're trying to do and what you're trying to accomplish here. Sure, so Surinder, I would say double-digit growth is our goal, and that comes from a combination of market growth plus... simply delivering an integrated firm, an integrated firm that's now possible for us to show up as Envestnet and get the benefit of clients just wanting to We don't have to go out and win new clients, which we will continue to strive for, but we just have to go deeper with those clients that we have, monetize, and serve our advisors more effectively and more capably. So for us, it's grow with the market and then add on top of that. I got it.
Tom Sip: Over the course of the year, but it turned or if you look at our our Q3 Q for sequential revenue growth was up in the data business.
Tom Sip: And we think we're we're very focused on stabilizing that revenue base, which so you're up to three to queue for and we think it will be stable you know.
Tom Sip: As we look out at Q1, and then where we've recovered the dataset you know so that that is that if you were in a much better place and then we're launching new products to drive you know kind of medium term growth, but I think the the sequential revenue growth in the stable revenue Yo revenue base would be important milestones from our perspective.
Speaker Change: Thank you I appreciate it thanks.
Tom Sip: <unk>.
Tom Sip: So we ended the other thing I would add would be.
Tom Sip: We've done a lot of work to transfer the wealth data capabilities.
Tom Sip: Into our wealth segment and what that means is from an organization, it's fully integrated and from a client is fully integrated. So we are now delivering data and analytics, where our clients want to receive them, where they want it where they're doing business and the response from our client base is really really positive I think where do you live.
Tom Sip: Bring about $25 million insights.
Surinder Thind: That's helpful. And then, hopefully, as a quick follow-up, just the outlook for the data and analytics business over the next year? Sure. So I think, look, for data and analytics. Here are a couple thoughts. The first is, as you know, business has had a lot of challenges in 2023, a combination of the banking turmoil in March of 2023. It's also had some idiosyncratic issues with regard to a data loss, which we've now restored.
Tom Sip: Off the back of you know 80, or 90 use cases and the reception from our client base from that you will fully integrated data and insight capability to all clients has been really positive.
Speaker Change: That's good to hear thank you guys.
Speaker Change: Thank you.
Surinder Thind: Uh-huh.
Surinder Thind: If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Next question comes from the lineup.
Surinder Thind: David Frum. Please proceed with your question.
Speaker Change: Hey, Thanks for taking my question I kill all the other analysts comments to your Bill It's Gonna we're gonna Miss.
Josh: We believe that there's a tremendous amount of, we believe some of these initiatives that we put in place are going to bear fruit, and actually the Q4 sequential results are early evidence of that. But our plan is to keep you updated on how those initiatives are gonna play out over the course of the year. But Surinder, if you look at our Q3 to Q4 sequential revenue growth was up in the data business, and we think we're very focused on stabilizing that revenue base, so you're up Q3 to Q4, and we think it'll be stable as we look out at Q1, and then we've recovered the data set, so that issue we're in a much better place, and then we're launching new products to drive kind of medium-term growth.
Josh: Working with you and and and and I appreciate it all your class and professionalism over the years.
Surinder Thind: Thank you Pete back at you.
Josh: Really really enjoyed the relationship very much. Thank you great.
Speaker Change: Great great well.
Surinder Thind: I think you know moving to the results in the outlook I think all of the analysts are struggling a bit.
Josh: The call format changed a little bit clearly, we're not giving as much guidance.
Josh: I think that the the knee jerk reaction is can sometimes be that.
Josh:
Surinder Thind: Yeah, there is no visibility and data analytics, and and I don't want to walk away thinking that if that's not the case.
Josh: You know I appreciate the adjusted numbers are down 7% year over year up 3% sequentially.
Surinder Thind: But can you flushed out a bit more in terms of how long do you think it's gonna take before the turn and.
Josh: But I think the sequential revenue growth and the stable revenue base would be important milestones from our perspective. Thank you. I appreciate all of you. So Rinder, the other thing I would add would be, you know, we've done a lot of work to transfer the wealth, you know, data capabilities, you know, into our wealth segment. And what that means is, from an organizational point of view, it's fully integrated, and from a client point of view, it's fully integrated.
Speaker Change: And at that turn.
Rinder: Can that business resume growing and and resume margin expansion or is there something fundamentally broken there.
Josh: No I I would just kind of go back to the sequential revenue growth is up for Q3 to queue for we think we have stabilized the revenue base recovering the dataset is a big deal you know that we worked hard on throughout last year that was a big driver of the decrease especially in our research business.
Tom Sip: You know, we're now delivering data and analytics where our clients want to receive them, where they want to, where they're doing business. And the response from our client base is really, really positive. I think we're delivering about 25 million insights off the back of, you know, 80 or 90 use cases.
Tom Sip: You cut you hit issues in the banking channel, we had issues with Fintech clients. So last year was a tough year with revenue down you know 14, 15%. We believe it's now in a stable situation. The there's been a lot of work to develop.
Tom Sip: And the reception from our client base from that, you know, fully integrated, you know, data and insight capability for wealth clients has been really positive. That's good to hear. Thank you guys. Transcribed by https://otter.ai. Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone. Our next question comes from the line of Pete Heckman with DAD, to pursue with their, Hey, thanks for taking my question. I echo all the other analysts' comments to you, Bill. It's gonna, we're gonna miss it.
Pete Heckman: And create new products and now that you have a more robust folsom dataset, we're better positioned to do it.
Pete Heckman: But it is not going to happen overnight either so.
Pete Heckman: We are investing the and you know over the coming quarters, and then 12 18 plus months.
Pete Heckman: Think the physician will be much better.
Pete Heckman: Segment will be much better positioned you know from there, but it is off the back of a restore dataset stabilized revenue base and adding more efficient we've reduced the cost base as well so a more efficient better margin from there, but it's stabilized and then investing in new products and then your medium to.
Pete Heckman: Working with you, and I have appreciated all your class and professionalism over the years. Thank you. Thank you, Pete. Back at you. I really, really enjoyed the relationship very much.
William C. Crager: Thank you. Great. Well, you know, moving to the results and the outlook, I think all of the analysts are struggling a bit. You know, the call format changed a little bit. Clearly, we're not giving as much guidance. I think that the problem Rishi Jaluria, Envestnet Inc., can sometimes be that there is no visibility in data analytics.
Pete Heckman: Back to growth.
William C. Crager: Okay.
Rishi Jaluria: I appreciate that and then just back to custody.
Rishi Jaluria: Yeah, I think I've been paying attention very closely and and I know that that's been delayed a bit but you made a comment early on it and I just want to see it.
William C. Crager: Make sure that that still on the table and and and see if there's been any.
William C. Crager: Further changes in the dates of the roll out or or besides they get the opportunity.
Rishi Jaluria: Yeah. So so it's extremely strategic is very important it's a big priority to deliver.
Pete Heckman: And I don't want to walk away thinking that if that's not the case. I appreciate the adjusted numbers down 7% year over year. ........................ fleshed out a bit more in terms of, How long do you think it's going to take before the turn? At that turn, can that business resume growing and resume margin expansion or is there something fundamentally wrong? Pete, I would just kind of go back to the sequential revenue growth is up Q3 to Q4. We think we have stabilized the revenue base. Recovering the data set is a big deal that we worked hard on throughout last year. That was a big driver of the decrease, especially in our research business. You hit issues in the banking channel. We had issues with FinTech clients. So last year was a tough year with revenue down 14, 15%.
Pete Heckman: The so we've we've announced we've partnered with F. N Z, there's been a ton of work over a year plus they're doing the work to localize a international platform and to localize the platform in the U S market as it takes time, it's complicated they've hit some pretty important milestones to date they've converted.
Pete Heckman: A legacy platform onto their technology, the they're standing up their operations, they're trading efforts and then they're they're getting the required required a regulatory framework in place and all that just takes.
Pete Heckman: Time to put in place as a new entrant into this market.
Pete Heckman: The technology is fantastic the and we've been working with them to integrate that technology throughout our ecosystem and that is really lining up to be in place.
Tom Sip: We believe it's now in a stable situation. There's been a lot of work to develop and create new products, and now that you have a more robust, fulsome data set, we're better positioned to do it. But it's not going to happen overnight either. So we are investing, and over the coming quarters and then 12, 18-plus months, we think the segment will be much better positioned from there. But it is off the back of a restored data set, a stabilized revenue base, and a more efficient – we've reduced the cost base as well, so a more efficient, better margin from there. But it's stabilized, and then investing in new products, and then, medium-term, back to growth.
Tom Sip: You know in the next couple of quarters, and then we'll be in market at some point this year, but it's very very important very strategic that.
Tom Sip: Custody solution.
Tom Sip: And then it would be interesting.
Tom Sip: If I could just and depending on the speed of adoption the speed of the rollout.
Tom Sip: You should think about F N Z as representing upside both on the top to.
Tom Sip: The top line guidance that we gave.
Tom Sip: Our expectation is this is a long term long term debt.
Pete Heckman: Okay. I appreciate that. And then just back to custody, yeah, I think I've been paying attention pretty closely, and I know that that's been delayed a bit, but you made a comment early on, and I just want to see that, make sure that that's still on the table, and if there's been any... I'm not sure. I'm not sure if there's been any further changes in the dates of the rollout or the sizing.
Tom Sip: Okay.
Tom Sip: Here is really outstanding up the capability and getting to market and then you'll you'll start to realize the benefits beyond this year.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Pete Heckman: Are there questions at that time and with that this concludes today's teleconference. You may disconnect. Your lines at this time thank.
Pete Heckman: You for your participation.
Pete Heckman: Mmm.
Tom Sip: Yeah, so it's extremely strategic. It's very important. It's a big priority, you know, to deliver. You know, the so we've, as we've announced, we've partnered with FNZ, there's been a ton of work over a year plus, they are doing the work to localize an international platform. And to localize a platform in the US market is, it takes time, it
Tom Sip: Uh-huh.
Tom Sip: Hum Hum Hum Hum Hum.
Tom Sip: Mmm.
Tom Sip: Mhm.
Tom Sip: [music].
Tom Sip:
Tom Sip: Uh-huh.
Tom Sip: Mmm Mmm mmm.
Tom Sip: Mmm Mmm Mmm Mmm.
Tom Sip: They've hit some pretty important, you know, milestones, you know, to date; they've converted a legacy platform onto their technology, they're standing up their operations, their trading efforts, and then, you know, they're getting the required regulatory framework in place. And all that just takes time to put in place as a new entrant into this market. The technology is fantastic, and we've been working with them to integrate that technology throughout our ecosystem, and that is really lining up to be in place by the next couple quarters, and then we'll be in the market at some point this year.
Tom Sip: Mhm.
Tom Sip: [music].
Tom Sip: Mmm.
Tom Sip: [music].
Tom Sip: But it's very, very important, very strategic, you know, that custody solution. And then, Pete, just to add to that, if I could, just, and depending on the speed of adoption, the speed of the rollout, you should think about FNZ as representing upside, both on the top, to the top-line guidance that we gave. Our expectation is this is a long-term, long-term bet. Yeah, this year is really about establishing the capability and getting to market, and then you'll start to realize the benefits, you know, beyond this year.
Tom Sip: Uh-huh.
Tom Sip: [music].
Tom Sip:
Tom Sip:
Tom Sip: Thank you. Thank you. There are no further questions at this time, and with that, this concludes today's teleconference. You may disconnect your lines.
Tom Sip: Mmm.
Tom Sip: Uh-huh.
Operator: Thank you for your participation,,,,, Thank you for watching! Thanks for watching! Uh huh. Still here, Chris? You're horrible.
Tom Sip: Mhm.
Operator: Uh-huh.
Operator: Mhm mhm.
Operator: [music].
Unnamed Speaker: Dismissed. Don't call me since you showed up. Never again. Never. I mean, you crave with you guys, so what?
Unnamed Speaker: Uh-huh.
Unnamed Speaker: Mmm.
Unnamed Speaker: [music].
Unnamed Speaker: Let's not get caught by the police. You'll make all the same mistakes you did last time. That's all right. I'll be out. I have a bunch of people to see now. I need a draw. Sure. I'm not sure about that one.
Unnamed Speaker: Mmm.
Unnamed Speaker: Mmm.
Unnamed Speaker: Uh-huh.
Unnamed Speaker: [noise] [music].
Unnamed Speaker: I want to bury you alive. Don't forget I'll be out for two days. And if you ever get caught, I'll let you live. That's all. Unless you're home.
Unnamed Speaker: Uh huh. That's what I'm gonna do with one of you. Okay. The Ultimate Parody Site! Thank you for watching! Rishi Jaluria, Chris Curtis, William Crager, Envestnet Inc.
Unnamed Speaker: Mmm.
Unnamed Speaker: [noise].