Envestnet sees Q4 bump with surge in nonrecurring revenue

Despite a hard year of ballooning losses and increased operating expenses, Envestnet managed to close out 2023 with a modest bump in its fourth-quarter revenue.

According to its latest earnings report, the fintech company posted $317.6 million in total revenue for the quarter ended December 31, an 8% increase over $292.9 million in the fourth quarter of 2022.

That three-month revenue record helped push the company’s annual earnings to $1.245 billion in 2023, practically unchanged from $1.24 billion the previous year.

Digging deeper into its financials, Envestnet saw a quarterly revenue pop, with professional services and other nonrecurring revenue streams increasing 115% between the fourth quarter of 2022 and the fourth quarter of 2023.

Its asset-based recurring revenue rose 13% in the fourth quarter of 2023. That income stream made up 59% of total revenue for Q4 2023, hardly changed from 57% in Q4 2022.

Meanwhile, subscription-based recurring revenue slipped, representing a 37% slice of total Q4 2023 revenue, slightly down from its 41% contribution to Envestnet’s Q4 2022 revenue.

The company’s latest reporting reflected an EPS of $0.65 per share for the fourth quarter, considerably up from $0.45 per share in the previous year. But looking at the expense side, the company reported its total operating expenses increased 55% year-on-year, from $319.4 million in the fourth quarter of 2022 to $496.3 million in Q4 2023.

That came as Envestnet navigated challenges on various fronts, including headwinds in the markets, a dispute with an activist investor, and struggles in its data and analytics business. As of December, the company was reportedly mulling the sale of Yodlee, a data aggregation platform it acquired in 2015.

Losses from operations totaled $178.7 million in the fourth quarter last year, compared to $36.5 million in the same three-month period for 2022. For the full year 2023, Envestnet’s operating losses amounted to $204.5 million – including a $238.7 million net loss attributable to the company – outstripping the $66 million annual operations loss it reported in 2022.

The annual surge in losses doesn’t seem to be of much concern to Envestnet’s co-founder and CEO, who praised the company’s integral role in the wealth industry.

"For 25 years it has been a privilege to be a part of and lead the amazing journey that is Envestnet — how foundational it is to the industry, our clients and the advisors who grow, serve and enrich the lives of millions of families," Bill Crager, who will be stepping down from his role as chief executive at the end of March, said in a statement. "The foundation of the business is strong and Envestnet has the right strategy and people to continue delivering for clients and the industry."