Investor Presentation January 2013

Transcription

1 Investor Presentation January 2013

2 Safe Harbor Disclosure This presentation contains forward-looking statements. These forward-looking statements include, in particular, statements about our plans, strategies and prospects. These statements are based on our current expectations and projections about future events. The words may, will, should, expect, scheduled, plan, seek, intend, anticipate, believe, estimate, aim, potential or continue or the negative of those terms or other similar expressions are intended to identify forward-looking statements and information. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on assumptions and estimates by our management that, although we believe to be reasonable, are inherently uncertain and subject to risks and uncertainties that could cause actual results to differ from historical results or those anticipated or predicted by our forward-looking statements. These risks and uncertainties include those described in our filings with the SEC. In light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this presentation may not in fact occur. We undertake no obligation to update or revise any forward-looking statement after the date of this presentation as a result of new information, future events or otherwise, except as required by law. We qualify all of our forward-looking statements by these cautionary statements. 2

3 Empowering Excellence in Wealth Management Our open architecture platform: unifies and simplifies the wealth management process, empowers financial advisors to achieve the highest standards in portfolio and practice management, and delivers unparalleled flexibility, accuracy, performance and value. We enable the transformation of wealth management to a transparent, conflict-free and fully-aligned standard of care, and empower advisors to deliver superior results. 3

4 Envestnet Company Snapshot Web-based solutions empower financial advisors to be more productive 100 AUM/AUA 93 Open architecture wealth management platform enables flexible, fully-customizable solutions for advisors ($bn) Recurring and predictable revenue base derived from asset-based and licensing fees /30/12 Supports over 22,500 advisors, nearly 1.6 million investor accounts and $347 billion in total assets Access New Relationships / Markets $93 billion of fee-generating assets under management or administration (AUM/AUA) ($mm) Total Revenue % compound revenue growth with substantial operating leverage in the business M11 9M12 4

5 Long Track Record of Growth Over $93 billion of AUM/AUA and Over $347 billion of Total Assets Supported Track-record of organic and acquisitive growth % Asset CAGR ( ) % Account CAGR ( ) 400 Assets AUM/AUA ($bn) AUM/AUA Accounts Accounts AUM/AUA (000s) Partnerships and Milestones Aegon, ISI, Ameritrade, MassMutual NAM and Oberon Acquisitions, ING Russell Investments, Fidelity Northwestern Mutual, Harris Bank, S&P National Planning Holdings HighTower Ameriprise, Commonwealth IPO, FundQuest Conversion Fidelity Contract Renewal, Dynasty Partners Tamarac and Prima Acquisitions 5

6 Investment Highlights Pure play on the independent advice space a large and growing market opportunity Leading provider of integrated solutions, empowering advisors to achieve excellence in wealth management Substantial organic and strategic growth opportunities Visible, recurring revenues, strong cash flow and operating leverage 6

7 Key Macro Trends An Industry in Transformation Envestnet is empowering fundamental changes in wealth management Increasing use of financial advisors Increasing prevalence of independent advisors Increasing fee-priced assets Advisors investing in technology as a strategic priority Households Investing Through Financial Advisors (%) Source: Cerulli Associates Retail Investor Provider Relationships 2011 RIAs Including Dually-Registered Advisors (000s) Source: Cerulli Associates Advisor Metrics December 2012 Fee-priced Assets ($ trillion) Source: Cerulli Retirement Edge Q1 2011, Cerulli Advisor Metrics December 2012, Cerulli Managed Accounts Edge Q Top 3 Reasons For Purchasing New Technology (% of Advisors) Increasing efficiency Enhancing client service Scaling their business Source: 2011 RIA Benchmarking Study from Charles Schwab 7

8 Envestnet s Advisor Suite Empowers the Fiduciary Process Our solutions enable advisors to leverage the investment, technology and operational capabilities of Envestnet Financial planning Capital markets assumptions Asset allocation guidance Prima premium research PMC portfolio solutions PMC Strategist Network Leading source of separate account managers Proven fiduciary solutions supported by leading investment research and management Independent and unbiased open architecture design with access to multiple providers, programs, products and custodians Performance reporting Multi-custody aggregation Fully-reconciled, trade-ready data Tamarac Advisor Xi portfolio and practice management Trading and rebalancing Integrated CRM Web-based platform offers a high degree of flexibility, mobility, configurability, ease of deployment and use 8

9 Trusted Provider to a Broad Client Base Our products serve a loyal and established customer base of more than 22,500 advisors across institutions Registered Investment Advisors (RIAs) Independent Broker Dealers (IBDs) Banks Custodians Empower many of the leading RIAs in the country Partner with 39 of the top 50 independent broker dealers Serve 7 of the top 20 banks Open architecture access to leading custodians 9

10 Significant Competitive Advantages Breadth and Depth of Integrated Product Suite Creates High Barriers to Entry Envestnet has attained a first-mover advantage through the development of integrated products and services Advisors "graduate" to Envestnet for ease-of-use of an integrated, feature-rich, web-based platform Difficult to replicate vast network of advisors, investment managers and strategists Unique ability to manage and implement portfolio strategies across multiple custodians Turnkey Asset Management Platforms Single Point Service Providers Considerations Fewer choices of products and services Inability to service full advisor book of business Address one specific issue or need Illustrative Companies Genworth Financial Inc. Lockwood Advisors SEI Investment Company Advent Software Albridge Custodial Platforms Does not support multi-custodian practice The Charles Schwab Corp. Pershing, a BNY Mellon company Offers the widest and deepest range of integrated wealth management solutions 10

11 Our Growth Strategy Deliver Growth by Adding Advisors and Increasing Share of Practice Share of Advisors Practice Develop New High-Value Solutions Expand Practice Management Support Acquire Leading Point Solutions > 22,500 Advisors ENVESTNET Now Focus on High Growth Channels (RIAs, Dually-Registered) Contract New Enterprise Relationships ENVESTNET Future Consolidate Other Platforms Number of Advisors 11

12 Focused on Multiple High Growth Distribution Channels Advisors in Various Distribution Channels Total Advisors 316,108 79,802 >22,500 (1) Independent Broker Dealers (IBDs) Insurance 88,524 51,450 Wirehouse Lower Growth Channels 33,368 Regional Brokerages 15,793 28,714 18,457 Banks Registered Investment Advisors (RIAs) Dually Registered Higher Growth Channels Source: Cerulli Associates Advisor Metrics December 2012 Note: (1) As of September 30,

13 Successful Acquisition Strategy Disciplined approach to acquisitions includes both consolidating and strategic transactions: Consolidating Transactions: highly accretive financially; scalable, adds advisors and assets Strategic Transactions: value accretive; enhance and expand our platform; add new capabilities or distribution We have a track-record of making value-enhancing acquisitions Type Benefit to Envestnet Date Consideration Tamarac Strategic Back-office software, 500+ RIA relationships Q $48 million Prima Capital Strategic Added investment manager research capabilities Q $14 million FundQuest Consolidating Increased TAMP business with $15 billion of AUM/AUA Q $28 million 13

14 Proven Management Team Jud Bergman (13) Founder, Chairman and Chief Executive Officer Previously Managing Director of Nuveen Investments Stuart DePina (5) Group President, Envestnet Tamarac Previously Chief Executive Officer of Tamarac Bill Crager (13) President Manages Advisor services for Envestnet Previously served as Managing Director of Marketing and Client Services at Rittenhouse Financial Services Pete D Arrigo (4) Chief Financial Officer Previously the Treasurer at Nuveen Investments Scott Grinis (12) Chief Technology Officer Previously co-founded Oberon Financial Technology Shelly O Brien (10) Chief Legal Officer, GC and Corp. Secretary Previously General Counsel and Director of Legal and Compliance for ING (U.S.) Securities, Futures & Options Inc. Brandon Thomas (13) Co-Founder and Chief Investment Officer Previously Vice President and Director, Equity Funds for Nuveen Investments Josh Mayer (12) EVP, Director of Operations Previously the Director of Operations at Oberon Financial Technology Jim Lumberg (13) Co-Founder, Managing Director Previously Vice President and Director of Fixed Income Funds for Nuveen Investments Lori Hardwick (12) EVP, Advisory Services Previously led RIA services division for Nuveen Investments Jim Patrick (3) Managing Director, Advisor Managed Programs Previously Co-Head of U.S. Retail Sales for Allianz Global Investors Viggy Mokkarala (12) EVP, Managing Director, Strat. Development Previously co-founded Oberon Financial Technology Babu Sivadasan (11) EVP, Product Development Previously Chief Technology Officer of NetAssetManagement Chris Curtis (5) SVP, Treasurer Previously VP of Corporate Affairs for Rewards Network Note: Envestnet tenure, including predecessor firms, in parentheses (years) 14

15 Financial Highlights

16 Compelling Financial Model Growth Significant growth in advisors, accounts and assets Visibility Most revenue billed quarterly in advance Recurring High client retention, long-term licensing contracts Increasing profitability Margins benefit from scalable business model and long-term market appreciation 16

17 Revenue Model Asset-Based Revenue from AUM/AUA 85% of AUM or AUA is billed quarterly in advance, based on invested assets at end of previous calendar quarter Represented 82% of revenues for the nine months ended September 30, 2012 Revenue for current quarter is very predictable Timing of net flows drives partial impact Intra-quarter market fluctuations impact arrears-billing accounts only Revenue for future quarters is predictable, impacted by two factors Net flows in the previous quarter Quarter-over-quarter market fluctuations Fixed Fee Licensing and Professional Services Typically earn fixed fees in multi-year agreements License agreements primarily with large enterprise clients Fees are based on the level and types of investment solutions and services provided Within contract term, revenue generally not subject to asset or account fluctuations 17

18 Strong Long-Term Growth Drivers Assets Under Management or Administration ($bn) (1) Accounts (000s) (1) CAGR (%) AUM 29 AUA 34 AUM/A CAGR (%) AUM 41 AUA 38 AUM/A /30/ /30/12 YoY YoY Growth (%) (2) 9 41 Growth (%) (2) AUM AUA Note: (1) Numbers may not sum due to rounding (2) Compared to September 30,

19 Strong Growth and Profitability Trends Recurring and predictable revenue base with significant operating leverage Other operating expenses reflect infrastructure in place to support substantial account growth Revenue ($mm) (1) Adjusted EBITDA ($mm) (2) LTM Asset-Based 9/30/12 Fees as % of Revenues (%) (5) (0.5) LTM 9/30/12 Licensing & Professional Services Asset-Based Note: (1) Numbers may not sum due to rounding (2) Adjusted EBITDA adjusts GAAP net income for deferred revenue fair value adjustment, interest income, interest expense, income tax provision (benefit), depreciation and amortization, impairment of goodwill, stockbased compensation expense, unrealized gain (loss) on investments, impairment of investments, restructuring charges and transaction costs, severance, bad debt expense, customer inducement costs, impairment of customer inducement assets, contract settlement charges, other income and litigation related expenses 19

20 Investment Highlights Pure play on the independent advice space a large and growing market opportunity Leading provider of integrated solutions, empowering advisors to achieve excellence in wealth management Substantial organic and strategic growth opportunities Visible, recurring revenues, strong cash flow and operating leverage 20

21 Appendix

22 Reconciliation: Net Income to Adjusted EBITDA ($MM) LTM 9/30/12 Net Income (Loss) (0.87) (0.63) Deferred revenue fair value adjustment Interest Income (0.58) (1.15) (0.81) (0.22) (0.15) (0.08) (0.04) Interest Expense Income Tax Provision (Benefit) - (14.15) (0.30) Depreciation and Amortization Impairment on Investments Stock Compensation Expense Impairment of Customer Inducement Assets Other Income (1.10) - Restructuring Charges and Transaction Costs Contract Settlement Charges Severance Bad Debt Expense Customer Inducement Costs Litigation Related Expense Adjusted EBITDA Note: Numbers may not sum due to rounding 22