The connections that certain companies have with the industries they serve are obvious. Envestnet (ENV +0.00%) is a good example, with its financial information technology business benefiting greatly from the 8-year-old bull market and its positive impact on wealth management providers. Favorable conditions have made customers more likely to use Envestnet more extensively in their operations.
Coming into Tuesday's second-quarter financial report, Envestnet investors wanted to see continuing growth from the fintech specialist, and the company's results were strong. Envestnet also was optimistic enough about its future to raise its guidance, and that also made shareholders quite pleased. Let's take a closer look at Envestnet and what its latest results say about how things are going for the company.
Image source: Envestnet.
Envestnet keeps moving forward
Envestnet's second-quarter results built on its past success and showed its favorable prospects for the future. Revenue was up 18% to $167.4 million, which represented a growth rate that was about 2 percentage points higher than most investors were expecting to see. Adjusted net income of $13.1 million was up more than two-fifths from year-ago levels, and the resulting adjusted earnings of $0.29 per share topped the consensus forecast by $0.02 per share.
Taking a closer look at the numbers, Envestnet saw its fundamental growth accelerate dramatically during the period. Total platform assets climbed to nearly $1.22 trillion, up more than a fifth from a year ago and by almost $95 billion in just the past three months. The number of platform accounts also rebounded sharply, climbing above 6.5 million and marking a more-than-750,000 jump over the past 12 months. Advisor counts also climbed sharply, eclipsing the 57,500 mark and rising by 12% from year-ago levels.
The financial markets kept helping Envestnet as well. Assets under management or administration were up by $32 billion between March and June, and favorable market moves contributed about $8 billion of the rise. Yet net inflows of $24 billion were also impressive, accelerating from the recent past. Envestnet got good performance from its various segments, with its core business posting 17% revenue gains while the Yodlee segment saw top-line growth of 22%. Adjusted pre-tax operating earnings gains were roughly equal for the two units, ranging between 35% and 40% compared to the year-ago period. Subscription and licensing revenue was up by more than a quarter, even as professional services sales remained roughly flat.
CEO Jud Bergman was happy with the company's progress. "Envestnet continues to execute on its growth strategy," the CEO said. "We experienced significant growth in recurring subscription revenue, and we further expanded our industry footprint, increasing advisors, accoutns, and assets served by our integrated wealth management offerings."
Can Envestnet continue climbing?
Envestnet thinks that the future holds even more promise for the company. In Bergman's words, "We see significant opportunities ahead, as enterprises and advisors adopt our intelligent systems for wealth management and financial wellness, delivering better financial outcomes for their clients."
Envestnet also gave good guidance for the current quarter and raised some of its projections for the full year. For the third quarter, Envestnet expects adjusted revenue of $170 million to $172 million, which was above the $168 million consensus forecast among those following the stock. Quarterly adjusted earnings of $0.35 per share would also compare favorably with what most investors were expecting. For the full 2017 year, Envestnet moved its revenue projections higher by roughly $9 million to $12 million, with a new range of $667 million to $673 million for the period.
Envestnet investors were very happy about the news, and the stock climbed more than 10% in the first hour of trading on Wednesday following the announcement. With the company having bounced back from what looked like a slightly sluggish quarter earlier in the year, Envestnet is poised to keep profiting from the bull market as long as it lasts.
