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Image: Envestnet.

The financial industry has soared almost nonstop since the market meltdown in 2008 and early 2009, and the companies that serve financial giants have ridden their coattails to success. Envestnet (NYSE:ENV) has been a big long-term winner for investors, as its cloud-based software suite helps financial advisors and other professionals manage their clients' wealth and handle the administrative functions involved in running a financial-services business. Coming into Monday's third-quarter financial report, Envestnet investors had been nervous about the downturn in the market and its potential impact on the company, but the software firm's results confirmed the stable growth that most of those following the stock have come to expect. Moreover, with its major acquisition of Yodlee (NASDAQ:YDLE) on track, Envestnet could look a lot different in the future. Let's take a closer look at how Envestnet did this quarter and whether it can keep up the pace going forward.

Envestnet sees sunny skies in cloud services
Envestnet's third-quarter results looked solid. Adjusted revenue jumped 17% to $103.5 million, just slightly exceeding the consensus forecast among investors. Adjusted net income saw similar gains of 18% to $9.3 million, and that produced adjusted earnings of $0.25 per share, exactly matching what most investors had expected to see.

Looking more closely at Envestnet's operating metrics, even the downturn in the stock market couldn't hold the company back. Assets under management and administration jumped 14% to top the quarter-trillion dollar mark, and Envestnet now boasts more than 1.06 million fee-based client accounts. The company has more than 30,000 advisors using its services, up 21% from the year-ago quarter, and gross sales amounted to $21.0 billion, with net flows of $7.5 billion after allowing for redemptions. Only the market's impact kept the company's assets from climbing further, with adverse movements cutting $15 billion off its total.

Assets are important as they provide the lion's share of Envestnet's sales, amounting to $85.6 million during the third quarter and climbing by 14% from the year-ago quarter. Licensing and professional services fees made up the difference, posting strong growth of 30% to $17.8 million.

Envestnet also did a good job of keeping its operating expenses under control. The overall rise of 15% was due largely to increases in compensation and benefits, along with higher overhead and depreciation costs. Yet the slower pace of expense growth helped widen operating margins by more than a full percentage point from the third quarter of 2014.

CEO Jud Bergman was pleased with the company's performance. "Envestnet continued to grow despite a more difficult market environment," Bergman said, and he sees the company as "creating the world's leading wealth management technology platform, which will deliver better relationships and greater lifetime value for financial advisors, investors, and financial services providers."

Can Envestnet keep growing?
The biggest news for Envestnet lately has been its pending merger with Yodlee. In Bergman's words, "We believe Envestnet will continue to grow organically through ongoing advisor adoption of our wealth management solutions and expect our merger with Yodlee to accelerate that growth." The company hopes to close its merger after shareholders meet on Nov. 19 to vote on the deal.

Indeed, from an operational standpoint, the Yodlee merger could be huge for Envestnet. The deal will allow Envestnet access to Yodlee's 14,000 data sources and 850 customers and partners, opening the door to personal financial data for more than 20 million accounts. If Envestnet can get just a fraction of those accounts onto its system, the potential for growth will be immense. Moreover, with added data available, Envestnet's services will be more valuable both for its existing customers and for those who have considered getting onto the platform previously.

The main concern for Envestnet is that a longer-term market downturn could make financial companies less willing to bear the cost of its services. Yet to the extent that Envestnet's customers pass through costs to their accountholders, the main risk is that falling asset values will reduce the amount that the company collects from fees based on account values.

Even after the pullback in Envestnet's shares lately, the stock still trades at a premium valuation, making it vulnerable to even the hint of bad news. For now, though, Envestnet is still working toward its long-term strategic goals, and even the mild correction stocks saw in the third quarter doesn't seem to have kept it from resonating with its financial-industry customers.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Envestnet. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.