BERWYN, PA — Envestnet, Inc. (NYSE: ENV) reported a notable increase in revenue for the third quarter of 2024, reaching $345.9 million—a 9% rise from the previous year. This growth was largely driven by a 16% increase in asset-based recurring revenue, which now accounts for 65% of the company’s total revenue.
The quarter saw stable subscription-based recurring revenue, making up 33% of total revenue, while professional services and other non-recurring revenue decreased by 30%. Despite these fluctuations, Envestnet’s operating expenses rose by 7% to $338.9 million. Notably, direct expenses grew by 13%, whereas employee compensation decreased by 9%, reflecting 30% of total revenue compared to 36% last year.
Envestnet managed to improve its income from operations, reporting $7.0 million, up from $0.6 million in the same period last year. However, the company posted a net loss of $1.7 million, or $(0.03) per diluted share, contrasting with a net income of $7.1 million, or $0.13 per diluted share, in the third quarter of 2023.
The company’s adjusted EBITDA surged by 23% to $80.5 million, and adjusted net income rose 27% to $46.5 million, or $0.70 per diluted share. Additionally, free cash flow significantly increased to $76.2 million from $9.4 million in the previous year.
As of September 30, 2024, Envestnet held $193.4 million in cash and cash equivalents, with $892.5 million in outstanding debt. The debt includes $317.5 million in convertible notes maturing in 2025 and $575.0 million in notes maturing in 2027. The company’s $500.0 million revolving credit facility remains undrawn.
In terms of strategic initiatives, Envestnet reorganized its reportable segments to align with its operational structure and decision-making processes. The company also addressed and corrected minor clerical errors related to the classification of convertible notes and cloud-hosting arrangements, emphasizing their immaterial impact on past financial statements.
With these financial results and strategic adjustments, Envestnet continues to focus on strengthening its market position and optimizing operational efficiency.
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