Envestnet Earnings: Wealth Solutions Results Solid While Yodlee Data and Analytics a Weak Point

During the first quarter of 2023, Envestnet ENV reported solid results at its larger wealth solutions segment but its smaller data and analytics (Yodlee) segment struggled. Revenue, adjusted EBITDA, and adjusted EPS were $299 million, $55 million, and $0.46 compared with the FactSet consensus estimates of $301 million, $54 million, and $0.44, respectively. We will maintain our narrow moat rating and $54 fair value estimate on Envestnet’s shares.

The firm’s wealth solutions segment continues to be healthy in our view. Net flows in the firm’s AUM/A programs were $20 billion in the quarter, up from $4 billion in the fourth quarter and roughly in line with the $21 billion reported in last year’s first quarter. The firm’s fee rate on its AUM/A book continues to be steady by our calculations. Subscription wealth revenue grew 12%, an uptick from 10% in the prior quarter. Envestnet continues to focus on monetizing assets under platform through overlay programs such as direct indexing and a custody partnership with FNZ. Envestnet is also partnering with record-keeper Empower to provider advisors with retirement plan fiduciary solutions with a cost of 3 to 9 basis points.

Envestnet’s data and analytics segment was soft with recurring revenue declining 9% from the year-ago period and 5% from the fourth quarter. The research business, whereby Envestnet sells anonymized data to asset managers, continues to be competitive. In addition, with the turmoil in the banking sector, Envestnet is also seeing some softness from financial technology firms.