Envestnet revenue falls short of expectations in Q2

investmentnews.com:

Headwinds across the wealth management industry and specific challenges in Envestnet’s data and analytics business contributed to another slide in quarterly earnings for the largest provider of financial advisor technology and outsourced investment management.

Envestnet brought in $312.4 million in total revenue during the three months that ended June 30, a 2% drop from the same period in 2022. The company’s second quarter revenue came in just short of Wall Street’s expectations of $315.1 million, according to analysts surveyed by Zacks Investment Research. Over the first half of 2023, Envestnet’s total revenue has fallen 5% year over year.

The company did meet Wall Street’s expectations for earnings per share at $0.46.

Asset flows into investments remain low as advisors remain cautious about the market and look for higher yields in fixed income and cash, said Envestnet CEO Bill Crager.  Until Envestnet formally enters the custodian business, which it plans on doing through a partnership with FNZ, it cannot capitalize on that trend.

“We’re a wealth management, investment-oriented business,” Crager told InvestmentNews.

The company has also been challenged by a slowdown in its non-wealth management business. Revenue from Envestnet Data & Analytics has slowed, particularly in its research division, due to increased competition and a decline in the quality in the data set, Crager said. Crager expects the business to stabilize in the second half of the year.  

However, the company is growing in several key areas despite now net asset flows across the wealth management industry, Crager added. During the second quarter, net flows represented an annualized growth rate of 5%, which outperforms the average growth of other publicly