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Envestnet's (ENV) Q4 Earnings Beat Estimates, Improve Y/Y

Envestnet, Inc. ENV posted better-than-expected results for the fourth quarter of 2019.

Quarterly adjusted EPS came in at 69 cents, beating the Zacks Consensus Estimate of 68 cents and increasing 13% year over year. Revenues of $239.9 million surpassed the consensus mark of $239.7 million and increased 14% year over year.

Envestnet, Inc Revenue (TTM)

The stock, however, declined 8.6% in the after hours trading as the company’s guidance was weak. For the first quarter of 2020, Envestnet expects adjusted EPS to be 45 cents, far below the current Zacks Consensus Estimate of 56 cents. Total revenues are expected between $241.7 million and $243.7 million, the midpoint ($242.7 million) of which is much below the consensus estimate of $248.7 million.

For 2020, adjusted EPS is expected between $2.22 and $ 2.27, the midpoint ($2.25) of which is much below the consensus mark of $2.56. Total revenues are anticipated between $1017.5 million and $1027.5 million, the midpoint ($1,022.5 million) of which is below the consensus estimate of $1,040 million.

Notably, shares have gained 30.1% over the past year, underperforming the 40.9% growth of the industry it belongs to.

Quarterly Numbers in Detail

Adjusted revenues of $242.5 million increased 15% year over year. Adjusted net revenues grew 18% to $177.1 million.

Asset-based recurring revenues of $128.7 million increased 5% year over year, representing 54% of total revenues. Subscription-based recurring revenues of $102.9 million were up 32% from the prior-year period, representing 43% of total revenues. Professional services and other non-recurring revenues decreased 11% year over year to $8.3 million. PortfolioCenter and PIE tech acquisitions contributed revenues of $2.3 million and $12.2 million, respectively.

Adjusted EBITDA came in at $61.5 million, up 30% year over year. Adjusted net income of $37.1 million increased 28%.

Envestnet ended the quarter with cash and cash equivalent balance of $82.5 million, compared with $71.6 million at the end of the prior quarter. The company generated around $46.9 million of cash from operating activities and CapEx was $3.8 million.

Outlook

First-quarter 2020 adjusted revenues are anticipated between $242 million and $244 million. Adjusted net revenues are projected in the range of $172 million to $174.5 million. The company expects adjusted EBITDA in the range of $46 million to $47 million.

For 2020, the company expects adjusted revenues to be between $1,018 million and $1,028 million. Adjusted net revenues are expected in the range of $724 million to $736 million. The company projects adjusted EBITDA of $220 million to $224 million.

Zacks Rank & Other Stocks to Consider

Envestnet currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader Zacks Business Services sector are S&P Global SPGI, NV5 Global NVEE and TransUnion TRU.  Each carries a Zacks Rank #2.

Long-term earnings (three to five years) growth rate for S&P Global, NV5 Global and TransUnion is estimated at 10%, 20% and 12.9%, respectively.

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