Envestnet Inc

NYSE:ENV

Earnings Call Transcript 2018-Q1

[Operator]

Good day, everyone, and welcome to the Envestnet First Quarter 2018 Earnings Conference Call. Today's call is being recorded.

At this time, I would like to turn the conference over to Mr. Chris Curtis, Division CFO and Head of Investor Relations. Please go ahead, sir.

[Chris Curtis, Envestnet, Inc.]

Thank you, and good afternoon. With me on today's call are Jud Bergman, Chairman and Chief Executive Officer; Pete D'Arrigo, Chief Financial Officer; and Anil Arora, Vice Chairman and Chief Executive of Envestnet | Yodlee. Our first quarter 2018 earnings press release and associated Form 8-K can be found at envestnet.com under the Investor Relations section.

During this conference call, we will be discussing certain non-GAAP information, including adjusted EBITDA, adjusted net income, and adjusted net income per share. This information is not calculated in accordance with GAAP and may be calculated differently than similar non-GAAP information for other companies. Quantitative reconciliations of our non-GAAP financial information to the most directly comparable GAAP information appear in today's press release.

During the call, we will also be discussing certain forward-looking information. These discussions are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause them to differ materially from what we expect. Please refer to our most recent SEC filings as well as our earnings press release, which are available on our website for more information on factors that could affect these matters.

This call is being webcast live and will be available for replay for one month on our website. All remarks made during the call are current at the time of the call and will not be updated to reflect subsequent material developments. We will take questions after our prepared remarks.

With that, I will turn the call over to Jud.

[Judson T. Bergman, Envestnet, Inc.]

Thank you, Chris. I add my own welcome to everyone joining us today. Envestnet growth continued in the first quarter with revenue, adjusted earnings before interest, taxes, depreciation and amortization, and adjusted earnings per share, all exceeding our expectations. Our top- and bottom-line growth benefited from solid operating performance and the inclusion of results from FolioDynamix, which we acquired in early January. We're off to a solid start in 2018 as we enhanced our operating system for wealth management one that connects advisors, enterprises, clients and service providers and enables better financial outcomes through better intelligence.

As a result of our strong operating performance in the first quarter, we delivered 25% growth in revenue and 27% growth in adjusted EBITDA over the prior year's period. Adjusted earnings per share increased 48% to $0.37. During the quarter, we executed well on our priorities for 2018, which I identified on last quarter's call, which are: first, to execute on our significant organic growth potential; second, to integrate FolioDynamix; and third, to align our organization and our developmental efforts around the growing opportunities we see in financial wellness.

With respect to our organic growth, our financial metrics were strong with revenue growing 17% year-over-year before the FolioDynamix acquisition and accounting changes. Our asset-based revenue benefited from strong markets during 2017. Our professional services revenue was up significantly from last year due to strong renewal and upsell activity at Yodlee, which we expect will materialize in higher subscription-based revenue in the future. Operating metrics were also strong, we had $23 billion in asset priced conversions, the third biggest – busiest conversion quarter we have ever had. And excluding conversions, gross sales were a record $36 billion.

Due to our success in on-boarding new business, we delivered positive net flows of roughly $11.5 billion for the quarter, more than overcoming the anticipated client departures during the quarter. Our normalized redemption rates were about 1.8% per month, in line with expectation.

Additionally, we delivered organic growth in advisors, accounts and assets, with assets growing more than $5 billion in the first quarter, despite a negative market impact, which will affect going forward revenue. Our operating performance in the first quarter confirms the strength of our core growth in wealth management solutions, which is to add advisors, and then those advisors each adding accounts, resulting in total account growth that fuels growth in both our asset-based and our subscription-based recurring revenue.

In addition to the organic growth we saw, FolioDynamix significantly increased the wealth management business that we support. All told, as of the end of March, more than 87,000 advisors, more than 10 million accounts, and some $2.5 trillion in assets benefit from Envestnet's Wealth Management Platform. And through Envestnet | Yodlee's data aggregation platform and financial wellness applications, we support roughly 23 million paid users and many trillions in aggregated financial data.

We've begun the client transition process for FolioDynamix with customer-specific integration and development planning underway. Meanwhile, the business performed slightly better than our expectations during the first quarter with annualized revenue approximately $70 million. And the adjusted EBITDA contribution from FolioDynamix sufficiently covers the additional interest expense for the acquisition.

Envestnet has built our proven operating system on the foundation of years of innovation and deliberate strategic activity. Our investment solutions, data aggregation, and analytics, and financial applications, form the base of a broader advice-centric financial wellness opportunity. As I mentioned in our last call, we believe financial wellness has five main components, which are planning, budgeting, investing, managing credit and protecting. We are delivering on much of this financial wellness opportunity today, including planning, budgeting, and investing.

Envestnet | Yodlee is introducing multiple new financial wellness applications that will be featured at our upcoming Advisor Summit next week in New Orleans. And a tangible example of an enterprise embracing our expanded set of solutions is D.A. Davidson. Davidson is the largest network of financial advisors headquartered in the West with over 1,300 employees and 90 offices in 26 states.

Envestnet's technology will support D.A. Davidson by providing advanced solutions better (8:01) integrated and that include account aggregation, business analytics, Unified Managed Account technology, and comprehensive client reporting.

As we expand our opportunity set in the wealth management space through client adoption of existing solutions, we also work to add additional capabilities to deliver a more complete advisor-centric financial wellness offering. While we see significant long-term opportunity in the area of managing credit and credit analytics, last quarter we discussed a strategic investment in the protection area of financial wellness.

And in March, we made a small investment in a newly formed insurance exchange platform created to enable financial advisors to provide better, more complete access to insurance and income protection products to their client base. The business is in the process of contracting with insurance carriers and developing the platform that will connect to Envestnet's wealth management platform. We expect it to go live within the next year. Our broker-dealer customers have expressed great interest in adding this offering to their advisors capabilities to better serve their clients.

Envestnet is committed to expanding our financial wellness offerings through initiatives like this as well as internal development and through acquisitions that provide additional scale or access new adjacencies, whether they be markets or geographies. We believe the wealth tech space represents a tremendous long-term opportunity for Envestnet, its enterprise and advisor customers and our shareholders.

I'll turn it over to Pete at this point. I'll be back in a few moments with some closing remarks.

[Peter H. D'Arrigo, Envestnet, Inc.]

Thank you, Jud. I'll review our first quarter results and our guidance for the second quarter and full year of 2018. As a reminder, we closed the FolioDynamix acquisition on January 2, so their results are included for the entire first quarter of 2018. Briefly summarizing Envestnet's results compared to the first quarter of 2017, revenue grew 25% to $198 million. Asset-based revenue was 61% of total revenue for the quarter and subscription-based revenue was 35% of total revenue for the quarter, for a total recurring revenue of 96%.

Organic revenue growth, excluding FolioDynamix, was 14% or 17% before the effects of the new revenue recognition rule. Adjusted EBITDA was $32.8 million or 27% increase over last year. Both the core business and FolioDynamix contributed to this growth, driven by solid revenue growth and expense management across the businesses. Adjusted earnings per share was $0.37 in the first quarter, $0.12 or 48% higher than the first quarter of last year. Overall, revenue, adjusted EBITDA and adjusted earnings per share were ahead of our expectations.

With that, I'll summarize our outlook, which is presented in full in our earnings release. For the second quarter, we expect total revenue to be between $197 million and $200 million, up 18% to 20% compared to the prior year, asset-based revenue between $116.5 million and $118.5 million or 18% to 20% higher than last year. The implied effective fee rate on our end of March assets under management or administration is 9.4 basis points to 9.5 basis points.

Subscription-based revenue between $72.5 million and $73 million, an increase of 21% to 22% compared to the prior year. Professional services and other revenue between $8 million and $8.5 million with cost of revenue between $66.5 million and $68 million. Of note in these last two items, next week, we will be hosting our Advisor Summit, which Jud mentioned, for which we expect to recognize roughly $3 million of revenue, which will be included in professional services and other, and roughly $4 million of expense in cost of revenue during the second quarter. We are investing more into this year's summit given the long-standing benefits we have gained each year through brand recognition and client goodwill.

Adjusted EBITDA should be between $32.5 million and $33.5 million in the second quarter. Using a normalized long-term effective tax rate of 27% and assuming approximately 47.5 million diluted shares outstanding, this translates into adjusted earnings per share of $0.37.

For the full year, we are tightening the range and increasing the midpoint of our revenue guidance, now expecting revenue to grow 19% to 20% in the range of $811 million to $821 million. We are affirming our prior guidance on adjusted EBITDA and adjusted earnings per share, expecting adjusted EBITDA to grow 17% to 20%, in a range of $151 million to $155 million and adjusted earnings per share to grow 36% to 40% to a range of $1.78 to $1.83. The contributions to our financial performance this year from the core business, FolioDynamix, and the insurance exchange platform are very much in line with the guidance we provided last quarter and are generally applicable to our expected results in both the second quarter and full year.

Finally, we ended the first quarter with total debt of $422 million, which represents leverage of approximately 3.1 times our trailing adjusted EBITDA, as compared to 3.4 times, which was the intra-quarter high, immediately following the closing of the FolioDynamix acquisition. Priorities for our cash flow in 2018 continue to be investing in the business to support our long-term growth, whether through acquisitions or new initiatives, and paying down debt.

Thank you for your support of Envestnet. And at this point, I will turn it back to Jud for his closing remarks.

[Judson T. Bergman, Envestnet, Inc.]

Thank you, Pete. We are pleased with our results for the first quarter and our execution of our 2018 priorities, and our ability to hold guidance for the year despite lower market levels, our continuing investment in our business and even increasing our investment this year in our annual summit. We continue to expect core business growth to be consistent with our long-term targets and we expect to maintain the 1.2 times relationship between the growth rate of revenue and the growth rate of adjusted EBITDA that comes from our core growth in our core business. We believe this is sustainable for the next several years as we build out and improve our operating system for wealth management and continue to develop the financial wellness network, helping enterprises and advisors deliver better outcomes for their clients.

I want to thank you again for your time this afternoon. Thank you for your interest and support of Envestnet. And with this, the completion of our prepared remarks, we are happy to take your questions.

[Operator]

And we'll take our first question from Alex Kramm with UBS.

[Alex Kramm, UBS Securities LLC]

Yeah. Hey.

[Judson T. Bergman, Envestnet, Inc.]

Hi.

[Alex Kramm, UBS Securities LLC]

Good morning. Good evening actually, sorry. Long day. Wanted to just very quickly, the revenue guidance change, if I heard this correctly, I assume it's – the midpoint comes up because you beat the first quarter or you were above your guidance, but then the current market environment or market performance probably is little bit of a headwind on the high end. Did I hear that correctly or is there anything else you would add?

[Peter H. D'Arrigo, Envestnet, Inc.]

That's exactly right. That's exactly what we are forecasting.

[Alex Kramm, UBS Securities LLC]

Okay. And simple enough, thank you. And then just in terms of flows, first quarter was a rough one from a volatility environment. But you still mentioned the really strong gross sales. So, can you talk a little bit about what you saw within the quarter? And maybe even like post quarter now, given that some volatility has continued, I assume, advisors have been doing a lot of handholding with their clients at this time. But anything you could add, Jud, I guess, from a market performance and how you think is this going to continue to play out from here?

[Judson T. Bergman, Envestnet, Inc.]

So, just to add maybe to reaffirm, the normalized redemption rate, and that's normalized for the anticipated client losses that we identified in the last call, was about 1.8% per month. That's slightly below our long-term normalized forecast. That's a little surprising, given the volatility of the past quarter and, more recently, we did see – that was the average monthly. We did see a slight increase over that for a period, about midway through the quarter, towards the – in the second half of the quarter. But even that has stabilized since in terms of redemption activity. And it's a little surprising that the market has been as – and with respect to redemptions and new flow activity, as durable as it has been in this first quarter, and it's nice to see that.

[Alex Kramm, UBS Securities LLC]

Okay. That's interesting. Thank you. And maybe just lastly, any more things you can elaborate on Folio and how that's been going so far? I mean there's obviously some things you had talked about in the past that you can learn from each other, certain relationships and product that they have that weren't really an addressable market for you. So, I'll leave it as an open question, but anything you would highlight so far in the, I guess, almost four months now that you've owned these guys?

[Judson T. Bergman, Envestnet, Inc.]

Yes, so the original rationale, the strategic rationale was that this is primarily a consolidating acquisition that has some very nice product enhancements for us. We are pleased with the receptivity of the client base to the new arrangement. As indicated, the revenue that we have as of first quarter, annualized run rate is slightly better than what we had forecast. We always expect there to be a little bit of client attrition. And so, we feel good about the yield, the revenue yield that we were able to get across the finish line. We see longer term some very nice cross-sell opportunities, selling more of the performance reporting, more of the full Unified Managed Account technology and more of the data analytics and data aggregation solutions that is Envestnet's business into the FolioDynamix base. And we see some opportunities to place the FolioDynamix trading set, the portfolio management tools and the trading tools into some subset of our independent broker-dealer network. So, we think that that's going to be beneficial and give us some upside to this acquisition over and above what we get from the efficiencies, and we think that that's going to play out over a two to a five-year period. And we like how it's starting out.

[Alex Kramm, UBS Securities LLC]

All right. Fair enough. I'll jump back in the queue. Thank you.

[Operator]

We'll take our next question from Chris Shutler with William Blair.

[Chris Charles Shutler, William Blair & Co. LLC]

Hey, guys. Good afternoon. Can you maybe provide an update on the conversion pipeline, Jud? How many more D.A. Davidsons are out there? And on that deal, specifically, what software were they using beforehand?

[Judson T. Bergman, Envestnet, Inc.]

And Chris, it's almost gets to be the same song a little different verse. I don't expect a huge conversion activity to continue forever. All we can see out is four, five, six quarters. We don't see any abatement in the conversion activity in the near term. And that said, at some point, there is fewer enterprises that have the opportunity to do large-scale conversions. D.A. Davidson is a regional brokerage, full service firm, and so we will be converting the managed account portion of their managed business. We will also be providing comprehensive reporting for a much broader subsection of their wealth management business and we will be incorporating the data aggregation, analytics and financial planning applications that we have via Yodlee.

So, it's a full suite. And in that respect, it's one of – it's just the most recent confirmation of our data-centric and advice-centric strategy to help or empower advisors to go way beyond their traditional strength of picking stocks or funds or managers and to enable them, empower them to do financial planning, and to provide an advisor-branded portal for end client adoption. And so, Davidson is just the most recent confirmation of that strategy. So, it's nice to see that. It's a marquee name for us. And they are converting off of really – they have not – certain of the services we're going to be providing, they have not provided in the past. So, they will be new capabilities for their wealth management activity.

Some of the stuff is coming off of in-house systems and based on their own custodial backend processing engine. So we're not displacing any of the traditional incumbent competitors, if that's what you're trying to get – if that's behind your question. This is a replacement of really the biggest competitor out there that we have, which is homegrown solutions that are still supporting the majority of independent wealth management technology out there.

[Chris Charles Shutler, William Blair & Co. LLC]

Okay. Great. And a question for Anil. Anil, how do you see open banking regulation impacting Yodlee? I saw an article earlier today about HSBC going live with an open banking app. So just curious to get your take there.

[Anil Arora, Envestnet, Inc.]

Yes. Hi, Chris. So, we are seeing across the world a bunch of similar trends. Whether it's PSD2 in Europe, Open Banking in the UK, similar trends in Singapore, Australia and in India as well. And all of them essentially are driving towards having consumers, end users, small businesses, clients, if you may, have unrestricted ability to access the data. This is very good for us. We obviously have been a pioneer in this space for a very long time. I think access will become more easily available to all and the value-add will shift to data enrichment, data reconciliation, the applications that we build on top of it, particularly with our machine learning and AI and other technologies. So, overall, I would say this is a very positive development for us. The U.S. is lagging a little bit in terms of our own thinking around this, but we're working behind the scenes to make it apply here as well.

[Chris Charles Shutler, William Blair & Co. LLC]

Okay. And then just one more for Jud, regarding M&A, Jud, I know you're focused on integrating Folio and paying down debt right now. But over the medium to longer term, just how should we think about the number of consolidating opportunities that still may be out there, in your opinion? And on the strategic side, any capabilities, geographies that you're taking a serious look at.

[Judson T. Bergman, Envestnet, Inc.]

So, we expect that most of our acquisition activity will be consolidating acquisitions. There is a lot of opportunity out there. What we're finding is that we're finding more potential opportunities that meet our return on invested capital threshold than meet some of the more strategic considerations, like how well do they fit our data-centric and advice-centric strategy, and how well do they advance the prospect of better outcomes for advisors and clients, and the advisors and practices. So, we still have the opportunity to be very selective on the consolidating side. And I'd like to be able to do one every four to six quarters. But you aren't always able to pace it out that way and we have to be responsive and able to move forward, when an acquisition – a consolidating acquisition, like FolioDynamix, comes along that is both efficiency producing and capability expanding. That's a very good opportunity for us.

On the strategic side, we do not see any big gaps in our strategy or our capabilities. The areas that we continue to hear from advisors that wish you would do more on is in the alternative space. We hear from advisors, wish, you were doing more on the CRM space. These are not high priorities for us. I'm not signaling that we're about to do it. I'm just saying this is what we hear from advisors and they've not been high priorities for us in the past. We continue to look at the overall business and regulatory environment beyond North America and we've looked, for a number of years, for opportunities in geographic adjacencies that may share cultural or language capability, affinity with North America, and that would also have regulatory tailwinds, similar to what we've experienced with the fiduciary standard, first by the DOL and now about to be introduced in some form by the SEC.

So, we expect most of the activity will be consolidating, at some point. We will be ready to expand with the right opportunity beyond our concentration in North America, recognizing that Envestnet | Yodlee gets around 15% of our revenue ex-North America or internationally. And the original strategic rationale for Yodlee was four parts. Number one, to bring that data and advice-centric strategy centerpiece in our overall platform, and we would see that by getting adoption of data aggregation and analytics into the core Envestnet advisor base, which is going very nicely. The second rationale was to create an enhanced data set, an enterprise data management capability combining the best of Yodlee and the best of Envestnet reconciliation, that was the second leg of the revenue cross-sell that we saw, and that's going very well.

A third leg was just the analytics revenue, which at the time was growing very nicely, but in the $30 million revenue run rate range analytics. I indicated that – I thought that – back in 2015, I indicated that we thought that that analytics business line could grow very rapidly and double and, perhaps, even triple – double within a few years and, perhaps, even triple within the longer period of time. Analytics continues to perform above our expectation. And if you'll recall, the fourth was international, leveraging Yodlee's footprint. And that's something that we have not taken concrete steps to follow-up on yet, because we've been focused on the first three. But at some point, that will become important for us to get the full benefit of the strategic investment we made in Envestnet | Yodlee.

[Chris Charles Shutler, William Blair & Co. LLC]

Great. Thank you.

[Operator]

We'll take our next question from Peter Heckmann with D. A. Davidson.

[Peter J. Heckmann, D. A. Davidson & Co.]

Good afternoon, everyone. Could you break down the $17.5 million of acquired revenue from FolioDynamix between the revenue segments?

[Peter H. D'Arrigo, Envestnet, Inc.]

Well, it's all in the Envestnet segment. None of it would be in the Yodlee segment.

[Peter J. Heckmann, D. A. Davidson & Co.]

I mean, between AUM/A and subscription, licensing?

[Peter H. D'Arrigo, Envestnet, Inc.]

Yeah. So, it's similar to what we had talked about last time, about 70% in AUM/A and 25% subscription, licensing, and then the remainder in PS.

[Peter J. Heckmann, D. A. Davidson & Co.]

Okay. And then around the legacy account aggregation business at Yodlee, how is pricing there? I mean, it seems as if aggregation is becoming table stakes, and so adoption appears good, but it also seems like there's some additional players. How would you characterize pricing? And I think we still have maybe a year or two on some of those large banks that Yodlee had contracts with, if you can comment on that as well.

[Anil Arora, Envestnet, Inc.]

Right. So, as we have discussed previously, the Yodlee revenue stream is really driven by four different factors. There is kind of the data gathering, Pete, that you just referred to. Then in addition to that, there's a bunch of data enrichment and digital solutions we provide; and then, finally, a bunch of analytics on top of that. So, if you may, the value-add is shifting from just the aggregation portion, more into what we do with the data, the enrichment, the reconciliation, the value-added applications that we provide, and then more and more so, as Jud just referenced, a lot of the analytics that we then power behind the scenes. So, if you view it within that context, the revenue continues to be driven by these four factors, which – at the foundation of which is how many active users do we get into the system, and that's growing nicely as you referenced. I think the average revenue per user is growing consistent with historical trends as well.

[Peter J. Heckmann, D. A. Davidson & Co.]

Okay. That's helpful. And then just last...

[Judson T. Bergman, Envestnet, Inc.]

And all I would add to that is that in those few cases where there is an enterprise that wants just the one element, we are seeing some pricing pressure on the single element of data aggregation.

[Peter J. Heckmann, D. A. Davidson & Co.]

Okay. That's helpful. And then just one last one on the client that were lost, you talked about in the prior quarter, and we're seeing that manifest itself in this quarter. Is that pretty much it or would we expect to see an elevated impact in any of the future quarters of 2018?

[Judson T. Bergman, Envestnet, Inc.]

So, everything we anticipated is done. It's out the door as of March 31. And so, now, the effect of that you're going to see in subsequent quarters, but the asset base that's there as of March 31 reflects what we anticipated, right? I don't know how I can be any more clear than that.

[Peter J. Heckmann, D. A. Davidson & Co.]

All right. That's clear enough (36:05).

[Judson T. Bergman, Envestnet, Inc.]

And it's in our second quarter guide, and it's incorporated into the rest of the year.

[Peter J. Heckmann, D. A. Davidson & Co.]

Perfect. That's what I'm using (36:13) now. Thanks.

[Judson T. Bergman, Envestnet, Inc.]

And thank you for your colleagues too, Pete.

[Peter J. Heckmann, D. A. Davidson & Co.]

I'll relay it (36:22).

[Operator]

We'll take our next question from Chris Donat with Sandler O'Neill.

[Christopher Roy Donat, Sandler O'Neill & Partners LP]

Good afternoon. Thanks for taking my questions. Jud, I'm trying to figure out the right way to ask this, but I think I'll go with the simple way. So with the appeals court striking down the DOL fiduciary rule and now with the SEC proposing their Standards of Conduct, are you seeing any impact, one way or the other, on either advisor behavior or enterprise behavior? Is there any chance that there's like a logjam that might get released or has that not been an issue for advisors and what they decide to do?

[Judson T. Bergman, Envestnet, Inc.]

So, let's just kind of roll back the tape. I think that the whole prospect of a uniform fiduciary standard being imposed from a regulatory environment misses the real dynamic. Roll it back a year-and-a-half, two years, when there was all this back and forth about the DOL, it did cause a contraction in the marketplace because enterprises were shutting down programs that would not comply and they were scrambling to put new programs in place, managed account programs, fiduciary programs that would comply.

So we found that in the last half of 2016, we detected a slowness across the enterprise world. Now, what that slowness then was, it provided something of a catalyst for more risk-mitigated firms that wanted to put in place a broader fiduciary standard. One CEO of a firm that we worked for said, never let a crisis go to waste. And what we expected was that beginning in the second quarter of 2017 and through the rest of 2017, we were going to see an uptick of advisor activity, which we did, in fact, see that came from banks and insurers – insurance broker-dealers adopting more of a fiduciary standard.

That momentum, if you will, which isn't as great as it would have been had there been a full DOL, but that momentum started and it's continuing. Remember, for context, the registered investment advisor base we serves already access fiduciaries in everything that they do. And there is a continuum in all of the other channels from being hybrid fiduciaries to hybrid brokers who do some fee-based advice. So, there still are a declining number, but there are still a number of advisors that do most or all of their business in a commission-based way.

So, I think that your question need – I think the context is that, for many of these firms, the fiduciary standard, the train has already left the station. Not for all of them. And some firms, for very good reasons, tend to be brokerage firms that have a larger portion of their revenue coming from commission-based activity, are continuing that business model. And I think that with the SEC and the standards that they're likely to have end up be adopted, that will mean not wholesale change for the way that segment of the market works.

So, now step all the way back, we have data that shows that the advisors that are growing the fastest and growing their practices at 2 times to 3 times the rate of the average advisor have adopted a fiduciary standard. They also have adopted a data-centric and advice-centric standard. So, we're helping advisors grow their practices faster. And I think that that's going to continue, but I don't expect there will be, even once the SEC, if it is – a new set of standards are adopted, I don't think that that's going to fundamentally alter the growth rate that we are experiencing with our client base right now.

[Christopher Roy Donat, Sandler O'Neill & Partners LP]

Okay. So, it's a market trend that's much bigger than just whatever the rule set is at DOL or SEC?

[Judson T. Bergman, Envestnet, Inc.]

Yes. In that respect, the DOL or the SEC is trying to catch up, if you will, with best practices that the industry is already is already following.

[Christopher Roy Donat, Sandler O'Neill & Partners LP]

Okay. And then, separate issue, but just curious. So earlier this year, you announced relationship with Edelman, and then recently we see Edelman and Financial Engines being combined with private equity. Any change to that Edelman relationship because of that or is that a separate issue?

[Judson T. Bergman, Envestnet, Inc.]

That's an agreement that's in place and announced, and we expect to have a very good partnership there.

[Christopher Roy Donat, Sandler O'Neill & Partners LP]

Okay. Thanks very much, Jud.

[Technical Difficulty] (42:14-42:38)

[Chris Curtis, Envestnet, Inc.]

This is Chris Curtis. I just got a message from our operator. They had a fire alarm that went off and they're unable to take any more questions out of the queue. This is a bit unusual. There are a couple more people in the queue. We apologize. We will answer your questions in the follow-ups, but I'll turn it over Jud for any closing comments.

[Judson T. Bergman, Envestnet, Inc.]

Well, could we get some e-mail questions? That doesn't look like that's going to work. Okay. So, there will be follow-ups and I did not expect that one. So, let me wrap up then. I was expecting this to go for another 15 minutes, but I want to thank you for your time. I'm sorry we didn't get to everybody. I will add that we are looking forward to seeing a number of you on this call next week in New Orleans and that will be great. We're looking very much forward to that, again, for the, I guess, sixth year in a row, it's a record attendance and it's significantly up this year because the venue is even bigger. And I guess people like the idea of going to New Orleans.

So, thank you, and we will continue to look forward to this ongoing dialog. Thank you. Bye.