Wealth-tech giant Envestnet is ramping up its investment in data and analytics to increase subscription-based revenue and create new products.
The data and analytics business at Envestnet, which generates subscription-based revenues across open banking and alternative data offerings, generated revenue of $35 million in the first quarter, down 8% year over year, partly driven by last year’s regional banking crisis, Chief Financial Officer Josh Warren said during the company’s earnings call on May 7.
“This business continues its path to stabilization,” Warren said, adding that Envestnet is working on “improving the quality of API exchanges, improving uptime, reduced incident response time and securing several contract renewals.”
“Underlying client activity throughout 2023 was down consistent with overall market activity,” Tom Sipp, executive vice president, said during the call. As market activity picks up, Envestnet will stabilize data collection from users through stronger APIs and leverage that to create new products, he said.
THE BIG PICTURE: Like Goldman Sachs and Morgan Stanley, Envestnet is trimming down employee compensation to manage costs.
In Q1, employee compensation decreased 9% YoY to $103.7 million, according to the company’s earnings report.
BY THE NUMBERS: In Q1, Envestnet reported;
- Revenue of $325 million, up 9% YoY;
- Wealth solutions revenue of $289 million, up 11% YoY; and
- Operating expense of $316 million, up 2 % YoY.
OF NOTE: The Berwyn, Pa.-based company launched automated investing solutions last year to help small and medium-sized financial institutions stop deposit outflows to fintechs, BAN reported previously.
Envestnet has also been exploring the sale of its data arm, Yodlee, which could yield up to $400 million for the company, according to previous BAN reporting.
FLASHBACK: Envestnet’s Chief Executive Bill Cager stepped down March 31after serving in the role for nearly four years.
Board Chair James Fox was appointed interim CEO on April 1.
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