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Envestnet Rides on Recurring Revenues, Tech Development

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Zacks Equity Research
·3 min read
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Envestnet, Inc. ENV is currently riding on its strong asset-based and subscription-based recurring-revenue generation capacity. The company’s shares have gained 22.2% year to date, significantly outperforming the 2.8% rally of the industry it belongs to.

Envestnet recently reported better-than-expected second-quarter 2020 results. Adjusted earnings per share of 59 cents beat the Zacks Consensus Estimate by 25.5% and increased 28.3% year over year. Revenues of $235.3 million surpassed the consensus mark by 3.5% and climbed 4.8% year over year.

Recurring Revenues Stay Strong

Envestnet’s business model ensures solid asset-based and subscription-based recurring-revenue generation capacity.

The company provides asset-based and subscription-based services on a business-to-business-to-consumer basis to its financial services’ clients. These clients offer solutions based on Envestnet’s platform to their end users. On a business-to-business basis, the company delivers an open platform to customers and third-party developers through an open API framework. Envestnet’s recurring revenues of $227.2 million in the second quarter of 2020 increased 7%  year over year.

Envestnet, Inc Revenue (TTM)

Envestnet, Inc Revenue (TTM)
Envestnet, Inc Revenue (TTM)

Envestnet, Inc revenue-ttm | Envestnet, Inc Quote

Focus on Technology Development

Envestnet continues to focus on technology development with a view to improve operational efficiency, increase market competitiveness, address regulatory demands and cater to client-driven requests for new capabilities. Currently, the company’s technology platforms are based on a three-tier architecture that combines a web-based user interface, an application tier that houses the business logic for all the platforms’ functionality and a SQL Server database. It believes that its technology design allows for significant scalability.

Zacks Rank and Key Picks

Currently, Envestnet has a Zacks Rank #1 (Strong Buy). Some other top-ranked stocks in the broader Zacks Business Services sector are Republic Services RSG, IQVIA Holdings IQV and NV5 Global NVEE, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for Republic Services, IQVIA Holdings and CoreLogic are 6.6%, 9.9% and 12%, respectively.

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Republic Services, Inc. (RSG) : Free Stock Analysis Report
 
Envestnet, Inc (ENV) : Free Stock Analysis Report
 
NV5 Global, Inc. (NVEE) : Free Stock Analysis Report
 
IQVIA Holdings Inc. (IQV) : Free Stock Analysis Report
 
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Zacks Investment Research