|Financial Engines Reports Second Quarter 2010 Financial Results|
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PALO ALTO, Calif., Aug 10, 2010 (BUSINESS WIRE) --
Financial Engines (NASDAQ: FNGN), the leading independent provider of investment management and advice to employees in retirement plans, today reported financial results for its second quarter ended June 30, 2010.
Financial results for the second quarter of 2010 compared to the second quarter of 2009:i
Key operating metrics as of June 30, 2010:ii
"The company's performance in the face of significant market turbulence in the second quarter demonstrated the strength of our business model," said Jeff Maggioncalda, president and chief executive officer of Financial Engines. "While markets dropped 12% in the period, Financial Engines' assets under management declined only 2% as we continued to make our services available to large plan sponsors and enroll new members."
Review of Financial Results
Total revenue increased 32% to $25.6 million for the second quarter of 2010 from $19.4 million for the second quarter of 2009. The increase in revenue was driven primarily by the growth in Professional Management revenue, which increased 60% to $17.8 million for the second quarter of 2010 from $11.1 million for the second quarter of 2009.
Total costs and expenses increased 27% to $24.1 million for the second quarter of 2010 from $19.1 million for the second quarter of 2009. The increase was due primarily to headcount growth, an increase in fees paid to plan providers for connectivity to plan and plan participant data, annual compensation increases and professional services expense to support operations as a public company. As a percentage of revenue, cost of revenue (exclusive of amortization of internal use software) decreased to 34% for the second quarter of 2010 from 36% for the second quarter of 2009. The decrease was due primarily to a slower increase in employee-related expenses relative to the increase in revenue.
Income from operations was $1.4 million for the second quarter of 2010 compared to $0.4 million for the second quarter of 2009. As a percentage of revenue, income from operations was 6% for the second quarter of 2010 compared to 2% for the second quarter of 2009.
Net income was $1.3 million, or $0.03 per diluted share, for the second quarter of 2010 compared to $0.3 million, or $0.01 per diluted share, for the second quarter of 2009.
On a non-GAAP basis, Adjusted Net Incomei was $3.1 million and Adjusted Earnings Per Sharei were $0.07 for the second quarter of 2010 compared to Adjusted Net Income of $1.6 million and Adjusted Earnings Per Share of $0.04 for the second quarter of 2009.
"Despite the market headwinds, we grew revenue 32%," said Ray Sims, chief financial officer of Financial Engines. "As markets took double-digit dips, our assets under management remained essentially flat. That is consistent with our view that our business model is predictable, recurring and resilient."
Assets Under Contract and Assets Under Management
AUC was $300 billion as of June 30, 2010.
AUM increased by 51% to $29.4 billion as of June 30, 2010 from $19.5 billion as of June 30, 2009. The increase in AUM was driven primarily by net new enrollment into the Professional Management service as well as by market appreciation and contributions.
Aggregate Asset Class Exposure for Portfolios Under Management
As of June 30, 2010, the percentage for the style exposures of the portfolios we managed, in aggregate, were approximately as follows:
Financial Engines' growth strategy includes focusing on increasing penetration within existing Professional Management plan sponsors, enhancing and extending services to individuals entering retirement, expanding the number of retirement plan sponsors, and offering Professional Management to existing online-only sponsors.
Based on financial markets remaining at June 30, 2010 levels, the Company continues to expect fiscal year 2010 revenue to be in the range of $105 million to $110 million and fiscal year 2010 non-GAAP Adjusted EBITDAi to be in the range of $24 million to $26 million.
The Company will host a conference call to discuss second quarter 2010 financial results today at 5:00 PM ET. Hosting the call will be Jeff Maggioncalda, president and chief executive officer, and Ray Sims, chief financial officer. The conference call can be accessed live over the phone by dialing (888) 437-9364, or, for international callers, (719) 325-2180. A replay will be available beginning one hour after the call and can be accessed by dialing (888) 203-1112, or (719) 457-0820 for international callers; the conference ID is 1816794. The replay will remain available until Friday, August 13, 2010 and an archived replay will be available at http://ir.financialengines.com for 30 calendar days after the call.
About Non-GAAP Financial Measures
This press release and its attachments include certain non-GAAP financial measures. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP measures include non-GAAP Adjusted Net Income, non-GAAP Adjusted Earnings Per Share and non-GAAP Adjusted EBITDA. Non-GAAP Adjusted Net Income is defined as net income (loss) before stock-based compensation expense, net of tax and does not include the impact of stock dividends issued. Non-GAAP Adjusted Earnings Per Share is defined as non-GAAP Adjusted Net Income divided by all weighted-average dilutive common share equivalents outstanding. For all periods, the dilutive common share equivalents outstanding also include on a non-weighted basis the conversion of all preferred stock to common stock, the shares associated with the stock dividend and the shares sold in the initial public offering. This differs from the weighted average diluted shares outstanding used for purposes of calculating GAAP earnings per share. Non-GAAP Adjusted EBITDA is defined as net income (loss) before net interest (income) expense, income tax expense (benefit), depreciation, amortization of internal use software, amortization of direct response advertising, amortization of deferred commission and stock-based compensation. Further information regarding the non-GAAP financial measures included in this press release is contained in the attachments.
To supplement the Company's consolidated financial statements presented on a GAAP basis, management believes that these non-GAAP measures provide useful information about the Company's core operating results and thus are appropriate to enhance the overall understanding of the Company's past financial performance and its prospects for the future. These adjustments to the Company's GAAP results are made with the intent of providing both management and investors a more complete understanding of the Company's underlying operational results, trends and performance.
About Financial Engines
Financial Engines is the leading independent investment advisor committed to providing everyone the trusted retirement help they deserve. The Company helps investors with their total retirement picture by offering personalized retirement plans for saving, investing, and retirement income. To meet the needs of different investors, Financial Engines offers both Online Advice and Professional Management. Co-founded in 1996 by Nobel Prize-winning economist Bill Sharpe, Financial Engines works with America's leading employers and retirement plan providers to make retirement help available to millions of American workers. For more information, please visit www.financialengines.com.
This press release and its attachments contain forward-looking statements that involve risks and uncertainties. These forward-looking statements may be identified by terms such as "will," "expect," "believes," "intends," "may," "continues," "to be" or the negative of these terms, and similar expressions intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding Financial Engines' expected financial performance and outlook, its strategic operational plans and growth strategy and the benefits of its non-GAAP financial measures. These statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. These risks and uncertainties include, but are not limited to, our reliance on fees earned on the value of assets we manage for a substantial portion of our revenue, the impact of the financial markets on our revenue and earnings, unanticipated delays in rollouts of our services, our ability to increase enrollment, our ability to introduce new services and accurately estimate the impact of any future services on our business, our relationships with plan providers and plan sponsors, the fees we can charge for our Professional Management service, our reliance on accurate and timely data from plan providers and plan sponsors, system failures, errors or unsatisfactory performance of our services, our reputation, our ability to protect the confidentiality of plan provider, plan sponsor and plan participant data and other privacy concerns, acquisition activity involving plan providers or plan sponsors, our ability to compete, our regulatory environment and risks associated with our fiduciary obligations. More information regarding these and other risks, uncertainties and factors is contained in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed with the SEC, and in other reports filed by the Company with the SEC from time to time. You are cautioned not to unduly rely on these forward-looking statements, which speak only as of the date of this press release. All information in this press release and its attachments is as of August 10, 2010 and unless required by law, Financial Engines undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this press release or to report the occurrence of unanticipated events.
Our investment advisory and management services are provided through our subsidiary, Financial Engines Advisors, L.L.C., a federally registered investment adviser. References in this press release to "Financial Engines," "our company," "the Company," "we," "us" and "our" refer to Financial Engines, Inc. and its consolidated subsidiaries during the periods presented unless the context requires otherwise.
SOURCE: Financial Engines