SUNNYVALE, Calif.--(BUSINESS WIRE)--Feb. 23, 2017--
Financial Engines (NASDAQ:FNGN), America’s largest independent
investment advisori, today reported financial results for its
fourth quarter and full year ended December 31, 2016.
Financial results for the fourth quarter of 2016 compared to the
fourth quarter of 2015:ii
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Revenue increased 44% to $113.2 million for the fourth quarter of 2016
from $78.7 million for the fourth quarter of 2015.
-
Professional management revenue increased 48% to $104.4 million for
the fourth quarter of 2016 from $70.7 million for the fourth quarter
of 2015.
-
Net income increased 34% to $9.0 million for the fourth quarter of
2016 from $6.7 million for the fourth quarter of 2015.
-
Diluted earnings per share increased 8% to $0.14 per share for the
fourth quarter of 2016 from $0.13 per share for the fourth quarter of
2015.
-
Non-GAAP adjusted EBITDAii increased 46% to $36.2 million
for the fourth quarter of 2016 from $24.9 million for the fourth
quarter of 2015.
-
Non-GAAP adjusted net incomeii increased 47% to $18.6
million for the fourth quarter of 2016 from $12.6 million for the
fourth quarter of 2015.
-
Non-GAAP adjusted earnings per shareii increased 21% to
$0.29 for the fourth quarter of 2016 from $0.24 for the fourth quarter
of 2015.
Financial results for the full year of 2016 compared to the full year
of 2015: ii
-
Revenue increased 36% to $423.9 million for 2016 from $310.7 million
for 2015.
-
Professional management revenue increased 39% to $385.9 million for
2016 from $277.2 million for 2015.
-
Net income decreased 10% to $28.6 million for 2016 compared to $31.6
million for 2015.
-
Diluted earnings per share decreased 23% to $0.46 per share for 2016
from $0.60 per share for 2015.
-
Non-GAAP adjusted EBITDAii increased 40% to $134.3 million
for 2016 from $95.6 million for 2015.
-
Non-GAAP adjusted net incomeii increased 42% to $70.0
million for 2016 from $49.4 million for 2015.
-
Non-GAAP adjusted earnings per shareii increased 22% to
$1.13 for 2016 from $0.93 for 2015.
Key operating metrics as of December 31, 2016:iii
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Assets under contract (“AUC”) were $1.05 trillion.
-
Assets under management (“AUM”) were $138.0 billion.
-
Clients enrolled in discretionary portfolio management services were
over 1,012,000.
-
Asset enrollment rates across all defined contribution employer plans
was 12.1%iv.
“I reflect on our 2016 accomplishments with pride and excitement. During
the year, we seamlessly integrated our first acquisition, delivered new
services to market, deepened our client relationships, and expanded our
provider network while delivering healthy earnings growth,” said Larry
Raffone, president and chief executive officer of Financial Engines. “As
we enter 2017, there is more work ahead but I believe our fundamentals
are strong and the building blocks are in place to help drive our future
growth. We are focused on executing on our long-term plan and optimizing
our business to help more people achieve their financial goals.”
Review of Financial Results for the Fourth Quarter of 2016
Revenue increased 44% to $113.2 million for the fourth quarter of 2016
from $78.7 million for the fourth quarter of 2015. The increase in
revenue was driven primarily by $30.1 million of revenue for the fourth
quarter of 2016 related to acquisitions. Professional management revenue
increased 48% to $104.4 million for the fourth quarter of 2016 from
$70.7 million for the fourth quarter of 2015, driven primarily by $28.6
million of professional management revenue related to acquisitions.
Costs and expenses increased 44% to $97.4 million for the fourth quarter
of 2016 from $67.9 million for the fourth quarter of 2015. This was due
primarily to employee-related costs, including wages, cash incentive
compensation expense and non-cash stock-based compensation expense due
primarily to gaining approximately 340 employees as the result of
acquisitions. Advisor center variable incentive cash compensation
expense increased, related to ongoing asset management at acquired
advisor centers, due primarily to acquisition activity. In addition,
fees paid to plan providers for data connectivity increased. Intangibles
amortization and facilities expenses increased related primarily to
acquisitions, and marketing programs expense increased due primarily to
radio and digital advertising.
As a percentage of revenue, cost of revenue was 44% for the fourth
quarter of 2016 compared to 43% for the fourth quarter of 2015.
Income from operations was $15.8 million for the fourth quarter of 2016,
which included $3.3 million of integration expenses attributable to
acquisitions and $2.8 million of additional amortization of intangible
assets, compared to $10.9 million for the fourth quarter of 2015. As a
percentage of revenue, income from operations remained constant at 14%
for the fourth quarters of 2015 and 2016.
Net income was $9.0 million, or $0.14 per diluted share, for the fourth
quarter of 2016 compared to net income of $6.7 million, or $0.13 per
diluted share, for the fourth quarter of 2015. On a non-GAAP basis,
adjusted net incomeii was $18.6 million and adjusted earnings
per shareii were $0.29 for the fourth quarter of 2016
compared to adjusted net income of $12.6 million and adjusted earnings
per share of $0.24 for the fourth quarter of 2015.
“In 2016, as we combined two companies, Financial Engines continued to
perform well across our key operating and financial metrics and
maintained our strong balance sheet,” said Ray Sims, chief financial
officer of Financial Engines. “Looking ahead, we are confident in our
strategy and ability to deliver an enhanced client experience and
achieve solid profitable long term growth.”
Assets Under Contract and Assets Under Management
AUC in defined contribution plans increased 7% year-over-year to $1.05
trillion as of December 31, 2016 from $987 billion as of December 31,
2015, due primarily to market performance, new employers making our
services available and contributions, partially offset by cancellations
and withdrawals. AUC for plans in which the Income+ service has been
made available was $450 billion as of December 31, 2016, which increased
38% from $325 billion as of December 31, 2015.
AUM increased by 22% year-over-year to $138.0 billion as of December 31,
2016, from $113.4 billion as of December 31, 2015. The increase in AUM
was driven primarily by new assets from new and existing clients, AUM
from the acquisition of The Mutual Fund Store and market performance,
partially offset by cancellations and withdrawals.
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Q1'16
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Q2'16
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Q3'16
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Q4'16
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(In billions)
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AUM, beginning of period
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$
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113.4
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$
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122.0
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$
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125.3
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$
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134.4
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New assets - new clients(1)
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3.0
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4.6
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4.4
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5.9
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New assets - existing clients(2)
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1.9
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2.0
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2.2
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2.1
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New assets - acquisitions(3)
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9.8
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-
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-
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-
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Asset cancellations - voluntary(4)
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(2.0
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)
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(1.8
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)
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(1.9
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)
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(2.3
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)
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Asset cancellations - involuntary(5)
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(3.3
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)
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(1.4
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)
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(1.8
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)
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(2.1
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)
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Assets withdrawn - existing clients(6)
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-
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(0.1
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)
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(0.1
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)
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(0.2
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)
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Net new assets
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9.4
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3.3
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2.8
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3.4
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Market movement and other(7)
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(0.8
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)
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-
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6.3
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0.2
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AUM, end of period
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$
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122.0
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$
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125.3
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$
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134.4
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$
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138.0
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(1)
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New assets from new clients represents the aggregate amount of new
AUM, measured at or near the end of the quarter, from new clients
who enrolled in our discretionary portfolio management services.
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(2)
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New assets from existing clients represents the aggregate amount of
new AUM within the quarter from existing clients who originally
enrolled in our discretionary portfolio management services during a
prior period, including employee and employer contributions of $1.9
billion for the current quarter. Employer and employee contributions
are estimated each quarter from annual contribution rates based on
data received from plan providers or plan sponsors.
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(3)
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The value of the AUM acquired on February 1, 2016 from The Mutual
Fund Store transaction, as measured on March 31, 2016.
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(4)
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Voluntary cancellations represent the aggregate amount of assets,
measured at or near the start of the quarter, for clients who have
voluntarily terminated their discretionary portfolio management
service relationship within the period.
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(5)
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Involuntary cancellations represent the aggregate amount of
defined contribution assets, measured at or near the start of the
quarter, for clients whose Professional Management service
relationship was terminated within the quarter for reasons other
than a voluntary termination.
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(6)
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Assets withdrawn represents the amount of voluntary withdrawals from
IRA and taxable accounts by existing clients.
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(7)
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Market movement and other represents factors affecting AUM
including estimated market movement, plan administrative and
investment advisory fees, client loans and hardship and other
account defined contribution withdrawals, and timing differences
for the data feeds for clients enrolled in our Professional
Management service throughout the period.
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For further information on the AUM data above, please refer to our Form
10-K to be filed for the period ended December 31, 2016.
Aggregate Investment Style Exposure for Portfolios Under Management
As of December 31, 2016, the approximate aggregate investment style
exposure of the accounts we managed was as follows:
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Domestic Equity
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47
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%
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International Equity
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25
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%
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Bonds
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25
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%
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Cash and uncategorized assets(1)
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3
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%
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Total
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100
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%
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(1)
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Uncategorized assets may include CDs, options, warrants and other
vehicles not currently categorized.
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Quarterly Dividend
On February 14, 2017, Financial Engines’ Board of Directors declared a
regular quarterly cash dividend of $0.07 per share of the Company’s
common stock. The cash dividend will be paid on April 5, 2017 to
stockholders of record as of the close of business on March 22, 2017.
Outlook
Financial Engines’ growth strategy includes focusing on increasing
penetration within existing professional management plan sponsors,
enhancing and extending services to individuals entering and in
retirement, and expanding the number of plan sponsors.
Based on the closing level of financial markets on February 16, 2017 and
under typical market conditions, the Company estimates that its 2017
revenue will be in the range of $480 million and $487 million, GAAP 2017
net income will be in the range of $53 million to $55 million, and 2017
non-GAAP adjusted EBITDA will be in the range of $158 million to $162
million. A reconciliation of our non-GAAP adjusted EBITDA outlook to our
GAAP net income outlook is contained in the accompanying financial
tables.
The Company is currently estimating the remaining acquisition-related
expenses in the first quarter of 2017 to be less than $5 million,
excluding non-cash stock-based compensation expense. These expenses will
be added back to net income in the calculation of non-GAAP adjusted
EBITDA and non-GAAP adjusted net income. The related tax effect
adjustment will be calculated using an estimated statutory tax rate of
38.2%.
Please refer to the tables included in this release that reconcile our
GAAP net income to non-GAAP adjusted EBITDA, non-GAAP adjusted net
income and non-GAAP adjusted earnings per share.
Conference Call
The Company will host a conference call to discuss its fourth quarter
and full year 2016 financial results as well as its 2017 outlook
on Thursday, February 23, 2017 at 5:00 p.m. ET. The live webcast and
presentation can be accessed from the Company's investor relations
website at www.financialengines.com.
The conference call can also be accessed live over the phone by dialing
(888) 348-6435, or (412) 902-4238 for international callers. A replay
will be available beginning approximately one hour after the call and
can be accessed from the Company’s investor relations website, or by
dialing (844) 512-2921, or (412) 317-6671 for international callers; the
conference ID is 10100734. The conference call replay will be available
until March 2, 2017.
About Non-GAAP Financial Measures
This press release and its attachments include certain non-GAAP
supplemental performance 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 EBITDA, non-GAAP
adjusted net income, and non-GAAP adjusted earnings per share. Adjusted
EBITDA represents net income before net interest expense (income),
income tax expense (benefit), depreciation, amortization of intangible
assets, including internal use software, amortization and impairment of
direct response advertising, amortization of deferred sales commissions,
non-cash stock-based compensation expense and expenses related to the
closing and integration of acquisitions, if applicable for the period.
Adjusted net income represents net income before non-cash stock-based
compensation expense, amortization of intangible assets related to
assets acquired, including customer relationships, trade names and
trademarks, expenses related to the closing and integration of
acquisitions and certain other items such as the income tax benefit from
the release of valuation allowances, if applicable for the period,
partially offset by the related tax impact of these items. Adjusted
earnings per share is defined as adjusted net income divided by the
weighted average of dilutive common share equivalents outstanding.
Further information regarding the non-GAAP performance measures included
in this press release, including a reconciliation of non-GAAP financial
measures to the most directly comparable GAAP measures, is contained in
the financial tables and will be contained in the Company’s Form 10-K to
be filed for the year ended December 31, 2016.
To supplement the Company’s consolidated financial statements presented
on a GAAP basis, management believes that these non-GAAP measures
provide our Board of Directors, management and investors with additional
information and greater transparency with respect to our performance and
decision-making. We feel these performance measures provide investors
and others with a better understanding and ability to evaluate our
operating results and future prospects and provides the same performance
measurement information as utilized by management. 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.
Our management uses non-GAAP adjusted EBITDA, adjusted net income and
adjusted earnings per share as measures of operating performance, for
planning purposes, including the preparation of annual budgets, to
allocate resources to enhance the financial performance of our business,
to evaluate the effectiveness of our business strategies and in
communications with our Board of Directors concerning our financial
performance. In addition, management currently uses non-GAAP measures in
determining cash incentive compensation.
About Financial Engines
Financial Engines is America’s largest independent investment advisor.
We help people achieve greater financial clarity by providing
comprehensive financial planning and professional investment management
and advice. Headquartered in Sunnyvale, CA, Financial Engines was
co-founded in 1996 by Nobel Prize-winning economist William F. Sharpe.
We currently offer financial help to more than 9 million people across
over 700 companies (including 146 of the Fortune 500). Our unique
approach, combined with powerful online services, dedicated advisors and
personal attention, promotes greater financial wellness and helps more
Americans to meet their financial goals.
For more information, visit www.financialengines.com.
©[1998-2017] Financial Engines, Inc. All rights reserved. Financial
Engines® is a registered trademark of Financial Engines, Inc. Advisory
services provided by our investment advisory subsidiary Financial
Engines Advisors L.L.C. Financial Engines does not guarantee results and
past performance is no guarantee of future results.
Forward-Looking Statements
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 “plan to,” “designed to,”
“will,” “can,” “expect,” “estimates,” “believes,” “intends,” “may,”
“continues,” “help,” “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: our future growth; our focus on executing on our long-term
plan and optimizing our business; our strategy and ability to deliver an
enhanced client experience and achieve solid profitable long-term
growth; Financial Engines’ expected financial performance and outlook,
including reconciliation information related thereto and factors which
may impact our outlook; and the benefits and anticipated uses of our
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, risks related to the
acquisition of The Mutual Fund Store, including our ability to fully
realize the anticipated benefits of the transaction in a timely manner
or at all, unanticipated costs or complexities related to and
integration of The Mutual Fund Store, and the potential impact of the
transaction, or reaction thereto, on our business, operating results and
financial condition, 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 correctly identify and invest appropriately in growth
opportunities, our ability to introduce new services and accurately
estimate the impact of any future services on our business, the risk
that the anticipated benefits of our investments in these services or in
growth opportunities may not outweigh the resources and costs associated
with these investments or the liabilities associated with the operation
of these services, 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, litigation matters, sales of
substantial amounts of our common stock, 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 any changes thereto, and risks associated with our
fiduciary obligations. More information regarding these and other risks,
uncertainties and factors is contained in the Company’s Form 10-K to be
filed for the year ended December 31, 2016, and in other reports filed
by the Company with the SEC from time to time, including the Company’s
10-K filed for the year ended December 31, 2015. 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 the date stated or February 23, 2017 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.
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.
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____________
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i
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For independence methodology and ranking, see InvestmentNews RIA
Data Center. (http://data.investmentnews.com/ria/).
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ii
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Please see “About Non-GAAP Financial Measures” for definitions of
the terms Adjusted Net Income, Adjusted Earnings Per Share, and
Adjusted EBITDA.
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iii
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Operating metrics include both advised and subadvised relationships.
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iv
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Information regarding enrollment rates and the component AUC can be
found in the section entitled “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in the Company’s
Securities and Exchange Commission (“SEC”) filings, including the
Form 10-K for the year ended December 31, 2015 and the Form 10-K to
be filed for the year ended December 31, 2016.
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Financial Tables
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FINANCIAL ENGINES, INC. AND SUBSIDIARIES
Unaudited
Consolidated Balance Sheets
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December 31,
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2015
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2016
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|
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(In thousands, except per share data)
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Assets
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Current assets:
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Cash and cash equivalents
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$
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305,216
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$
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134,246
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Short-term investments
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39,936
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-
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Accounts receivable, net of allowances of $225 and $206 as of
December
31, 2015 and 2016, respectively
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|
|
71,287
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|
|
|
103,256
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|
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Prepaid expenses
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|
|
4,486
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|
|
|
7,370
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|
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Other current assets
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|
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3,061
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|
|
|
3,468
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|
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Total current assets
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|
|
423,986
|
|
|
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248,340
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Property and equipment, net
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20,385
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24,532
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Intangible assets, net
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7,085
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205,751
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Goodwill
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-
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312,020
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Long-term deferred tax assets
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21,780
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40,504
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Direct response advertising, net
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7,186
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5,849
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Other assets
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2,158
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3,140
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Total assets
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$
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482,580
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$
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840,136
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Liabilities and Stockholders’ Equity
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Current liabilities:
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Accounts payable
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$
|
26,933
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|
$
|
36,780
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Accrued compensation
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17,101
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27,667
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Deferred revenue
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6,400
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4,701
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Dividend payable
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3,615
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|
|
4,350
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Other current liabilities
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1,169
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|
|
|
4,343
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Total current liabilities
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55,218
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|
|
77,841
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Long-term deferred rent
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9,485
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12,269
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Long-term tax liabilities
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|
|
2,206
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2,207
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Other liabilities
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|
|
524
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|
|
|
488
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Total liabilities
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|
|
67,433
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|
|
|
92,805
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Contingencies
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Stockholders’ equity:
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Preferred stock, $0.0001 par value — 10,000 authorized as of
December
31, 2015 and 2016; None issued or outstanding as of
December
31, 2015 and 2016
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—
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|
—
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Common stock, $0.0001 par value — 500,000 authorized as of
December
31, 2015 and 2016; 52,972 and 63,476 shares issued and
51,695
and 62,199 shares outstanding at December 31, 2015 and 2016,
respectively
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5
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6
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|
Additional paid-in capital
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|
|
461,139
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|
|
|
782,079
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|
|
Treasury stock, at cost (1,277 shares as of December 31, 2015 and
2016)
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|
|
(47,637
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)
|
|
|
(47,637
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)
|
|
Retained Earnings
|
|
|
1,640
|
|
|
|
12,883
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|
|
Total stockholders’ equity
|
|
|
415,147
|
|
|
|
747,331
|
|
|
Total liabilities and stockholders’ equity
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|
$
|
482,580
|
|
|
$
|
840,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL ENGINES, INC. AND SUBSIDIARIES
Unaudited
Consolidated Statements of Income
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
|
|
(In thousands, except per share data)
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional management
|
|
$
|
70,661
|
|
|
$
|
104,426
|
|
|
$
|
277,162
|
|
|
$
|
385,944
|
|
|
Platform
|
|
|
7,640
|
|
|
|
7,060
|
|
|
|
30,766
|
|
|
|
28,366
|
|
|
Other
|
|
|
423
|
|
|
|
1,736
|
|
|
|
2,794
|
|
|
|
9,627
|
|
|
Total revenue
|
|
|
78,724
|
|
|
|
113,222
|
|
|
|
310,722
|
|
|
|
423,937
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
33,479
|
|
|
|
49,908
|
|
|
|
131,011
|
|
|
|
186,009
|
|
|
Research and development
|
|
|
9,044
|
|
|
|
10,150
|
|
|
|
35,581
|
|
|
|
37,983
|
|
|
Sales and marketing
|
|
|
15,014
|
|
|
|
22,176
|
|
|
|
61,262
|
|
|
|
84,068
|
|
|
General and administrative
|
|
|
9,093
|
|
|
|
10,899
|
|
|
|
28,813
|
|
|
|
46,497
|
|
|
Amortization of intangible assets, including internal use software
|
|
|
1,220
|
|
|
|
4,271
|
|
|
|
4,900
|
|
|
|
15,408
|
|
|
Loss on reacquired franchisee rights
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,092
|
|
|
Total costs and expenses
|
|
|
67,850
|
|
|
|
97,404
|
|
|
|
261,567
|
|
|
|
374,057
|
|
|
Income from operations
|
|
|
10,874
|
|
|
|
15,818
|
|
|
|
49,155
|
|
|
|
49,880
|
|
|
Interest income, net
|
|
|
93
|
|
|
|
43
|
|
|
|
356
|
|
|
|
176
|
|
|
Other expense, net
|
|
|
(13
|
)
|
|
|
(139
|
)
|
|
|
(30
|
)
|
|
|
(784
|
)
|
|
Income before income taxes
|
|
|
10,954
|
|
|
|
15,722
|
|
|
|
49,481
|
|
|
|
49,272
|
|
|
Income tax expense
|
|
|
4,215
|
|
|
|
6,681
|
|
|
|
17,864
|
|
|
|
20,712
|
|
|
Net and comprehensive income
|
|
$
|
6,739
|
|
|
$
|
9,041
|
|
|
$
|
31,617
|
|
|
$
|
28,560
|
|
|
Dividends declared per share of common stock
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
0.28
|
|
|
$
|
0.28
|
|
|
Net income per share attributable to holders of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.13
|
|
|
$
|
0.15
|
|
|
$
|
0.61
|
|
|
$
|
0.47
|
|
|
Diluted
|
|
$
|
0.13
|
|
|
$
|
0.14
|
|
|
$
|
0.60
|
|
|
$
|
0.46
|
|
|
Shares used to compute net income per share attributable to
holders of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
51,575
|
|
|
|
62,024
|
|
|
|
51,732
|
|
|
|
60,962
|
|
|
Diluted
|
|
|
52,745
|
|
|
|
63,437
|
|
|
|
53,039
|
|
|
|
62,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL ENGINES, INC. AND SUBSIDIARIES
Unaudited
Consolidated Statements of Cash Flows
|
|
|
|
|
|
2014
|
|
2015
|
|
2016
|
|
|
|
(In thousands)
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
36,952
|
|
|
$
|
31,617
|
|
|
$
|
28,560
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
4,930
|
|
|
|
6,092
|
|
|
|
8,946
|
|
|
Amortization of intangible assets
|
|
|
5,614
|
|
|
|
4,566
|
|
|
|
14,964
|
|
|
Stock-based compensation
|
|
|
19,765
|
|
|
|
26,028
|
|
|
|
33,689
|
|
|
Amortization of deferred sales commissions
|
|
|
1,525
|
|
|
|
1,717
|
|
|
|
1,560
|
|
|
Amortization and impairment of direct response advertising
|
|
|
6,010
|
|
|
|
5,359
|
|
|
|
4,702
|
|
|
Amortization of discount on short-term investments
|
|
|
(69
|
)
|
|
|
(359
|
)
|
|
|
(5
|
)
|
|
Provision for doubtful accounts
|
|
|
617
|
|
|
|
938
|
|
|
|
746
|
|
|
Write off of notes receivable
|
|
|
-
|
|
|
|
-
|
|
|
|
290
|
|
|
Deferred tax assets
|
|
|
10,869
|
|
|
|
(9,196
|
)
|
|
|
(1,116
|
)
|
|
Loss (gain) on fixed asset disposal
|
|
|
(17
|
)
|
|
|
14
|
|
|
|
281
|
|
|
Loss (gain) on sale of short-term investments
|
|
|
-
|
|
|
|
(9
|
)
|
|
|
18
|
|
|
Excess tax benefit associated with stock-based compensation
|
|
|
(12,659
|
)
|
|
|
(25,058
|
)
|
|
|
(18,435
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(2,813
|
)
|
|
|
(6,225
|
)
|
|
|
(15,250
|
)
|
|
Prepaid expenses
|
|
|
(492
|
)
|
|
|
(723
|
)
|
|
|
(1,369
|
)
|
|
Direct response advertising
|
|
|
(4,450
|
)
|
|
|
(4,338
|
)
|
|
|
(3,388
|
)
|
|
Other assets
|
|
|
(3,533
|
)
|
|
|
1,773
|
|
|
|
(1,455
|
)
|
|
Accounts payable
|
|
|
13,653
|
|
|
|
30,856
|
|
|
|
18,827
|
|
|
Accrued compensation
|
|
|
(4,034
|
)
|
|
|
6,998
|
|
|
|
4,369
|
|
|
Deferred revenue
|
|
|
(2,315
|
)
|
|
|
391
|
|
|
|
(1,768
|
)
|
|
Deferred rent
|
|
|
2,202
|
|
|
|
814
|
|
|
|
1,130
|
|
|
Other liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
(526
|
)
|
|
Net cash provided by operating activities
|
|
$
|
71,755
|
|
|
$
|
71,255
|
|
|
$
|
74,770
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(10,157
|
)
|
|
|
(6,094
|
)
|
|
|
(7,037
|
)
|
|
Sale of property and equipment
|
|
|
17
|
|
|
|
-
|
|
|
|
-
|
|
|
Capitalization of internal use software
|
|
|
(3,571
|
)
|
|
|
(5,049
|
)
|
|
|
(6,904
|
)
|
|
Purchases of short-term investments
|
|
|
(179,789
|
)
|
|
|
(159,555
|
)
|
|
|
-
|
|
|
Maturities of short-term investments
|
|
|
120,000
|
|
|
|
180,000
|
|
|
|
-
|
|
|
Sale of short-term investments
|
|
|
-
|
|
|
|
119,872
|
|
|
|
39,923
|
|
|
Cash paid for acquisitions, net of cash acquired
|
|
|
-
|
|
|
|
-
|
|
|
|
(274,569
|
)
|
|
Net cash (used in) provided by investing activities
|
|
$
|
(73,500
|
)
|
|
$
|
129,174
|
|
|
$
|
(248,587
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Payments on capital lease obligations
|
|
|
(105
|
)
|
|
|
(112
|
)
|
|
|
(106
|
)
|
|
Payments related to business combinations
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,189
|
)
|
|
Excess tax benefit associated with stock-based compensation
|
|
|
12,659
|
|
|
|
25,058
|
|
|
|
18,435
|
|
|
Net share settlements for stock-based awards minimum tax withholdings
|
|
|
(2,002
|
)
|
|
|
(3,514
|
)
|
|
|
(3,336
|
)
|
|
Repurchase of common stock
|
|
|
(9,182
|
)
|
|
|
(38,455
|
)
|
|
|
-
|
|
|
Proceeds from issuance of common stock
|
|
|
12,761
|
|
|
|
9,201
|
|
|
|
6,625
|
|
|
Cash dividend payments
|
|
|
(11,825
|
)
|
|
|
(13,955
|
)
|
|
|
(16,582
|
)
|
|
Net cash provided by (used in) financing activities
|
|
$
|
2,306
|
|
|
$
|
(21,777
|
)
|
|
$
|
2,847
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
561
|
|
|
|
178,652
|
|
|
|
(170,970
|
)
|
|
Cash and cash equivalents, beginning of year
|
|
|
126,003
|
|
|
|
126,564
|
|
|
|
305,216
|
|
|
Cash and cash equivalents, end of year
|
|
$
|
126,564
|
|
|
$
|
305,216
|
|
|
$
|
134,246
|
|
|
Supplemental cash flows information:
|
|
|
|
|
|
|
|
Income taxes paid, net of refunds
|
|
$
|
91
|
|
|
$
|
1,584
|
|
|
$
|
3,336
|
|
|
Interest paid
|
|
$
|
12
|
|
|
$
|
13
|
|
|
$
|
13
|
|
|
Non-cash operating, investing and financing activities:
|
|
|
|
|
|
|
|
Issuance of common stock related to acquisition
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
267,018
|
|
|
Unpaid purchases of property and equipment
|
|
$
|
1,118
|
|
|
$
|
574
|
|
|
$
|
173
|
|
|
Purchase of property and equipment with non-cash tenant
improvement allowance
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,952
|
|
|
Purchase of property and equipment under capital lease
|
|
$
|
169
|
|
|
$
|
216
|
|
|
$
|
-
|
|
|
Capitalized stock-based compensation for internal use software
|
|
$
|
294
|
|
|
$
|
515
|
|
|
$
|
766
|
|
|
Capitalized stock-based compensation for direct response advertising
|
|
$
|
119
|
|
|
$
|
97
|
|
|
$
|
79
|
|
|
Dividends declared but not yet paid
|
|
$
|
3,113
|
|
|
$
|
3,615
|
|
|
$
|
4,350
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL ENGINES, INC. AND SUBSIDIARIES
|
|
Reconciliation of GAAP to Non-GAAP Operating Results
|
|
|
The table below sets forth a reconciliation of net income to non-GAAP
adjusted EBITDA based on our historical results:
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
Non-GAAP adjusted EBITDA
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
|
|
(In thousands, unaudited)
|
|
|
GAAP net income
|
|
$
|
6,739
|
|
|
$
|
9,041
|
|
|
$
|
31,617
|
|
|
$
|
28,560
|
|
|
Interest income, net
|
|
|
(93
|
)
|
|
|
(43
|
)
|
|
|
(356
|
)
|
|
|
(176
|
)
|
|
Income tax expense
|
|
|
4,215
|
|
|
|
6,681
|
|
|
|
17,864
|
|
|
|
20,712
|
|
|
Depreciation and amortization
|
|
|
1,608
|
|
|
|
2,276
|
|
|
|
6,092
|
|
|
|
8,946
|
|
|
Amortization of intangible assets (excluding internal use software)
|
|
|
-
|
|
|
|
2,810
|
|
|
|
-
|
|
|
|
10,111
|
|
|
Amortization of internal use software
|
|
|
1,133
|
|
|
|
1,335
|
|
|
|
4,566
|
|
|
|
4,853
|
|
|
Amortization and impairment of direct response advertising
|
|
|
1,227
|
|
|
|
1,155
|
|
|
|
5,359
|
|
|
|
4,702
|
|
|
Amortization of deferred sales commissions
|
|
|
500
|
|
|
|
316
|
|
|
|
1,717
|
|
|
|
1,560
|
|
|
Stock-based compensation
|
|
|
6,832
|
|
|
|
9,382
|
|
|
|
26,028
|
|
|
|
33,689
|
|
|
Acquisition-related expenses(1)
|
|
|
2,700
|
|
|
|
3,281
|
|
|
|
2,700
|
|
|
|
17,239
|
|
|
Loss on reacquired franchisee rights
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,092
|
|
|
Non-GAAP adjusted EBITDA
|
|
$
|
24,861
|
|
|
$
|
36,234
|
|
|
$
|
95,587
|
|
|
$
|
134,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
We expect to incur acquisition-related expenses through the first
quarter of 2017.
|
|
|
|
|
The table below sets forth a reconciliation of net income to non-GAAP
adjusted net income based on our historical results:
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
Non-GAAP adjusted net income
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
|
|
(In thousands, unaudited)
|
|
GAAP net income
|
|
$
|
6,739
|
|
|
$
|
9,041
|
|
|
$
|
31,617
|
|
|
$
|
28,560
|
|
|
Stock-based compensation expense
|
|
|
6,832
|
|
|
|
9,382
|
|
|
|
26,028
|
|
|
|
33,689
|
|
|
Amortization of intangible assets (excluding internal use software)
|
|
|
-
|
|
|
|
2,810
|
|
|
|
-
|
|
|
|
10,111
|
|
|
Acquisition-related expenses
|
|
|
2,700
|
|
|
|
3,281
|
|
|
|
2,700
|
|
|
|
17,239
|
|
|
Loss on reacquired franchisee rights
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,092
|
|
|
Income tax expense from non-deductible transaction expenses(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,162
|
|
|
Release of valuation allowance
|
|
|
(11
|
)
|
|
|
-
|
|
|
|
(11
|
)
|
|
|
-
|
|
|
Tax effect of adjustments(2)
|
|
|
(3,641
|
)
|
|
|
(5,911
|
)
|
|
|
(10,974
|
)
|
|
|
(24,880
|
)
|
|
Non-GAAP adjusted net income
|
|
$
|
12,619
|
|
|
$
|
18,603
|
|
|
$
|
49,360
|
|
|
$
|
69,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
This amount represents estimated additional income tax expense
incurred in the period for non-deductible transaction expenses
related to acquisition activity.
|
|
(2)
|
|
An estimated statutory tax rate of 38.2% has been applied to
eliminate the tax-effect for all periods presented.
|
|
|
|
|
The table below sets forth a reconciliation of GAAP diluted earnings per
share to non-GAAP adjusted earnings per share based on our historical
results:
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
Non-GAAP adjusted earnings per share
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
|
|
(In thousands, except per share data, unaudited)
|
|
GAAP diluted earnings per share
|
|
$
|
0.13
|
|
|
$
|
0.14
|
|
|
$
|
0.60
|
|
|
$
|
0.46
|
|
|
Stock-based compensation expense
|
|
|
0.13
|
|
|
|
0.15
|
|
|
|
0.49
|
|
|
|
0.54
|
|
|
Amortization of intangible assets (excluding internal use software)
|
|
|
-
|
|
|
|
0.04
|
|
|
|
-
|
|
|
|
0.16
|
|
|
Acquisition-related expenses
|
|
|
0.05
|
|
|
|
0.05
|
|
|
|
0.05
|
|
|
|
0.28
|
|
|
Loss on reacquired franchisee rights
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.07
|
|
|
Income tax expense from non-deductible transaction expenses(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.02
|
|
|
Release of valuation allowance
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Tax effect of adjustments(2)
|
|
|
(0.07
|
)
|
|
|
(0.09
|
)
|
|
|
(0.21
|
)
|
|
|
(0.40
|
)
|
|
Non-GAAP adjusted earnings per share
|
|
$
|
0.24
|
|
|
$
|
0.29
|
|
|
$
|
0.93
|
|
|
$
|
1.13
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of common stock outstanding
|
|
|
51,575
|
|
|
|
62,024
|
|
|
|
51,732
|
|
|
|
60,962
|
|
|
Dilutive stock options, RSUs and PSUs
|
|
|
1,170
|
|
|
|
1,413
|
|
|
|
1,307
|
|
|
|
1,141
|
|
|
Non-GAAP adjusted common shares outstanding
|
|
|
52,745
|
|
|
|
63,437
|
|
|
|
53,039
|
|
|
|
62,103
|
|
|
|
|
|
|
(1)
|
|
This amount represents estimated additional income tax expense
incurred in the period for non-deductible transaction expenses
related to acquisition activity.
|
|
(2)
|
|
An estimated statutory tax rate of 38.2% has been applied to
eliminate the tax-effect for all periods presented.
|
|
|
|
|
The table below sets forth a reconciliation of our 2017 outlook for GAAP
net income to our 2017 outlook for non-GAAP adjusted EBITDA:
|
|
|
|
|
|
|
Outlook for Fiscal 2017
as of February 16, 2017
|
|
Non-GAAP adjusted EBITDA outlook
|
|
Low
|
|
High
|
|
|
|
(In millions, unaudited)
|
|
GAAP net income outlook
|
|
$
|
53
|
|
$
|
55
|
|
Estimated interest income, net(1)
|
|
|
-
|
|
|
-
|
|
Estimated income tax expense(1)
|
|
|
33
|
|
|
35
|
|
Estimated depreciation and amortization(1)
|
|
|
10
|
|
|
10
|
|
Estimated amortization of intangible assets (excluding internal use
software)(1)
|
|
|
11
|
|
|
11
|
|
Estimated amortization of internal use software(1)
|
|
|
7
|
|
|
7
|
|
Estimated amortization and impairment of direct response advertising(1)
|
|
|
5
|
|
|
5
|
|
Estimated amortization of deferred sales commissions(1)
|
|
|
1
|
|
|
1
|
|
Estimated stock-based compensation(1)
|
|
|
33
|
|
|
33
|
|
Estimated acquisition-related expenses(1)
|
|
|
5
|
|
|
5
|
|
Non-GAAP adjusted EBITDA outlook
|
|
$
|
158
|
|
$
|
162
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The estimated items are provided solely for the purpose of
reconciling our 2017 outlook for GAAP net income to our 2017 outlook
for non-GAAP adjusted EBITDA and are not intended and should not be
construed as part of the Company’s outlook for 2017, which outlook
is limited to revenue, net income and non-GAAP adjusted EBITDA.
These items are subject to a number of variables which make them
inherently difficult to estimate accurately. In addition, actual
amounts for such items have historically varied and may continue to
vary significantly from period to period. Any variances in these
estimates may in turn have a significant impact on our 2017 outlook
and future GAAP results.
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170223006461/en/
Source: Financial Engines
Financial Engines
Amy Conley, 617-556-2305
aconley@financialengines.com
or
Don
Duffy, 408-498-6040
ir@financialengines.com
|
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