Part of the fintech team here at RBC Capital Markets. I'm pleased to welcome Josh Warren, who is the Chief Financial Officer of Envestnet for a little fireside chat. Yes, without a fire, but. Without a fire. Next year, we'll work on the fire. We have plenty of water here, so we're in good shape. We are well hydrated up here, which is good. I'm going to start with a difficult question. Okay. Bill Crager just stepped down as CEO. You're relatively new as CFO. What's happening there in terms of the senior management? Sure. So let's start with Bill. I mean, look, Bill, and I don't want to speak for him, but look, the guy is an absolutely immense figure in the industry. Served as Envestnet CFO or CEO for the last several years. As I think you know, he assumed the role in pretty awful circumstances and really guided the company through a difficult but necessary period of replatforming. By the way, I say immense figure as in not like large, like physically, but he is a genuine visionary. And the idea of what Envestnet is and really our source of competitive differentiation, it really flows from him. The idea that financial advice requires a fulsome view of an individual's goals, of an individual's objectives, of an individual's constraints, personal preferences, that goes beyond stock picking. The industry used to be a bit of like the Wolf of Wall Street into what it is today, which is really more of a holistic, comprehensive perspective. That leads to better outcomes for clients. That leads to stronger advisor-client relationships. That's what Envestnet powers. So for him, look, I think these are very, to be blunt, even though I'm a new CFO, I can tell you these are very difficult jobs, very difficult to do if you're not hard to do if you aren't loving every second of it. And I think for him, and he stated this when he started to think about when it would be his time to kind of move past this really difficult chapter, he was thinking about it in terms of when. And Envestnet today is set up now that that period of replatforming has been completed. I think he's excited to take a step back and focus on really being an advocate for Envestnet, being an advocate for the industry. So that's Bill. Maybe pulling it all together with me joining the company last year. Look, we are in a super strong position. I think the strategy for growth is pretty clear. My and our job is going to be to execute on that strategy while make sure that flows seamlessly while the board conducts a search. And I think we're delivering on that. Just look at the results. Our client feedback continues to improve. Our revenue was up 9% year-over-year. We added 350 basis points of margin. There's more cash on the balance sheet than there was. Our leverage ratio has been reduced. So almost like any metric you want to point to, we're making progress against it. If you think about what Envestnet really is, the company's 25 years old. Our top 25 clients, the average duration is 15 years. We're just going to be hyper-focused, hyper-committed, relentless in terms of delivering against that. We're entering a new chapter, one more focused on one Envestnet, one more focused on delivering with operational scale. Envestnet previously was maybe through a lot of the acquisitions that it had made a bit of a holding company structure. Now we have a different skill set, a stronger leadership team, and we're just ready to kind of take the company to the next level. I think our results are starting to point to that trajectory. Okay. Can you help me understand or investors understand the fee-based revenue? Sure. Is it different solutions than the subscription revenue, or is it the same platform and just a different pricing model? Yeah. So let's take a step back to sort of set the scene. So the goal of Envestnet is to serve the needs of the industry. And what ultimately happens is to those two pricing constructs, asset-based or license-based or subscription-based, clients ultimately choose the construct or model that is more suitable for them. We believe providing both provides choice. It enables us to serve the needs of the industry. Asset-based pricing is great. It provides a way to get a market return plus a risk premium. It provides a way for Envestnet to effectively monetize a client channel that, in some respects, is growing less fast than what RIAs had been traditionally growing at. We've taken an either/or approach, so the parts sum to the whole. We've traditionally defined asset-based revenue as primarily consisting of variable fees, basis point fees for providing our platforms. The independent channel, which is where nearly 2/3 of our advisors are, or sorry, the independent RIA channel, where nearly 2/3 of our advisors are, has grown faster, as I mentioned, than the independent broker-dealer channel. So our mix has shifted a little bit to more subscription-based advisors. So that's almost 2/3 are using subscription-based revenue. But asset-based pricing still constitutes the bulk of our revenue. So think of it as the way I think about our business. We have a sort of technology services offering that's typically priced either in subscription licensing fees, traditional Px Q, SaaS types of products, or AUA if it's an asset-based. And then we have a fiduciary feature to our business. That's more of our AUM delivery model. Again, those two pricing constructs, asset-based, subscription-based for a diverse industry, enable us to fit the needs of that industry and help really power Envestnet's growth. The fee rate's always been an issue. You've said, I believe, 9-10, just kind of how to think about it. What are the pressures and the opportunities with the fee rate? So the fee rate, it's funny that you say it. We see our fee rate as stable. There isn't necessarily pricing pressure at the product level. This bottle of water costs $5 today or whatever that Icelandic bottle of water costs less tomorrow. That's very different from other parts of the investment, or rather the financial services industry where the cost of a trade or certain investment products kind of is really under assault. We provide a platform. It's a very different characteristic in terms of pricing. It's a very different value proposition that we offer. And remember, Envestnet, since it has gone public in 2010, has been in inflows each and every quarter. Structural growth is kind of one of the core and enduring features. So in some respects, the fee rate is a mixed story, not a pricing one. What happens in any quarter, the blended fee rate, it's impacted by events. It's impacted by a couple of things. So let's just talk about the most recent quarter or the quarter that we're in now, Q2. There are really two major headwinds. The first, not really new for this quarter, but new over the long span of history, is given the yield curve being what it is, clients are holding assets in cash more than historical. And then also there's been a higher mix of reporting-only assets. Several of our most recent wins, including approximately half of our Q1 net flows were reporting-only assets. So that causes a negative mix shift on the fee rate. I would argue that that fee rate, which is a blend of millions of different accounts, that decline is for the right reasons. That's new revenue opportunities consistent with a platform strategy. Our goal continues to be, how do we continue to deliver to our existing client base as effectively as possible? How do we help clients rent the scale that our platform can now provide? And then ultimately for investors, for shareholders, how does more and more of that operating leverage that is really new to Envestnet and now post this replatforming period is really possible and achievable? How does more and more of that incremental revenue dollar, that marginal revenue, flow all the way down to free cash flow? So that's our focus. So the fee rate, it's one indicator, if you will, of activity, but it's not the sole driver. The primary driver to us, when we sit down and look at clients and look at activities, are we doing more with that client? Are we going deeper with that client? Are we delivering more effectively for that client? I believe, and we believe, if we kind of stick to that, stick to that strategy, stick to delivering and serving the clients that we have as effectively as possible, Envestnet and ultimately our shareholders will benefit. You mentioned the replatforming. Part of that was also development of new solutions. How does that come into the fee rate? In general, there's a couple of puts and takes. As I said, the fee rate is an output. It's a big calc across millions of different accounts. You mentioned nine and 10. I don't actually think there's any product at nine nor any product at 10. It's a blend. Some of the newer solutions that are relatively even new in terms of the way money is managed, direct indexing, having financial advisors that are more tax aware. You and I live in a post-tax world. Most advisors are trained to construct portfolios in a tax-agnostic world. It's like, "Oh, what about that other thing?" These more customized, more bespoke, more higher value-added strategies, direct indexing, personal preferences, screens, things of that regard are in general higher revenue margin products. We intend to keep investing them. We intend to keep driving adoption from them. In any quarter, they can get outweighed by a gigantic block of $17 billion assets, as may be the case in Q2. That's okay. That's going to happen over kind of short time cycles. But I think we believe the long-term trend is clear. More customized, more bespoke solutions is the way the industry is trending. That, in my opinion, is consistent with providing a platform, consistent with providing data analytics tools so an advisor is able to deliver to a client what he or she needs. What's the sort of difference between where you're just administering the assets, getting paid on basis points, and when you're actually managing the money? The 40 Act. The answer to that question is literally a regulatory answer to is something AUM versus AUA. It's the 40 Act. It generally comes up with who has discretion. Let me try not to. So as we've determined during the breakout, was it a former lawyer? I was a former lawyer, so it's all kicking around there. But let me leave it as the 40 Act and is something AUM is a 40 Act definition. Okay. In terms of the fee rate, though, gross and net to you all, I'm assuming if you're just doing kind of the administration, it's. Gross is net. Gross is net, and it's probably single basis point. And then management is going to be gross at. So when we have in our manager marketplace, which today is something like 800 different managers, when we are providing what we call either a gateway fee or a portfolio administration fee on top of that to provide access, in many respects, access, research, due diligence, in some respects, trading and support for third-party products, we have a, to use your words, gross net, we have a set of asset-based costs which we collect and then pay to asset managers. That's a feature of what we in our reporting call AUM. It is not necessarily a feature of what we call AUA. In first-party managed product, when it's literally an Envestnet product, we don't have that separation. So one of the things that we did this past year in terms of KPIs and ultimately compensation is we looked at really three key indicators of what, and careful readers of our proxy, you can scope this out, but it's really kind of three key data points that we're looking at. I mentioned free cash flow that we can reinvest, return, do something with. Free cash flow is one. Total shareholder return as a measure of like, are we doing a good job of delivering a return for you, our investors? And then the other one is revenue less asset-based costs, which is take away our non-controllable, the asset manager fee that we collect and then repay. That is a key indicator of our growth. More so than, and by the way, your 9-10, those are entirely focused on a gross figure. I think thinking about things in terms of a revenue less asset-based cost construct, because that's revenue that Envestnet can actually use to pay employees, invest in the business, et cetera, that might be a more appropriate way to think. GAAP is GAAP. We, of course, will comply with it and follow up. But I think from a business performance perspective, thinking in terms of revenue less asset-based costs might be a, it's how I think and how we're focused on delivering. Thinking about new products, Envestnet announced that we're going to start offering custodial services. Sure. In partnership with FNZ. Where do we stand with the rollout? And is there a danger that the custodial banks start competing against Envestnet? A couple questions there. Of course. The rollout, I think Tom from FNZ was here. I don't know if he was in this room or was in one of the other rooms. That's a super exciting opportunity for us. We announced that partnership with them in 2022. It has been slow to come to market. We are excited to bring it to market. Our expectation is to bring it to market this year. With regard to that, think of that almost as like an easy button-like experience for an advisor who is either moving new assets, either leaving a wirehouse, shifting among firms. Effectively, that bundle is a more effective, integrated, tightly coupled offering. Our goal was first standing up the technology, and then we're hoping to bring that to market this year. Is there a danger of some competitive retaliation among our deep existing partnerships with, in particular, Fidelity and Schwab, which are the two leading providers to our clients? I mean, look, I don't want to speak for them. I would say we've done more with them more recently than less. They are focused, as are we, on just going to market and delivering as much as we can for those clients. It's a big world out there. Delivering the bundle, which is a tightly coupled technology layer with custody solutions, technology layer with a choice of asset managers, choice of custodians, connecting the ecosystem, we feel is a super exciting opportunity for us and where we're going to keep leaning in with our partners, which include the big box custodians, if you will, Fidelity and Schwab. Okay. Last week, you announced, I want to get the wording here correct, deepened partnerships with BlackRock, Fidelity, Franklin Templeton, State Street. I mean, those are some of the custodians right there. Right. More on the institutional side. More on, that was going to be State Street, more on the institutional custodian, Fidelity, more on the retail custodian, right? But sorry, please. I was going to say, what do you mean by deepened partnerships? Yeah. I mean, look, remember just what the advisor experience is like. The advisor desktop is crowded. There are over 400 different providers out there in many respects providing point solutions where potentially the sum of the parts is less than the whole in total. Advisors have to swivel chair, mix among these things. Our surveys suggest, our feedback suggests advisors want to be financial advisors. They don't want to be CTOs referring among these different point solutions. So if you think about what is our technology, it's connecting all the parts of the advisor workflow. You can see this in some of the client surveys that we've, or sorry, even industry feedback that we've gotten. The T3 study said, here's all the different verticals. Well, Envestnet's in the top three of these 13 different verticals where we compete against point solutions in each. Regarding your question, those four premier asset management partners, BlackRock, Fidelity, Franklin Templeton, and State Street, we believe nobody can connect the ecosystem like we can. And we're very comfortable whether it's those partners, whether our custody partners, Fidelity, and Schwab in particular, we believe that we can deliver with our partners to our clients to create just an easier, more seamless experience to power them to do what they do best, which is deliver financial advice, figure out what is in a client's best interest, client's objectives, use in some respects that deepened partnership is really all about bringing these customized solutions to bear and enabling customization and seamless integration in the portfolio construction parts of the workflow so an advisor can pick among the best products that these four managers have to offer, as well as Envestnet products, and assemble more of a bespoke, curated, on-the-fly, high-net-worth type of experience for a client. That's what we're focused on versus think of what the advisor of, I don't want to quite say the advisor at all, but what the alternative is, which is like assembling is too hard. And so you either leave it, you just sort of don't do it. A portfolio is suboptimally managed. Advisors spending all of their time keying in things. That's not what anybody wants to do for an advisor to get scale. You need some level of technology integration. And that's what we can provide that bundle, whether it's with our asset manager partners, whether it's with our custody partners. Connecting that ecosystem is a major opportunity for us and a major opportunity to help power that level of financial advice. I'd say that's one of the biggest opportunities that we have. An even bigger one is simply delivering the firm, the cross-sell like we talked about, delivering the firm of selling Envestnet products to Envestnet customers in the foundation. Those two, we believe, are going to be kind of at the foundation of our growth going forward. When you look at the competitive set, who are they? And can anyone else sort of do the entire platform, the entire ecosystem? So who are they is different in depending on the channel of the independent advisor. But in answer to your question, we believe today, no. No other platform can go as broad as Envestnet, can be as comprehensive as Envestnet, can be as holistic as Envestnet. Others are attempting to replicate Envestnet. I think others have attempted to replicate Envestnet over the years. Some of those attempts have not been successful. Others will attempt to replicate Envestnet in the future. Who knows? To me, that's an indication like we're in the right space. I'd almost be worried if the opposite were true, if like nobody was trying to replicate us, it'd be like, wait, what are we doing? In many respects, there is no like-for-like out there. The competition, though, just to name names, in the RIA space, it's typically private companies, InvestCloud, Orion, Orion Brinker, now the merged firm, or as of 2020, the merged firm is a competitor, Addepar, other providers that are out there. But we don't really see situations where we are in a world where we're competing kind of like-for-like with clients. We're competing with point solutions. And in the retiring of point solutions, that's our opportunity. Clients want to go deeper with fewer partners. That's not a unique thing to financial advisors. You're probably hearing that in other rooms that you're in, in other parts of whatever. Our clients are not unique in that regard. They want a provider that they can lean into, rely on, build their business on. That's a productivity enhancer or productivity enabler. And that's what Envestnet is today. Okay. Switching gears a little bit, the data and analytics unit. Envestnet bought Yodlee. Seems like it didn't work out. What exactly is in the data and analytics unit? What's working? What's not working? Where do we go from here? Yeah. So Envestnet acquired Yodlee, I guess, in 2015. That became the foundation for the DNA segment. And during that period of platform integration that we described, where we merged all the parts of the kingdom into one, the data and analytics business, which has really a fundamentally different client set, it was less integrated than some of the kind of core components, if you will, of wealth. Maybe let me pick up the story kind of today, or rather in 2023. So look, the data and analytics business, you're right, did not perform as well as Envestnet had hoped. We took an impairment charge in connection with that performance. Envestnet had not taken one up until that point. Why was the performance? Combination of reasons. The March 2023 turmoil, if the business is really two segments, open banking and alternative data. So the March 2023 regional banking turmoil, SVB, Signature, and the like, that negatively impacted open banking. There've been a sort of series of client delinquencies in the alternative data offering. I think we discussed even on earnings calls that we were impacted by an idiosyncratic data loss, which we've since repopulated. Look, I would say on the forward, we're pleased with the sequential progress from Q3 to Q4 to Q1. We are focused on continued improvements there. And look, as the business stabilizes, we hope to reorient it to growth going forward. How much does it interact with the other pieces, with core Envestnet? To use the old-fashioned. Yeah. So as I mentioned, so think of it as having different clients. I'm thinking more on the technology side. What do you learn from it? Well, I would say using data is essential in delivery of the financial advice that really helps make a financial advisor more effective and helps power some of the Envestnet software and tools and the Envestnet system. You want your software, your tools, your systems to be informed by data. But you have fundamentally a different client set. So in terms of how much, I mean, it's a user of might be how best to think about it. I'm going to, if anyone in the room has any questions, or I can keep running through as I lose my voice at the end of the day. Yeah, it's a long day, right? Please. Maybe I guess, as you guys think about the opportunity to cross-sell and upsell products to clients, which sounds like you're on the very existing clients' performance strategy, how will that be reflected, if not in the theory? What sort of outcome might we be able to expect? Think about a longer-term horizon. What does the bundle look like? I mean, I think what you would start to see is a couple of things. It would be reflected, maybe a kind of crude way to think about it, is just in your sort of revenue capture per advisor ultimately would be benefited. But you would start to see it in a few things. You will start to see a couple of things. And actually, I would argue, Dan, you've already seen it. We're growing accounts faster than advisors. We have been doing that for a while. So our advisor growth is up 2%, 3%. Our account growth is up 4%, even trending slightly higher. That's observable data that shows clients are doing more business with Envestnet. And then our monetization of those accounts through the mix of products that we offer, that's where you'll start to see it show up ultimately in revenue and then flow down to profitability. So, think of us as not growing our foundation of advisors from the advisor count is growing. And we're excited about that because it means even against an industry that's not necessarily growing in terms of population, our count is still growing. That may, frankly, that's not a requisite to power what we believe is our growth algorithm. Going deeper with our clients is and monetizing more accounts, more revenue capture per account, whether it's in the form of subscription revenue, whether it's in the form of asset-based revenue, whatever the client's pricing construct demands. Ultimately, greater revenue capture flows from greater productivity and us selling and delivering more of, to use your words, the bundle. As we come down to the last couple of seconds, I'm going to ask a question that probably has more than 30 seconds of an answer. That's one of the pushbacks among Envestnet has been around free cash flow, free cash flow conversion, the various quarterly adjustments to numbers. What should investors expect from you over the next 2-3 years? I mean, I'll say this. Look, we are just looking forward. I think there are a couple of things. We are absolutely committed to continuing to expand our margins, including our adjusted EBITDA margins. But to use your point, free cash flow, I mentioned the compensation structure before. That is and should be our north star for generating value. That's where we're focused. We're starting to report on it. Careful readers of our earnings supplement can see that. And we're starting to ultimately deliver against that. If you just take Q1 2024 to Q1 2023, just what's the free cash flow between those two points? We added $42 million of free cash flow between those two quarters. You should expect that to continue. You should, frankly, expect us to run a company that is consistent with one that's focused on operational excellence and ultimately free cash flow generation because that's the stage that the company is at and the way that the business should be run. Thank you. Appreciate it. Thank you. Appreciate it. Great way to end. Yeah. Well, this.