株探米国株
日本語 英語
エドガーで原本を確認する
false 0000880631 0000880631 2024-07-24 2024-07-24 0000880631 WT:CommonStock0.01ParValueMember 2024-07-24 2024-07-24 0000880631 WT:PreferredStockPurchaseRightsMember 2024-07-24 2024-07-24 iso4217:USD xbrli:shares iso4217:USD xbrli:shares

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________ 

Form 8-K
________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 24, 2024
__________________

WisdomTree, Inc.

(Exact name of registrant as specified in its charter)

_____________________

 

 

Delaware 001-10932 13-3487784

(State or other jurisdiction

of incorporation)

Commission

File Number:

(IRS Employer

Identification No.)

250 West 34th Street

3rd Floor

New York, NY 10119

(Address of principal executive offices, including zip code)

(212) 801-2080

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)
 _______________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class  

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, $0.01 par value   WT   The New York Stock Exchange
Preferred Stock Purchase Rights   WT   The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

 

 

 

   

 

 

Item 2.02. Results of Operations and Financial Condition

On July 26, 2024, WisdomTree, Inc. (the “Company”) issued a press release announcing its financial results for the three and six months ended June 30, 2024. A copy of the press release containing this information is being furnished as Exhibit 99.1 to this Report on Form 8-K and is incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section and shall not be deemed incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended.

Item 8.01. Other Events

On July 24, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.03 per share of common stock, payable on August 21, 2024 to stockholders of record as of the close of business on August 7, 2024. A copy of the press release issued in connection with the dividend is attached as Exhibit 99.1 to this Report on Form 8-K and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits:

 

Exhibit 99.1 Press Release, dated July 26, 2024
Exhibit 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

   

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    WisdomTree, Inc.
       
Date: July 26, 2024   By: 

/s/ Bryan Edmiston

 

      Bryan Edmiston
      Chief Financial Officer

 

 

 

 

 

 

 

EX-99.1 2 ex99_1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

-

 

 

 

 

 

   

WisdomTree Announces Second Quarter 2024 Results

 

Record AUM of $109.7 Billion

940 bps of Operating Margin Expansion vs. YTD June 30, 2023

Diluted Earnings Per Share of $0.13 ($0.16, as Adjusted)

 

New York, NY – (Business Wire) – July 26, 2024 – WisdomTree, Inc. (NYSE: WT), a global financial innovator, today reported financial results for the second quarter of 2024.

 

$21.8 million of net income ($27.1(1) million of net income, as adjusted), see “Non-GAAP Financial Measurements” for additional information.

 

$109.7 billion of ending AUM, an increase of 2.3% from the prior quarter arising from market appreciation and net inflows.

 

$0.3 billion of net inflows, primarily driven by inflows into our international developed equity, fixed income and U.S. equity products, partially offset by outflows from our commodity products.

 

0.37% average advisory fee, a 1 basis point increase from the prior quarter.

 

$107.0 million of operating revenues, an increase of 10.5% from the prior quarter due to higher average AUM and higher other revenues attributable to our European listed products.

 

81.2% gross margin(1), a 1.8 point increase from the prior quarter due to higher revenues.

 

31.3% operating income margin (35.3%(1) as adjusted), a 2.4 point increase (5.7 point increase, as adjusted(1)) compared to our operating margin of 28.9% (29.6%(1), as adjusted) in the prior quarter primarily due to higher revenues.

 

$0.03 quarterly dividend declared, payable on August 21, 2024 to stockholders of record as of the close of business on August 7, 2024.

Update from Jonathan Steinberg, WisdomTree CEO

 

“WisdomTree continued to thrive in the second quarter, generating record assets under management with a global footprint and leadership in advisor solutions and tokenization on the back of only 300 employees. It is truly a testament to the efficiency of our business model and reflects our mission, vision and values.  The broadening of our product lineup over the years while adding portfolio solutions for our advisor clients are showcased in our three-plus years of strong net inflows and record assets under management.  Continued traction in those areas, alongside our leadership position in the industry’s secular shift toward ETFs, tokenization and blockchain technology, further set the company up for success in the long run.” 

 

 

 

 

  1  

Update from Jarrett Lilien, WisdomTree COO and President

 

“WisdomTree once again delivered strong revenue growth on the back of record assets under management, net inflows and expanding other revenue streams. With well-managed expenses and scale benefits, we’ve expanded adjusted operating margins 840 basis points this year as compared to the first half of last year.  This all translates into an accelerated pace of EPS growth and strong returns for stockholders.” 

 

 

 

OPERATING AND FINANCIAL HIGHLIGHTS

   

Three Months Ended

 

 
    June 30,
2024
    Mar. 31,
2024
    Dec. 31,
2023
    Sept. 30,
2023
    June 30,
2023
 
Consolidated Operating Highlights ($ in billions):                                        
AUM—end of period   $ 109.7     $ 107.2     $ 100.1     $ 93.7     $ 93.7  
Net inflows/(outflows)   $ 0.3     $ 2.0     $ (0.3 )   $ 2.0     $ 2.3  
Average AUM   $ 108.4     $ 102.4     $ 96.6     $ 95.7     $ 91.6  
Average advisory fee     0.37%     0.36%     0.36%     0.36%     0.36%
                                         
Consolidated Financial Highlights ($ in millions, except per
share amounts):
                                       
Operating revenues   $ 107.0     $ 96.8     $ 90.8     $ 90.4     $ 85.7  
Net income   $ 21.8     $ 22.1     $ 19.1     $ 13.0     $ 54.3  
Diluted earnings per share   $ 0.13     $ 0.13     $ 0.16     $ 0.07     $ 0.32  
Operating income margin     31.3%     28.9%     28.7%     29.5%     21.2%
                                         
As Adjusted (Non-GAAP(1)):                                        
Gross margin     81.2%     79.4%     79.7%     80.1%     79.3%
Net income, as adjusted   $ 27.1     $ 20.3     $ 18.6     $ 18.0     $ 14.9  
Diluted earnings per share, as adjusted   $ 0.16     $ 0.12     $ 0.11     $ 0.10     $ 0.09  
Operating income margin, as adjusted     35.3%     29.6%     28.7%     29.5%     26.9%
                                         

RECENT BUSINESS DEVELOPMENTS

Company News

· In June 2024, WisdomTree stockholders voted for all proposals, including to overwhelmingly elect all nine of WisdomTree’s nominees to the Board of Directors at its 2024 Annual Meeting of Stockholders.

· Also in June 2024, WisdomTree Europe was named ‘Best ETF Provider’ at the Online Money Awards for the third year in a row.

Product News

· In May 2024, we launched the WisdomTree India Hedged Equity Fund (INDH) on the NASDAQ; we were one of the first issuers to list Crypto ETPs on the London Stock Exchange, including the WisdomTree Physical Bitcoin ETP (BTCW) and the WisdomTree Physical Ethereum ETP (ETHW); and we listed eight 5x short-and-leveraged equity ETPs on the London Stock Exchange, Börse Xetra and Borsa Italiana.

· In June 2024, we launched the WisdomTree Global Sustainable UCITS ETF (WSDG) on the London Stock Exchange and Börse Xetra, in collaboration with Irish Life Investment Managers.

· In July 2024, we introduced Portfolio Solutions, a comprehensive suite of solutions empowering new and deeper advisor relationships through scalable model portfolios; we cross-listed the WisdomTree Global Sustainable UCITS ETF (WSDG) on Borsa Italiana; and we partnered with Trading 212, one of the UK’s most popular commission-free investing apps, to offer six ETF model portfolios for European retail investors.

 

  2  

 

WISDOMTREE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

 

    Three Months Ended   Six Months Ended
    June 30,
2024
    Mar. 31,
2024
    Dec. 31,
2023
    Sept. 30,
2023
    June 30,
2023
    June 30,
2024
    June 30,
2023
 
Operating Revenues:                                                        
Advisory fees   $ 98,938     $ 92,501     $ 86,988     $ 86,598     $ 82,004     $ 191,439     $ 159,641  
Other revenues     8,096       4,337       3,856       3,825       3,720       12,433       8,127  
Total revenues     107,034       96,838       90,844       90,423       85,724       203,872       167,768  
Operating Expenses:                                                        
Compensation and benefits     30,790       31,054       27,860       27,955       26,319       61,844       53,717  
Fund management and administration     20,139       19,962       18,445       18,023       17,727       40,101       34,880  
Marketing and advertising     5,110       4,408       4,951       3,833       4,465       9,518       8,472  
Sales and business development     3,640       3,611       3,881       3,383       3,326       7,251       6,320  
Contractual gold payments                             1,583             6,069  
Professional fees     6,594       3,630       3,201       3,719       8,334       10,224       12,049  
Occupancy, communications and equipment     1,314       1,210       1,208       1,203       1,172       2,524       2,273  
Depreciation and amortization     418       383       335       307       121       801       230  
Third-party distribution fees     2,687       2,307       2,549       2,694       1,881       4,994       4,134  
Other     2,831       2,323       2,379       2,601       2,615       5,154       4,872  
Total operating expenses     73,523       68,888       64,809       63,718       67,543       142,411       133,016  
Operating income     33,511       27,950       26,035       26,705       18,181       61,461       34,752  
Other Income/(Expenses):                                                        
Interest expense     (4,140 )     (4,128 )     (3,758 )     (3,461 )     (4,021 )     (8,268 )     (8,023 )
Gain on revaluation/termination of deferred
consideration—gold payments
                            41,361             61,953  
Interest income     1,438       1,398       1,225       791       1,000       2,836       2,083  
Impairments                 (339 )     (2,703 )                 (4,900 )
Loss on extinguishment of convertible notes                                         (9,721 )
Other losses and gains, net     (1,283 )     2,592       1,602       (2,512 )     1,286       1,309       (721 )
Income before income taxes     29,526       27,812       24,765       18,820       57,807       57,338       75,423  
Income tax expense     7,767       5,701       5,688       5,836       3,555       13,468       4,938  
Net income   $ 21,759     $ 22,111     $ 19,077     $ 12,984     $ 54,252     $ 43,870       70,485  
Earnings per share—basic   $ 0.13(2)   $ 0.14(2)   $ 0.16(2)   $ 0.07(2)   $ 0.32(2)   $ 0.27(2)   $ 0.43(2)
Earnings per share—diluted   $ 0.13     $ 0.13     $ 0.16(2)   $ 0.07     $ 0.32     $ 0.26     $ 0.42(2)
Weighted average common shares—basic     146,896       146,464       145,310       145,284       144,351       146,680       144,108  
Weighted average common shares—diluted     166,359       165,268       171,703       177,140       170,672       165,872       165,468  
                                                         
As Adjusted (Non-GAAP(1))                                                        
Total operating expenses   $ 69,252     $ 68,193     $ 64,809     $ 63,718     $ 62,630                  
Operating income   $ 37,782     $ 28,645     $ 26,035     $ 26,705     $ 23,094                  
Income before income taxes   $ 36,083     $ 26,987     $ 23,908     $ 23,902     $ 19,752                  
Income tax expense   $ 9,008     $ 6,731     $ 5,342     $ 5,854     $ 4,833                  
Net income   $ 27,075     $ 20,256     $ 18,566     $ 18,048     $ 14,919                  
Earnings per share—diluted   $ 0.16     $ 0.12     $ 0.11     $ 0.10     $ 0.09                  
Weighted average common shares—diluted     166,359       165,268       171,703       177,140       170,672                  

 

  3  

QUARTERLY HIGHLIGHTS

Operating Revenues

· Operating revenues increased 10.5% and 24.9% from the first quarter of 2024 and the second quarter of 2023, respectively, due to higher average AUM and higher other revenues attributable to our European listed exchange-traded products (“ETPs”).
· Our average advisory fee was 0.37%, 0.36% and 0.36% during the second quarter of 2024, the first quarter of 2024 and the second quarter of 2023, respectively.

Operating Expenses

· Operating expenses increased 6.7% from the first quarter of 2024 primarily due to higher professional fees arising from expenses incurred in connection with an activist campaign, as well as higher marketing expenses.
· Operating expenses increased 8.9% from the second quarter of 2023 primarily due to higher incentive and stock-based compensation expense and increased headcount, fund management and administration costs, third-party distribution fees and marketing expenses. These increases were partly offset by lower professional fees and the termination of the deferred consideration—gold payments obligation on May 10, 2023.

Other Income/(Expenses)

· Interest expense was essentially unchanged from the first quarter of 2024. Interest expense increased 3.0% from the second quarter of 2023 due to the recognition of imputed interest on our obligation payable to Gold Bullion Holdings (Jersey) Limited (“GBH”), a subsidiary of the World Gold Council, in connection with our repurchase in November 2023 of our Series C Non-Voting Convertible Preferred Stock, partly offset by a lower level of debt outstanding.
· Interest income increased 2.9% and 43.8% from the first quarter of 2024 and second quarter of 2023, respectively, due to a higher level of interest-earning assets.
· Other losses and gains, net was a loss of $1.3 million for the second quarter of 2024. The quarter included net losses of $1.3 million and $0.3 million on our investments and financial instruments owned, respectively. Gains and losses also generally arise from the sale of gold and crypto earned from management fees paid by our physically-backed gold and crypto ETPs, foreign exchange fluctuations and other miscellaneous items.

Income Taxes

· Our effective income tax rate for the second quarter of 2024 was 26.3%, resulting in income tax expense of $7.8 million. The effective tax rate differs from the federal statutory rate of 21.0% primarily due to non-deductible executive compensation, an increase in the deferred tax asset valuation allowance on losses recognized on our investments and state and local income taxes. These items were partly offset by a lower tax rate on foreign earnings.
· Our adjusted effective income tax rate for the second quarter of 2024 was 25.0%(1).

SIX MONTH HIGHLIGHTS

· Operating revenues increased 21.5% as compared to 2023 due to higher average AUM and higher other revenues attributable to our European listed ETPs.
· Operating expenses increased 7.1% as compared to 2023 primarily due to higher incentive and stock-based compensation expense and increased headcount, fund management and administration costs, marketing expenses, sales and business development expenses, third-party distribution fees, as well as higher depreciation and amortization. These increases were partly offset by lower contractual gold payments and professional fees.
· Significant items reported in other income/(expense) in 2024 include: an increase in interest expense of 3.1% due to imputed interest on our obligation payable to GBH, partly offset by a lower level of debt outstanding; an increase in interest income of 36.1% due to an increase in our interest-earning assets; net gains on our financial instruments owned of $1.8 million; and losses on our investments of $1.2 million. Gains and losses also generally arise from the sale of gold earned on management fees paid by our physically-backed gold ETPs, foreign exchange fluctuations and other miscellaneous items.
· Our effective income tax rate for 2024 was 23.5%, resulting in an income tax expense of $13.5 million. Our tax rate differs from the federal statutory rate of 21.0% primarily due to non-deductible executive compensation and state and local income taxes. These items were partly offset by a lower tax rate on foreign earnings and tax windfalls associated with the vesting of stock-based compensation awards.

 

  4  

CONFERENCE CALL DIAL-IN AND WEBCAST DETAILS

WisdomTree will discuss its results and operational highlights during a live webcast on Friday, July 26, 2024 at 11:00 a.m. ET, which can be accessed using the following link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=5z2QQw8B.

Participants also can dial in using the following numbers: (877) 407-9210 or (201) 689-8049. Click here to access the participant international toll-free access numbers. To avoid delays, we encourage participants to log in or dial into the conference call 10 minutes ahead of the scheduled start time. All earnings materials and the webcast can be accessed through WisdomTree’s investor relations website at https://ir.wisdomtree.com. A replay of the webcast will also be available shortly after the call.

About WisdomTree

WisdomTree is a global financial innovator, offering a well-diversified suite of exchange-traded products (ETPs), models, solutions and products leveraging blockchain technology. We empower investors and consumers to shape their future and support financial professionals to better serve their clients and grow their businesses. WisdomTree is leveraging the latest financial infrastructure to create products that provide access, transparency and an enhanced user experience. Building on our heritage of innovation, we are also developing and have launched next-generation digital products, services and structures, including digital or blockchain-enabled mutual funds and tokenized assets, as well as our blockchain-native digital wallet, WisdomTree Prime®.*

* The WisdomTree Prime digital wallet and digital asset services are made available through WisdomTree Digital Movement, Inc., a federally registered money services business, state-licensed money transmitter and financial technology company (NMLS ID: 2372500) or WisdomTree Digital Trust Company, LLC, in select U.S. jurisdictions and may be limited where prohibited by law. WisdomTree Digital Trust Company, LLC is chartered as a limited purpose trust company by the New York State Department of Financial Services to engage in virtual currency business. Visit https://www.wisdomtreeprime.com or the WisdomTree Prime mobile app for more information.

WisdomTree currently has approximately $111.2 billion in assets under management globally.

For more information about WisdomTree and WisdomTree Prime®, visit: https://www.wisdomtree.com.

Please visit us on X, at @WisdomTreeNews.

WisdomTree® is the marketing name for WisdomTree, Inc. and its subsidiaries worldwide.

PRODUCTS AND SERVICES AVAILABLE VIA WISDOMTREE PRIME:

NOT FDIC INSURED | NO BANK GUARANTEE | NOT A BANK DEPOSIT | MAY LOSE VALUE | NOT SIPC PROTECTED | NOT INSURED BY ANY GOVERNMENT AGENCY

The products and services available through the WisdomTree Prime app are not endorsed, indemnified or guaranteed by any regulatory agency.

                                 

(1) See “Non-GAAP Financial Measurements.”
(2) Earnings per share (“EPS”) is calculated pursuant to the two-class method as it results in a lower EPS amount as compared to the treasury stock method. In addition, the three months ended December 31, 2023 includes a gain of $7.966 recognized upon the repurchase of our Series C non-voting preferred shares convertible into approximately 13.1 million shares of common stock from GBH, which is excluded from net income, but required to be added to net income to arrive at income available to common stockholders in the calculation of EPS. This gain is excluded from our EPS when computed on a non-GAAP basis.

 

 

Contact Information:

 

Investor Relations Corporate Communications
Jeremy Campbell Jessica Zaloom
+1.917.267.3859 +1.917.267.3735
jeremy.campbell@wisdomtree.com jzaloom@wisdomtree.com

 

  5  

 

WISDOMTREE, INC. AND SUBSIDIARIES

KEY OPERATING STATISTICS

(Unaudited)

 

       
    Three Months Ended  
   

June 30,

2024

   

Mar. 31,

2024

   

Dec. 31,

2023

   

Sept. 30,

2023

   

June 30,

2023

 
GLOBAL ETPs ($ in millions)                              
                               
Beginning of period assets   $ 107,230     $ 100,124     $ 93,735     $ 93,666     $ 90,740  
Inflows/(outflows)     340       1,990       (255 )     1,983       2,327  
Market appreciation/(depreciation)     2,116       5,116       6,644       (1,914 )     599  
End of period assets   $ 109,686     $ 107,230     $ 100,124     $ 93,735     $ 93,666  
Average assets during the period   $ 108,392     $ 102,360     $ 96,534     $ 95,743     $ 91,578  
Average advisory fee during the period     0.37 %     0.36 %     0.36 %     0.36 %     0.36 %
Revenue days     91       91       92       92       91  
Number of ETFs—end of the period     350       338       337       344       344  
                                         
U.S. LISTED ETFs ($ in millions)                                        
                                         
Beginning of period assets   $ 78,087     $ 72,486     $ 68,018     $ 65,903     $ 61,283  
Inflows/(outflows)     1,106       1,983       (67 )     3,601       3,249  
Market appreciation/(depreciation)     529       3,618       4,535       (1,486 )     1,371  
End of period assets   $ 79,722     $ 78,087     $ 72,486     $ 68,018     $ 65,903  
Average assets during the period   $ 78,436     $ 74,730     $ 69,694     $ 68,008     $ 62,712  
Number of ETFs—end of the period     78       77       76       80       80  
                                         
EUROPEAN LISTED ETPs ($ in millions)                                        
                                         
Beginning of period assets   $ 29,143     $ 27,638     $ 25,717     $ 27,763     $ 29,457  
(Outflows)/inflows     (766 )     7       (188 )     (1,618 )     (922 )
Market appreciation/(depreciation)     1,587       1,498       2,109       (428 )     (772 )
End of period assets   $ 29,964     $ 29,143     $ 27,638     $ 25,717     $ 27,763  
Average assets during the period   $ 29,956     $ 27,630     $ 26,840     $ 27,735     $ 28,866  
Number of ETPs—end of the period     272       261       261       264       264  
                                         
PRODUCT CATEGORIES ($ in millions)                                        
                                         
U.S. Equity                                        
Beginning of period assets   $ 31,670     $ 29,156     $ 25,643     $ 26,001     $ 24,534  
Inflows     221       536       487       864       414  
Market (depreciation)/appreciation     (57 )     1,978       3,026       (1,222 )     1,053  
End of period assets   $ 31,834     $ 31,670     $ 29,156     $ 25,643     $ 26,001  
Average assets during the period   $ 31,252     $ 30,056     $ 26,822     $ 26,501     $ 24,732  
                                         
Commodity & Currency                                        
Beginning of period assets   $ 21,944     $ 21,336     $ 20,466     $ 22,384     $ 24,924  
Outflows     (1,499 )     (460 )     (449 )     (1,814 )     (1,513 )
Market appreciation/(depreciation)     1,542       1,068       1,319       (104 )     (1,027 )
End of period assets   $ 21,987     $ 21,944     $ 21,336     $ 20,466     $ 22,384  
Average assets during the period   $ 22,437     $ 20,837     $ 21,254     $ 22,278     $ 24,033  
                                         
Fixed Income                                        
Beginning of period assets   $ 21,218     $ 21,197     $ 21,797     $ 20,215     $ 18,708  
Inflows/(outflows)     236       (14 )     (715 )     1,670       1,471  
Market (depreciation)/appreciation     (24 )     35       115       (88 )     36  
End of period assets   $ 21,430     $ 21,218     $ 21,197     $ 21,797     $ 20,215  
Average assets during the period   $ 21,277     $ 21,082     $ 21,889     $ 20,965     $ 19,185  

 

  6  

 

    Three Months Ended  
   

June 30,

2024

   

Mar. 31,

2024

   

Dec. 31,

2023

   

Sept. 30,

2023

   

June 30,

2023

 
International Developed Market Equity                                        
Beginning of period assets   $ 18,103     $ 15,103     $ 13,902     $ 13,423     $ 11,433  
Inflows     1,253       1,599       9       798       1,593  
Market appreciation/(depreciation)     29       1,401       1,192       (319 )     397  
End of period assets   $ 19,385     $ 18,103     $ 15,103     $ 13,902     $ 13,423  
Average assets during the period   $ 18,809     $ 16,688     $ 14,266     $ 13,873     $ 12,276  
                                         
Emerging Market Equity                                        
Beginning of period assets   $ 11,189     $ 10,726     $ 9,569     $ 9,191     $ 8,811  
Inflows     57       217       412       451       329  
Market appreciation/(depreciation)     629       246       745       (73 )     51  
End of period assets   $ 11,875     $ 11,189     $ 10,726     $ 9,569     $ 9,191  
Average assets during the period   $ 11,448     $ 10,900     $ 9,833     $ 9,652     $ 8,998  
                                         
Leveraged & Inverse                                        
Beginning of period assets   $ 1,828     $ 1,815     $ 1,781     $ 1,864     $ 1,785  
(Outflows)/inflows     (18 )     (50 )     (59 )     (1 )     12  
Market appreciation/(depreciation)     112       63       93       (82 )     67  
End of period assets   $ 1,922     $ 1,828     $ 1,815     $ 1,781     $ 1,864  
Average assets during the period   $ 1,905     $ 1,792     $ 1,803     $ 1,894     $ 1,798  
                                         
Cryptocurrency                                        
Beginning of period assets   $ 874     $ 414     $ 243     $ 248     $ 239  
Inflows     75       158       28       10       (1 )
Market (depreciation)/appreciation     (111 )     302       143       (15 )     10  
End of period assets   $ 838     $ 874     $ 414     $ 243     $ 248  
Average assets during the period   $ 856     $ 614     $ 325     $ 238     $ 236  
                                         
Alternatives                                        
Beginning of period assets   $ 404     $ 377     $ 334     $ 340     $ 306  
Inflows     15       4       32       5       22  
Market (depreciation)/appreciation     (4 )     23       11       (11 )     12  
End of period assets   $ 415     $ 404     $ 377     $ 334     $ 340  
Average assets during the period   $ 408     $ 391     $ 342     $ 342     $ 320  
                                         
Headcount     304       300       303       299       291  

 

Note: Previously issued statistics may be restated due to fund closures and trade adjustments

Source: WisdomTree

 

  7  

 

WISDOMTREE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

   

June 30,
2024

 

Dec. 31,
2023

    (Unaudited)        
ASSETS                
Current assets:                
Cash, cash equivalents and restricted cash   $ 132,459     $ 129,305  
Financial instruments owned, at fair value     69,783       58,722  
Accounts receivable     42,664       35,473  
Prepaid expenses     8,595       5,258  
Other current assets     1,199       1,036  
Total current assets     254,700       229,794  
Fixed assets, net     413       427  
Securities held-to-maturity     218       230  
Deferred tax assets, net     6,786       11,057  
Investments     8,288       9,684  
Right of use assets—operating leases     847       563  
Goodwill     86,841       86,841  
Intangible assets, net     605,580       605,082  
Other noncurrent assets     457       459  
Total assets   $ 964,130     $ 944,137  
LIABILITIES AND STOCKHOLDERS’ EQUITY                
LIABILITIES                
Current liabilities:                
Fund management and administration payable   $ 26,551     $ 30,085  
Compensation and benefits payable     20,315       38,111  
Payable to Gold Bullion Holdings (Jersey) Limited (“GBH”)     14,804       14,804  
Income taxes payable     1,830       3,866  
Operating lease liabilities     847       578  
Accounts payable and other liabilities     20,341       15,772  
Total current liabilities     84,688       103,216  
Convertible notes—long term     275,638       274,888  
Payable to GBH     25,671       24,328  
Total liabilities     385,997       402,432  
Preferred stock:                
Series A Non-Voting Convertible, par value $0.01; 14.750 shares authorized, issued and outstanding     132,569       132,569  
STOCKHOLDERS’ EQUITY                
Common stock, par value $0.01; 400,000 shares authorized:                
Issued and outstanding: 151,857 and 150,330 at June 30, 2024 and December 31, 2023, respectively     1,519       1,503  
Additional paid-in capital     315,359       312,440  
Accumulated other comprehensive loss     (931 )     (548 )
Retained earnings     129,617       95,741  
Total stockholders’ equity     445,564       409,136  
Total liabilities and stockholders’ equity   $ 964,130     $ 944,137  

 

  8  

 

WISDOMTREE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

    Six Months Ended
June 30,
    2024     2023
Cash flows from operating activities:                
Net income   $ 43,870     $ 70,485  
Adjustments to reconcile net income to net cash provided by operating activities:                
Advisory and license fees paid in gold, other precious metals and cryptocurrency     (25,365 )     (25,692 )
Stock-based compensation     10,755       8,506  
Deferred income taxes     4,326       2,964  
Gains on financial instruments owned, at fair value     (1,772 )     (947 )
Imputed interest on payable to GBH     1,342        
Losses on investments     1,195       819  
Depreciation and amortization     801       230  
Amortization of issuance costs—convertible notes     750       1,069  
Amortization of right of use asset     647       640  
Gain on revaluation/termination of deferred consideration—gold payments           (61,953 )
Loss on extinguishment of convertible notes           9,721  
Impairments           4,900  
Contractual gold payments           6,069  
Other           (946 )
Changes in operating assets and liabilities:                
Accounts receivable     (7,132 )     (5,254 )
Prepaid expenses     (3,353 )     (3,425 )
Gold and other precious metals     24,972       18,441  
Other assets     (118 )     347  
Fund management and administration payable     (3,430 )     6,419  
Compensation and benefits payable     (17,657 )     (18,941 )
Income taxes payable     (2,028 )     (2,523 )
Operating lease liabilities     (662 )     (652 )
Accounts payable and other liabilities     4,031       9,752  
Net cash provided by operating activities     31,172       20,029  
Cash flows from investing activities:                
Purchase of financial instruments owned, at fair value     (14,193 )     (40,532 )
Purchase of investments           (10,000 )
Cash paid—software development     (1,184 )      
Purchase of fixed assets     (102 )     (58 )
Proceeds from the sale of financial instruments owned, at fair value     5,303       102,020  
Proceeds from the exit from investment in Securrency, Inc.     465        
Proceeds from held-to-maturity securities maturing or called prior to maturity     12       14  
Receipt of contingent consideration—Sale of Canadian ETF business           1,477  
Acquisition of Securrency Transfers, Inc. (net of cash acquired)           (985 )
Net cash (used in)/provided by investing activities     (9,699 )     51,936  
Cash flows from financing activities:                
Dividends paid     (9,873 )     (9,647 )
Shares repurchased     (7,820 )     (3,540 )
Repurchase and maturity of convertible notes           (184,272 )
Proceeds from the issuance of convertible notes           130,000  
Termination of deferred consideration—gold payments           (50,005 )
Issuance costs—convertible notes           (3,548 )
Issuance costs—Series C Non-Voting Convertible Preferred Stock           (97 )
Net cash used in financing activities     (17,693 )     (121,109 )
(Decrease)/increase in cash flow due to changes in foreign exchange rate     (626 )     778  
Net increase/(decrease) in cash, cash equivalents and restricted cash     3,154       (48,366 )
Cash, cash equivalents and restricted cash—beginning of year     129,305       132,101  
Cash, cash equivalents and restricted cash—end of period   $ 132,459     $ 83,735  
Supplemental disclosure of cash flow information:                
Cash paid for income taxes   $ 11,138     $ 5,900  
Cash paid for interest   $ 6,175     $ 4,514  

 

  9  

NON-GAAP FINANCIAL MEASUREMENTS

In an effort to provide additional information regarding our results as determined by GAAP, we also disclose certain non-GAAP information which we believe provides useful and meaningful information. Our management reviews these non-GAAP financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-GAAP measurements so as to share this perspective of management. Non-GAAP measurements do not have any standardized meaning, do not replace nor are superior to GAAP financial measurements and are unlikely to be comparable to similar measures presented by other companies. These non-GAAP financial measurements should be considered in the context with our GAAP results. The non-GAAP financial measurements contained in this press release include:

Adjusted Operating Income, Operating Expenses, Income Before Income Taxes, Income Tax Expense, Net Income and Diluted Earnings per Share

We disclose adjusted operating income, operating expenses, income before income taxes, income tax expense, net income and diluted earnings per share as non-GAAP financial measurements in order to report our results exclusive of items that are non-recurring or not core to our operating business. We believe presenting these non-GAAP financial measurements provides investors with a consistent way to analyze our performance. These non-GAAP financial measurements exclude the following:

Gains or losses on financial instruments owned: We account for our financial instruments owned as trading securities, which requires these instruments to be measured at fair value with gains and losses reported in net income. We exclude these items when calculating our non-GAAP financial measurements as the gains and losses introduce volatility in earnings and are not core to our operating business.

Tax windfalls and shortfalls upon vesting of stock-based compensation awards: GAAP requires the recognition of tax windfalls and shortfalls within income tax expense. These items arise upon the vesting of stock-based compensation awards and the magnitude is directly correlated to the number of awards vesting/exercised as well as the difference between the price of our stock on the date the award was granted and the date the award vested or was exercised. We exclude these items when calculating our non-GAAP financial measurements as they introduce volatility in earnings and are not core to our operating business.

Imputed interest on our payable to the Gold Bullion Holdings (Jersey) Limited (“GBH”): During the fourth quarter of 2023, we repurchased our Series C Non-Voting Convertible Preferred Stock, which was convertible into approximately 13.1 million shares of WisdomTree common stock, from GBH, a subsidiary of the World Gold Council, for aggregate cash consideration of approximately $84.4 million. Under the terms of the transaction, we paid GBH $40.0 million on the closing date, with the remainder of the purchase price payable in equal annual installments on the first, second and third anniversaries of the closing date, with no requirement to pay interest. Under US GAAP, the obligation is recorded at its present value utilizing a market rate of interest on the closing date of 7.0% and the corresponding discount is amortized as interest expense pursuant to the effective interest method of accounting over the life of the obligation. We exclude this item when calculating our non-GAAP financial measurements as recognition of interest expense is non-cash and contrary to the stated terms of our obligation.

Other items: Gains and losses recognized on our investments, changes in deferred tax asset valuation allowance, expenses incurred in response to an activist campaign, unrealized gains or losses on the revaluation/termination of deferred consideration—gold payments which we terminated in the second quarter of 2023, loss on extinguishment of convertible notes, impairments and litigation expenses associated with certain provisions of our Stockholder Rights Agreement dated as of March 17, 2023, as amended, with Continental Stock Transfer & Trust Company, as Rights Agent, are excluded when calculating our non-GAAP financial measurements.

Adjusted Effective Income Tax Rate

We disclose our adjusted effective income tax rate as a non-GAAP financial measurement in order to report our effective income tax rate exclusive of items that are non-recurring or not core to our operating business. We believe reporting our adjusted effective income tax rate provides investors with a consistent way to analyze our income taxes. Our adjusted effective income tax rate is calculated by dividing adjusted income tax expense by adjusted income before income taxes. See above for information regarding the items that are excluded.

Gross Margin and Gross Margin Percentage

We disclose our gross margin and gross margin percentage as non-GAAP financial measurements because we believe they provide investors with a consistent way to analyze the amount we retain after paying third-party service providers to operate our ETPs. These measures also assist us in analyzing the profitability of our products. We define gross margin as total operating revenues less fund management and administration expenses. Gross margin percentage is calculated as gross margin divided by total operating revenues.

 

  10  

 

GAAP to NON-GAAP RECONCILIATION (CONSOLIDATED)

(in thousands)

(Unaudited)

 

    Three Months Ended  

 

Adjusted Net Income and Diluted Earnings per Share:

 

June 30,

2024

   

Mar. 31,

2024

   

Dec. 31,

2023

   

Sept. 30,

2023

   

June 30,

2023

 
                               
Net income, as reported   $ 21,759     $ 22,111     $ 19,077     $ 12,984     $ 54,252  
Add back: Expenses incurred in response to an activist
campaign, net of income taxes
    3,234       526                   3,720  
Add back/(deduct): Losses/(gains) recognized on investments,
net of income taxes
    998       (93 )     (336 )     323       (2,346 )
Add back: Imputed interest on payable to GBH, net of income
taxes
    513       504       224              
Add back/(deduct): Increase/(decrease) in deferred tax asset
valuation allowance on financial instruments owned and
investments
    391       (531 )     (280 )     1,234       (508 )
Add back/(deduct): Losses/(gains) on financial instruments
owned, net of income taxes
    220       (1,562 )     (370 )     1,479       762  
(Deduct)/add back: Tax (windfalls)/shortfalls upon vesting of
stock-based compensation awards
    (40 )     (699 )     (6 )     (18 )     33  
Add back: Litigation expenses associated with certain
provisions of the Stockholder Rights Agreement, net of
income taxes
                            367  
Add back: Impairments, net of income taxes                 257       2,046        
Deduct: Gain on revaluation/termination of deferred
consideration—gold payments
                            (41,361 )
Adjusted net income   $ 27,075     $ 20,256     $ 18,566     $ 18,048     $ 14,919  
Weighted average common shares—diluted     166,359       165,268       171,703       177,140       170,672  
Adjusted earnings per share—diluted   $ 0.16     $ 0.12     $ 0.11     $ 0.10     $ 0.09  

 

    Three Months Ended  

 

Gross Margin and Gross Margin Percentage:

 

June 30,

2024

   

Mar. 31,

2024

   

Dec. 31,

2023

   

Sept. 30,

2023

   

June 30,

2023

 
                               
Operating revenues   $ 107,034     $ 96,838     $ 90,844     $ 90,423     $ 85,724  
Less: Fund management and administration     (20,139 )     (19,962 )     (18,445 )     (18,023 )     (17,727 )
Gross margin   $ 86,895     $ 76,876     $ 72,399     $ 72,400     $ 67,997  
Gross margin percentage     81.2%     79.4%     79.7%     80.1%     79.3%

 

    Three Months Ended  

Adjusted Operating Income and Adjusted Operating

Income Margin:

 

June 30,

2024

   

Mar. 31,

2024

   

Dec. 31,

2023

   

Sept. 30,

2023

   

June 30,

2023

 
                               
Operating revenues   $ 107,034     $ 96,838     $ 90,844     $ 90,423     $ 85,724  
Operating income   $ 33,511     $ 27,950     $ 26,035     $ 26,705     $ 18,181  
Add back: Expenses incurred in response to an activist
campaign
    4,271       695                   4,913  
Adjusted operating income   $ 37,782     $ 28,645     $ 26,035     $ 26,705     $ 23,094  
Adjusted operating income margin     35.3%     29.6%     28.7%     29.5%     26.9%

 

 

  11  

 

    Three Months Ended  

 

Adjusted Total Operating Expenses:

 

June 30,

2024

   

Mar. 31,

2024

   

Dec. 31,

2023

   

Sept. 30,

2023

   

June 30,

2023

 
                               
Total operating expenses   $ 73,523     $ 68,888     $ 64,809     $ 63,718     $ 67,543  
Deduct: Expenses incurred in response to an activist campaign     (4,271 )     (695 )                 (4,913 )
Adjusted total operating expenses   $ 69,252     $ 68,193     $ 64,809     $ 63,718     $ 62,630  

 

    Three Months Ended  

 

Adjusted Income Before Income Taxes:

 

June 30,

2024

   

Mar. 31,

2024

   

Dec. 31,

2023

   

Sept. 30,

2023

   

June 30,

2023

 
                               
Income before income taxes   $ 29,526     $ 27,812     $ 24,765     $ 18,820     $ 57,807  
Add back: Expenses incurred in response to an activist
campaign
    4,271       695                   4,913  
Add back/(deduct): Losses/(gains) recognized on investments     1,318       (123 )     (1,003 )     426       (3,099 )
Add back: Imputed interest on payable to GBH     677       666       296              
Add back/(deduct): Losses/(gains) on financial instruments
owned
    291       (2,063 )     (489 )     1,953       1,007  
Add back: Litigation expenses associated with certain
provisions of the Stockholder Rights Agreement
                            485  
Add back: Impairments                 339       2,703        
Deduct: Gain on revaluation/termination of deferred
consideration—gold payments
                            (41,361 )
Add back: Loss on extinguishment of convertible notes                              
Adjusted income before income taxes   $ 36,083     $ 26,987     $ 23,908     $ 23,902     $ 19,752  

 

    Three Months Ended  
Adjusted Income Tax Expense and Adjusted Effective Income
Tax Rate:
 

June 30,

2024

   

Mar. 31,

2024

   

Dec. 31,

2023

   

Sept. 30,

2023

   

June 30,

2023

 
                               
Adjusted income before income taxes (above)   $ 36,083     $ 26,987     $ 23,908     $ 23,902     $ 19,752  
Income tax expense   $ 7,767     $ 5,701     $ 5,688     $ 5,836     $ 3,555  
Add back: Tax benefit arising from expenses incurred in
response to an activist campaign
    1,037       169                   1,193  
(Deduct)/add back: (Increase)/decrease in deferred tax asset
valuation allowance on financial instruments owned and
investments
    (391 )     531       280       (1,234 )     508  
Add back/(deduct): Tax benefit/(expense) on gains and losses on
investments
    320       (30 )     (667 )     103       (753 )
Add back: Tax benefit on imputed interest     164       162       72              
Add back/(deduct): Tax benefit/(expense) arising from
(gains)/losses on financial instruments owned
    71       (501 )     (119 )     474       245  
Add back/(deduct): Tax windfalls/(shortfalls) upon vesting of
stock-based compensation awards
    40       699       6       18       (33 )
Add back: Tax benefit arising from litigation expenses
associated with certain provisions of the Stockholder Rights
Agreement
                            118  
Add back: Tax benefit arising from impairments                 82       657        
Adjusted income tax expense   $ 9,008     $ 6,731     $ 5,342     $ 5,854     $ 4,833  
Adjusted effective income tax rate     25.0%     24.9%     22.3%     24.5%     24.5%

 

  12  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, the risks described below. If one or more of these or other risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this press release completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.

In particular, forward-looking statements in this press release may include statements about:

· anticipated trends, conditions and investor sentiment in the global markets and ETPs;
· anticipated levels of inflows into and outflows out of our ETPs;
· our ability to deliver favorable rates of return to investors;
· competition in our business;
· whether we will experience future growth;
· our ability to develop new products and services and their potential for success;
· our ability to maintain current vendors or find new vendors to provide services to us at favorable costs;
· our ability to successfully implement our strategy relating to digital assets and blockchain-enabled financial services, including WisdomTree Prime®, and achieve its objectives;
· our ability to successfully operate and expand our business in non-U.S. markets;
· the effect of laws and regulations that apply to our business; and
· actions of activist stockholders.

Our business is subject to many risks and uncertainties, including without limitation:

· declining prices of securities, gold and other precious metals and other commodities and changes in interest rates and general market conditions can adversely affect our business by reducing the market value of the assets we manage or causing WisdomTree ETP investors to sell their fund shares and trigger redemptions;
· fluctuations in the amount and mix of our AUM, whether caused by disruptions in the financial markets or otherwise, including but not limited to events such as a pandemic or war, geopolitical conflicts, political events, acts of terrorism and other matters beyond our control, may negatively impact revenues and operating margins, and may impede our ability to refinance our debt upon maturity or increase the cost of borrowing upon a refinancing;
· competitive pressures could reduce revenues and profit margins;
· we derive a substantial portion of our revenues from a limited number of products, and, as a result, our operating results are particularly exposed to investor sentiment toward investing in the products’ strategies and our ability to maintain the AUM of these products, as well as the performance of these products and market-specific and political and economic risk;
· a significant portion of our AUM is held in products with exposure to U.S. and international developed markets, and we therefore have exposure to domestic and foreign market conditions and are subject to currency exchange rate risks;
· withdrawals or broad changes in investments in our ETPs by investors with significant positions may negatively impact revenues and operating margins;
· we face increased operational, regulatory, financial and other risks as a result of conducting our business internationally, and as we expand our digital assets product offerings and services beyond our existing ETP business;
· many of our ETPs have a limited track record, and poor investment performance could cause our revenues to decline;
· we depend on third parties to provide many critical services to operate our business and our ETPs. The failure of key vendors to adequately provide such services could materially affect our operating business and harm WisdomTree ETP investors; and
· actions of activist stockholders against us, which have been costly and may be disruptive and cause uncertainty about the strategic direction of our business.

Other factors, such as general economic conditions, including currency exchange rate fluctuations, also may have an effect on the results of our operations. For a more complete description of the risks noted above and other risks that could cause our actual results to differ from our current expectations, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and our quarterly report on Form 10-Q for the quarter ended March 31, 2024.

The forward-looking statements in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. Therefore, these forward-looking statements do not represent our views as of any date other than the date of this press release.

 

Category: Business Update

 

 

13