$0.2 million net income, or $5.2 million as
adjusted
WisdomTree Investments, Inc. (NASDAQ:WETF), an exchange-traded fund
(“ETF”) and exchange-traded product (“ETP”) sponsor and asset
manager today reported net income of $0.2 million or $0.00
diluted EPS in the fourth quarter. Excluding certain
transaction costs and a charge to remeasure deferred tax assets,
adjusted net income (a non-GAAP measure1) was $5.2 million1 or
$0.04 diluted EPS1. This compares to net income of
$2.5 million or $0.02 diluted EPS in the fourth quarter of
last year (as adjusted, $4.2 million1 or $0.03 diluted EPS1) and
net income of $8.0 million or $0.06 diluted EPS in the third
quarter of 2017.
WisdomTree CEO and President Jonathan Steinberg said, “2017 was
a transformative year for WisdomTree with the announcement of a
strategic acquisition, considerable improvement in net flow breadth
and the rollout of technology-enabled solutions to help financial
intermediaries thrive in an evolving industry landscape.
These successes are a direct result of the investments we’ve made
in our people, products, geographies and technology capabilities.
Coming off a record 2017 for the ETF industry, the best is still
ahead and WisdomTree is one of the few global ETP sponsors with a
broad suite of differentiated products and technology solutions to
fully capitalize on the tremendous global opportunity.”
Summary Operating and Financial Highlights
|
|
Three Months Ended |
|
Change From |
|
|
|
Dec. 31, 2017 |
|
|
|
Sept. 30, 2017 |
|
|
|
Dec. 31, 2016 |
|
|
|
Sept. 30, 2017 |
|
|
Dec. 31, 2016 |
Operating
Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. listed ETFs ($, in billions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUM |
|
$ |
46.8 |
|
|
$ |
44.4 |
|
|
$ |
40.2 |
|
|
|
5.5 |
% |
|
|
16.6 |
% |
Net
inflows/(outflows) |
|
$ |
0.3 |
|
|
$ |
(0.6) |
|
|
$ |
0.1 |
|
|
|
n/a |
|
|
|
131.8 |
% |
Average
AUM |
|
$ |
46.0 |
|
|
$ |
43.5 |
|
|
$ |
38.3 |
|
|
|
5.8 |
% |
|
|
20.3 |
% |
Average
advisory fee |
|
|
0.50 |
% |
|
|
0.50 |
% |
|
|
0.50 |
% |
|
|
— |
|
|
|
— |
|
Market
share of industry inflows |
|
|
0.2 |
% |
|
|
n/a |
|
|
|
0.1 |
% |
|
|
n/a |
|
|
|
0.01 |
|
European listed ETPs ($, in millions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUM |
|
$ |
1,804.2 |
|
|
$ |
1,765.5 |
|
|
$ |
1,024.3 |
|
|
|
2.2 |
% |
|
|
76.1 |
% |
Net
inflows/(outflows) |
|
$ |
(65.7 |
) |
|
$ |
229.3 |
|
|
$ |
(25.8 |
) |
|
|
n/a |
|
|
|
155.1 |
% |
Average
AUM |
|
$ |
1,764.6 |
|
|
$ |
1,563.4 |
|
|
$ |
1,015.4 |
|
|
|
12.9 |
% |
|
|
73.8 |
% |
Average
advisory fee |
|
|
0.61 |
% |
|
|
0.62 |
% |
|
|
0.66 |
% |
|
|
(0.01 |
) |
|
|
(0.05 |
) |
Canadian listed ETFs ($, in millions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUM |
|
$ |
305.5 |
|
|
$ |
205.5 |
|
|
$ |
68.6 |
|
|
|
48.7 |
% |
|
|
345.2 |
% |
Assets
acquired |
|
$ |
77.42 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
n/a |
|
|
|
n/a |
|
Net
inflows/(outflows) |
|
$ |
15.0 |
|
|
$ |
96.7 |
|
|
$ |
— |
|
|
|
(84.5 |
%) |
|
|
n/a |
|
Average
AUM |
|
$ |
270.9 |
|
|
$ |
129.3 |
|
|
$ |
67.2 |
|
|
|
109.5 |
% |
|
|
303.3 |
% |
Average
advisory fee |
|
|
0.30%3 |
|
|
|
0.28%3 |
|
|
|
0.46 |
% |
|
|
0.02 |
|
|
|
(0.16 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Highlights ($, in millions, except per share
amounts): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory
fees |
|
$ |
60.8 |
|
|
$ |
57.6 |
|
|
$ |
50.4 |
|
|
|
5.6 |
% |
|
|
20.8 |
% |
Net
income |
|
$ |
0.2 |
|
|
$ |
8.0 |
|
|
$ |
2.5 |
|
|
|
(97.0 |
%) |
|
|
(90.4 |
%) |
Diluted
earnings per share |
|
$ |
0.00 |
|
|
$ |
0.06 |
|
|
$ |
0.02 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.02 |
) |
Pre-tax
margin |
|
|
9.2 |
% |
|
|
26.7 |
% |
|
|
16.8 |
% |
|
|
(17.5 |
) |
|
|
(7.6 |
) |
Non-GAAP1: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income, as adjusted |
|
$ |
5.2 |
|
|
|
n/a |
|
|
$ |
4.2 |
|
|
|
n/a |
|
|
|
24.9 |
% |
Diluted
earnings per share, as adjusted |
|
$ |
0.04 |
|
|
|
n/a |
|
|
$ |
0.03 |
|
|
|
n/a |
|
|
$ |
0.01 |
|
Pre-tax
margin, as adjusted |
|
|
17.1 |
% |
|
|
n/a |
|
|
|
20.1 |
% |
|
|
n/a |
|
|
|
(3.0 |
) |
U.S. Business segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin1 |
|
|
82.1 |
% |
|
|
82.0 |
% |
|
|
81.0 |
% |
|
|
0.1 |
|
|
|
1.1 |
|
Pre-tax
margin |
|
|
15.2 |
% |
|
|
33.4 |
% |
|
|
27.4 |
% |
|
|
(18.2 |
) |
|
|
(12.2 |
) |
Pre-tax
margin, as adjusted1 |
|
|
23.5 |
% |
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recent Business Developments
Company News
- In November 2017, the Company announced that it entered into an
agreement to acquire ETF Securities’ European exchange-traded
commodity, currency and short-and-leveraged business (“ETFS”), with
approximately $18 billion in assets under management.
- In December 2017, the Company announced the cross-listing of
eight U.S. ETFs in Mexico on the Bolsa Mexicana de Valores; the
Company announced key leadership appointments and organizational
changes; and the Company announced that it was recognized by both
Pensions & Investments and Crain’s New York as a “Best Places
to Work” for the third consecutive year.
- In January 2018, the Company announced it finalized terms for
an option to acquire AdvisorEngine Inc. and facilitated the
acquisition of CRM-software provider Junxure, further solidifying
its commitment to technology-enabled solutions to help advisors
grow; the Company announced that its ETF Model Portfolios are
available on the TD Ameritrade Institutional Model Market Center;
and the Company announced that two additional WisdomTree ETFs filed
notification with the Financial Services Agency of Japan.
U.S. Listed Product News
- In December 2017, the Company announced final capital gains
distributions; the Company announced the company’s first
actively-managed equity ETF – the WisdomTree U.S. Quality
Shareholder Yield Fund (QSY), formerly the WisdomTree U.S. LargeCap
Value Fund (EZY); and the Company announced the launch of the
WisdomTree ICBCCS S&P 500 Fund (WCHN) and WisdomTree Balanced
Income Fund (WBAL).
- In January 2018, the Company announced the addition of the
WisdomTree Emerging Markets ex-State-Owned Enterprises Fund (XSOE)
on Schwab ETF OneSourceTM; and the Company announced the launch of
the WisdomTree CBOE Russell 2000 PutWrite Strategy Fund
(RPUT).
European Listed Product News
- In November 2017, the Company announced it was named “Passive
Management Group of the Year” by Investment Week’s Annual
Specialist Investment Awards. WisdomTree also received a “Highly
Commended” award for the WisdomTree Eurozone Quality Dividend
Growth UCITS ETF - EUR Acc (ticker: EGRA) in the factor-based and
smart beta fund category.
- In December 2017, the Company announced the launch of three
Boost ETPs, offering investors inverse exposure to UK Gilts, German
Bunds and US Treasuries. The products include the Boost Gilts 10Y
1x Short Daily ETP (listing on the London Stock Exchange), as well
as the Boost Bund 30Y 3x Short Daily ETP (listing on the Borsa
Italiana and Deutsche Börse Xetra) and the Boost US Treasuries 30Y
3x Short Daily ETP (listing on the London Stock Exchange and the
Borsa Italiana), both of which are market firsts in Europe.
- In January 2018, five of the Company's UCITS ETFs celebrated
their third anniversary since listing on the Borsa Italiana,
including the WisdomTree Europe Equity Income UCITS ETF, the
WisdomTree Europe SmallCap Dividend UCITS ETF, the WisdomTree US
Equity Income UCITS ETF, the WisdomTree Emerging Markets Equity
Income UCITS ETF, and the WisdomTree Emerging Markets SmallCap
Dividend UCITS ETF; and the Company announced a collaboration with
Directa SIM, one of Italy’s leading financial brokerage companies,
to offer WisdomTree’s Global Dividend Equity Model Portfolio on
Directa’s new platform, Dpro.
Canadian Listed Product News
- In December 2017, the Company announced its 2018 Canadian ETF
Industry Outlook, and the Company announced final cash
distributions and 2017 annual capital gains distributions.
- In January 2018, the Company announced final 2017 reinvested
distributions.
Assets Under Management and Net Inflows
U.S. listed ETF assets under management (“AUM”) was
$46.8 billion at December 31, 2017, up 5.5% from
September 30, 2017 due to market appreciation and to a lesser
extent, net inflows. European listed ETPs’ AUM was
$1.8 billion at December 31, 2017, up 2.2% from September 30,
2017 due to market appreciation, partly offset by net outflows.
Canadian listed ETF’s AUM was $305.5 million at December 31,
2017, up 48.7% from September 30, 2017 due to assets acquired, net
inflows and market appreciation.
Performance
In evaluating the performance of our U.S. listed equity, fixed
income and alternative strategy ETFs against actively managed and
index based mutual funds and ETFs, 91.6% of the $46.0 billion
invested in our ETFs and 68.7% (46 of 67) of our ETFs covered by
Morningstar outperformed their comparable Morningstar average since
inception as of December 31, 2017.
For more information about WisdomTree ETFs including
standardized performance, please click here or visit
www.wisdomtree.com.
Fourth Quarter Financial Discussion
Unusual items in the quarter
We incurred transaction costs of $4.8 million in connection with
our agreement to acquire ETFS and securing an option to purchase
the remaining equity interests in AdvisorEngine. In addition,
we recorded an after-tax charge of $0.4 million to remeasure our
deferred tax assets (“DTAs”) as a result of the passage of tax
reform rules.
Revenues
Advisory fees of $60.8 million increased 20.8% from the
fourth quarter of 2016 primarily due to an increase in our average
global AUM. Our average global AUM increased primarily due to
market appreciation of our U.S. listed ETFs and net inflows into
certain of our U.S. listed ETFs (including within our international
equity, emerging markets, U.S. equity, fixed income and alternative
strategy ETFs), European listed ETPs and Canadian listed ETFs.
These increases were partly offset by outflows primarily in our two
largest U.S. listed ETFs. Advisory fees increased 5.6% from
the third quarter of 2017 on higher average global AUM primarily
due to market appreciation and to a lesser extent, net inflows. Our
average U.S. advisory fees were unchanged from the fourth quarter
of 2016 and third quarter of 2017.
Other income increased 29.9% from the fourth quarter of 2016 and
36.2% from the third quarter of 2017 to $0.6 million primarily due
to higher interest earned on our investments.
Margins
Gross margin for our U.S. Business segment, which is U.S.
advisory fee revenue less U.S. fund management and administration
expenses and U.S. third-party sharing arrangements, was 82.1%1 in
the fourth quarter of 2017 as compared to 81.0%1 in the fourth
quarter of 2016 and 82.0%1 in the third quarter of 2017. The
increase from the fourth quarter of 2016 was primarily due to
higher revenues. This measure was essentially unchanged from
the third quarter of 2017.
Pre-tax margin was 9.2% in the fourth quarter of 2017 (as
adjusted 17.1%1) as compared to 16.8% in the fourth quarter of 2016
(as adjusted 20.1%1) and 26.7% in the third quarter of 2017.
Pre-tax margin for our U.S. Business segment was 15.2% in the
fourth quarter of 2017 (as adjusted 23.5%1) as compared to 27.4% in
the fourth quarter of 2016 and 33.4% in the third quarter of
2017.
Expenses
Total expenses were $55.7 million for the fourth quarter of
2017, up 31.8% and 31.2% from the fourth quarter of 2016 and the
third quarter of 2017, respectively. These increases were
primarily attributable to the $4.8 million of transaction costs
(included within professional fees) and higher
compensation.
- Compensation and benefits expense increased 40.0% from the
fourth quarter of 2016 and 31.9% from the third quarter of 2017 to
$25.7 million primarily due to higher accrued incentive
compensation and stock-based compensation. In the fourth
quarter, we shifted a greater portion of our employees’ incentive
compensation to cash from stock thereby limiting future stock-based
compensation expense. In addition, we increased our incentive
compensation pool in the quarter to recognize the achievement of
certain milestones involving several important strategic
initiatives as well as the addition of a key executive.
Lastly, we accelerated the vesting of certain stock-based
compensation awards to December 2017 which were originally
scheduled to vest in January 2018. This allowed us to benefit
from a tax deduction at the higher tax rate in 2017, rather than
the recently enacted reduced tax rate which became effective
January 1, 2018. Headcount of our U.S. Business segment was
162, 165 and 163 and our International Business segment was 42, 43
and 46 at December 31, 2017, September 30, 2017 and December
31, 2016, respectively.
- Fund management and administration expense increased 15.2% from
the fourth quarter of 2016 and 6.5% from the third quarter of 2017
to $11.6 million primarily attributable to higher average
global AUM. We had 89 U.S. listed ETFs, 87 European ETPs and
12 Canadian ETFs at the end of the quarter.
- Marketing and advertising expense was essentially unchanged
from the fourth quarter of 2016. This expense increased 12.4%
from the third quarter of 2017 to $3.7 million primarily due
to higher levels of advertising related activities within our U.S.
Business segment.
- Sales and business development expense increased 20.8% from the
fourth quarter of 2016 to $3.8 million primarily due to higher
spending on sales related activities globally. This expense
increased 6.2% from the third quarter of 2017 primarily due to
higher spending within our U.S. Business segment.
- Professional and consulting fees increased 330.5% from the
fourth quarter of 2016 and 506.0% from the third quarter of 2017 to
$6.3 million primarily due to $4.8 million of transaction costs
described above.
- Third-party sharing arrangements expense increased 83.5% from
the fourth quarter of 2016 to $1.1 million primarily due to higher
fees paid to our third-party marketing agents in the United States
and Latin America as well as the addition of a new distribution
relationship. This expense increased 52.3% from the third
quarter of 2017 primarily due to higher fees paid to our
third-party marketing agents in the United States.
- A goodwill impairment charge of $1.7 million was recorded in
the fourth quarter of 2016, related to an interim impairment test
performed on the goodwill previously recognized in connection with
our acquisition of U.K. based ETP sponsor, Boost, in April
2014.
- Our effective income tax rate for the fourth quarter of 2017 of
95.8% resulted in income tax expense of $5.4 million.
Our tax rate differs from the federal statutory tax rate of 35%
primarily due to $4.1 million of non-deductible transaction costs
(increasing tax expense by $1.5 million) discussed above and a
valuation allowance on foreign net operating losses and state and
local income tax expense. In addition, included within our
effective income tax rate is a charge of $0.4 million to remeasure
our DTAs in connection with tax reform. We were required to
remeasure our DTAs using the newly enacted federal corporate income
tax rate at the date of enactment. This reduced the carrying
value of our DTAs and increased tax expense.
Twelve Month Results
Total revenues increased 8.2% to $237.4 million primarily
due to the settlement gain of $6.9 million recorded during the
second quarter of 2017, higher advisory fees due to higher average
global AUM and higher interest earned on our investments.
Total expenses increased 9.3% to $179.2 million. This
increase was primarily due higher compensation expense partly
offset by the acquisition payment expense of $6.7 million and
a goodwill impairment charge of $1.7 million recorded in the prior
year.
Balance Sheet
As of December 31, 2017, the Company had total assets of
$255.0 million which consisted primarily of cash and cash
equivalents of $54.2 million, securities owned of
$66.3 million, securities held-to-maturity of
$21.2 million, investments of $35.8 million, accounts
receivable of $21.3 million and note receivable of $18.1
million. There were approximately 137.0 million shares of
common stock outstanding as of December 31, 2017. Fully
diluted weighted average shares outstanding were 136.6 million
for the quarter.
Quarterly Dividend
The Company’s Board of Directors declared a quarterly cash
dividend of $0.03 per share of the Company’s common stock. The
dividend will be paid on February 28, 2018 to stockholders of
record as of the close of business on February 14, 2018.
Conference Call
WisdomTree will discuss its quarterly results and operational
highlights during a conference call on Friday, February 2, 2018 at
9:00 a.m. ET. The call-in number will be
(877) 303-7209. Anyone outside the U.S. or Canada should
call (970) 315-0420. The slides used during the
presentation will be available at http://ir.wisdomtree.com. For
those unable to join the conference call at the scheduled time, an
audio replay will be available on http://ir.wisdomtree.com.
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 which 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;
- our ability to develop new products and services;
- our ability to maintain current vendors or find new vendors to
provide services to us at favorable costs;
- our ability to successfully expand our business into non-U.S.
markets;
- competition in our business; and
- the effect of laws and regulations that apply to our
business.
Our business is subject to many risks and uncertainties,
including without limitation:
- Net outflows in our two largest ETFs – the WisdomTree Europe
Hedged Equity Fund and the WisdomTree Japan Hedged Equity Fund –
have had, and in the future could continue to have, a negative
impact on our revenues.
- Declining prices of securities can adversely affect our
business by reducing the market value of the assets we manage or
causing customers to sell their fund shares and trigger
redemptions.
- Fluctuations in the amount and mix of our AUM may negatively
impact revenues and operating 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 the performance of these products and our
ability to maintain the AUM of these products, as well as investor
sentiment toward investing in the funds’ strategies and
market-specific and political and economic risk.
- Much of our AUM is held in our U.S. listed ETFs that invest in
foreign securities and we therefore have substantial exposure to
foreign market conditions and are subject to foreign currency
exchange rate risks.
- 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 our customers.
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, please see the
section entitled “Risk Factors” in the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2016.
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.
About WisdomTree
WisdomTree Investments, Inc., through its subsidiaries in the
U.S., Europe, Canada and Japan (collectively, “WisdomTree”), is an
exchange-traded fund (“ETF”) and exchange-traded product (“ETP”)
sponsor and asset manager headquartered in New
York. WisdomTree offers products covering equities, fixed
income, currencies, commodities and alternative strategies.
WisdomTree currently has approximately $49.5 billion in assets
under management globally.
WisdomTree® is the marketing name for WisdomTree Investments,
Inc. and its subsidiaries worldwide.
____________________
1 See “Non-GAAP Financial Measurements.”
2 During the fourth quarter of 2017, WisdomTree Asset
Management Canada, Inc. (“WTAMC”) acquired and became the trustee
and manager for a suite of eight Canadian registered ETFs
previously sponsored and managed by Questrade Wealth Management,
Inc. (“QWM”) with approximately CAD $99.1 million (USD $77.4
million) in AUM at closing. Most of these ETFs were
subsequently merged into existing ETFs managed by WTAMC.
3 Average ETF advisory fee for our Canadian listed ETFs
declined from 0.46% at December 31, 2016 to 0.30% and 0.28% at
December 31, 2017 and September 30, 2017, respectively, due to
management fee rebates provided to initial seed capital
providers.
Contact Information:
Investor Relations WisdomTree Investments, Inc. Jason Weyeneth,
CFA +1.917.267.3858 jweyeneth@wisdomtree.com
Media Relations WisdomTree Investments, Inc. Jessica Zaloom
+1.917.267.3735 jzaloom@wisdomtree.com
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in thousands, except per share
amounts) |
(Unaudited) |
|
|
Three Months Ended |
|
% Change From |
|
Years Ended |
|
|
Dec. 31, 2017 |
|
|
Sept. 30, 2017 |
|
|
Dec. 31, 2016 |
|
Sept. 30, 2017 |
|
|
Dec. 31, 2016 |
|
|
|
Dec. 31, 2017 |
|
|
Dec. 31, 2016 |
|
% Change |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory
fees |
$ |
60,825 |
|
$ |
57,574 |
|
$ |
50,366 |
|
5.6 |
% |
|
20.8 |
% |
|
$ |
227,775 |
|
$ |
218,465 |
|
4.3 |
% |
Settlement gain |
|
— |
|
|
— |
|
|
— |
|
n/a |
|
|
n/a |
|
|
|
6,909 |
|
|
— |
|
n/a |
|
Other
income |
|
561 |
|
|
412 |
|
|
432 |
|
36.2 |
% |
|
29.9 |
% |
|
|
2,715 |
|
|
981 |
|
176.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
61,386 |
|
|
57,986 |
|
|
50,798 |
|
5.9 |
% |
|
20.8 |
% |
|
|
237,399 |
|
|
219,446 |
|
8.2 |
% |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
25,706 |
|
|
19,492 |
|
|
18,366 |
|
31.9 |
% |
|
40.0 |
% |
|
|
81,493 |
|
|
63,263 |
|
28.8 |
% |
Fund
management and administration |
|
11,570 |
|
|
10,862 |
|
|
10,046 |
|
6.5 |
% |
|
15.2 |
% |
|
|
42,144 |
|
|
41,083 |
|
2.6 |
% |
Marketing
and advertising |
|
3,726 |
|
|
3,314 |
|
|
3,645 |
|
12.4 |
% |
|
2.2 |
% |
|
|
14,402 |
|
|
15,643 |
|
-7.9 |
% |
Sales and
business development |
|
3,843 |
|
|
3,617 |
|
|
3,181 |
|
6.2 |
% |
|
20.8 |
% |
|
|
13,811 |
|
|
12,537 |
|
10.2 |
% |
Professional and consulting fees |
|
6,272 |
|
|
1,035 |
|
|
1,457 |
|
506.0 |
% |
|
330.5 |
% |
|
|
10,086 |
|
|
6,692 |
|
50.7 |
% |
Occupancy, communications and equipment |
|
1,313 |
|
|
1,378 |
|
|
1,279 |
|
-4.7 |
% |
|
2.7 |
% |
|
|
5,415 |
|
|
5,211 |
|
3.9 |
% |
Depreciation and amortization |
|
353 |
|
|
353 |
|
|
327 |
|
0.0 |
% |
|
8.0 |
% |
|
|
1,395 |
|
|
1,305 |
|
6.9 |
% |
Third-party sharing arrangements |
|
1,081 |
|
|
710 |
|
|
589 |
|
52.3 |
% |
|
83.5 |
% |
|
|
3,393 |
|
|
2,827 |
|
20.0 |
% |
Goodwill
impairment |
|
— |
|
|
— |
|
|
1,676 |
|
n/a |
|
|
n/a |
|
|
|
— |
|
|
1,676 |
|
n/a |
|
Acquisition payment |
|
— |
|
|
— |
|
|
— |
|
n/a |
|
|
n/a |
|
|
|
— |
|
|
6,738 |
|
n/a |
|
Other |
|
1,873 |
|
|
1,729 |
|
|
1,723 |
|
8.3 |
% |
|
8.7 |
% |
|
|
7,068 |
|
|
6,909 |
|
2.3 |
% |
Total
expenses |
|
55,737 |
|
|
42,490 |
|
|
42,289 |
|
31.2 |
% |
|
31.8 |
% |
|
|
179,207 |
|
|
163,884 |
|
9.3 |
% |
Income before
taxes |
|
5,649 |
|
|
15,496 |
|
|
8,509 |
|
-63.5 |
% |
|
-33.6 |
% |
|
|
58,192 |
|
|
55,562 |
|
4.7 |
% |
Income tax expense |
|
5,411 |
|
|
7,520 |
|
|
6,032 |
|
-28.0 |
% |
|
-10.3 |
% |
|
|
30,993 |
|
|
29,407 |
|
5.4 |
% |
Net
income |
$ |
238 |
|
$ |
7,976 |
|
$ |
2,477 |
|
-97.0 |
% |
|
-90.4 |
% |
|
$ |
27,199 |
|
$ |
26,155 |
|
4.0 |
% |
Net income per share –
basic |
$ |
0.00 |
|
$ |
0.06 |
|
$ |
0.02 |
|
|
|
|
|
|
|
$ |
0.20 |
|
$ |
0.19 |
|
|
|
Net income per share –
diluted |
$ |
0.00 |
|
$ |
0.06 |
|
$ |
0.02 |
|
|
|
|
|
|
|
$ |
0.20 |
|
$ |
0.19 |
|
|
|
Weighted average common
shares – basic |
|
134,800 |
|
|
134,709 |
|
|
133,985 |
|
|
|
|
|
|
|
|
134,614 |
|
|
134,401 |
|
|
|
Weighted average common
shares – diluted |
|
136,568 |
|
|
135,933 |
|
|
135,373 |
|
|
|
|
|
|
|
|
136,003 |
|
|
135,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES SEGMENT INFORMATION
(in thousands) (Unaudited)
The following table sets forth the pre-tax operating results for
the Company’s U.S. Business and International Business segments.
The U.S. Business segment represents the results of the Company’s
U.S. operations and Japan sales office. The results of the
Company’s European and Canadian operations are reported as the
International Business segment.
U.S. Business Segment
|
|
Three Months Ended |
|
% Change From |
|
Years Ended |
|
|
Dec. 31, 2017 |
|
|
|
Sept. 30, 2017 |
|
|
|
Dec. 31, 2016 |
|
|
Sept. 30, 2017 |
|
|
Dec. 31, 2016 |
|
|
|
Dec. 31, 2017 |
|
|
|
Dec. 31, 2016 |
|
|
% Change |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory
fees |
$ |
57,605 |
|
|
$ |
54,749 |
|
|
$ |
48,345 |
|
|
5.2 |
% |
|
19.2 |
% |
|
$ |
217,021 |
|
|
$ |
211,066 |
|
|
2.8 |
% |
Settlement gain |
|
— |
|
|
|
— |
|
|
|
— |
|
|
n/a |
|
|
n/a |
|
|
|
6,909 |
|
|
|
— |
|
|
n/a |
|
Other
income |
|
539 |
|
|
|
590 |
|
|
|
493 |
|
|
-8.6 |
% |
|
9.3 |
% |
|
|
2,949 |
|
|
|
1,424 |
|
|
107.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
58,144 |
|
|
|
55,339 |
|
|
|
48,838 |
|
|
5.1 |
% |
|
19.1 |
% |
|
|
226,879 |
|
|
|
212,490 |
|
|
6.8 |
% |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
23,132 |
|
|
|
16,967 |
|
|
|
15,798 |
|
|
36.3 |
% |
|
46.4 |
% |
|
|
71,079 |
|
|
|
55,554 |
|
|
27.9 |
% |
Fund
management and administration |
|
9,247 |
|
|
|
9,168 |
|
|
|
8,611 |
|
|
0.9 |
% |
|
7.4 |
% |
|
|
35,524 |
|
|
|
36,076 |
|
|
-1.5 |
% |
Marketing
and advertising |
|
3,169 |
|
|
|
2,795 |
|
|
|
3,148 |
|
|
13.4 |
% |
|
0.7 |
% |
|
|
12,286 |
|
|
|
13,637 |
|
|
-9.9 |
% |
Sales and
business development |
|
3,427 |
|
|
|
3,218 |
|
|
|
3,046 |
|
|
6.5 |
% |
|
12.5 |
% |
|
|
12,079 |
|
|
|
11,657 |
|
|
3.6 |
% |
Professional and consulting fees |
|
6,022 |
|
|
|
796 |
|
|
|
1,118 |
|
|
656.5 |
% |
|
438.6 |
% |
|
|
9,153 |
|
|
|
5,546 |
|
|
65.0 |
% |
Occupancy, communications and equipment |
|
1,178 |
|
|
|
1,257 |
|
|
|
1,161 |
|
|
-6.3 |
% |
|
1.5 |
% |
|
|
4,895 |
|
|
|
4,675 |
|
|
4.7 |
% |
Depreciation and amortization |
|
339 |
|
|
|
340 |
|
|
|
320 |
|
|
-0.3 |
% |
|
5.9 |
% |
|
|
1,347 |
|
|
|
1,283 |
|
|
5.0 |
% |
Third-party sharing arrangements |
|
1,072 |
|
|
|
705 |
|
|
|
589 |
|
|
52.1 |
% |
|
82.0 |
% |
|
|
3,374 |
|
|
|
2,827 |
|
|
19.3 |
% |
Other |
|
1,734 |
|
|
|
1,600 |
|
|
|
1,652 |
|
|
8.4 |
% |
|
5.0 |
% |
|
|
6,605 |
|
|
|
6,514 |
|
|
1.4 |
% |
Total
expenses |
|
49,320 |
|
|
|
36,846 |
|
|
|
35,443 |
|
|
33.9 |
% |
|
39.2 |
% |
|
|
156,342 |
|
|
|
137,769 |
|
|
13.5 |
% |
Income before
taxes |
$ |
8,824 |
|
|
$ |
18,493 |
|
|
$ |
13,395 |
|
|
-52.3 |
% |
|
-34.1 |
% |
|
$ |
70,537 |
|
|
$ |
74,721 |
|
|
-5.6 |
% |
Pre-tax margin |
|
15.2 |
% |
|
|
33.4 |
% |
|
|
27.4 |
% |
|
|
|
|
|
|
|
|
31.1 |
% |
|
|
35.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Business Segment
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
% Change From |
|
|
Years Ended |
|
|
Dec. 31, 2017 |
|
|
|
Sept. 30, 2017 |
|
|
|
Dec. 31, 2016 |
|
|
Sept. 30, 2017 |
|
|
Dec. 31, 2016 |
|
|
|
Dec. 31, 2017 |
|
|
|
Dec. 31, 2016 |
|
|
% Change |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory
fees |
$ |
3,220 |
|
|
$ |
2,825 |
|
|
$ |
2,021 |
|
|
14.0 |
% |
|
59.3 |
% |
|
$ |
10,754 |
|
|
$ |
7,399 |
|
|
45.3 |
% |
Other
income/(loss) |
|
22 |
|
|
|
(178 |
) |
|
|
(61 |
) |
|
-112.4 |
% |
|
-136.1 |
% |
|
|
(234 |
) |
|
|
(443 |
) |
|
-47.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
3,242 |
|
|
|
2,647 |
|
|
|
1,960 |
|
|
22.5 |
% |
|
65.4 |
% |
|
|
10,520 |
|
|
|
6,956 |
|
|
51.2 |
% |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
2,574 |
|
|
|
2,525 |
|
|
|
2,568 |
|
|
1.9 |
% |
|
0.2 |
% |
|
|
10,414 |
|
|
|
7,709 |
|
|
35.1 |
% |
Fund
management and administration |
|
2,323 |
|
|
|
1,694 |
|
|
|
1,435 |
|
|
37.1 |
% |
|
61.9 |
% |
|
|
6,620 |
|
|
|
5,007 |
|
|
32.2 |
% |
Marketing
and advertising |
|
557 |
|
|
|
519 |
|
|
|
497 |
|
|
7.3 |
% |
|
12.1 |
% |
|
|
2,116 |
|
|
|
2,006 |
|
|
5.5 |
% |
Sales and
business development |
|
416 |
|
|
|
399 |
|
|
|
135 |
|
|
4.3 |
% |
|
208.1 |
% |
|
|
1,732 |
|
|
|
880 |
|
|
96.8 |
% |
Professional and consulting fees |
|
250 |
|
|
|
239 |
|
|
|
339 |
|
|
4.6 |
% |
|
-26.3 |
% |
|
|
933 |
|
|
|
1,146 |
|
|
-18.6 |
% |
Occupancy, communications and equipment |
|
135 |
|
|
|
121 |
|
|
|
118 |
|
|
11.6 |
% |
|
14.4 |
% |
|
|
520 |
|
|
|
536 |
|
|
-3.0 |
% |
Depreciation and amortization |
|
14 |
|
|
|
13 |
|
|
|
7 |
|
|
7.7 |
% |
|
100.0 |
% |
|
|
48 |
|
|
|
22 |
|
|
118.2 |
% |
Third-party sharing arrangements |
|
9 |
|
|
|
5 |
|
|
|
— |
|
|
80.0 |
% |
|
n/a |
|
|
|
19 |
|
|
|
— |
|
|
n/a |
|
Goodwill
impairment |
|
— |
|
|
|
— |
|
|
|
1,676 |
|
|
n/a |
|
|
n/a |
|
|
|
— |
|
|
|
1,676 |
|
|
n/a |
|
Acquisition payment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
n/a |
|
|
n/a |
|
|
|
— |
|
|
|
6,738 |
|
|
n/a |
|
Other |
|
139 |
|
|
|
129 |
|
|
|
71 |
|
|
7.8 |
% |
|
95.8 |
% |
|
|
463 |
|
|
|
395 |
|
|
17.2 |
% |
Total
expenses |
|
6,417 |
|
|
|
5,644 |
|
|
|
6,846 |
|
|
13.7 |
% |
|
-6.3 |
% |
|
|
22,865 |
|
|
|
26,115 |
|
|
-12.4 |
% |
Loss before taxes |
$ |
(3,175 |
) |
|
$ |
(2,997 |
) |
|
$ |
(4,886 |
) |
|
5.9 |
% |
|
-35.0 |
% |
|
$ |
(12,345 |
) |
|
$ |
(19,159 |
) |
|
-35.6 |
% |
Pre-tax margin |
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
n/a |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(in thousands, except per share
amounts) |
|
|
December 31, 2017 |
|
December 31, 2016
|
|
(Unaudited) |
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
54,193 |
|
|
$ |
92,722 |
|
Securities owned, at fair value |
|
66,294 |
|
|
|
58,907 |
|
Securities held-to-maturity |
|
1,000 |
|
|
|
3,994 |
|
Accounts
receivable |
|
21,309 |
|
|
|
17,668 |
|
Income
taxes receivable |
|
6,978 |
|
|
|
— |
|
Prepaid
expenses |
|
3,550 |
|
|
|
3,346 |
|
Other
current assets |
|
1,007 |
|
|
|
555 |
|
Total
current assets |
|
154,331 |
|
|
|
177,192 |
|
Fixed assets, net |
|
10,693 |
|
|
|
11,748 |
|
Note receivable |
|
18,118 |
|
|
|
— |
|
Securities
held-to-maturity |
|
20,299 |
|
|
|
18,502 |
|
Deferred tax asset,
net |
|
1,050 |
|
|
|
9,826 |
|
Investments, carried at
cost |
|
35,817 |
|
|
|
20,000 |
|
Goodwill |
|
1,799 |
|
|
|
1,799 |
|
Intangible assets |
|
12,085 |
|
|
|
9,953 |
|
Other noncurrent
assets |
|
793 |
|
|
|
747 |
|
Total assets |
$ |
254,985 |
|
|
$ |
249,767 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Fund
management and administration payable |
$ |
20,099 |
|
|
$ |
13,584 |
|
Compensation and benefits payable |
|
28,053 |
|
|
|
14,652 |
|
Income
taxes payable |
|
— |
|
|
|
4,700 |
|
Acquisition payable |
|
— |
|
|
|
3,537 |
|
Securities sold, but not yet purchased, at fair value |
|
950 |
|
|
|
1,248 |
|
Accounts
payable and other liabilities |
|
8,246 |
|
|
|
5,806 |
|
Total
current liabilities |
|
57,348 |
|
|
|
43,527 |
|
Deferred
rent payable |
|
4,686 |
|
|
|
4,896 |
|
Total liabilities |
|
62,034 |
|
|
|
48,423 |
|
STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
Common stock, par value
$0.01; 250,000 shares authorized: |
|
|
|
|
|
|
|
Issued
and outstanding: 136,996 and 136,475 at December 31, 2017 and
December 31, 2016, respectively |
|
1,370 |
|
|
|
1,365 |
|
Additional paid-in
capital |
|
216,006 |
|
|
|
224,739 |
|
Accumulated other
comprehensive income/(loss) |
|
291 |
|
|
|
(44 |
) |
Accumulated
deficit |
|
(24,716 |
) |
|
|
(24,716 |
) |
Total stockholders’
equity |
|
192,951 |
|
|
|
201,344 |
|
Total liabilities and
stockholders’ equity |
$ |
254,985 |
|
|
$ |
249,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(in thousands) |
(Unaudited) |
|
|
Years Ended |
|
Dec. 31, 2017 |
|
Dec. 31, 2016 |
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net
income |
$ |
27,199 |
|
|
$ |
26,155 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
Settlement gain |
|
(6,909 |
) |
|
|
— |
|
Deferred
income taxes |
|
8,838 |
|
|
|
12,900 |
|
Stock-based compensation |
|
14,717 |
|
|
|
14,892 |
|
Depreciation and amortization |
|
1,395 |
|
|
|
1,305 |
|
Realized
losses on securities available-for-sale |
|
1,132 |
|
|
|
— |
|
Goodwill
impairment |
|
— |
|
|
|
1,676 |
|
Other |
|
(211 |
) |
|
|
(278 |
) |
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
Securities owned, at fair value |
|
(135 |
) |
|
|
(1,556 |
) |
Accounts
receivable |
|
(3,532 |
) |
|
|
9,778 |
|
Income
taxes receivable/payable |
|
(11,211 |
) |
|
|
1,687 |
|
Prepaid
expenses |
|
(204 |
) |
|
|
(719 |
) |
Other
assets |
|
(408 |
) |
|
|
(307 |
) |
Acquisition payable |
|
(3,547 |
) |
|
|
(384 |
) |
Fund
management and administration payable |
|
6,203 |
|
|
|
9,636 |
|
Compensation and benefits payable |
|
13,126 |
|
|
|
(13,089 |
) |
Securities sold, but not yet purchased, at fair value |
|
(299 |
) |
|
|
1,249 |
|
Accounts
payable and other liabilities |
|
2,354 |
|
|
|
(8,034 |
) |
Net cash
provided by operating activities |
|
48,508 |
|
|
|
54,911 |
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Purchase
of fixed assets |
|
(295 |
) |
|
|
(1,070 |
) |
Purchase
of securities held-to-maturity |
|
(3,009 |
) |
|
|
(15,502 |
) |
Purchase
of securities available-for-sale |
|
(99,848 |
) |
|
|
(63,619 |
) |
Purchase
of investments |
|
(8,908 |
) |
|
|
(20,000 |
) |
Funding
of AdvisorEngine note receivable, net of original issue
discount |
|
(18,118 |
) |
|
|
— |
|
Acquisition of the right to manage QWM’s ETFs |
|
(2,132 |
) |
|
|
— |
|
Proceeds
from held-to-maturity securities maturing or called prior to
maturity |
|
4,194 |
|
|
|
16,742 |
|
Proceeds
from sales and maturities of securities available-for-sale |
|
91,095 |
|
|
|
6,002 |
|
Acquisition less cash acquired |
|
— |
|
|
|
(11,818 |
) |
Net cash
used in investing activities |
|
(37,021 |
) |
|
|
(89,265 |
) |
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
Dividends
paid |
|
(43,777 |
) |
|
|
(43,660 |
) |
Shares
repurchased |
|
(7,891 |
) |
|
|
(39,379 |
) |
Proceeds
from exercise of stock options |
|
532 |
|
|
|
195 |
|
Net cash
used in financing activities |
|
(51,136 |
) |
|
|
(82,844 |
) |
Increase/(decrease) in
cash flows due to changes in foreign exchange rate |
|
1,120 |
|
|
|
(150 |
) |
Net decrease in cash
and cash equivalents |
|
(38,529 |
) |
|
|
(117,348 |
) |
Cash and cash
equivalents – beginning of period |
|
92,722 |
|
|
|
210,070 |
|
Cash and cash
equivalents – end of period |
$ |
54,193 |
|
|
$ |
92,722 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
|
|
|
Cash paid
for taxes |
$ |
33,113 |
|
|
$ |
14,990 |
|
WisdomTree Investments, Inc. |
Key Operating Statistics (Unaudited) |
|
Three Months Ended |
|
Year Ended |
|
|
Dec. 31, 2017 |
|
|
|
Sept. 30, 2017 |
|
|
Dec. 31, 2016 |
|
Dec. 31,2017 |
U.S. LISTED
ETFs (in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
44,398 |
|
|
$ |
43,183 |
|
|
$ |
37,704 |
|
|
$ |
40,164 |
|
Inflows/(outflows) |
|
306 |
|
|
|
(619 |
) |
|
|
132 |
|
|
|
234 |
|
Market
appreciation/(depreciation) |
|
2,123 |
|
|
|
1,834 |
|
|
|
2,328 |
|
|
|
6,429 |
|
End of
period assets |
$ |
46,827 |
|
|
$ |
44,398 |
|
|
$ |
40,164 |
|
|
$ |
46,827 |
|
Average
assets during the period |
$ |
46,030 |
|
|
$ |
43,523 |
|
|
$ |
38,253 |
|
|
$ |
43,516 |
|
Revenue
days |
|
92 |
|
|
|
92 |
|
|
|
92 |
|
|
|
365 |
|
Number of
ETFs – end of the period |
|
89 |
|
|
|
87 |
|
|
|
94 |
|
|
|
89 |
|
ETF Industry
and Market Share (in billions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ETF
industry net inflows |
$ |
130.7 |
|
|
$ |
87.7 |
|
|
$ |
127.2 |
|
|
$ |
464.3 |
|
WisdomTree market share of industry inflows |
|
0.2 |
% |
|
|
n/a |
|
|
|
0.1 |
% |
|
|
0.1 |
% |
Average ETF
advisory fee during the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternative strategy ETFs |
|
0.55 |
% |
|
|
0.57 |
% |
|
|
0.72 |
% |
|
|
0.59 |
% |
Emerging
markets equity ETFs |
|
0.69 |
% |
|
|
0.70 |
% |
|
|
0.70 |
% |
|
|
0.70 |
% |
International developed equity ETFs |
|
0.55 |
% |
|
|
0.55 |
% |
|
|
0.56 |
% |
|
|
0.56 |
% |
International hedged equity ETFs |
|
0.53 |
% |
|
|
0.53 |
% |
|
|
0.54 |
% |
|
|
0.53 |
% |
Currency
ETFs |
|
0.50 |
% |
|
|
0.50 |
% |
|
|
0.50 |
% |
|
|
0.50 |
% |
Fixed
income ETFs |
|
0.37 |
% |
|
|
0.40 |
% |
|
|
0.43 |
% |
|
|
0.40 |
% |
U.S.
equity ETFs |
|
0.35 |
% |
|
|
0.35 |
% |
|
|
0.35 |
% |
|
|
0.35 |
% |
Blended
total |
|
0.50 |
% |
|
|
0.50 |
% |
|
|
0.50 |
% |
|
|
0.50 |
% |
EUROPEAN LISTED
ETPs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ETPs (in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
979,608 |
|
|
$ |
812,604 |
|
|
$ |
647,497 |
|
|
$ |
626,280 |
|
Inflows/(outflows) |
|
(102,453 |
) |
|
|
129,742 |
|
|
|
(38,214 |
) |
|
|
290,399 |
|
Market
appreciation/(depreciation) |
|
55,798 |
|
|
|
37,262 |
|
|
|
16,997 |
|
|
|
16,274 |
|
End of
period assets |
$ |
932,953 |
|
|
$ |
979,608 |
|
|
$ |
626,280 |
|
|
$ |
932,953 |
|
Average
assets during the period |
$ |
933,975 |
|
|
$ |
870,773 |
|
|
$ |
640,101 |
|
|
$ |
812,434 |
|
Average
ETP advisory fee during the period |
|
0.77 |
% |
|
|
0.77 |
% |
|
|
0.80 |
% |
|
|
0.78 |
% |
Number of
ETPs – end of the period |
|
70 |
|
|
|
68 |
|
|
|
68 |
|
|
|
70 |
|
Total UCITS
ETFs (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
785,899 |
|
|
$ |
643,199 |
|
|
$ |
371,307 |
|
|
$ |
398,015 |
|
Inflows/(outflows) |
|
36,711 |
|
|
|
99,546 |
|
|
|
12,442 |
|
|
|
340,053 |
|
Market
appreciation/(depreciation) |
|
48,592 |
|
|
|
43,154 |
|
|
|
14,266 |
|
|
|
133,134 |
|
End of
period assets |
$ |
871,202 |
|
|
$ |
785,899 |
|
|
$ |
398,015 |
|
|
$ |
871,202 |
|
Average
assets during the period |
$ |
830,637 |
|
|
$ |
692,666 |
|
|
$ |
375,286 |
|
|
$ |
665,290 |
|
Average
UCITS ETF advisory fee during the period |
|
0.44 |
% |
|
|
0.44 |
% |
|
|
0.42 |
% |
|
|
0.44 |
% |
Number of
UCITS ETFs – end of the period |
|
17 |
|
|
|
17 |
|
|
|
16 |
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CANADIAN LISTED
ETFs (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
205,469 |
|
|
$ |
91,490 |
|
|
$ |
68,427 |
|
|
$ |
68,618 |
|
Assets
acquired |
|
77,4032 |
|
|
|
— |
|
|
|
— |
|
|
|
77,4032 |
|
Inflows/(outflows) |
|
15,034 |
|
|
|
96,745 |
|
|
|
3 |
|
|
|
127,057 |
|
Market
appreciation/(depreciation) |
|
7,570 |
|
|
|
17,234 |
|
|
|
188 |
|
|
|
32,398 |
|
End of
period assets |
$ |
305,476 |
|
|
$ |
205,469 |
|
|
$ |
68,618 |
|
|
$ |
305,476 |
|
Average
assets during the period |
$ |
270,901 |
|
|
$ |
129,284 |
|
|
$ |
67,168 |
|
|
$ |
203,426 |
|
Average
ETF advisory fee during the period |
|
0.30%3 |
|
|
|
0.28%3 |
|
|
|
0.46 |
% |
|
|
0.34 |
% |
Number of
ETFs – end of the period |
|
12 |
|
|
|
11 |
|
|
|
6 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Headcount –
U.S. Business segment |
|
162 |
|
|
|
165 |
|
|
|
163 |
|
|
|
162 |
|
Headcount –
International segment |
|
42 |
|
|
|
43 |
|
|
|
46 |
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Previously issued
statistics may be restated due to trade adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source: Investment
Company Institute, Bloomberg, WisdomTree |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
release include:
- Gross margin and gross margin percentage (U.S. Business
segment). We disclose our gross margin and gross margin percentage
for our U.S. Business segment separately from the start up stage of
our international businesses (Europe and Canada) to allow investors
to better understand and track the performance and operating
efficiency of our core U.S. operations, which make up the vast
majority of our operating and financial results. We disclose U.S.
Business segment gross margin, which we define as U.S. advisory
fees less U.S. fund management and administration expenses and U.S.
third-party sharing arrangements, and U.S. Business segment 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 and third party marketing agents whose fees are
associated with our AUM level. Management tracks gross margin and
gross margin percentage to analyze the profitability of our
products.
- Consolidated and U.S. Business segment operating results and
pre-tax margin for the fourth quarter of 2017 excluding transaction
costs of $4.8 million (or $4.5 million after-tax) and an
after-tax charge of $0.4 million to remeasure our net DTAs in
connection with tax reform. We exclude these costs when
analyzing our results as they represent non-recurring charges which
are not core to our operating business.
- Consolidated operating results and pre-tax margin for the
fourth quarter of 2016 excluding a $1.7 million goodwill impairment
charge. We exclude this charge, which is non-deductible for tax
purposes, when analyzing our results as it is a one-time,
non-recurring charge and not core to our operating business.
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES GAAP to NON-GAAP
RECONCILIATION (in
thousands)(Unaudited)
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Dec. 31, |
|
|
Sept. 30, |
|
Dec. 31, |
Gross Margin and Gross Margin Percentage (U.S. Business
segment): |
|
|
2017 |
|
|
2017 |
|
|
2016 |
|
Advisory fees |
|
$ |
57,605 |
|
|
54,749 |
|
|
$ |
48,345 |
|
Less:
Fund management and administration |
|
|
(9,247 |
) |
|
(9,168 |
) |
|
|
(8,611 |
) |
Less:
Third-party sharing arrangements |
|
|
(1,072 |
) |
|
(705 |
) |
|
|
(589 |
) |
U.S. Gross margin |
|
$ |
47,286 |
|
|
44,876 |
|
|
$ |
39,145 |
|
U.S. Gross margin
percentage |
|
|
82.1 |
% |
|
82.0 |
% |
|
|
81.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Dec. 31, |
|
|
Sept. 30, |
|
Dec. 31, |
Adjusted Net Income and Diluted Earnings per Share
(Consolidated): |
|
|
2017 |
|
|
2017 |
|
|
2016 |
|
Net income, as
reported |
|
$ |
238 |
|
|
n/a |
|
|
$ |
2,477 |
|
Add back:
Transaction costs, net of income taxes of $292 |
|
|
4,540 |
|
|
n/a |
|
|
|
— |
|
Add back:
Remeasurement of net deferred tax assets (tax reform) |
|
|
411 |
|
|
n/a |
|
|
|
— |
|
Add back:
Goodwill impairment |
|
|
— |
|
|
n/a |
|
|
|
1,676 |
|
Adjusted net
income |
|
$ |
5,189 |
|
|
n/a |
|
|
$ |
4,153 |
|
Weighted average common
shares - diluted |
|
|
136,568 |
|
|
n/a |
|
|
|
135,373 |
|
Adjusted net income per
share - diluted |
|
$ |
0.04 |
|
|
n/a |
|
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Dec. 31, |
|
|
Sept. 30, |
|
|
Dec. 31, |
|
Adjusted Pre-tax Margin (Consolidated):
|
|
|
2017 |
|
|
2017 |
|
|
2016 |
|
Total revenues |
|
$ |
61,386 |
|
|
n/a |
|
|
$ |
50,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
$ |
5,649 |
|
|
n/a |
|
|
$ |
8,509 |
|
Add back:
Transaction costs, before income taxes |
|
|
4,832 |
|
|
n/a |
|
|
|
— |
|
Add back:
Goodwill impairment |
|
|
— |
|
|
n/a |
|
|
|
1,676 |
|
Adjusted income before
income taxes |
|
$ |
10,481 |
|
|
n/a |
|
|
$ |
10,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted pre-tax
margin |
|
|
17.1 |
% |
|
n/a |
|
|
|
20.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Dec. 31, |
|
|
Sept. 30, |
|
|
Dec. 31, |
Adjusted Pre-tax Margin (U.S. Business Segment):
|
|
|
2017 |
|
|
2017 |
|
|
2016 |
Total revenues |
|
$ |
58,144 |
|
|
n/a |
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
$ |
8,824 |
|
|
n/a |
|
|
n/a |
Add back:
Transaction costs, before income taxes |
|
|
4,832 |
|
|
n/a |
|
|
n/a |
Adjusted income before
income taxes |
|
$ |
13,656 |
|
|
n/a |
|
|
n/a |
Adjusted pre-tax
margin |
|
|
23.5 |
% |
|
n/a |
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
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