$16.7 million net income, or $14.3 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 $16.7 million or $0.10 diluted
EPS in the second quarter. Adjusted net income (a non-GAAP
measure1) was $14.3 million1 or $0.09 diluted EPS1. This
compares to net income of $12.1 million or $0.09 diluted EPS (as
adjusted, $7.8 million1 or $0.06 diluted EPS1) in the second
quarter of last year and net income of $9.4 million or $0.07
diluted EPS (as adjusted, $11.3 million1 or $0.08 diluted EPS1) in
the first quarter of 2018.
WisdomTree CEO and President Jonathan Steinberg said,
“Technology and data investments made over the past several years
are driving growing cost efficiencies across our organization and
allowing us to better serve our existing clients and prospects,
leading the firm towards our next wave of growth. Over the past
several months we signed distribution agreements with notable third
parties, pointing to the strength of our innovative product suite
and differentiated technology and advisor solutions offerings, both
in the U.S. and abroad.”
Steinberg continued, “The second quarter was a busy quarter for
our international operations. Early in the quarter, we completed
our acquisition of ETF Securities, transforming our
European platform. We have achieved the cost savings we
identified ahead of schedule and continue to work towards
leveraging the expanded distribution reach and enhanced resources.
Additionally, in Canada we continued to generate strong organic
growth and further establish ourselves in that growing market.
Lastly, we are restructuring our Japan distribution strategy which
in addition to reducing our cost base, we believe will drive
stronger growth in the region.”
|
|
|
|
|
Three Months Ended |
|
Change From |
|
June 30, 2018 |
|
Mar. 31, 2018 |
|
June 30, 2017 |
|
Mar. 31, 2018 |
|
June 30, 2017 |
Consolidated
Operating Highlights ($, in billions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUM |
$ |
60.0 |
|
|
$ |
45.0 |
|
|
$ |
44.7 |
|
|
|
33.4 |
% |
|
|
34.1 |
% |
Assets acquired |
$ |
17.6 |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
Net
inflows/(outflows) |
$ |
(1.3 |
) |
|
$ |
(2.2 |
) |
|
$ |
0.8 |
|
|
|
(43.2 |
%) |
|
|
n/a |
|
Average AUM |
$ |
61.3 |
|
|
$ |
47.7 |
|
|
$ |
44.4 |
|
|
|
28.4 |
% |
|
|
38.0 |
% |
Average advisory
fee |
|
0.48 |
% |
|
|
0.50 |
% |
|
|
0.50 |
% |
|
|
(0.02 |
) |
|
|
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Financial Highlights ($, in millions, except per
share amounts): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues |
$ |
74.8 |
|
|
$ |
58.9 |
|
|
$ |
56.2 |
|
|
|
26.9 |
% |
|
|
33.0 |
% |
Net income |
$ |
16.7 |
|
|
$ |
9.4 |
|
|
$ |
12.1 |
|
|
|
77.5 |
% |
|
|
38.2 |
% |
Diluted earnings per
share |
$ |
0.10 |
|
|
$ |
0.07 |
|
|
$ |
0.09 |
|
|
$ |
0.03 |
|
|
$ |
0.01 |
|
Operating income
margin |
|
19.4 |
% |
|
|
22.4 |
% |
|
|
26.7 |
% |
|
|
-3.0 |
|
|
|
-7.3 |
|
Non-GAAP1: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income, as
adjusted |
$ |
14.3 |
|
|
$ |
11.3 |
|
|
$ |
7.8 |
|
|
|
27.0 |
% |
|
|
82.4 |
% |
Diluted net income per
share, as adjusted |
$ |
0.09 |
|
|
$ |
0.08 |
|
|
$ |
0.06 |
|
|
$ |
0.01 |
|
|
$ |
0.03 |
|
Operating income
margin, as adjusted |
|
30.0 |
% |
|
|
25.9 |
% |
|
|
n/a |
|
|
|
4.1 |
|
|
|
n/a |
|
|
|
|
|
|
|
Recent Business Developments
Company News
- In June 2018, the Company announced the addition of Chris
Gardner, author of “The Pursuit of Happyness,” as a Senior
Advisor.
- In July 2018, the Company announced that it entered into an ETF
Program Agreement with Cetera Financial Group to be the only ETF
sponsor with ETFs available through the no-transaction fee
platform; Oranj announced that the Company’s model portfolios and
products are now available on Oranj’s free end-to-end wealth
management platform; and WisdomTree and AdvisorEngine were selected
by a large independent broker-dealer to digitize and optimize their
wealth management platform, with WisdomTree providing model
portfolios.
U.S. Listed Product News
- In July 2018, the Company announced that it expanded its
offering on Schwab ETF OneSourceTM, a commission-free ETF program,
with the addition of the WisdomTree Floating Rate Treasury Fund
(USFR) and the WisdomTree Yield Enhanced U.S. Short-Term Aggregate
Bond Fund (SHAG).
European Listed Product News
- In May 2018, the Company announced the launch of two new
funds. The WisdomTree AT1 CoCo Bond UCITS ETF is the first
ETF globally to provide investors with access to the Additional
Tier 1 (AT1) Contingent Convertible (CoCo) bond market while the
WisdomTree Cboe S&P 500 PutWrite UCITS ETF replicates a
strategy that is already successful for the Company in the
U.S. Both funds were listed on the London Stock Exchange,
Borsa Italiana and Deutsche Börse Xetra.
- In July 2018, the Company announced the launch of two new smart
beta fixed income ETFs which seek to provide enhanced yields on
core European investment grade bonds and treasuries, without
potentially riskier exposures. The WisdomTree EUR Aggregate
Bond Enhanced Yield UCITS ETF (WTDP) and the WisdomTree EUR
Government Bond Enhanced Yield UCITS ETF (WTDR) are both listed on
the Deutsche Börse Xetra and Borsa Italiana; and the Company
announced the launch of two smart beta equity ETFs, offering
multifactor exposure to U.S. equities and exposure to Japanese
small cap equities. The WisdomTree US Multifactor UCITS ETF
(USMF) and the WisdomTree Japan SmallCap Dividend UCITS ETF (DFJ)
are both listed on the London Stock Exchange.
Canadian Listed Product News
- In May 2018, the Company announced the launch of the Digital
Portfolio Developer (DPD), an on-demand tool for Canadian advisors
that focuses on providing deep data analytics to evaluate client
and prospect portfolios.
Assets Under Management and Net Inflows
U.S. listed ETF assets under management (“AUM”) was
$41.3 billion at June 30, 2018, down 3.6% from March 31, 2018
primarily due to net outflows. International listed ETPs’ AUM
was $18.6 billion at June 30, 2018, up $16.6 billion from
March 31, 2018 primarily due to the $17.6 billion of AUM acquired
in connection with the completion of our acquisition on April 11,
2018 of the European exchange-traded commodity, currency and
short-and-leveraged business (“ETFS”) of ETFS Capital Limited
(“ETFS Capital,” formerly known as ETF Securities Limited) partly
offset by market depreciation. We refer to the acquisition
throughout this press release as the ETFS Acquisition.
Performance
In evaluating the performance of our U.S. listed equity, fixed
income and alternative ETFs against actively managed and index
based mutual funds and ETFs, 76.5% of the $40.7 billion invested in
our ETFs and 62.9% (44 of 70) of our ETFs covered by Morningstar
outperformed their comparable Morningstar average since inception
as of June 30, 2018.
For more information about WisdomTree ETFs including
standardized performance, please click here or visit
www.wisdomtree.com.
Second Quarter Financial Discussion
On April 11, 2018, we completed the ETFS Acquisition. Our
financial results for the second quarter of 2018 include the
recognition of certain items directly associated with the
acquisition, including contractual gold payments expense, a gain on
revaluation of deferred consideration and interest expense, each of
which are described in further detail below.
In addition, the presentation of our Consolidated Statements of
Operations has changed to include operating revenues and operating
expenses, as well as other income/(expenses) not included in
operating income. Prior period amounts previously disclosed
within our Consolidated Statements of Operations have been
reclassified to conform with our current presentation. These
reclassifications had no effect on previously reported net
income.
The primary reason for the increase in our revenues, expenses
and net income this quarter compared to prior periods is the
inclusion of the ETFS Acquisition.
Operating Revenues
Advisory Fees
Advisory fees of $73.8 million increased 32.1% and 26.2% from
the second quarter of 2017 and first quarter of 2018, respectively,
due to an increase in our average global AUM. Our average
global AUM increased from the second quarter of 2017 primarily due
to the $17.6 billion of AUM acquired in connection with the ETFS
Acquisition as well as market appreciation and net inflows into
certain of our ETFs. These increases were partly offset by
outflows from our two largest U.S. listed ETFs.
Our average global AUM increased from the first quarter of 2018
primarily due to the $17.6 billion of AUM acquired, partly offset
by net outflows from our two largest U.S. listed ETFs and market
depreciation.
Our average global advisory fee was 0.48% during the second
quarter of 2018.
Other Income
Other income of $1.0 million increased 158.3% and 122.5% from
the second quarter of 2017 and first quarter of 2018, respectively,
primarily due to creation/redemption fees earned from the ETFS
exchange-traded products.
Margins
Gross margin for our U.S. Business segment was 83.4%1 in the
second quarter of 2018 as compared to 83.7%1 2 in the second
quarter of 2017 and 83.9%1 2 in the first quarter of 2018.
Gross margin for our International Business segment was 73.2%1 in
the second quarter of 2018 as compared to 46.2%1 in the second
quarter of 2017 and 40.1%1 in the first quarter of 2018.
Gross margins of the International Business segment for prior
quarters were not meaningful as the business was not scaled.
The change in gross margin from the prior quarters is due to
the ETFS Acquisition.
Operating income margin on a consolidated basis was 19.4% in the
second quarter of 2018 (as adjusted 30.0%1) as compared to 26.7% in
the second quarter of 2017 and 22.4% in the first quarter of 2018
(as adjusted 25.9%1).
Pre-tax margin on a consolidated basis was 29.7% in the second
quarter of 2018 as compared to 39.5% in the second quarter of 2017
and 23.6% in the first quarter of 2018.
Operating Expenses
Total operating expenses were $60.2 million for the second
quarter of 2018, up 46.2% and 31.9% from the second quarter of 2017
and the first quarter of 2018, respectively. Operating
expenses increased primarily due to the ETFS Acquisition. In
addition, included in the second quarter of 2018 and first quarter
of 2018 were acquisition-related costs of $7.9 million and $2.1
million, respectively.
- Compensation and benefits expense increased 4.8% from the
second quarter of 2017 to $19.3 million due to the ETFS
Acquisition, partly offset by lower accrued incentive compensation
in our U.S. Business segment. Compensation and benefits
expense increased 2.5% from the first quarter of 2018 due to the
ETFS Acquisition, partly offset by lower payroll taxes and benefits
expense. Payroll taxes and benefits expense in the first
quarter of 2018 are seasonally higher due to bonus payments made
during that period. Headcount of our U.S. Business segment
was 155, 157 and 166 and our International Business segment was 76,
34 and 46 at June 30, 2018, March 31, 2018 and June 30, 2017,
respectively.
- Fund management and administration expense increased 44.6% from
the second quarter of 2017 and 34.0% from the first quarter of 2018
to $14.6 million due to higher average AUM of our International
Business segment primarily associated with the ETFS
Acquisition. We had 81 U.S. listed ETFs and 445 International
listed ETPs at the end of the quarter.
- Marketing and advertising expense was essentially unchanged
from the second quarter of 2017. This expense increased 18.2%
from the first quarter of 2018 to $3.8 million due to higher levels
of spending globally.
- Sales and business development expense increased 32.9% from the
second quarter of 2017 to $4.5 million primarily due to higher
spending on sales related activities globally. This expense
increased 18.1% from the first quarter of 2018 primarily due to
higher spending in our International Business segment.
- Contractual gold payments expense represents an ongoing
obligation of ETFS Capital that we assumed in connection with the
ETFS Acquisition. This ongoing obligation requires us to pay
9,500 ounces of gold annually from the advisory fee income we earn
for managing physically backed gold ETPs. During the second
quarter of 2018, we recognized $2.7 million of contractual gold
payments expense associated with the payment of 2,085 ounces of
gold at an average daily spot price of $1,302 per
ounce.
- Professional and consulting fees increased 27.8% from the
second quarter of 2017 to $1.6 million due to higher professional
and corporate consulting-related expenses globally. These
expenses were essentially unchanged from the first quarter of
2018.
- Occupancy, communications and equipment expense increased 14.8%
from the second quarter of 2017 and 15.5% from the first quarter of
2018 to $1.6 million primarily due to higher headcount associated
with the ETFS Acquisition.
- Third-party distribution fees increased 148.7% from the second
quarter of 2017 to $1.7 million primarily due to a new distribution
relationship announced in the fourth quarter of 2017 and higher
fees paid to our third-party marketing agent in Latin
America. These expenses were essentially unchanged from the
first quarter of 2018.
- Acquisition-related costs increased $5.9 million from the first
quarter of 2018 to $7.9 million and included professional advisor
fees payable upon completion of the ETFS Acquisition, a write-off
of our office lease and compensation and other integration
costs. Costs incurred in the prior quarter were principally
severance, professional fees and other integration
costs.
- Other expenses increased 22.7% from the second quarter of 2017
and 26.3% from the first quarter of 2018 to $2.3 million primarily
due to higher International Business segment office expenses
associated with an increase in headcount from the ETFS
Acquisition.
Other Income/(Expenses)
- Interest expense for the second quarter of 2018 of $2.4 million
was incurred principally in connection with a newly raised term
loan to facilitate the ETFS Acquisition. Our effective
interest rate during the period was 4.9% and includes our cost of
borrowing and amortization of issuance costs.
- Gain on revaluation of deferred consideration of $9.9 million
arose from the ongoing contractual gold payment obligation
described above that we assumed from ETFS Capital in connection
with the ETFS Acquisition. The present value of the ongoing
obligation to pay 9,500 ounces of gold until March 2058, which is
then reduced to 6,333 ounces into perpetuity, is recorded on our
Consolidated Balance Sheet as deferred consideration, which is
re-measured each quarter based upon forward-looking gold
prices. A gain was recognized during the second quarter of
2018 as the price of gold had declined when compared to the price
on April 11, 2018, the date on which the deferred consideration was
originally measured.
- Interest income was essentially unchanged from the second
quarter of 2017. Interest income decreased 36.4% from the
first quarter of 2018 to $0.6 million due to lower interest income
on our short-term investment grade bond portfolio which has
matured, partly offset by paid-in-kind (“PIK”) interest on a note
receivable from AdvisorEngine Inc.
- Other net losses increased 37.6% from the second quarter of
2017 and 92.0% from the first quarter of 2018 to $0.5 million
primarily due to realized losses arising from the sale of gold
earned from management fees paid by physically-backed gold ETPs
associated with the ETFS Acquisition, as well as miscellaneous
foreign exchange losses.
Income Taxes
Our estimated effective income tax rate for the quarter ended
June 30, 2018 of 24.6% (as adjusted 29.2%1) resulted in income tax
expense of $5.5 million. Our tax rate differs from the
federal statutory tax rate of 21% primarily due to non-deductible
acquisition-related costs, a valuation allowance on foreign net
operating losses and state and local income taxes, partly offset by
the gain on revaluation of deferred consideration and a lower tax
rate on foreign earnings. The gain on revaluation of deferred
consideration is not adjusted for income taxes as the obligation
was assumed by a wholly-owned subsidiary of ours that is based in
Jersey, a region where we are subject to a zero percent tax
rate.
Six Month Results
Total operating revenues increased 22.0% to $133.7 million for
the six months ended June 30, 2018 primarily due to higher average
global AUM, including the $17.6 billion of AUM acquired in
connection with the ETFS Acquisition. Total operating
expenses increased 30.8% to $105.9 million primarily due to
expenses associated with the ETFS acquired business. In
addition, operating expenses for the six months ended June 30, 2018
include acquisition-related costs of $10.0 million.
Other income/(expenses) for the six months ended June 30, 2018
includes $2.4 million of interest expense incurred principally in
connection with a newly raised term loan to facilitate the ETFS
Acquisition, as well as a gain on revaluation of deferred
consideration of $9.9 million associated with the ETFS
Acquisition. Interest income increased 28.5% to $1.6 million,
primarily due to PIK interest on a note receivable from
AdvisorEngine, Inc., partly offset by lower interest income on our
short-term investment grade bond portfolio which has matured.
In addition, the prior year period includes a settlement gain of
$6.9 million as well as a reimbursement of fund-related costs of
$0.8 million classified within other gains and losses, net.
Balance Sheet
In connection with the ETFS Acquisition, at April 11, 2018 we
recognized goodwill of $84.1 million, intangible assets of $601.2
million, deferred consideration of $172.7 million, long-term debt,
net of issuance costs of $192.9 million, preferred stock of $132.6
million and common stock of $137.2 million.
As of June 30, 2018, we had total assets of $902.1 million
which consisted primarily of intangible assets of $613.2 million,
goodwill of $85.9 million, cash and cash equivalents of
$70.7 million, investments of $35.2 million, securities
held-to-maturity of $20.2 million, accounts receivable of $27.3
million and a note receivable of $24.6 million. There were
approximately 153.1 million shares of our common stock
outstanding as of June 30, 2018. Fully diluted weighted average
shares outstanding were 163.3 million for the quarter.
Quarterly Dividend
Our Board of Directors declared a quarterly cash dividend of
$0.03 per share of our common stock. The dividend will be paid on
August 22, 2018 to stockholders of record as of the close of
business on August 8, 2018.
Conference Call
WisdomTree will discuss its results and operational highlights
during a conference call on Friday, July 27, 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.
Over the last few years, we have expanded our business globally.
This expansion subjects us to increased operational, regulatory,
financial and other risks.
The ETFS Acquisition is significant in size relative to our
assets and operations and may result in significant changes in our
business. Our failure to integrate and manage ETFS successfully
could materially and adversely affect our business, results of
operations and financial condition.
Declining prices of securities, precious metals and other
commodities 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, whether caused by
disruptions in the financial markets or otherwise, may negatively
impact revenues and operating margins, and may impede our ability
to refinance our debt upon maturity, increase the cost of borrowing
or result in our debt being called prior to maturity.
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 and ETFs 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 and ETFs. 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, 2017 and
Quarterly Report on Form 10-Q for the quarter ended March 31,
2018.
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 $60.2 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 Gross margin is now calculated as total operating
revenues, less fund management and administration expenses.
Gross margin percentage is calculated as gross margin divided by
total operating revenues. See “Non-GAAP Financial
Measurements” below for additional information. Amounts
previously reported as gross margin for the U.S. Business segment
have been restated to conform with our current presentation.
Contact Information:
Investor Relations WisdomTree Investments,
Inc. Jason Weyeneth,
CFA +1.917.267.3858 jweyeneth@wisdomtree.com
Media RelationsWisdomTree Investments, Inc.Jessica
Zaloom+1.917.267.3735jzaloom@wisdomtree.com
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share
amounts) (Unaudited)
|
|
|
|
|
|
|
Three Months Ended |
|
% Change From |
|
Six Months Ended |
|
June 30, 2018 |
|
Mar. 31, 2018 |
|
June 30, 2017 |
|
Mar. 31,
2018 |
|
June 30,
2017 |
|
June 30, 2018 |
|
June 30, 2017 |
|
% Change |
Operating
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory
fees |
$ |
73,778 |
|
|
$ |
58,456 |
|
|
$ |
55,856 |
|
|
26.2 |
% |
|
32.1 |
% |
|
$ |
132,234 |
|
|
$ |
108,884 |
|
|
21.4 |
% |
Other
income |
|
997 |
|
|
|
448 |
|
|
|
386 |
|
|
122.5 |
% |
|
158.3 |
% |
|
|
1,445 |
|
|
|
725 |
|
|
99.3 |
% |
Total
revenues |
|
74,775 |
|
|
|
58,904 |
|
|
|
56,242 |
|
|
26.9 |
% |
|
33.0 |
% |
|
|
133,679 |
|
|
|
109,609 |
|
|
22.0 |
% |
Operating
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
19,301 |
|
|
|
18,832 |
|
|
|
18,421 |
|
|
2.5 |
% |
|
4.8 |
% |
|
|
38,133 |
|
|
|
36,295 |
|
|
5.1 |
% |
Fund
management and administration |
|
14,621 |
|
|
|
10,912 |
|
|
|
10,112 |
|
|
34.0 |
% |
|
44.6 |
% |
|
|
25,533 |
|
|
|
19,712 |
|
|
29.5 |
% |
Marketing
and advertising |
|
3,778 |
|
|
|
3,195 |
|
|
|
3,825 |
|
|
18.2 |
% |
|
-1.2 |
% |
|
|
6,973 |
|
|
|
7,362 |
|
|
-5.3 |
% |
Sales and
business development |
|
4,503 |
|
|
|
3,813 |
|
|
|
3,389 |
|
|
18.1 |
% |
|
32.9 |
% |
|
|
8,316 |
|
|
|
6,351 |
|
|
30.9 |
% |
Contractual gold payments |
|
2,715 |
|
|
|
— |
|
|
|
— |
|
|
n/a |
|
|
n/a |
|
|
|
2,715 |
|
|
|
— |
|
|
n/a |
|
Professional and consulting fees |
|
1,560 |
|
|
|
1,636 |
|
|
|
1,221 |
|
|
-4.6 |
% |
|
27.8 |
% |
|
|
3,196 |
|
|
|
2,779 |
|
|
15.0 |
% |
Occupancy, communications and equipment |
|
1,574 |
|
|
|
1,363 |
|
|
|
1,371 |
|
|
15.5 |
% |
|
14.8 |
% |
|
|
2,937 |
|
|
|
2,724 |
|
|
7.8 |
% |
Depreciation and amortization |
|
337 |
|
|
|
355 |
|
|
|
352 |
|
|
-5.1 |
% |
|
-4.3 |
% |
|
|
692 |
|
|
|
689 |
|
|
0.4 |
% |
Third-party distribution fees |
|
1,666 |
|
|
|
1,725 |
|
|
|
670 |
|
|
-3.4 |
% |
|
148.7 |
% |
|
|
3,391 |
|
|
|
1,602 |
|
|
111.7 |
% |
Acquisition-related costs |
|
7,928 |
|
|
|
2,062 |
|
|
|
— |
|
|
284.5 |
% |
|
n/a |
|
|
|
9,990 |
|
|
|
— |
|
|
n/a |
|
Other |
|
2,261 |
|
|
|
1,790 |
|
|
|
1,842 |
|
|
26.3 |
% |
|
22.7 |
% |
|
|
4,051 |
|
|
|
3,466 |
|
|
16.9 |
% |
Total
expenses |
|
60,244 |
|
|
|
45,683 |
|
|
|
41,203 |
|
|
31.9 |
% |
|
46.2 |
% |
|
|
105,927 |
|
|
|
80,980 |
|
|
30.8 |
% |
Operating income |
|
14,531 |
|
|
|
13,221 |
|
|
|
15,039 |
|
|
9.9 |
% |
|
-3.4 |
% |
|
|
27,752 |
|
|
|
28,629 |
|
|
-3.1 |
% |
Other
Income/(Expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
(2,356 |
) |
|
|
— |
|
|
|
— |
|
|
n/a |
|
|
n/a |
|
|
|
(2,356 |
) |
|
|
— |
|
|
n/a |
|
Gain on
revaluation of deferred consideration – gold payments |
|
9,898 |
|
|
|
— |
|
|
|
— |
|
|
n/a |
|
|
n/a |
|
|
|
9,898 |
|
|
|
— |
|
|
n/a |
|
Interest
income |
|
612 |
|
|
|
962 |
|
|
|
641 |
|
|
-36.4 |
% |
|
-4.5 |
% |
|
|
1,574 |
|
|
|
1,225 |
|
|
28.5 |
% |
Settlement gain |
|
— |
|
|
|
— |
|
|
|
6,909 |
|
|
n/a |
|
|
n/a |
|
|
|
— |
|
|
|
6,909 |
|
|
n/a |
|
Other
gains and losses, net |
|
(501 |
) |
|
|
(261 |
) |
|
|
(364 |
) |
|
92.0 |
% |
|
37.6 |
% |
|
|
(762 |
) |
|
|
284 |
|
|
n/a |
|
Income before
taxes |
|
22,184 |
|
|
|
13,922 |
|
|
|
22,225 |
|
|
59.3 |
% |
|
-0.2 |
% |
|
|
36,106 |
|
|
|
37,047 |
|
|
-2.5 |
% |
Income tax
expense |
|
5,460 |
|
|
|
4,498 |
|
|
|
10,120 |
|
|
21.4 |
% |
|
-46.0 |
% |
|
|
9,958 |
|
|
|
18,062 |
|
|
-44.9 |
% |
Net
income |
$ |
16,724 |
|
|
$ |
9,424 |
|
|
$ |
12,105 |
|
|
77.5 |
% |
|
38.2 |
% |
|
$ |
26,148 |
|
|
$ |
18,985 |
|
|
37.7 |
% |
Net income per share –
basic |
$ |
0.10 |
|
|
$ |
0.07 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
$ |
0.17 |
|
|
$ |
0.14 |
|
|
|
|
Net income per share –
diluted |
$ |
0.10 |
|
|
$ |
0.07 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
$ |
0.17 |
|
|
$ |
0.14 |
|
|
|
|
Weighted average common
shares – basic |
|
149,056 |
|
|
|
135,329 |
|
|
|
134,557 |
|
|
|
|
|
|
|
|
|
142,230 |
|
|
|
134,472 |
|
|
|
|
Weighted average common
shares – diluted |
|
163,346 |
|
|
|
136,468 |
|
|
|
135,574 |
|
|
|
|
|
|
|
|
|
149,979 |
|
|
|
135,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIESSEGMENT
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 |
|
Six Months Ended |
|
June 30, 2018 |
|
Mar. 31, 2018 |
|
June 30, 2017 |
|
Mar. 31,
2018 |
|
June 30,
2017 |
|
June 30, 2018 |
|
June 30, 2017 |
|
% Change |
Operating
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory
fees |
$ |
52,931 |
|
|
$ |
55,518 |
|
|
$ |
53,641 |
|
|
-4.7 |
% |
|
-1.3 |
% |
|
$ |
108,449 |
|
|
$ |
104,667 |
|
|
3.6 |
% |
Other
income |
|
162 |
|
|
|
147 |
|
|
|
128 |
|
|
10.2 |
% |
|
26.6 |
% |
|
|
309 |
|
|
|
231 |
|
|
33.8 |
% |
Total
revenues |
|
53,093 |
|
|
|
55,665 |
|
|
|
53,769 |
|
|
-4.6 |
% |
|
-1.3 |
% |
|
|
108,758 |
|
|
|
104,898 |
|
|
3.7 |
% |
Operating
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
14,526 |
|
|
|
16,371 |
|
|
|
15,910 |
|
|
-11.3 |
% |
|
-8.7 |
% |
|
|
30,897 |
|
|
|
30,980 |
|
|
-0.3 |
% |
Fund
management and administration |
|
8,802 |
|
|
|
8,973 |
|
|
|
8,782 |
|
|
-1.9 |
% |
|
0.2 |
% |
|
|
17,775 |
|
|
|
17,109 |
|
|
3.9 |
% |
Marketing
and advertising |
|
2,987 |
|
|
|
2,843 |
|
|
|
3,253 |
|
|
5.1 |
% |
|
-8.2 |
% |
|
|
5,830 |
|
|
|
6,322 |
|
|
-7.8 |
% |
Sales and
business development |
|
3,446 |
|
|
|
3,455 |
|
|
|
2,824 |
|
|
-0.3 |
% |
|
22.0 |
% |
|
|
6,901 |
|
|
|
5,434 |
|
|
27.0 |
% |
Professional and consulting fees |
|
1,134 |
|
|
|
1,325 |
|
|
|
1,013 |
|
|
-14.4 |
% |
|
11.9 |
% |
|
|
2,459 |
|
|
|
2,335 |
|
|
5.3 |
% |
Occupancy, communications and equipment |
|
1,309 |
|
|
|
1,225 |
|
|
|
1,232 |
|
|
6.9 |
% |
|
6.3 |
% |
|
|
2,534 |
|
|
|
2,460 |
|
|
3.0 |
% |
Depreciation and amortization |
|
314 |
|
|
|
339 |
|
|
|
339 |
|
|
-7.4 |
% |
|
-7.4 |
% |
|
|
653 |
|
|
|
670 |
|
|
-2.5 |
% |
Third-party distribution fees |
|
1,621 |
|
|
|
1,649 |
|
|
|
670 |
|
|
-1.7 |
% |
|
141.9 |
% |
|
|
3,270 |
|
|
|
1,597 |
|
|
104.8 |
% |
Acquisition-related costs |
|
6,773 |
|
|
|
1,197 |
|
|
|
— |
|
|
465.8 |
% |
|
n/a |
|
|
|
7,970 |
|
|
|
— |
|
|
n/a |
|
Other |
|
1,726 |
|
|
|
1,653 |
|
|
|
1,725 |
|
|
4.4 |
% |
|
0.1 |
% |
|
|
3,379 |
|
|
|
3,271 |
|
|
3.3 |
% |
Total
expenses |
|
42,638 |
|
|
|
39,030 |
|
|
|
35,748 |
|
|
9.2 |
% |
|
19.3 |
% |
|
|
81,668 |
|
|
|
70,178 |
|
|
16.4 |
% |
Operating
income |
|
10,455 |
|
|
|
16,635 |
|
|
|
18,021 |
|
|
-37.2 |
% |
|
-42.0 |
% |
|
|
27,090 |
|
|
|
34,720 |
|
|
-22.0 |
% |
Other
Income/(Expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
(173 |
) |
|
|
— |
|
|
|
— |
|
|
n/a |
|
|
n/a |
|
|
|
(173 |
) |
|
|
— |
|
|
n/a |
|
Interest
income |
|
612 |
|
|
|
962 |
|
|
|
641 |
|
|
-36.4 |
% |
|
-4.5 |
% |
|
|
1,574 |
|
|
|
1,225 |
|
|
28.5 |
% |
Settlement gain |
|
— |
|
|
|
— |
|
|
|
6,909 |
|
|
n/a |
|
|
n/a |
|
|
|
— |
|
|
|
6,909 |
|
|
n/a |
|
Other
gains and losses, net |
|
(66 |
) |
|
|
(226 |
) |
|
|
(261 |
) |
|
-70.8 |
% |
|
-74.7 |
% |
|
|
(292 |
) |
|
|
364 |
|
|
n/a |
|
Income before
taxes |
$ |
10,828 |
|
|
$ |
17,371 |
|
|
$ |
25,310 |
|
|
-37.7 |
% |
|
-57.2 |
% |
|
$ |
28,199 |
|
|
$ |
43,218 |
|
|
-34.8 |
% |
Operating income
margin |
|
19.7 |
% |
|
|
29.9 |
% |
|
|
33.5 |
% |
|
|
|
|
|
|
|
|
24.9 |
% |
|
|
33.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Business Segment
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
% Change From |
|
Six Months Ended |
|
June 30, 2018 |
|
Mar. 31, 2018 |
|
June 30, 2017 |
|
Mar. 31,
2018 |
|
June 30,
2017 |
|
June 30, 2018 |
|
June 30, 2017 |
|
% Change |
Operating
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory
fees |
$ |
20,847 |
|
|
$ |
2,938 |
|
|
$ |
2,215 |
|
|
609.6 |
% |
|
841.2 |
% |
|
$ |
23,785 |
|
|
$ |
4,217 |
|
|
464.0 |
% |
Other
income |
|
835 |
|
|
|
301 |
|
|
|
258 |
|
|
177.4 |
% |
|
223.6 |
% |
|
|
1,136 |
|
|
|
494 |
|
|
130.0 |
% |
Total
revenues |
|
21,682 |
|
|
|
3,239 |
|
|
|
2,473 |
|
|
569.4 |
% |
|
776.7 |
% |
|
|
24,921 |
|
|
|
4,711 |
|
|
429.0 |
% |
Operating
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
4,775 |
|
|
|
2,461 |
|
|
|
2,511 |
|
|
94.0 |
% |
|
90.2 |
% |
|
|
7,236 |
|
|
|
5,315 |
|
|
36.1 |
% |
Fund
management and administration |
|
5,819 |
|
|
|
1,939 |
|
|
|
1,330 |
|
|
200.1 |
% |
|
337.5 |
% |
|
|
7,758 |
|
|
|
2,603 |
|
|
198.0 |
% |
Marketing
and advertising |
|
791 |
|
|
|
352 |
|
|
|
572 |
|
|
124.7 |
% |
|
38.3 |
% |
|
|
1,143 |
|
|
|
1,040 |
|
|
9.9 |
% |
Sales and
business development |
|
1,057 |
|
|
|
358 |
|
|
|
565 |
|
|
195.3 |
% |
|
87.1 |
% |
|
|
1,415 |
|
|
|
917 |
|
|
54.3 |
% |
Contractual gold payments |
|
2,715 |
|
|
|
— |
|
|
|
— |
|
|
n/a |
|
|
n/a |
|
|
|
2,715 |
|
|
|
— |
|
|
n/a |
|
Professional and consulting fees |
|
426 |
|
|
|
311 |
|
|
|
208 |
|
|
37.0 |
% |
|
104.8 |
% |
|
|
737 |
|
|
|
444 |
|
|
66.0 |
% |
Occupancy, communications and equipment |
|
265 |
|
|
|
138 |
|
|
|
139 |
|
|
92.0 |
% |
|
90.6 |
% |
|
|
403 |
|
|
|
264 |
|
|
52.7 |
% |
Depreciation and amortization |
|
23 |
|
|
|
16 |
|
|
|
13 |
|
|
43.8 |
% |
|
76.9 |
% |
|
|
39 |
|
|
|
19 |
|
|
105.3 |
% |
Third-party distribution fees |
|
45 |
|
|
|
76 |
|
|
|
— |
|
|
-40.8 |
% |
|
n/a |
|
|
|
121 |
|
|
|
5 |
|
|
n/a |
|
Acquisition-related costs |
|
1,155 |
|
|
|
865 |
|
|
|
— |
|
|
33.5 |
% |
|
n/a |
|
|
|
2,020 |
|
|
|
— |
|
|
n/a |
|
Other |
|
535 |
|
|
|
137 |
|
|
|
117 |
|
|
290.5 |
% |
|
357.3 |
% |
|
|
672 |
|
|
|
195 |
|
|
244.6 |
% |
Total
expenses |
|
17,606 |
|
|
|
6,653 |
|
|
|
5,455 |
|
|
164.6 |
% |
|
222.7 |
% |
|
|
24,259 |
|
|
|
10,802 |
|
|
124.6 |
% |
Operating
income/(loss) |
|
4,076 |
|
|
|
(3,414 |
) |
|
|
(2,982 |
) |
|
n/a |
|
|
n/a |
|
|
|
662 |
|
|
|
(6,091 |
) |
|
n/a |
|
Other
Income/(Expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
(2,183 |
) |
|
|
— |
|
|
|
— |
|
|
n/a |
|
|
n/a |
|
|
|
(2,183 |
) |
|
|
— |
|
|
n/a |
|
Gain on
revaluation of deferred consideration – gold payments |
|
9,898 |
|
|
|
— |
|
|
|
— |
|
|
n/a |
|
|
n/a |
|
|
|
9,898 |
|
|
|
— |
|
|
n/a |
|
Other
gains and losses, net |
|
(435 |
) |
|
|
(35 |
) |
|
|
(103 |
) |
|
n/a |
|
|
322.3 |
% |
|
|
(470 |
) |
|
|
(80 |
) |
|
487.5 |
% |
Income/(loss) before
taxes |
$ |
11,356 |
|
|
$ |
(3,449 |
) |
|
$ |
(3,085 |
) |
|
n/a |
|
|
n/a |
|
|
$ |
7,907 |
|
|
$ |
(6,171 |
) |
|
n/a |
|
Operating income
margin |
|
18.8 |
% |
|
|
n/a |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
2.7 |
% |
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
June 30, 2018 |
|
December 31, 2017 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
70,744 |
|
|
$ |
54,193 |
|
Securities owned, at fair value |
|
3,719 |
|
|
|
66,294 |
|
Securities held-to-maturity |
|
— |
|
|
|
1,000 |
|
Accounts
receivable |
|
27,329 |
|
|
|
21,309 |
|
Income
taxes receivable |
|
— |
|
|
|
6,978 |
|
Prepaid
expenses |
|
6,545 |
|
|
|
3,550 |
|
Other
current assets |
|
194 |
|
|
|
1,007 |
|
Total
current assets |
|
108,531 |
|
|
|
154,331 |
|
Fixed assets, net |
|
10,028 |
|
|
|
10,693 |
|
Note receivable |
|
24,588 |
|
|
|
18,748 |
|
Securities
held-to-maturity |
|
20,229 |
|
|
|
20,299 |
|
Deferred tax assets,
net |
|
2,024 |
|
|
|
1,050 |
|
Investments, carried at
cost |
|
35,187 |
|
|
|
35,187 |
|
Goodwill |
|
85,856 |
|
|
|
1,799 |
|
Intangible assets |
|
613,227 |
|
|
|
12,085 |
|
Other noncurrent
assets |
|
2,428 |
|
|
|
793 |
|
Total assets |
$ |
902,098 |
|
|
$ |
254,985 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Fund
management and administration payable |
$ |
22,002 |
|
|
$ |
20,099 |
|
Compensation and benefits payable |
|
13,664 |
|
|
|
28,053 |
|
Deferred
consideration – gold payments |
|
11,378 |
|
|
|
— |
|
Income
taxes payable |
|
1,252 |
|
|
|
— |
|
Securities sold, but not yet purchased, at fair value |
|
2,026 |
|
|
|
950 |
|
Payable
to ETFS Capital |
|
7,033 |
|
|
|
— |
|
Accounts
payable and other liabilities |
|
9,366 |
|
|
|
8,246 |
|
Total
current liabilities |
|
66,721 |
|
|
|
57,348 |
|
Long-term
debt |
|
193,407 |
|
|
|
— |
|
Deferred
consideration – gold payments |
|
151,470 |
|
|
|
— |
|
Deferred
rent payable |
|
4,608 |
|
|
|
4,686 |
|
Total
liabilities |
|
416,206 |
|
|
|
62,034 |
|
Preferred stock –
Series A Non-Voting Convertible, par value $0.01; 14,750 shares
authorized, issued and outstanding |
|
132,569 |
|
|
|
— |
|
STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
Common stock, par value
$0.01; 250,000 shares authorized: |
|
|
|
|
|
|
|
Issued
and outstanding: 153,142 and 136,996 at June 30, 2018 and
December 31, 2017, respectively |
|
1,531 |
|
|
|
1,370 |
|
Additional paid-in
capital |
|
359,066 |
|
|
|
216,006 |
|
Accumulated other
comprehensive income |
|
461 |
|
|
|
291 |
|
Accumulated
deficit |
|
(7,735 |
) |
|
|
(24,716 |
) |
Total stockholders’
equity |
|
353,323 |
|
|
|
192,951 |
|
Total liabilities and
stockholders’ equity |
$ |
902,098 |
|
|
$ |
254,985 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (in
thousands)(Unaudited)
|
|
|
|
Six Months Ended |
|
June 30, 2018 |
|
June 30, 2017 |
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net
income |
$ |
26,148 |
|
|
$ |
18,985 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
Advisory
fees paid in gold and other precious metals |
|
(11,033 |
) |
|
|
— |
|
Contractual gold payments |
|
2,715 |
|
|
|
— |
|
Gain on
revaluation of deferred consideration – gold payments |
|
(9,898 |
) |
|
|
— |
|
Stock-based compensation |
|
6,838 |
|
|
|
6,951 |
|
Deferred
income taxes |
|
(1,055 |
) |
|
|
5,890 |
|
Paid-in-kind interest income |
|
(839 |
) |
|
|
— |
|
Settlement gain |
|
— |
|
|
|
(6,909 |
) |
Amortization of credit facility issuance costs |
|
637 |
|
|
|
— |
|
Depreciation and amortization |
|
692 |
|
|
|
689 |
|
Other |
|
834 |
|
|
|
301 |
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
Securities owned, at fair value |
|
(2,028 |
) |
|
|
1,148 |
|
Accounts
receivable |
|
2,871 |
|
|
|
(1,671 |
) |
Income
taxes receivable/payable |
|
8,109 |
|
|
|
2,217 |
|
Prepaid
expenses |
|
(1,669 |
) |
|
|
(1,405 |
) |
Gold and
other precious metals |
|
8,930 |
|
|
|
— |
|
Other
assets |
|
975 |
|
|
|
143 |
|
Acquisition payable |
|
— |
|
|
|
(3,542 |
) |
Fund
management and administration payable |
|
(380 |
) |
|
|
(729 |
) |
Compensation and benefits payable |
|
(21,170 |
) |
|
|
(3,958 |
) |
Securities sold, but not yet purchased, at fair value |
|
1,077 |
|
|
|
(1,222 |
) |
Payable
to ETFS Capital |
|
222 |
|
|
|
— |
|
Accounts
payable and other liabilities |
|
(2,962 |
) |
|
|
395 |
|
Net cash
provided by operating activities |
|
9,014 |
|
|
|
17,283 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Purchase
of fixed assets |
|
(34 |
) |
|
|
(220 |
) |
Purchase
of securities held-to-maturity |
|
— |
|
|
|
(759 |
) |
Purchase
of debt securities available-for-sale |
|
— |
|
|
|
(38,680 |
) |
Purchase
of investments |
|
— |
|
|
|
(5,000 |
) |
Funding
of AdvisorEngine note receivable |
|
(5,000 |
) |
|
|
— |
|
Proceeds
from held-to-maturity securities maturing or called prior to
maturity |
|
1,063 |
|
|
|
2,102 |
|
Proceeds
from sales and maturities of debt securities
available-for-sale |
|
64,498 |
|
|
|
46,065 |
|
Cash paid
– ETFS Acquisition, net of cash acquired |
|
(233,172 |
) |
|
|
— |
|
Net cash
(used in)/provided by investing activities |
|
(172,645 |
) |
|
|
3,508 |
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
Dividends
paid |
|
(9,167 |
) |
|
|
(21,872 |
) |
Shares
repurchased |
|
(1,006 |
) |
|
|
(3,693 |
) |
Credit
facility issuance costs |
|
(8,690 |
) |
|
|
— |
|
Preferred
stock issuance costs |
|
(181 |
) |
|
|
— |
|
Proceeds
from the issuance of long-term debt |
|
200,000 |
|
|
|
— |
|
Proceeds
from exercise of stock options |
|
139 |
|
|
|
42 |
|
Net cash
provided by/(used in) financing activities |
|
181,095 |
|
|
|
(25,523 |
) |
(Decrease)/increase in cash flows due to changes in foreign
exchange rate |
|
(913 |
) |
|
|
624 |
|
Net
increase/(decrease) in cash and cash equivalents |
|
16,551 |
|
|
|
(4,108 |
) |
Cash and
cash equivalents – beginning of period |
|
54,193 |
|
|
|
92,722 |
|
Cash and
cash equivalents – end of period |
$ |
70,744 |
|
|
$ |
88,614 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
|
|
|
Cash paid
for taxes |
$ |
2,841 |
|
|
$ |
9,708 |
|
Cash paid
for interest |
$ |
1,241 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WisdomTree
Investments, Inc. |
|
|
|
Key Operating
Statistics (Unaudited) |
|
|
|
|
Three Months Ended |
|
June 30, 2018 |
|
Mar. 31, 2018 |
|
June 30, 2017 |
U.S. LISTED
ETFs (in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
42,886 |
|
|
$ |
46,827 |
|
|
$ |
41,940 |
|
Inflows/(outflows) |
|
(1,231 |
) |
|
|
(2,167 |
) |
|
|
605 |
|
Market
appreciation/(depreciation) |
|
(315 |
) |
|
|
(1,774 |
) |
|
|
638 |
|
End of period
assets |
$ |
41,340 |
|
|
$ |
42,886 |
|
|
$ |
43,183 |
|
Average
assets during the period |
$ |
43,464 |
|
|
$ |
45,618 |
|
|
$ |
42,961 |
|
Average
ETF advisory fee during the period |
|
0.49 |
% |
|
|
0.49 |
% |
|
|
0.50 |
% |
Revenue
days |
|
91 |
|
|
|
90 |
|
|
|
91 |
|
Number of
ETFs – end of the period |
|
81 |
|
|
|
81 |
|
|
|
90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
INTERNATIONAL
LISTED ETPs (in millions) |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
2,075 |
|
|
$ |
2,110 |
|
|
$ |
1,424 |
|
Assets
acquired |
|
17,641 |
|
|
|
— |
|
|
|
— |
|
Inflows/(outflows) |
|
(25 |
) |
|
|
(45 |
) |
|
|
163 |
|
Market
appreciation/(depreciation) |
|
(1,062 |
) |
|
|
10 |
|
|
|
(40 |
) |
End of
period assets |
$ |
18,629 |
|
|
$ |
2,075 |
|
|
$ |
1,547 |
|
Average
assets during the period |
$ |
17,837 |
|
|
$ |
2,106 |
|
|
$ |
1,446 |
|
Average
ETP advisory fee during the period |
|
0.47 |
% |
|
|
0.57 |
% |
|
|
0.61 |
% |
Revenue
days |
|
91 |
|
|
|
90 |
|
|
|
91 |
|
Number of
ETPs – end of the period |
|
445 |
|
|
|
99 |
|
|
|
93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
PRODUCT
CATEGORIES (in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Developed Market Equity |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
22,432 |
|
|
$ |
25,950 |
|
|
$ |
24,057 |
|
Inflows/(outflows) |
|
(1,502 |
) |
|
|
(2,705 |
) |
|
|
125 |
|
Market
appreciation/(depreciation) |
|
(599 |
) |
|
|
(813 |
) |
|
|
465 |
|
End of
period assets |
$ |
20,331 |
|
|
$ |
22,432 |
|
|
$ |
24,647 |
|
Average
assets during the period |
$ |
22,455 |
|
|
$ |
24,435 |
|
|
$ |
24,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity &
Currency |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
416 |
|
|
$ |
445 |
|
|
$ |
519 |
|
Assets
acquired |
|
16,778 |
|
|
|
— |
|
|
|
— |
|
Inflows/(outflows) |
|
(99 |
) |
|
|
(28 |
) |
|
|
(44 |
) |
Market
appreciation/(depreciation) |
|
(928 |
) |
|
|
(1 |
) |
|
|
(11 |
) |
End of
period assets |
$ |
16,167 |
|
|
$ |
416 |
|
|
$ |
464 |
|
Average
assets during the period |
$ |
15,316 |
|
|
$ |
426 |
|
|
$ |
488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Equity |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
13,359 |
|
|
$ |
14,234 |
|
|
$ |
12,516 |
|
Inflows/(outflows) |
|
114 |
|
|
|
48 |
|
|
|
248 |
|
Market
appreciation/(depreciation) |
|
828 |
|
|
|
(923 |
) |
|
|
124 |
|
End of
period assets |
$ |
14,301 |
|
|
$ |
13,359 |
|
|
$ |
12,888 |
|
Average
assets during the period |
$ |
14,021 |
|
|
$ |
14,122 |
|
|
$ |
12,629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging Market
Equity |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
6,289 |
|
|
$ |
5,887 |
|
|
$ |
4,563 |
|
Inflows/(outflows) |
|
(120 |
) |
|
|
425 |
|
|
|
191 |
|
Market
appreciation/(depreciation) |
|
(526 |
) |
|
|
(23 |
) |
|
|
74 |
|
End of
period assets |
$ |
5,643 |
|
|
$ |
6,289 |
|
|
$ |
4,828 |
|
Average
assets during the period |
$ |
6,116 |
|
|
$ |
6,259 |
|
|
$ |
4,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Leveraged &
Inverse |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
872 |
|
|
$ |
930 |
|
|
$ |
773 |
|
Assets
acquired |
|
863 |
|
|
|
— |
|
|
|
— |
|
Inflows/(outflows) |
|
(71 |
) |
|
|
(133 |
) |
|
|
101 |
|
Market
appreciation/(depreciation) |
|
(133 |
) |
|
|
75 |
|
|
|
(65 |
) |
End of
period assets |
$ |
1,531 |
|
|
$ |
872 |
|
|
$ |
809 |
|
Average
assets during the period |
$ |
1,592 |
|
|
$ |
877 |
|
|
$ |
733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
Income |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
1,101 |
|
|
$ |
862 |
|
|
$ |
572 |
|
Inflows/(outflows) |
|
349 |
|
|
|
253 |
|
|
|
43 |
|
Market
appreciation/(depreciation) |
|
(39 |
) |
|
|
(14 |
) |
|
|
5 |
|
End of
period assets |
$ |
1,411 |
|
|
$ |
1,101 |
|
|
$ |
620 |
|
Average
assets during the period |
$ |
1,230 |
|
|
$ |
1,014 |
|
|
$ |
604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternatives |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
492 |
|
|
$ |
582 |
|
|
$ |
276 |
|
Inflows/(outflows) |
|
66 |
|
|
|
(70 |
) |
|
|
122 |
|
Market
appreciation/(depreciation) |
|
20 |
|
|
|
(20 |
) |
|
|
6 |
|
End of
period assets |
$ |
578 |
|
|
$ |
492 |
|
|
$ |
404 |
|
Average
assets during the period |
$ |
564 |
|
|
$ |
547 |
|
|
$ |
348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed
ETPs |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
— |
|
|
$ |
47 |
|
|
$ |
88 |
|
Inflows/(outflows) |
|
7 |
|
|
|
(2 |
) |
|
|
(18 |
) |
Market
appreciation/(depreciation) |
|
— |
|
|
|
(45 |
) |
|
|
— |
|
End of
period assets |
$ |
7 |
|
|
$ |
— |
|
|
$ |
70 |
|
Average
assets during the period |
$ |
7 |
|
|
$ |
44 |
|
|
$ |
69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Headcount –
U.S. Business segment |
|
155 |
|
|
|
157 |
|
|
|
166 |
|
Headcount –
International Business segment |
|
76 |
|
|
|
34 |
|
|
|
46 |
|
Note: Previously issued statistics may be restated due to trade
adjustments Source: 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:
- Adjusted net income and adjusted diluted net income per
share. We disclose adjusted net income and adjusted diluted
net income 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. These non-GAAP financial
measures exclude the following:
- Unrealized gains or losses on the revaluation of deferred
consideration: Deferred consideration is an obligation we
assumed in connection with the ETFS Acquisition that is carried at
fair value. This item represents the present value of an
obligation to pay fixed ounces of gold into perpetuity and is
measured using forward-looking gold prices. Changes in the
price of gold may have a material impact on the carrying value of
the deferred consideration and our reported net income. We
exclude this item when arriving at adjusted net income and adjusted
diluted net income per share as it is not core to our operating
business. The item is not adjusted for income taxes as the
obligation was assumed by a wholly-owned subsidiary of ours that is
based in Jersey, a jurisdiction where we are subject to a zero
percent tax rate.
- Non-recurring items: The following non-recurring items
are excluded when arriving at adjusted net income and adjusted
earnings per share (i) acquisition-related costs of $7.9 million
(or $7.5 million after-tax) and $2.1 million (or $1.9 million
after-tax) for the second quarter and first quarter of 2018,
respectively and (ii) a settlement gain of $6.9 million (or $4.3
million after-tax) for the second quarter of 2017.
- 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 “adjusted net income
and adjusted diluted net income per share” 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 for our U.S. Business segment and International
Business segment 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
ratios 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.
- Adjusted operating income margin. We disclose adjusted
operating income margin as a non-GAAP financial measurement on a
consolidated basis, as well as for our U.S. Business segment and
International Business segment in order to report our operating
income margin exclusive of items that are non-recurring or not core
to our operating business.
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES |
GAAP to NON-GAAP
RECONCILIATION |
|
(in thousands) |
(Unaudited) |
Consolidated |
|
|
Three Months Ended |
|
|
June 30, |
|
Mar. 31, |
|
June 30, |
Adjusted Net Income and Diluted Net Income per
Share: |
|
2018 |
|
2018 |
|
2017 |
Net income, as
reported |
|
$ |
16,724 |
|
|
$ |
9,424 |
|
|
$ |
12,105 |
|
Add back:
Acquisition-related costs, net of income taxes |
|
|
7,489 |
|
|
|
1,851 |
|
|
|
— |
|
Less:
Unrealized gain on revaluation of deferred consideration |
|
|
(9,898 |
) |
|
|
— |
|
|
|
— |
|
Less: Settlement gain, net of income taxes |
|
|
— |
|
|
|
— |
|
|
|
(4,256 |
) |
Adjusted net
income |
|
$ |
14,315 |
|
|
$ |
11,275 |
|
|
$ |
7,849 |
|
Weighted average common
shares - diluted |
|
|
163,346 |
|
|
|
136,468 |
|
|
|
135,574 |
|
Adjusted net income per
share - diluted |
|
$ |
0.09 |
|
|
$ |
0.08 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, |
|
Mar. 31, |
|
June 30, |
Adjusted Operating Income Margin: |
|
2018 |
|
2018 |
|
2017 |
Operating
revenues |
|
$ |
74,775 |
|
|
$ |
58,904 |
|
|
|
n/a |
|
Operating income |
|
$ |
14,531 |
|
|
$ |
13,221 |
|
|
|
n/a |
|
Add back:
Acquisition-related costs, before income taxes |
|
|
7,928 |
|
|
|
2,062 |
|
|
|
n/a |
|
Adjusted operating
income |
|
$ |
22,459 |
|
|
$ |
15,283 |
|
|
|
n/a |
|
Adjusted operating
income margin |
|
|
30.0 |
% |
|
|
25.9 |
% |
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, |
|
Mar. 31, |
|
June 30, |
Adjusted Effective Income Tax Rate: |
|
2018 |
|
2018 |
|
2017 |
Income before income
taxes |
|
$ |
22,184 |
|
|
$ |
13,922 |
|
|
$ |
22,225 |
|
Add back:
Acquisition-related costs, before income taxes |
|
|
7,928 |
|
|
|
2,062 |
|
|
|
— |
|
Less:
Unrealized gain on revaluation of deferred consideration |
|
|
(9,898 |
) |
|
|
— |
|
|
|
— |
|
Less: Settlement gain, before income taxes |
|
|
— |
|
|
|
— |
|
|
|
(6,909 |
) |
Adjusted income before
income taxes |
|
$ |
20,214 |
|
|
$ |
15,984 |
|
|
$ |
15,316 |
|
Income tax
expense |
|
$ |
5,460 |
|
|
$ |
4,498 |
|
|
$ |
10,120 |
|
Add back:
Tax benefit arising from acquisition-related costs |
|
|
439 |
|
|
|
211 |
|
|
|
— |
|
Less: Tax
expense arising from revaluation of deferred consideration |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Less: Tax
expense arising from settlement gain |
|
|
— |
|
|
|
— |
|
|
|
(2,653 |
) |
Adjusted income tax
expense |
|
$ |
5,899 |
|
|
$ |
4,709 |
|
|
$ |
7,467 |
|
Adjusted effective
income tax rate |
|
|
29.2 |
% |
|
|
29.5 |
% |
|
|
48.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Business
Segment |
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, |
|
Mar. 31, |
|
June 30, |
Gross Margin and Gross Margin Percentage:
|
|
2018 |
|
2018 |
|
2017 |
Operating
revenues |
|
$ |
53,093 |
|
|
$ |
55,665 |
|
|
53,769 |
|
Less:
Fund management and administration |
|
|
(8,802 |
) |
|
|
(8,973 |
) |
|
(8,782 |
) |
Gross margin |
|
$ |
44,291 |
|
|
$ |
46,692 |
|
|
44,987 |
|
Gross margin
percentage |
|
|
83.4 |
% |
|
|
83.9 |
% |
|
83.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, |
|
Mar. 31, |
|
June 30, |
Adjusted Operating Income Margin: |
|
2018 |
|
2018 |
|
2017 |
Operating
revenues |
|
$ |
53,093 |
|
|
$ |
55,665 |
|
|
n/a |
|
Operating income |
|
$ |
10,455 |
|
|
$ |
16,635 |
|
|
n/a |
|
Add back:
Acquisition-related costs, before income taxes |
|
|
6,773 |
|
|
|
1,197 |
|
|
n/a |
|
Adjusted operating
income |
|
$ |
17,228 |
|
|
$ |
17,832 |
|
|
n/a |
|
Adjusted operating
income margin |
|
|
32.4 |
% |
|
|
32.0 |
% |
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
International Business Segment
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, |
|
Mar. 31, |
|
June 30, |
Gross Margin and Gross Margin Percentage: |
|
2018 |
|
2018 |
|
2017 |
Operating
revenues |
|
$ |
21,682 |
|
|
$ |
3,239 |
|
|
$ |
2,473 |
|
Less:
Fund management and administration |
|
|
(5,819 |
) |
|
|
(1,939 |
) |
|
|
(1,330 |
) |
Gross margin |
|
$ |
15,863 |
|
|
$ |
1,300 |
|
|
$ |
1,143 |
|
Gross margin
percentage |
|
|
73.2 |
% |
|
|
40.1 |
% |
|
|
46.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, |
|
Mar. 31, |
|
June 30, |
Adjusted Operating Income Margin: |
|
2018 |
|
2018 |
|
2017 |
Operating
revenues |
|
$ |
21,682 |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
4,076 |
|
|
|
n/a |
|
|
|
n/a |
|
Add back:
Acquisition-related costs, before income taxes |
|
|
1,155 |
|
|
|
n/a |
|
|
|
n/a |
|
Adjusted operating
income |
|
$ |
5,231 |
|
|
|
n/a |
|
|
|
n/a |
|
Adjusted operating
income margin |
|
|
24.1 |
% |
|
|
n/a |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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