$22.0 million net income, or $14.7 million as
adjusted
$0.13 diluted EPS for the quarter, or
$0.09 as adjusted
Declares $0.03 quarterly
dividend
NEW YORK, Oct. 26, 2018 (GLOBE NEWSWIRE) -- WisdomTree
Investments, Inc. (NASDAQ: WETF), an exchange-traded fund (“ETF”)
and exchange-traded product (“ETP”) sponsor and asset manager today
reported net income of $22.0 million or $0.13 diluted EPS in the
third quarter. Adjusted net income (a non-GAAP
measure1) was $14.7 million1 or $0.09 diluted
EPS1. This compares to net income of $8.0 million
or $0.06 diluted EPS in the third quarter of last year and net
income of $16.7 million or $0.10 diluted EPS (as adjusted, $14.3
million1 or $0.09 diluted EPS1) in the second
quarter of 2018.
WisdomTree CEO and President Jonathan Steinberg said, “The asset
and wealth management industry continues to evolve with increasing
pressure being exerted on legacy product structures and business
models. WisdomTree has always operated with an eye towards the
future and is well positioned to navigate this environment.
Our Modern Alpha™ approach combines the promise of
active management with the benefits of the ETF structure to deliver
a better investing experience while preserving attractive and
sustainable economics for our shareholders. The marriage of our
differentiated and strong performing product set, modern
distribution approach and technology-driven, award winning
solutions program positions WisdomTree for the next wave of
growth.”
“One highlight stems from product innovations in 2013/2014 when
WisdomTree launched a suite of fixed income ETFs in the U.S.,
designed for a rising interest rate environment. These products
found the perfect market environment in 2018, performing exactly as
designed and attracting significant inflows. This same fixed income
product suite has since taken in nearly $700 million of flows
through the first three quarters of the year and remains very well
positioned for further growth.” Steinberg continued.
|
|
Three Months Ended |
|
Change From |
|
|
Sept. 30, |
|
June 30, |
|
Sept. 30, |
|
June 30, |
|
Sept. 30, |
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Consolidated Operating Highlights ($, in
billions): |
|
|
|
|
|
|
|
|
|
|
AUM |
|
$ |
59.1 |
|
|
$ |
60.0 |
|
|
$ |
46.4 |
|
|
|
(1.4 |
%) |
|
|
27.5 |
% |
Assets acquired |
|
|
n/a |
|
|
$ |
17.6 |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
Net inflows/(outflows) |
|
$ |
(1.3 |
) |
|
$ |
(1.3 |
) |
|
$ |
(0.3 |
) |
|
|
(0.3 |
%) |
|
|
337.8 |
% |
Average AUM |
|
$ |
59.5 |
|
|
$ |
61.3 |
|
|
$ |
45.2 |
|
|
|
(3.0 |
%) |
|
|
31.5 |
% |
Average advisory fee |
|
|
0.48 |
% |
|
|
0.48 |
% |
|
|
0.50 |
% |
|
|
— |
|
|
|
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Highlights ($, in millions,
except per share amounts): |
|
|
|
|
|
|
|
|
|
|
Operating revenues |
|
$ |
72.6 |
|
|
$ |
74.8 |
|
|
$ |
57.7 |
|
|
|
-2.9 |
% |
|
|
25.7 |
% |
Net income |
|
$ |
22.0 |
|
|
$ |
16.7 |
|
|
$ |
8.0 |
|
|
|
31.8 |
% |
|
|
176.4 |
% |
Diluted earnings per share |
|
$ |
0.13 |
|
|
$ |
0.10 |
|
|
$ |
0.06 |
|
|
$ |
0.03 |
|
|
$ |
0.07 |
|
Operating income margin |
|
|
29.9 |
% |
|
|
19.4 |
% |
|
|
26.4 |
% |
|
|
10.5 |
|
|
|
3.5 |
|
Non-GAAP1 |
|
|
|
|
|
|
|
|
|
|
Net income, as adjusted |
|
$ |
14.7 |
|
|
$ |
14.3 |
|
|
|
n/a |
|
|
|
2.5 |
% |
|
|
n/a |
|
Diluted earnings per share, as adjusted |
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
|
n/a |
|
|
$ |
0.00 |
|
|
|
n/a |
|
Operating income margin, as adjusted |
|
|
30.5 |
% |
|
|
30.0 |
% |
|
|
n/a |
|
|
|
0.5 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
Recent Business
Developments
Company News
- In August 2018, Ally Invest announced the addition of
commission-free ETFs to its online trading platform, including
WisdomTree’s full range of ETFs.
- In September 2018, the Company announced that the WisdomTree
Digital Portfolio Developer (DPD) won the 2018 WealthManagement.com
Industry Award for “Thought Leadership Initiative” of the Year; and
TCA by E*Trade announced the expansion of its ETF trading platform
to include WisdomTree ETFs.
- In October 2018, the Company announced it collaborated with
PIMCO on three ETF Model Portfolios in which PIMCO’s fixed income
ETFs will be added; and AdvisorEngine announced that the Company’s
Digital Portfolio Developer is now available as a free add-on for
Junxure, AdvisorEngine’s wholly-owned subsidiary.
U.S. Listed Product News
- In August 2018, the Company announced the launch of the
WisdomTree 90/60 U.S. Balanced Fund (NTSX); and the Company
announced the launch of two transparent actively managed
multifactor funds – the WisdomTree Emerging Markets Multifactor
Fund (EMMF) and the WisdomTree International Multifactor Fund
(DWMF).
- In October 2018, the Company announced the restructuring of the
WisdomTree Emerging Markets Consumer Growth Fund (EMCG) and the
WisdomTree Emerging Markets Quality Dividend Growth Fund (DGRE)
from index-based to transparent active funds.
European Listed Product News
- In August 2018, the Company announced the launch of three new
currency hedged share classes for the WisdomTree AT1 CoCo Bond
UCITS ETF. Investors can now access USD and GBP hedged options on
the London Stock Exchange and EUR hedged options on the Borsa
Italiana and the Deutsche Börse Xetra; and the Company announced
the launch of two new currency hedged share classes of the
WisdomTree Enhanced Commodity UCITS ETF, making EUR hedged options
available on the Borsa Italiana and Deutsche Börse Xetra, and GBP
hedged options available on the London Stock Exchange.
- In October 2018, following the acquisition of ETF Securities in
April, the Company successfully completed the migration of all
content relating to legacy-ETFS products to the WisdomTree
website.
Canadian Listed Product News
- In August 2018, the Company announced the launch of the
WisdomTree Japan Equity Index ETF – hedged (JAPN) and non-hedged
(JAPN.B) – and the WisdomTree ICBCCS S&P China 500 Index ETF –
non-hedged (CHNA.B) – on the Toronto Stock Exchange.
- In October 2018, the Company announced the launch of the ONE
North American Core Plus Bond ETF (ONEB) on the Toronto Stock
Exchange.
Assets Under Management and Net
Flows
U.S. listed ETF assets under management (“AUM”) was
$41.6 billion at September 30, 2018, up 0.5% from June 30,
2018 due to market appreciation, largely offset by net
outflows. International listed ETPs’ AUM was
$17.6 billion at September 30, 2018, down 5.6% from June 30,
2018 due to market depreciation and net outflows.
Third Quarter Financial
Discussion
The primary reason for the increase in our revenues, expenses
and net income this quarter as compared to the third quarter of
2017 is due to our acquisition of the European exchange-traded
commodity, currency and short-and-leveraged business (“ETFS”) of
ETFS Capital Limited, which was completed on April 11, 2018.
We refer to the acquisition throughout this press release as the
ETFS Acquisition.
Previously disclosed results for the third quarter of 2017
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.
Operating Revenues
Advisory Fees
Advisory fees of $71.7 million increased 25.1% from the third
quarter of 2017 primarily due to the ETFS Acquisition, partly
offset by lower average AUM of our U.S. Business segment.
Advisory fees decreased 2.8% from the second quarter of 2018
primarily due to lower average AUM of our U.S. Business segment,
partly offset by the recognition of a full quarter of advisory fees
from the ETFS Acquisition which was completed on April 11,
2018.
Our average global advisory fee was 0.48%, 0.48% and 0.50%
during the third quarter of 2018, second quarter of 2018 and third
quarter of 2017, respectively. The change as compared to the
third quarter of 2017 was due to the ETFS Acquisition and a change
in product mix.
Other Income
Other income of $0.9 million increased 111.6% from the third
quarter of 2017 primarily due to creation/redemption fees earned
from the ETFS exchange-traded products. Other income was
essentially unchanged from the second quarter of 2018.
Margins
Gross margin for our U.S. Business segment was 82.3%1
in the third quarter of 2018 as compared to 83.3%1 2 in
the third quarter of 2017 and 83.4%1 in the second
quarter of 2018. The decline as compared to the prior periods
was primarily due to lower AUM levels, coupled with new regulatory
expenses and costs associated with recent product launches.
Gross margin for our International Business segment was
71.3%1 in the third quarter of 2018 as compared to
40.0%1 in the third quarter of 2017 and
73.2%1 in the second quarter of 2018. The change
in gross margin for our International Business segment from the
third quarter of 2017 was due to the ETFS Acquisition. The
decline from the second quarter of 2018 was primarily due to
expenses associated with recent product launches.
Operating income margin on a consolidated basis was 29.9% in the
third quarter of 2018 (as adjusted 30.5%1) as compared
to 26.4% in the third quarter of 2017 and 19.4% in the second
quarter of 2018 (as adjusted 30.0%1).
Pre-tax margin on a consolidated basis was 37.9% in the third
quarter of 2018 as compared to 26.8% in the third quarter of 2017
and 29.7% in the second quarter of 2018.
Operating Expenses
Total operating expenses were $50.9 million for the third
quarter of 2018, up 19.7% from the third quarter of 2017 and down
15.6% from the second quarter of 2018. Operating expenses
increased from the third quarter of 2017 primarily due to the ETFS
Acquisition. The decline from the second quarter of 2018 was
primarily due to lower acquisition-related costs which were $0.5
million in the third quarter of 2018 and $7.9 million in the second
quarter of 2018, respectively.
- Compensation and benefits expense decreased 10.0% from the
third quarter of 2017 to $17.5 million due to lower incentive
compensation within our U.S. Business segment, partly offset by
higher compensation of our International Business segment due to
the ETFS Acquisition. These expenses decreased 9.1% from the
second quarter of 2018 primarily due to lower incentive
compensation within our U.S. Business segment. Headcount of
our U.S. Business segment was 151, 155 and 165 and our
International Business segment was 76, 76 and 43 at September 30,
2018, June 30, 2018 and September 30, 2017, respectively.
- Fund management and administration expense increased 40.8% from
the third quarter of 2017 to $15.3 million due to higher average
AUM of our International Business segment primarily associated with
the ETFS Acquisition. These expenses increased 4.6% from the
second quarter of 2018 primarily due to the recognition of a full
quarter of expense from the ETFS Acquisition which was completed on
April, 11, 2018. We had 84 U.S. listed ETFs and 451
International listed ETPs at the end of the quarter.
- Marketing and advertising expense was essentially unchanged
from the third quarter of 2017. These expenses decreased
14.3% from the second quarter of 2018 to $3.2 million due to lower
levels of spending in our U.S. Business segment, as previously
disclosed.
- Sales and business development expense was essentially
unchanged from the third quarter of 2017. These expenses
decreased 15.6% from the second quarter of 2018 to $3.8 million
primarily due to lower spending on sales related activities in our
U.S. Business segment, as previously disclosed.
- Contractual gold payments expense was $2.9 million during the
third quarter of 2018, which was associated with the payment of
2,375 ounces of gold at an average daily spot price of $1,213 per
ounce. For the period April 11 through June 30, 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 86.9% and 24.0% from
the third quarter of 2017 and second quarter of 2018, respectively,
to $1.9 million due to higher professional and corporate
consulting-related expenses in our U.S. Business segment.
- Occupancy, communications and equipment expense increased 25.0%
from the third quarter of 2017 to $1.7 million due to office space
associated with the ETFS Acquisition, as well as higher real estate
taxes. These expenses increased 9.4% from the second quarter
of 2018 due to higher real estate taxes.
- Third-party distribution fees increased 98.2% from the third
quarter of 2017 to $1.4 million primarily due to a new distribution
relationship announced in the fourth quarter of 2017. These
expenses decreased 15.5% from the second quarter of 2018 primarily
due to lower fees paid to our third-party marketing agent in Latin
America.
- Acquisition-related costs decreased 94.2% from the second
quarter of 2018 to $0.5 million and primarily included costs
associated with the integration of ETFS. Costs incurred in
the prior quarter included professional advisor fees payable upon
completion of the ETFS Acquisition, a write-off of our office lease
and compensation and other integration costs.
- Other expenses increased 31.9% from the third quarter of 2017
to $2.3 million primarily due to higher International Business
segment office expenses associated with an increase in headcount
from the ETFS Acquisition. These expenses were essentially
unchanged from the second quarter of 2018.
Other Income/(Expenses)
- Interest expense increased 16.6% from the second quarter of
2018 to $2.7 million primarily due to the recognition of a full
quarter of expense as borrowing under our term loan commenced on
April 11, 2018.
- We recognized a gain on revaluation of deferred consideration
of $7.7 million during the third quarter of 2018 as compared to a
gain of $9.9 million recognized in the second quarter of
2018. The gain arose in the current quarter as the price of
gold decreased when compared to the price on June 30, 2018, the
date on which the deferred consideration was last measured.
The magnitude of any gain or loss recognized is highly correlated
to the magnitude of the change in the price of gold.
- Interest income was essentially unchanged from the third
quarter of 2017. This item increased 17.5% from the second
quarter of 2018 to $0.7 million due to higher paid-in-kind (“PIK”)
interest on a note receivable from AdvisorEngine Inc.
- Other net gains of $0.1 million recognized in the third quarter
of 2018 arose from the recognition of an insurance claim
reimbursement, partly offset by miscellaneous foreign exchange
losses. We reported other net losses of $0.5 million in the
third quarter of 2017 which were primarily associated with our
short-term investment grade bond portfolio and miscellaneous
foreign exchange losses. Other net losses of $0.5 million
reported in the second quarter of 2018 were primarily due to the
sale of gold earned from management fees paid by physically-backed
gold ETPs, as well as miscellaneous foreign exchange losses.
Income Taxes
Our estimated effective income tax rate for the quarter ended
September 30, 2018 of 19.9% (as adjusted 27.6%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
the non-taxable gain on revaluation of deferred consideration and a
lower tax rate on foreign earnings, partly offset by a valuation
allowance on foreign net operating losses and state and local
income taxes.
Nine Month Results
Total operating revenues increased 23.3% to $206.2 million for
the nine months ended September 30, 2018 primarily due to the ETFS
Acquisition. Total operating expenses increased 27.0% to
$156.8 million primarily due to expenses associated with the ETFS
acquired business. In addition, operating expenses for the
nine months ended September 30, 2018 include acquisition-related
costs of $10.4 million.
Other income/(expenses) for the nine months ended September 30,
2018 includes $5.1 million of interest expense, a gain on
revaluation of deferred consideration of $17.6 million, interest
income of $2.3 million and other net losses of $0.6 million.
Other net losses arose from our short-term investment grade bond
portfolio, the sale of gold earned from advisory fees paid by
physically-backed gold ETPs and miscellaneous foreign exchange
losses. These losses were partly offset by an insurance claim
reimbursement. In addition, the prior year period includes a
settlement gain of $6.9 million.
Balance Sheet
As of September 30, 2018, we had total assets of
$909.8 million which consisted primarily of intangible assets
of $613.3 million, goodwill of $85.9 million, cash and cash
equivalents of $77.1 million, investments, carried at cost of
$35.2 million, note receivable of $28.1 million, accounts
receivable of $25.5 million and securities held-to-maturity of
$20.1 million. There were approximately 153.1 million
shares of our common stock outstanding as of September 30, 2018.
Fully diluted weighted average shares outstanding were
166.6 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
November 21, 2018 to stockholders of record as of the close of
business on November 7, 2018.
Conference Call
WisdomTree will discuss its results and operational highlights
during a conference call on Friday, October 26, 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 was significant in size relative to our
assets and operations and has resulted 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 and Canada (collectively, “WisdomTree”), is an ETF and
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 $56.3 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 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
|
|
Nine Months
Ended
|
|
Sept. 30,
2018
|
|
June 30,
2018
|
|
Sept. 30,
2017
|
|
June 30,
2018
|
|
Sept. 30,
2017
|
|
Sept. 30,
2018
|
|
Sept. 30,
2017
|
|
%
Change |
Operating
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory
fees |
$ |
71,679 |
|
|
$ |
73,778 |
|
|
$ |
57,293 |
|
|
-2.8 |
% |
|
25.1 |
% |
|
$ |
203,913 |
|
|
$ |
166,177 |
|
|
22.7 |
% |
Other
income |
|
891 |
|
|
|
997 |
|
|
|
421 |
|
|
-10.6 |
% |
|
111.6 |
% |
|
|
2,336 |
|
|
|
1,145 |
|
|
104.0 |
% |
Total
revenues |
|
72,570 |
|
|
|
74,775 |
|
|
|
57,714 |
|
|
-2.9 |
% |
|
25.7 |
% |
|
|
206,249 |
|
|
|
167,322 |
|
|
23.3 |
% |
Operating
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
17,544 |
|
|
|
19,301 |
|
|
|
19,492 |
|
|
-9.1 |
% |
|
-10.0 |
% |
|
|
55,677 |
|
|
|
55,787 |
|
|
-0.2 |
% |
Fund
management and administration |
|
15,292 |
|
|
|
14,621 |
|
|
|
10,862 |
|
|
4.6 |
% |
|
40.8 |
% |
|
|
40,825 |
|
|
|
30,574 |
|
|
33.5 |
% |
Marketing
and advertising |
|
3,239 |
|
|
|
3,778 |
|
|
|
3,314 |
|
|
-14.3 |
% |
|
-2.3 |
% |
|
|
10,212 |
|
|
|
10,676 |
|
|
-4.3 |
% |
Sales and
business development |
|
3,801 |
|
|
|
4,503 |
|
|
|
3,617 |
|
|
-15.6 |
% |
|
5.1 |
% |
|
|
12,117 |
|
|
|
9,968 |
|
|
21.6 |
% |
Contractual gold payments |
|
2,880 |
|
|
|
2,715 |
|
|
|
— |
|
|
6.1 |
% |
|
n/a |
|
|
|
5,595 |
|
|
|
— |
|
|
n/a |
|
Professional and consulting fees |
|
1,934 |
|
|
|
1,560 |
|
|
|
1,035 |
|
|
24.0 |
% |
|
86.9 |
% |
|
|
5,130 |
|
|
|
3,814 |
|
|
34.5 |
% |
Occupancy, communications and equipment |
|
1,722 |
|
|
|
1,574 |
|
|
|
1,378 |
|
|
9.4 |
% |
|
25.0 |
% |
|
|
4,659 |
|
|
|
4,102 |
|
|
13.6 |
% |
Depreciation and amortization |
|
306 |
|
|
|
337 |
|
|
|
353 |
|
|
-9.2 |
% |
|
-13.3 |
% |
|
|
998 |
|
|
|
1,042 |
|
|
-4.2 |
% |
Third-party distribution fees |
|
1,407 |
|
|
|
1,666 |
|
|
|
710 |
|
|
-15.5 |
% |
|
98.2 |
% |
|
|
4,798 |
|
|
|
2,312 |
|
|
107.5 |
% |
Acquisition-related costs |
|
456 |
|
|
|
7,928 |
|
|
|
— |
|
|
-94.2 |
% |
|
n/a |
|
|
|
10,446 |
|
|
|
— |
|
|
n/a |
|
Other |
|
2,281 |
|
|
|
2,261 |
|
|
|
1,729 |
|
|
0.9 |
% |
|
31.9 |
% |
|
|
6,332 |
|
|
|
5,195 |
|
|
21.9 |
% |
Total
expenses |
|
50,862 |
|
|
|
60,244 |
|
|
|
42,490 |
|
|
-15.6 |
% |
|
19.7 |
% |
|
|
156,789 |
|
|
|
123,470 |
|
|
27.0 |
% |
Operating
income |
|
21,708 |
|
|
|
14,531 |
|
|
|
15,224 |
|
|
49.4 |
% |
|
42.6 |
% |
|
|
49,460 |
|
|
|
43,852 |
|
|
12.8 |
% |
Other
Income/(Expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
(2,747 |
) |
|
|
(2,356 |
) |
|
|
— |
|
|
16.6 |
% |
|
n/a |
|
|
|
(5,103 |
) |
|
|
— |
|
|
n/a |
|
Gain on
revaluation of deferred consideration – gold payments |
|
7,732 |
|
|
|
9,898 |
|
|
|
— |
|
|
-21.9 |
% |
|
n/a |
|
|
|
17,630 |
|
|
|
— |
|
|
n/a |
|
Interest
income |
|
719 |
|
|
|
612 |
|
|
|
772 |
|
|
17.5 |
% |
|
-6.9 |
% |
|
|
2,293 |
|
|
|
1,999 |
|
|
14.7 |
% |
Settlement gain |
|
— |
|
|
|
— |
|
|
|
— |
|
|
n/a |
|
|
n/a |
|
|
|
— |
|
|
|
6,909 |
|
|
n/a |
|
Other
gains and losses, net |
|
118 |
|
|
|
(501 |
) |
|
|
(500 |
) |
|
n/a |
|
|
n/a |
|
|
|
(644 |
) |
|
|
(217 |
) |
|
196.8 |
% |
Income before
taxes |
|
27,530 |
|
|
|
22,184 |
|
|
|
15,496 |
|
|
24.1 |
% |
|
77.7 |
% |
|
|
63,636 |
|
|
|
52,543 |
|
|
21.1 |
% |
Income tax
expense |
|
5,481 |
|
|
|
5,460 |
|
|
|
7,520 |
|
|
0.4 |
% |
|
-27.1 |
% |
|
|
15,439 |
|
|
|
25,582 |
|
|
-39.6 |
% |
Net
income |
$ |
22,049 |
|
|
$ |
16,724 |
|
|
$ |
7,976 |
|
|
31.8 |
% |
|
176.4 |
% |
|
$ |
48,197 |
|
|
$ |
26,961 |
|
|
78.8 |
% |
Net income per share –
basic |
$ |
0.13 |
|
|
$ |
0.10 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
$ |
0.31 |
|
|
$ |
0.20 |
|
|
|
|
Net income per share –
diluted |
$ |
0.13 |
|
|
$ |
0.10 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
$ |
0.31 |
|
|
$ |
0.20 |
|
|
|
|
Weighted average common
shares – basic |
|
150,892 |
|
|
|
149,056 |
|
|
|
134,709 |
|
|
|
|
|
|
|
|
|
145,149 |
|
|
|
134,552 |
|
|
|
|
Weighted average common
shares – diluted |
|
166,622 |
|
|
|
163,346 |
|
|
|
135,933 |
|
|
|
|
|
|
|
|
|
155,584 |
|
|
|
135,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES
SEGMENT INFORMATION
(in thousands)
(Unaudited)
The following tables set forth the pre-tax operating results for
the Company’s U.S. Business and International Business
segments.
U.S. Business Segment
|
|
|
|
|
|
|
Three Months
Ended
|
|
% Change
From
|
|
Nine Months
Ended
|
|
Sept. 30,
2018
|
|
June 30,
2018
|
|
Sept. 30,
2017
|
|
June 30,
2018
|
|
Sept. 30,
2017
|
|
Sept. 30,
2018
|
|
Sept. 30,
2017
|
|
%
Change |
Operating
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory
fees |
$ |
50,216 |
|
|
$ |
52,931 |
|
|
$ |
54,749 |
|
|
-5.1 |
% |
|
-8.3 |
% |
|
$ |
158,665 |
|
|
$ |
159,417 |
|
|
-0.5 |
% |
Other
income |
|
173 |
|
|
|
162 |
|
|
|
140 |
|
|
6.8 |
% |
|
23.6 |
% |
|
|
482 |
|
|
|
371 |
|
|
29.9 |
% |
Total
revenues |
|
50,389 |
|
|
|
53,093 |
|
|
|
54,889 |
|
|
-5.1 |
% |
|
-8.2 |
% |
|
|
159,147 |
|
|
|
159,788 |
|
|
-0.4 |
% |
Operating
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
13,040 |
|
|
|
14,526 |
|
|
|
16,967 |
|
|
-10.2 |
% |
|
-23.1 |
% |
|
|
43,937 |
|
|
|
47,947 |
|
|
-8.4 |
% |
Fund
management and administration |
|
8,915 |
|
|
|
8,802 |
|
|
|
9,168 |
|
|
1.3 |
% |
|
-2.8 |
% |
|
|
26,690 |
|
|
|
26,277 |
|
|
1.6 |
% |
Marketing
and advertising |
|
2,469 |
|
|
|
2,987 |
|
|
|
2,795 |
|
|
-17.3 |
% |
|
-11.7 |
% |
|
|
8,299 |
|
|
|
9,117 |
|
|
-9.0 |
% |
Sales and
business development |
|
2,778 |
|
|
|
3,446 |
|
|
|
3,218 |
|
|
-19.4 |
% |
|
-13.7 |
% |
|
|
9,679 |
|
|
|
8,652 |
|
|
11.9 |
% |
Professional and consulting fees |
|
1,544 |
|
|
|
1,134 |
|
|
|
796 |
|
|
36.2 |
% |
|
94.0 |
% |
|
|
4,003 |
|
|
|
3,131 |
|
|
27.9 |
% |
Occupancy, communications and equipment |
|
1,423 |
|
|
|
1,309 |
|
|
|
1,257 |
|
|
8.7 |
% |
|
13.2 |
% |
|
|
3,957 |
|
|
|
3,717 |
|
|
6.5 |
% |
Depreciation and amortization |
|
282 |
|
|
|
314 |
|
|
|
340 |
|
|
-10.2 |
% |
|
-17.1 |
% |
|
|
935 |
|
|
|
1,009 |
|
|
-7.3 |
% |
Third-party distribution fees |
|
1,398 |
|
|
|
1,621 |
|
|
|
705 |
|
|
-13.8 |
% |
|
98.3 |
% |
|
|
4,668 |
|
|
|
2,302 |
|
|
102.8 |
% |
Acquisition-related costs |
|
247 |
|
|
|
6,773 |
|
|
|
— |
|
|
-96.4 |
% |
|
n/a |
|
|
|
8,217 |
|
|
|
— |
|
|
n/a |
|
Other |
|
1,678 |
|
|
|
1,726 |
|
|
|
1,600 |
|
|
-2.8 |
% |
|
4.9 |
% |
|
|
5,057 |
|
|
|
4,871 |
|
|
3.8 |
% |
Total
expenses |
|
33,774 |
|
|
|
42,638 |
|
|
|
36,846 |
|
|
-20.8 |
% |
|
-8.3 |
% |
|
|
115,442 |
|
|
|
107,023 |
|
|
7.9 |
% |
Operating
income |
|
16,615 |
|
|
|
10,455 |
|
|
|
18,043 |
|
|
58.9 |
% |
|
-7.9 |
% |
|
|
43,705 |
|
|
|
52,765 |
|
|
-17.2 |
% |
Other
Income/(Expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
(196 |
) |
|
|
(173 |
) |
|
|
— |
|
|
13.3 |
% |
|
n/a |
|
|
|
(369 |
) |
|
|
— |
|
|
n/a |
|
Interest
income |
|
719 |
|
|
|
612 |
|
|
|
772 |
|
|
17.5 |
% |
|
-6.9 |
% |
|
|
2,293 |
|
|
|
1,999 |
|
|
14.7 |
% |
Settlement gain |
|
— |
|
|
|
— |
|
|
|
— |
|
|
n/a |
|
|
n/a |
|
|
|
— |
|
|
|
6,909 |
|
|
n/a |
|
Other
gains and losses, net |
|
318 |
|
|
|
(66 |
) |
|
|
(322 |
) |
|
n/a |
|
|
n/a |
|
|
|
26 |
|
|
|
39 |
|
|
-33.3 |
% |
Income before
taxes |
$ |
17,456 |
|
|
$ |
10,828 |
|
|
$ |
18,493 |
|
|
61.2 |
% |
|
-5.6 |
% |
|
$ |
45,655 |
|
|
$ |
61,712 |
|
|
-26.0 |
% |
Operating income
margin |
|
33.0 |
% |
|
|
19.7 |
% |
|
|
32.9 |
% |
|
|
|
|
|
|
|
|
27.5 |
% |
|
|
33.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Business Segment
|
|
|
|
|
|
|
Three Months Ended
|
|
% Change From
|
|
Nine Months Ended
|
|
Sept. 30,
2018
|
|
June 30,
2018
|
|
Sept. 30,
2017
|
|
June 30,
2018 |
|
Sept. 30,
2017 |
|
Sept. 30,
2018
|
|
Sept. 30,
2017
|
|
%
Change
|
Operating
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory
fees |
$ |
21,463 |
|
|
$ |
20,847 |
|
|
$ |
2,544 |
|
|
3.0 % |
|
743.7 |
% |
|
$ |
45,248 |
|
|
$ |
6,760 |
|
|
569.3 |
% |
Other
income |
|
718 |
|
|
|
835 |
|
|
|
281 |
|
|
-14.0% |
|
155.5 |
% |
|
|
1,854 |
|
|
|
774 |
|
|
139.5 |
% |
Total
revenues |
|
22,181 |
|
|
|
21,682 |
|
|
|
2,825 |
|
|
2.3 % |
|
685.2 |
% |
|
|
47,102 |
|
|
|
7,534 |
|
|
525.2 |
% |
Operating
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
4,504 |
|
|
|
4,775 |
|
|
|
2,525 |
|
|
-5.7% |
|
78.4 |
% |
|
|
11,740 |
|
|
|
7,840 |
|
|
49.7 |
% |
Fund
management and administration |
|
6,377 |
|
|
|
5,819 |
|
|
|
1,694 |
|
|
9.6 % |
|
276.4 |
% |
|
|
14,135 |
|
|
|
4,297 |
|
|
229.0 |
% |
Marketing
and advertising |
|
770 |
|
|
|
791 |
|
|
|
519 |
|
|
-2.7% |
|
48.4 |
% |
|
|
1,913 |
|
|
|
1,559 |
|
|
22.7 |
% |
Sales and
business development |
|
1,023 |
|
|
|
1,057 |
|
|
|
399 |
|
|
-3.2% |
|
156.4 |
% |
|
|
2,438 |
|
|
|
1,316 |
|
|
85.3 |
% |
Contractual gold payments |
|
2,880 |
|
|
|
2,715 |
|
|
|
— |
|
|
6.1 % |
|
n/a |
|
|
|
5,595 |
|
|
|
— |
|
|
n/a |
|
Professional and consulting fees |
|
390 |
|
|
|
426 |
|
|
|
239 |
|
|
-8.5% |
|
63.2 |
% |
|
|
1,127 |
|
|
|
683 |
|
|
65.0 |
% |
Occupancy, communications and equipment |
|
299 |
|
|
|
265 |
|
|
|
121 |
|
|
12.8 % |
|
147.1 |
% |
|
|
702 |
|
|
|
385 |
|
|
82.3 |
% |
Depreciation and amortization |
|
24 |
|
|
|
23 |
|
|
|
13 |
|
|
4.3 % |
|
84.6 |
% |
|
|
63 |
|
|
|
33 |
|
|
90.9 |
% |
Third-party distribution fees |
|
9 |
|
|
|
45 |
|
|
|
5 |
|
|
-80.0% |
|
80.0 |
% |
|
|
130 |
|
|
|
10 |
|
|
1200.0 |
% |
Acquisition-related costs |
|
209 |
|
|
|
1,155 |
|
|
|
— |
|
|
-81.9% |
|
n/a |
|
|
|
2,229 |
|
|
|
— |
|
|
n/a |
|
Other |
|
603 |
|
|
|
535 |
|
|
|
129 |
|
|
12.7 % |
|
367.4 |
% |
|
|
1,275 |
|
|
|
324 |
|
|
293.5 |
% |
Total
expenses |
|
17,088 |
|
|
|
17,606 |
|
|
|
5,644 |
|
|
-2.9% |
|
202.8 |
% |
|
|
41,347 |
|
|
|
16,447 |
|
|
151.4 |
% |
Operating
income/(loss) |
|
5,093 |
|
|
|
4,076 |
|
|
|
(2,819 |
) |
|
25.0 % |
|
n/a |
|
|
|
5,755 |
|
|
|
(8,913 |
) |
|
n/a |
|
Other
Income/(Expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
(2,551 |
) |
|
|
(2,183 |
) |
|
|
— |
|
|
16.9 % |
|
n/a |
|
|
|
(4,734 |
) |
|
|
— |
|
|
n/a |
|
Gain on
revaluation of deferred consideration – gold payments |
|
7,732 |
|
|
|
9,898 |
|
|
|
— |
|
|
-21.9% |
|
n/a |
|
|
|
17,630 |
|
|
|
— |
|
|
n/a |
|
Other
gains and losses, net |
|
(200 |
) |
|
|
(435 |
) |
|
|
(178 |
) |
|
-54.0% |
|
12.4 |
% |
|
|
(670 |
) |
|
|
(256 |
) |
|
161.7 |
% |
Income/(loss) before
taxes |
$ |
10,074 |
|
|
$ |
11,356 |
|
|
$ |
(2,997 |
) |
|
-11.3% |
|
n/a |
|
|
$ |
17,981 |
|
|
$ |
(9,169 |
) |
|
n/a |
|
Operating income
margin |
|
23.0 |
% |
|
|
18.8 |
% |
|
|
n/a |
|
|
|
|
|
|
|
|
12.2 |
% |
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
Sept. 30,
2018
|
|
December 31,
2017
|
|
(Unaudited)
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
77,125 |
|
$ |
54,193 |
|
Securities owned, at fair value |
|
4,426 |
|
|
66,294 |
|
Securities held-to-maturity |
|
— |
|
|
1,000 |
|
Accounts
receivable |
|
25,528 |
|
|
21,309 |
|
Income
taxes receivable |
|
— |
|
|
6,978 |
|
Prepaid
expenses |
|
5,505 |
|
|
3,550 |
|
Other
current assets |
|
303 |
|
|
1,007 |
|
Total
current assets |
|
112,887 |
|
|
154,331 |
|
Fixed assets,
net |
|
9,723 |
|
|
10,693 |
|
Note receivable |
|
28,121 |
|
|
18,748 |
|
Securities
held-to-maturity |
|
20,199 |
|
|
20,299 |
|
Deferred tax assets,
net |
|
2,213 |
|
|
1,050 |
|
Investments, carried at
cost |
|
35,187 |
|
|
35,187 |
|
Goodwill |
|
85,856 |
|
|
1,799 |
|
Intangible
assets |
|
613,274 |
|
|
12,085 |
|
Other noncurrent
assets |
|
2,304 |
|
|
793 |
|
Total assets |
$ |
909,764 |
|
$ |
254,985 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Fund
management and administration payable |
$ |
24,383 |
|
$ |
20,099 |
|
Compensation and benefits payable |
|
13,728 |
|
|
28,053 |
|
Deferred
consideration – gold payments |
|
11,788 |
|
|
— |
|
Income
taxes payable |
|
799 |
|
|
— |
|
Securities sold, but not yet purchased, at fair value |
|
2,018 |
|
|
950 |
|
Accounts
payable and other liabilities |
|
8,668 |
|
|
8,246 |
|
Total
current liabilities |
|
61,384 |
|
|
57,348 |
|
Long-term
debt |
|
193,999 |
|
|
— |
|
Deferred
consideration – gold payments |
|
144,267 |
|
|
— |
|
Deferred
rent payable |
|
4,462 |
|
|
4,686 |
|
Total liabilities |
|
404,112 |
|
|
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: 153,083 and 136,996 at September 30, 2018 and
December 31, 2017, respectively |
|
1,531 |
|
|
1,370 |
|
Additional paid-in
capital |
|
361,900 |
|
|
216,006 |
|
Accumulated other
comprehensive income |
|
373 |
|
|
291 |
|
Retained
earnings/(Accumulated deficit) |
|
9,279 |
|
|
(24,716 |
) |
Total stockholders’
equity |
|
373,083 |
|
|
192,951 |
|
Total liabilities and
stockholders’ equity |
$ |
909,764 |
|
$ |
254,985 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
|
|
|
|
Nine Months Ended |
|
Sept. 30,
2018
|
|
Sept. 30,
2017
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net
income |
$ |
48,197 |
|
|
$ |
26,961 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
Advisory
fees paid in gold and other precious metals |
|
(21,998 |
) |
|
|
— |
|
Contractual gold payments |
|
5,595 |
|
|
|
— |
|
Gain on
revaluation of deferred consideration – gold payments |
|
(17,630 |
) |
|
|
— |
|
Stock-based compensation |
|
10,078 |
|
|
|
10,558 |
|
Deferred
income taxes |
|
(1,251 |
) |
|
|
3,823 |
|
Paid-in-kind interest income |
|
(1,373 |
) |
|
|
— |
|
Settlement gain |
|
— |
|
|
|
(6,909 |
) |
Amortization of credit facility issuance costs |
|
1,360 |
|
|
|
— |
|
Depreciation and amortization |
|
998 |
|
|
|
1,042 |
|
Other |
|
810 |
|
|
|
524 |
|
Changes
in operating assets and liabilities, net of the effects of the ETFS
Acquisition: |
|
|
|
|
|
|
|
Securities owned, at fair value |
|
(2,735 |
) |
|
|
1,146 |
|
Accounts
receivable |
|
3,771 |
|
|
|
(1,969 |
) |
Income
taxes receivable/payable |
|
7,654 |
|
|
|
(628 |
) |
Prepaid
expenses |
|
(621 |
) |
|
|
(361 |
) |
Gold and
other precious metals |
|
18,472 |
|
|
|
— |
|
Other
assets |
|
954 |
|
|
|
(31 |
) |
Acquisition payable |
|
— |
|
|
|
(3,545 |
) |
Fund
management and administration payable |
|
1,998 |
|
|
|
561 |
|
Compensation and benefits payable |
|
(21,025 |
) |
|
|
115 |
|
Securities sold, but not yet purchased, at fair value |
|
1,068 |
|
|
|
(1,249 |
) |
Accounts
payable and other liabilities |
|
(4,122 |
) |
|
|
1,041 |
|
Net cash
provided by operating activities |
|
30,200 |
|
|
|
31,079 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Purchase
of fixed assets |
|
(45 |
) |
|
|
(253 |
) |
Purchase
of securities held-to-maturity |
|
— |
|
|
|
(3,009 |
) |
Purchase
of debt securities available-for-sale |
|
— |
|
|
|
(76,776 |
) |
Purchase
of investments |
|
— |
|
|
|
(5,000 |
) |
Funding
of AdvisorEngine note receivable |
|
(8,000 |
) |
|
|
— |
|
Proceeds
from held-to-maturity securities maturing or called prior to
maturity |
|
1,096 |
|
|
|
2,162 |
|
Proceeds
from sales and maturities of debt securities
available-for-sale |
|
64,498 |
|
|
|
65,067 |
|
Cash paid
– ETFS Acquisition, net of cash acquired |
|
(239,313 |
) |
|
|
— |
|
Net cash
used in investing activities |
|
(181,764 |
) |
|
|
(17,809 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
Dividends
paid |
|
(14,202 |
) |
|
|
(32,825 |
) |
Shares
repurchased |
|
(1,430 |
) |
|
|
(4,178 |
) |
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 |
|
157 |
|
|
|
53 |
|
Net cash
provided by/(used in) financing activities |
|
175,654 |
|
|
|
(36,950 |
) |
(Decrease)/increase in
cash flows due to changes in foreign exchange rate |
|
(1,158 |
) |
|
|
1,179 |
|
Net increase/(decrease)
in cash and cash equivalents |
|
22,932 |
|
|
|
(22,501 |
) |
Cash and cash
equivalents – beginning of period |
|
54,193 |
|
|
|
92,722 |
|
Cash and cash
equivalents – end of period |
$ |
77,125 |
|
|
$ |
70,221 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
|
|
|
Cash paid
for taxes |
$ |
8,759 |
|
|
$ |
22,130 |
|
Cash paid
for interest |
$ |
3,351 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WisdomTree Investments, Inc.
Key Operating Statistics (Unaudited)
|
Three Months Ended |
|
Sept. 30,
2018
|
|
June 30,
2018
|
|
Sept. 30,
2017
|
U.S. LISTED
ETFs (in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
41,340 |
|
|
$ |
42,886 |
|
|
$ |
43,183 |
|
Inflows/(outflows) |
|
(878 |
) |
|
|
(1,231 |
) |
|
|
(619 |
) |
Market
appreciation/(depreciation) |
|
1,094 |
|
|
|
(315 |
) |
|
|
1,834 |
|
End of
period assets |
$ |
41,556 |
|
|
$ |
41,340 |
|
|
$ |
44,398 |
|
Average
assets during the period |
$ |
41,555 |
|
|
$ |
43,464 |
|
|
$ |
43,523 |
|
Average
ETF advisory fee during the period |
|
0.48 |
% |
|
|
0.49 |
% |
|
|
0.50 |
% |
Revenue
days |
|
92 |
|
|
|
91 |
|
|
|
92 |
|
Number of
ETFs – end of the period |
|
84 |
|
|
|
81 |
|
|
|
87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
INTERNATIONAL LISTED ETPs (in
millions) |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
18,629 |
|
|
$ |
2,075 |
|
|
$ |
1,547 |
|
Assets
acquired |
|
— |
|
|
|
17,641 |
|
|
|
— |
|
Inflows/(outflows) |
|
(374 |
) |
|
|
(25 |
) |
|
|
333 |
|
Market
appreciation/(depreciation) |
|
(668 |
) |
|
|
(1,062 |
) |
|
|
91 |
|
End of
period assets |
$ |
17,587 |
|
|
$ |
18,629 |
|
|
$ |
1,971 |
|
Average
assets during the period |
$ |
17,905 |
|
|
$ |
17,837 |
|
|
$ |
1,693 |
|
Average
ETP advisory fee during the period |
|
0.48 |
% |
|
|
0.47 |
% |
|
|
0.60 |
% |
Revenue
days |
|
92 |
|
|
|
91 |
|
|
|
92 |
|
Number of
ETPs – end of the period |
|
451 |
|
|
|
445 |
|
|
|
96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
PRODUCT
CATEGORIES (in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Developed Market Equity |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
20,331 |
|
|
$ |
22,432 |
|
|
$ |
24,647 |
|
Inflows/(outflows) |
|
(1,289 |
) |
|
|
(1,502 |
) |
|
|
(550 |
) |
Market
appreciation/(depreciation) |
|
660 |
|
|
|
(599 |
) |
|
|
1,177 |
|
End of
period assets |
$ |
19,702 |
|
|
$ |
20,331 |
|
|
$ |
25,274 |
|
Average
assets during the period |
$ |
19,907 |
|
|
$ |
22,455 |
|
|
$ |
24,704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity &
Currency |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
16,167 |
|
|
$ |
416 |
|
|
$ |
464 |
|
Assets
acquired |
|
— |
|
|
|
16,778 |
|
|
|
— |
|
Inflows/(outflows) |
|
(434 |
) |
|
|
(99 |
) |
|
|
(1 |
) |
Market
appreciation/(depreciation) |
|
(682 |
) |
|
|
(928 |
) |
|
|
2 |
|
End of
period assets |
$ |
15,051 |
|
|
$ |
16,167 |
|
|
$ |
465 |
|
Average
assets during the period |
$ |
15,384 |
|
|
$ |
15,316 |
|
|
$ |
468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Equity |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
14,301 |
|
|
$ |
13,359 |
|
|
$ |
12,888 |
|
Inflows/(outflows) |
|
347 |
|
|
|
114 |
|
|
|
(227 |
) |
Market
appreciation/(depreciation) |
|
539 |
|
|
|
828 |
|
|
|
500 |
|
End of
period assets |
$ |
15,187 |
|
|
$ |
14,301 |
|
|
$ |
13,161 |
|
Average
assets during the period |
$ |
14,950 |
|
|
$ |
14,021 |
|
|
$ |
12,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging Market
Equity |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
5,643 |
|
|
$ |
6,289 |
|
|
$ |
4,828 |
|
Inflows/(outflows) |
|
(216 |
) |
|
|
(120 |
) |
|
|
241 |
|
Market
appreciation/(depreciation) |
|
(81 |
) |
|
|
(526 |
) |
|
|
205 |
|
End of
period assets |
$ |
5,346 |
|
|
$ |
5,643 |
|
|
$ |
5,274 |
|
Average
assets during the period |
$ |
5,548 |
|
|
$ |
6,116 |
|
|
$ |
5,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Leveraged &
Inverse |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
1,531 |
|
|
$ |
872 |
|
|
$ |
809 |
|
Assets
acquired |
|
— |
|
|
|
863 |
|
|
|
— |
|
Inflows/(outflows) |
|
(61 |
) |
|
|
(71 |
) |
|
|
130 |
|
Market
appreciation/(depreciation) |
|
(25 |
) |
|
|
(133 |
) |
|
|
37 |
|
End of
period assets |
$ |
1,445 |
|
|
$ |
1,531 |
|
|
$ |
976 |
|
Average
assets during the period |
$ |
1,489 |
|
|
$ |
1,592 |
|
|
$ |
867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
Income |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
1,411 |
|
|
$ |
1,101 |
|
|
$ |
620 |
|
Inflows/(outflows) |
|
329 |
|
|
|
349 |
|
|
|
86 |
|
Market
appreciation/(depreciation) |
|
(2 |
) |
|
|
(39 |
) |
|
|
16 |
|
End of
period assets |
$ |
1,738 |
|
|
$ |
1,411 |
|
|
$ |
722 |
|
Average
assets during the period |
$ |
1,554 |
|
|
$ |
1,230 |
|
|
$ |
659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternatives |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
578 |
|
|
$ |
492 |
|
|
$ |
404 |
|
Inflows/(outflows) |
|
72 |
|
|
|
66 |
|
|
|
40 |
|
Market
appreciation/(depreciation) |
|
24 |
|
|
|
20 |
|
|
|
4 |
|
End of
period assets |
$ |
674 |
|
|
$ |
578 |
|
|
$ |
448 |
|
Average
assets during the period |
$ |
628 |
|
|
$ |
564 |
|
|
$ |
427 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed
ETPs |
|
|
|
|
|
|
|
|
|
|
|
Beginning
of period assets |
$ |
7 |
|
|
$ |
— |
|
|
$ |
70 |
|
Inflows/(outflows) |
|
— |
|
|
|
7 |
|
|
|
(5 |
) |
Market
appreciation/(depreciation) |
|
(7 |
) |
|
|
— |
|
|
|
(16 |
) |
End of
period assets |
$ |
— |
|
|
$ |
7 |
|
|
$ |
49 |
|
Average
assets during the period |
$ |
— |
|
|
$ |
7 |
|
|
$ |
68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Headcount –
U.S. Business segment |
|
151 |
|
|
|
155 |
|
|
|
165 |
|
Headcount –
International Business segment |
|
76 |
|
|
|
76 |
|
|
|
43 |
|
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 earnings per
share. We disclose adjusted net income and adjusted
diluted earnings per share as non-GAAP financial measurements in
order to report our results exclusive of items that are
non-recurring or not core to our operating business. 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 earnings 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: Acquisition-related costs of $0.5
million (or $0.4 million after-tax) for the third quarter of 2018
and $7.9 million (or $7.5 million after-tax) for the second quarter
of 2018 are excluded when arriving at adjusted net income and
adjusted earnings per share.
- 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 earnings 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 |
|
|
Sept. 30,
|
|
June 30,
|
|
Sept. 30, |
Adjusted Net Income and Diluted Earnings per
Share: |
|
2018 |
|
2018 |
|
2017 |
Net income, as
reported |
|
$ |
22,049 |
|
|
$ |
16,724 |
|
|
n/a |
Add back:
Acquisition-related costs, net of income taxes |
|
|
356 |
|
|
|
7,489 |
|
|
n/a |
Less:
Unrealized gain on revaluation of deferred consideration |
|
|
(7,732 |
) |
|
|
(9,898 |
) |
|
n/a |
Adjusted net
income |
|
$ |
14,673 |
|
|
$ |
14,315 |
|
|
n/a |
Weighted average common
shares - diluted |
|
|
166,622 |
|
|
|
163,346 |
|
|
n/a |
Adjusted net income per
share - diluted |
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Sept. 30,
|
|
June 30,
|
|
Sept. 30, |
Adjusted Operating Income Margin: |
|
2018 |
|
2018 |
|
2017 |
Operating revenues |
|
$ |
72,570 |
|
|
$ |
74,775 |
|
|
n/a |
Operating income |
|
$ |
21,708 |
|
|
$ |
14,531 |
|
|
n/a |
Add back:
Acquisition-related costs, before income taxes |
|
|
456 |
|
|
|
7,928 |
|
|
n/a |
Adjusted operating
income |
|
$ |
22,164 |
|
|
$ |
22,459 |
|
|
n/a |
Adjusted operating
income margin |
|
|
30.5 |
% |
|
|
30.0 |
% |
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Sept. 30,
|
|
June 30,
|
|
Sept.
30, |
Adjusted Effective Income Tax Rate: |
|
2018 |
|
2018 |
|
2017 |
Income before income
taxes |
|
$ |
27,530 |
|
|
$ |
22,184 |
|
|
n/a |
Add back:
Acquisition-related costs, before income taxes |
|
|
456 |
|
|
|
7,928 |
|
|
n/a |
Less:
Unrealized gain on revaluation of deferred consideration |
|
|
(7,732 |
) |
|
|
(9,898 |
) |
|
n/a |
Adjusted income before
income taxes |
|
$ |
20,254 |
|
|
$ |
20,214 |
|
|
n/a |
Income tax expense |
|
$ |
5,481 |
|
|
$ |
5,460 |
|
|
n/a |
Add back:
Tax benefit arising from acquisition-related costs . |
|
|
100 |
|
|
|
439 |
|
|
n/a |
Less: Tax
expense arising from revaluation of deferred consideration |
|
|
— |
|
|
|
— |
|
|
n/a |
Adjusted income tax
expense |
|
$ |
5,581 |
|
|
$ |
5,899 |
|
|
n/a |
Adjusted effective
income tax rate |
|
|
27.6 |
% |
|
|
29.2 |
% |
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
U.S. Business
Segment |
|
|
|
|
|
|
Three Months Ended |
|
|
Sept. 30,
|
|
June 30,
|
|
Sept. 30,
|
Gross Margin and Gross Margin Percentage: |
|
2018 |
|
2018 |
|
2017 |
Operating revenues |
|
$ |
50,389 |
|
|
$ |
53,093 |
|
|
|
$ |
54,889 |
|
Less:
Fund management and administration |
|
|
(8,915 |
) |
|
|
(8,802 |
) |
|
|
|
(9,168 |
) |
Gross margin |
|
$ |
41,474 |
|
|
$ |
44,291 |
|
|
|
$ |
45,721 |
|
Gross margin
percentage |
|
|
82.3 |
% |
|
|
83.4 |
% |
|
|
|
83.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Sept. 30,
|
|
June 30,
|
|
|
Sept. 30,
|
Adjusted Operating Income Margin: |
|
2018 |
|
2018 |
|
|
2017 |
Operating revenues |
|
$ |
50,389 |
|
|
$ |
53,093 |
|
|
|
n/a |
|
Operating income |
|
$ |
16,615 |
|
|
$ |
10,455 |
|
|
|
n/a |
|
Add back:
Acquisition-related costs, before income taxes |
|
|
247 |
|
|
|
6,773 |
|
|
|
n/a |
|
Adjusted operating
income |
|
$ |
16,862 |
|
|
$ |
17,228 |
|
|
|
n/a |
|
Adjusted operating
income margin |
|
|
33.5 |
% |
|
|
32.4 |
% |
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Business Segment
|
|
|
|
|
|
|
Three Months Ended |
|
|
Sept. 30,
|
|
June 30,
|
|
Sept. 30,
|
Gross Margin and Gross Margin Percentage: |
|
2018 |
|
2018
|
|
2017 |
Operating revenues |
|
$ |
22,181 |
|
|
$ |
21,682 |
|
|
$ |
2,825 |
|
Less:
Fund management and administration |
|
|
(6,377 |
) |
|
|
(5,819 |
) |
|
|
(1,694 |
) |
Gross margin |
|
$ |
15,804 |
|
|
$ |
15,863 |
|
|
$ |
1,131 |
|
Gross margin
percentage |
|
|
71.3 |
% |
|
|
73.2 |
% |
|
|
40.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Sept. 30,
|
|
June 30,
|
|
June 30,
|
Adjusted Operating Income Margin: |
|
2018 |
|
2018 |
|
2017 |
Operating revenues |
|
$ |
22,181 |
|
|
$ |
21,682 |
|
|
n/a |
|
Operating income |
|
$ |
5,093 |
|
|
$ |
4,076 |
|
|
n/a |
|
Add back:
Acquisition-related costs, before income taxes |
|
|
209 |
|
|
|
1,155 |
|
|
n/a |
|
Adjusted operating
income |
|
$ |
5,302 |
|
|
$ |
5,231 |
|
|
n/a |
|
Adjusted operating
income margin |
|
|
23.9 |
% |
|
|
24.1 |
% |
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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