WisdomTree Investments, Inc. (NASDAQ: WETF) today reported
financial results for the second quarter of 2020.
During the second quarter of 2020, we experienced a partial
recovery of our AUM which was adversely impacted by severe market
declines arising from the COVID-19 pandemic toward the end of the
prior quarter. This recovery was driven principally by market
appreciation, resulting in a 14.6% increase of our ending
AUM. Our business continues to operate remotely without
disruption.
$23.0 million of non-cash charges, including
(i) a loss on revaluation of deferred consideration of ($23.4)
million (ii) a loss on extinguishment of debt of ($2.4) million and
(iii) a release of a deferred tax valuation allowance of $2.8
million.
($13.3) million net loss ($8.51 million net income, as
adjusted), see “Non-GAAP Financial Measurements” for
additional information.
$57.6 billion of ending AUM, an increase of
14.6% resulting primarily from market appreciation.
$126 million of net inflows ($928 million of net inflows
excluding HEDJ/DXJ), driven by inflows into our commodity
and leveraged and inverse products, partly offset by outflows from
our international developed market equity and U.S. equity
products.
0.41% average global advisory fee, a decrease
of 0.1 basis point due to AUM mix shift.
$58.1 million of operating revenues, a decrease
of 9.0% primarily due to lower average AUM and a lower average
global advisory fee.
75.1% gross margin1, a 2.2 point decrease
primarily due to lower revenues.
20.3% operating income margin (20.4%1 as
adjusted), a 4.2 point decrease (4.7 point decrease, as
adjusted1) primarily due to lower revenues, partly offset by
reduced discretionary spending as a result of the COVID-19
pandemic.
$150.0 million issuance of convertible senior notes due
2023, coupled with the repayment of $174.0 million of debt
previously outstanding and termination of our revolver,
collectively referred to in this press release as the “former
Credit Facility.”
$24.9 million repurchase of 6.7 million shares of our
common stock, principally in connection with the issuance
of the convertible notes.
$0.03 quarterly dividend
declared, payable on August 26, 2020 to
stockholders of record as of the close of business on August
12, 2020.
Update from Jonathan Steinberg,
WisdomTree CEO
“During the second quarter, assets under management rebounded,
resulting in revenue tailwinds as we entered the second half of the
year. The global WisdomTree team has remained focused on what we
can control, and demonstrated strong execution in the quarter,
including navigating unprecedented volatility in energy markets,
generating record client engagement and producing strong
U.S.-listed product gross sales and record Europe-listed product
net flows. “We’ve realized significant cost efficiencies in
the current environment, some of which should prove sustainable in
the future. We also successfully refinanced our debt, repurchased
6.7 million shares and improved our financial flexibility. Despite
the uncertain environment, we are seeing momentum in important lead
indicators, and we are well positioned for growth with the right
team and strategy in place.” |
OPERATING AND FINANCIAL HIGHLIGHTS
|
Three Months Ended |
|
June 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sept. 30, 2019 |
June 30, 2019 |
Consolidated Operating Highlights ($, in
billions): |
|
|
|
|
|
AUM |
$ |
57.6 |
|
$ |
50.3 |
|
$ |
63.6 |
|
$ |
60.0 |
|
$ |
60.4 |
|
Net inflows/(outflows) |
$ |
0.1 |
|
$ |
(0.5 |
) |
$ |
0.4 |
|
$ |
(0.7 |
) |
$ |
0.3 |
|
Average AUM |
$ |
55.7 |
|
$ |
59.8 |
|
$ |
61.9 |
|
$ |
60.3 |
|
$ |
58.6 |
|
Average advisory fee |
|
0.41 |
% |
|
0.42 |
% |
|
0.44 |
% |
|
0.44 |
% |
|
0.45 |
% |
|
|
|
|
|
|
Consolidated Financial Highlights ($, in
millions, except per share amounts): |
|
|
|
|
|
Operating revenues |
$ |
58.1 |
|
$ |
63.9 |
|
$ |
68.9 |
|
$ |
67.7 |
|
$ |
66.3 |
|
Net (loss)/income |
$ |
(13.3 |
) |
$ |
(8.6 |
) |
$ |
(25.9 |
) |
$ |
4.2 |
|
$ |
2.5 |
|
Diluted (loss)/earnings per share |
$ |
(0.09 |
) |
$ |
(0.06 |
) |
$ |
(0.17 |
) |
$ |
0.02 |
|
$ |
0.01 |
|
Operating income margin |
|
20.3 |
% |
|
24.5 |
% |
|
21.5 |
% |
|
23.8 |
% |
|
18.0 |
% |
As
Adjusted (Non-GAAP1): |
|
|
|
|
|
Gross Margin |
|
75.1 |
% |
|
77.3 |
% |
|
77.3 |
% |
|
77.7 |
% |
|
76.5 |
% |
Net income, as adjusted |
$ |
8.5 |
|
$ |
11.2 |
|
$ |
10.1 |
|
$ |
10.6 |
|
$ |
7.8 |
|
Diluted earnings per share, as adjusted |
$ |
0.05 |
|
$ |
0.07 |
|
$ |
0.06 |
|
$ |
0.06 |
|
$ |
0.05 |
|
Operating income margin, as adjusted |
|
20.4 |
% |
|
25.1 |
% |
|
22.0 |
% |
|
24.1 |
% |
|
20.2 |
% |
|
|
|
|
|
|
RECENT BUSINESS DEVELOPMENTS
Company News
- In June 2020, we issued $150.0 million in aggregate principal
amount of 4.25% Convertible Senior Notes due 2023, repaid our debt
previously outstanding and terminated our former Credit Facility;
and
- In June 2020, we entered into a new distribution agreement in
Italy for our model portfolios with The Intermonte Eye – a digital
service providing investment products to its network of private
banks.
Product News
- In May 2020, we listed sterling trading lines for the
WisdomTree Brent Crude Oil (BRNG), the WisdomTree Brent Crude Oil
Pre-roll (BRNB) and the WisdomTree WTI Crude Oil Pre-roll (WTIB) on
the London Stock Exchange.
- In June 2020, we announced the results of a WisdomTree study
revealing various investor behavior data as it relates to model
portfolio usage and allocation.
- In July 2020, we secured additional third-party
relationships for our model portfolios, including: Carson Group,
Riskalzye, Kwanti, ETF Logic and Orion; we listed WisdomTree
Battery Solutions UCITS ETF (VOLT) and WisdomTree Cloud Computing
UCITS ETF (WCLD) on SIX, the Swiss Exchange; and the WisdomTree WTI
Crude Oil ETC (CRUD) security holders voted in favour of changing
the underlying index tracked by the ETC. The new index is the
result of extensive work between WisdomTree and Bloomberg to create
an index which would be more resilient to extreme conditions in the
WTI Crude Oil market.
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share
amounts) (Unaudited)
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sept. 30, 2019 |
June 30, 2019 |
|
June 30, 2020 |
June 30, 2019 |
Operating
Revenues: |
|
|
|
|
|
|
|
Advisory fees |
$ |
57,208 |
|
|
$ |
62,950 |
|
|
$ |
68,179 |
|
|
$ |
67,006 |
|
|
$ |
65,627 |
|
|
$ |
120,158 |
|
|
$ |
130,467 |
|
Other income |
|
918 |
|
|
|
924 |
|
|
|
728 |
|
|
|
712 |
|
|
|
666 |
|
|
|
1,842 |
|
|
|
1,311 |
|
Total revenues |
|
58,126 |
|
|
|
63,874 |
|
|
|
68,907 |
|
|
|
67,718 |
|
|
|
66,293 |
|
|
|
122,000 |
|
|
|
131,778 |
|
Operating
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
17,455 |
|
|
|
17,295 |
|
|
|
19,280 |
|
|
|
18,880 |
|
|
|
21,300 |
|
|
|
34,750 |
|
|
|
42,601 |
|
Fund management and administration |
|
14,461 |
|
|
|
14,485 |
|
|
|
15,650 |
|
|
|
15,110 |
|
|
|
15,576 |
|
|
|
28,946 |
|
|
|
30,742 |
|
Marketing and advertising |
|
1,949 |
|
|
|
2,468 |
|
|
|
3,551 |
|
|
|
3,022 |
|
|
|
2,910 |
|
|
|
4,417 |
|
|
|
5,590 |
|
Sales and business development |
|
2,181 |
|
|
|
3,417 |
|
|
|
5,329 |
|
|
|
4,354 |
|
|
|
4,171 |
|
|
|
5,598 |
|
|
|
8,593 |
|
Contractual gold payments |
|
4,063 |
|
|
|
3,760 |
|
|
|
3,516 |
|
|
|
3,502 |
|
|
|
3,110 |
|
|
|
7,823 |
|
|
|
6,208 |
|
Professional and consulting fees |
|
1,357 |
|
|
|
1,273 |
|
|
|
1,604 |
|
|
|
1,259 |
|
|
|
1,296 |
|
|
|
2,630 |
|
|
|
2,778 |
|
Occupancy, communications and equipment |
|
1,643 |
|
|
|
1,551 |
|
|
|
1,587 |
|
|
|
1,549 |
|
|
|
1,548 |
|
|
|
3,194 |
|
|
|
3,166 |
|
Depreciation and amortization |
|
251 |
|
|
|
256 |
|
|
|
253 |
|
|
|
259 |
|
|
|
264 |
|
|
|
507 |
|
|
|
533 |
|
Third-party distribution fees |
|
1,340 |
|
|
|
1,355 |
|
|
|
1,146 |
|
|
|
1,503 |
|
|
|
1,919 |
|
|
|
2,695 |
|
|
|
4,319 |
|
Acquisition and disposition- related costs |
|
33 |
|
|
|
383 |
|
|
|
366 |
|
|
|
190 |
|
|
|
33 |
|
|
|
416 |
|
|
|
346 |
|
Other |
|
1,596 |
|
|
|
1,997 |
|
|
|
1,816 |
|
|
|
1,959 |
|
|
|
2,255 |
|
|
|
3,593 |
|
|
|
4,308 |
|
Total operating expenses |
|
46,329 |
|
|
|
48,240 |
|
|
|
54,098 |
|
|
|
51,587 |
|
|
|
54,382 |
|
|
|
94,569 |
|
|
|
109,184 |
|
Operating income |
|
11,797 |
|
|
|
15,634 |
|
|
|
14,809 |
|
|
|
16,131 |
|
|
|
11,911 |
|
|
|
27,431 |
|
|
|
22,594 |
|
Other
Income/(Expenses): |
|
|
|
|
|
|
|
Interest expense |
|
(2,044 |
) |
|
|
(2,419 |
) |
|
|
(2,606 |
) |
|
|
(2,832 |
) |
|
|
(2,910 |
) |
|
|
(4,463 |
) |
|
|
(5,802 |
) |
(Loss)/gain on revaluation of deferred consideration – gold
payments |
|
(23,358 |
) |
|
|
(2,208 |
) |
|
|
(5,354 |
) |
|
|
(6,306 |
) |
|
|
(4,037 |
) |
|
|
(25,566 |
) |
|
|
367 |
|
Interest income |
|
119 |
|
|
|
163 |
|
|
|
936 |
|
|
|
799 |
|
|
|
818 |
|
|
|
282 |
|
|
|
1,597 |
|
Impairments |
|
— |
|
|
|
(19,672 |
) |
|
|
(30,138 |
) |
|
|
— |
|
|
|
— |
|
|
|
(19,672 |
) |
|
|
(572 |
) |
Loss on extinguishment of debt |
|
(2,387 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,387 |
) |
|
|
— |
|
Other gains and losses, net |
|
1,819 |
|
|
|
(2,507 |
) |
|
|
(2 |
) |
|
|
843 |
|
|
|
284 |
|
|
|
(688 |
) |
|
|
(4,343 |
) |
(Loss)/income before income
taxes |
|
(14,054 |
) |
|
|
(11,009 |
) |
|
|
(22,355 |
) |
|
|
8,635 |
|
|
|
6,066 |
|
|
|
(25,063 |
) |
|
|
13,841 |
|
Income tax (benefit)/expense |
|
(804 |
) |
|
|
(2,371 |
) |
|
|
3,525 |
|
|
|
4,483 |
|
|
|
3,587 |
|
|
|
(3,175 |
) |
|
|
2,538 |
|
Net
(loss)/income |
$ |
(13,250 |
) |
|
$ |
(8,638 |
) |
|
$ |
(25,880 |
) |
|
$ |
4,152 |
|
|
$ |
2,479 |
|
|
$ |
(21,888 |
) |
|
$ |
11,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/earnings per share –
basic |
$ |
(0.09 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.17 |
) |
|
$ |
0.02 |
2 |
|
$ |
0.01 |
2 |
|
$ |
(0.15 |
)2 |
|
$ |
0.07 |
|
(Loss)/earnings per share –
diluted |
$ |
(0.09 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.17 |
) |
|
$ |
0.02 |
|
|
$ |
0.01 |
|
|
$ |
(0.15 |
)2 |
|
$ |
0.07 |
|
Weighted average common shares –
basic |
|
151,623 |
|
|
|
152,519 |
|
|
|
151,948 |
|
|
|
151,897 |
|
|
|
151,818 |
|
|
|
152,071 |
|
|
|
151,722 |
|
Weighted average common shares –
diluted |
|
151,623 |
|
|
|
152,519 |
|
|
|
151,948 |
|
|
|
167,163 |
|
|
|
167,249 |
|
|
|
152,071 |
|
|
|
166,855 |
|
|
|
|
|
|
|
|
|
As Adjusted (Non-GAAP1) |
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
$ |
17,455 |
|
|
$ |
17,295 |
|
|
$ |
19,280 |
|
|
$ |
18,880 |
|
|
$ |
19,825 |
|
|
|
|
Total expenses |
$ |
46,296 |
|
|
$ |
47,857 |
|
|
$ |
53,732 |
|
|
$ |
51,397 |
|
|
$ |
52,874 |
|
|
|
|
Operating income |
$ |
11,830 |
|
|
$ |
16,017 |
|
|
$ |
15,175 |
|
|
$ |
16,321 |
|
|
$ |
13,419 |
|
|
|
|
Income before income taxes |
$ |
10,911 |
|
|
$ |
14,358 |
|
|
$ |
13,503 |
|
|
$ |
15,131 |
|
|
$ |
11,611 |
|
|
|
|
Income tax expense |
$ |
2,417 |
|
|
$ |
3,134 |
|
|
$ |
3,396 |
|
|
$ |
4,489 |
|
|
$ |
3,798 |
|
|
|
|
Net income |
$ |
8,494 |
|
|
$ |
11,224 |
|
|
$ |
10,107 |
|
|
$ |
10,642 |
|
|
$ |
7,813 |
|
|
|
|
Earnings per share – diluted |
$ |
0.05 |
|
|
$ |
0.07 |
|
|
$ |
0.06 |
|
|
$ |
0.06 |
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QUARTERLY HIGHLIGHTS
Operating Revenues
- Operating revenues decreased 9.0% from the first quarter of
2020 due to lower average AUM of our U.S. listed products due to
market depreciation arising from the COVID-19 pandemic toward the
end of the prior quarter and net outflows. Also, our average
global advisory fee declined 1 basis point due to AUM mix
shift. These declines were partly offset by net inflows into
our international listed products and market appreciation.
- Operating revenues decreased 12.3% from the second quarter of
2019 due to lower average AUM of our U.S. listed products arising
from market depreciation and net outflows, as well as a 4 basis
point decline in our average global advisory fee due to AUM mix
shift. These declines were partly offset by higher average
AUM of our international listed products arising from net inflows
and market appreciation.
- Our average global advisory fee was 0.41%, 0.42% and 0.45%
during the second quarter of 2020, the first quarter of 2020 and
the second quarter of 2019, respectively.
Operating Expenses
- Operating expenses decreased 4.0% from the first quarter of
2020 due to lower discretionary spending as a result of the
COVID-19 pandemic, including lower sales and business development
costs and marketing expenses.
- Operating expenses decreased 14.8% from the second quarter of
2019 largely due to lower incentive compensation accruals as well
as $1.5 million of severance expense included in the prior period,
lower fund management and administration costs due to lower average
AUM and lower sales and business development costs, marketing
expenses and third-party distribution costs. These declines were
partly offset by higher contractual gold payments due to higher
average gold prices.
Other Income/(Expenses)
- We recognized a non-cash loss on revaluation of deferred
consideration of ($23.4) million, ($2.2) million and ($4.0) million
during the second quarter of 2020, first quarter of 2020 and second
quarter of 2019, respectively. These losses arose due to an
increase in forward-looking gold prices when compared to the
previous periods’ forward-looking gold curves. The magnitude
of any gain or loss recognized is highly correlated to the
magnitude of the change in the forward-looking price of gold.
- Interest expense decreased 15.5% and 29.8% from the first
quarter of 2020 and second quarter of 2019, respectively, due to
lower levels of debt outstanding and lower interest rates.
- During the second quarter of 2020, we recognized a non-cash
loss on extinguishment of debt of $2.4 million arising from the
acceleration of debt issuance cost amortization in connection with
the termination of our former Credit Facility.
- Other gains and losses, net, for the second quarter of 2020
includes a gain of $0.9 million arising from an adjustment to the
estimated fair value of consideration received from the exit of our
investment in AdvisorEngine. Gains and losses also generally
arise from the sale of gold earned from management fees paid by our
physically-backed gold ETPs, foreign exchange fluctuations,
securities owned and other miscellaneous items.
Income Taxes
- Our effective income tax rate for 2020 of 5.7% resulted in an
income tax benefit of $0.8 million. Our tax rate differs from
the federal statutory tax rate of 21% primarily due to a
non-deductible loss on revaluation of deferred consideration.
This loss was partly offset by a tax benefit of $2.8 million
recognized in connection with the release of a deferred tax asset
valuation allowance on interest carryforwards arising from our debt
previously held in the United Kingdom and a lower tax rate on
foreign earnings.
- Our adjusted effective income tax rate was 22.2%1.
SIX MONTH HIGHLIGHTS
- Operating revenues decreased 7.4% as compared to 2019 due to
lower average AUM of our U.S. listed products and a 3 basis point
decline in our average global advisory fee due to AUM mix
shift. These declines were partly offset by higher average
AUM of our international listed products.
- Operating expenses decreased 13.4% as compared to 2019 largely
due to lower incentive compensation accruals as well as $3.5
million of severance expense included in the prior period, lower
fund management and administration costs due to lower average AUM
and lower sales and business development costs, marketing expenses
and third-party distribution costs. These declines were partly
offset by higher contractual gold payments due to higher average
gold prices.
- Significant changes in items reported in other
income/(expenses) include a non-cash loss on revaluation of
deferred consideration of ($25.6) million in 2020 as compared to a
gain of $0.4 million in 2019; a non-cash impairment charge of $19.7
million recorded in the first quarter of 2020 in connection with
the exit from our investment in AdvisorEngine; a loss on
extinguishment of debt of $2.4 million in 2020; non-cash charges of
$6.0 million and $4.3 million in 2020 and 2019, respectively,
arising from the release of tax-related indemnification assets upon
the expiration of the statute of limitations (an equal and
offsetting benefit was recognized in income tax expense); and a
gain of $0.9 million in the second quarter of 2020 arising from an
adjustment to the estimated fair value of consideration received
from the exit of our investment in AdvisorEngine.
- Our effective income tax rate for 2020 of 12.7% resulted in an
income tax benefit of $3.2 million. Our tax rate differs from
the federal statutory rate of 21% primarily due to a valuation
allowance on capital losses, a non-deductible loss on revaluation
of deferred consideration and tax shortfalls associated with the
vesting and exercise of stock-based compensation awards.
These items were partly offset by a tax benefit of $6.0 million
recognized in connection with the release of the tax-related
indemnification asset described above, a $2.9 million non-taxable
gain recognized upon sale of our Canadian ETF business in the first
quarter, a tax benefit of $2.8 million recognized in connection
with the release of a deferred tax asset valuation allowance on
interest carryforwards arising from our debt previously held in the
United Kingdom and a lower tax rate on foreign earnings.
CONFERENCE CALL
WisdomTree will discuss its results and operational highlights
during a conference call on Friday, July 31, 2020 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.
ABOUT WISDOMTREE
WisdomTree Investments, Inc., through its subsidiaries in the
U.S. and Europe (collectively, “WisdomTree”), is an ETF and ETP
sponsor and asset manager headquartered in New
York. WisdomTree offers products covering equity, commodity,
fixed income, leveraged and inverse, currency and alternative
strategies. WisdomTree currently has approximately $61.5 billion in
assets under management globally.
WisdomTree® is the marketing name for WisdomTree Investments,
Inc. and its subsidiaries worldwide.
1 |
|
See “Non-GAAP
Financial Measurements.” |
2 |
|
(Loss)/earnings per share (“EPS”) is calculated pursuant to the
two-class method as it results in a lower EPS amount as compared to
the treasury stock method. |
Contact Information: |
|
|
|
Investor Relations |
|
Media Relations |
Jason Weyeneth, CFA |
|
Jessica Zaloom |
+1.917.267.3858 |
|
+1.917.267.3735 |
jweyeneth@wisdomtree.com |
|
jzaloom@wisdomtree.com |
WisdomTree Investments, Inc.Key Operating Statistics
(Unaudited)
|
Three Months Ended |
|
June 30,2020 |
|
Mar. 31,2020 |
Dec. 31,2019 |
Sept. 30,2019 |
June 30,2019 |
GLOBAL ETPs ($ in
millions) |
|
|
|
|
|
|
Beginning of period assets |
$ |
50,323 |
|
|
$ |
63,615 |
|
|
$ |
59,981 |
|
|
$ |
60,389 |
|
|
$ |
59,112 |
|
Assets sold |
|
— |
|
|
|
(778 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Inflows/(outflows) |
|
126 |
|
|
|
(536 |
) |
|
|
390 |
|
|
|
(698 |
) |
|
|
343 |
|
Market appreciation/(depreciation) |
|
7,494 |
|
|
|
(11,958 |
) |
|
|
3,247 |
|
|
|
471 |
|
|
|
934 |
|
Fund closures |
|
(296 |
) |
|
|
(20 |
) |
|
|
(3 |
) |
|
|
(181 |
) |
|
|
— |
|
End of period assets |
$ |
57,647 |
|
|
$ |
50,323 |
|
|
$ |
63,615 |
|
|
$ |
59,981 |
|
|
$ |
60,389 |
|
Average assets during the period |
$ |
55,689 |
|
|
$ |
59,819 |
|
|
$ |
61,858 |
|
|
$ |
60,306 |
|
|
$ |
58,575 |
|
Average advisory fee during the period |
|
0.41 |
% |
|
|
0.42 |
% |
|
|
0.44 |
% |
|
|
0.44 |
% |
|
|
0.45 |
% |
Revenue days |
|
91 |
|
|
|
91 |
|
|
|
92 |
|
|
|
92 |
|
|
|
91 |
|
Number of ETFs – end of the period |
|
311 |
|
|
|
331 |
|
|
|
349 |
|
|
|
348 |
|
|
|
536 |
|
|
|
|
|
|
|
|
U.S. LISTED ETFs ($ in
millions) |
|
|
|
|
|
|
Beginning of period assets |
$ |
28,893 |
|
|
$ |
40,600 |
|
|
$ |
37,592 |
|
|
$ |
39,220 |
|
|
$ |
39,366 |
|
Inflows/(outflows) |
|
(1,474 |
) |
|
|
(1,273 |
) |
|
|
563 |
|
|
|
(1,198 |
) |
|
|
(166 |
) |
Market appreciation/(depreciation) |
|
4,039 |
|
|
|
(10,424 |
) |
|
|
2,448 |
|
|
|
(430 |
) |
|
|
20 |
|
Fund closures |
|
(114 |
) |
|
|
(10 |
) |
|
|
(3 |
) |
|
|
— |
|
|
|
— |
|
End of period assets |
$ |
31,344 |
|
|
$ |
28,893 |
|
|
$ |
40,600 |
|
|
$ |
37,592 |
|
|
$ |
39,220 |
|
Average assets during the period |
$ |
30,607 |
|
|
$ |
36,936 |
|
|
$ |
39,094 |
|
|
$ |
37,857 |
|
|
$ |
38,945 |
|
Average advisory fee during the period |
|
0.41 |
% |
|
|
0.43 |
% |
|
|
0.44 |
% |
|
|
0.44 |
% |
|
|
0.44 |
% |
Number of ETFs – end of the period |
|
67 |
|
|
|
77 |
|
|
|
80 |
|
|
|
80 |
|
|
|
79 |
|
|
|
|
|
|
|
|
INTERNATIONAL LISTED ETPs
($ in millions) |
|
|
|
|
|
|
Beginning of period assets |
$ |
21,430 |
|
|
$ |
23,015 |
|
|
$ |
22,389 |
|
|
$ |
21,169 |
|
|
$ |
19,746 |
|
Assets sold |
|
— |
|
|
|
(778 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Inflows/(outflows) |
|
1,600 |
|
|
|
737 |
|
|
|
(173 |
) |
|
|
500 |
|
|
|
509 |
|
Market appreciation/(depreciation) |
|
3,455 |
|
|
|
(1,534 |
) |
|
|
799 |
|
|
|
901 |
|
|
|
914 |
|
Fund closures |
|
(182 |
) |
|
|
(10 |
) |
|
|
— |
|
|
|
(181 |
) |
|
|
— |
|
End of period assets |
$ |
26,303 |
|
|
$ |
21,430 |
|
|
$ |
23,015 |
|
|
$ |
22,389 |
|
|
$ |
21,169 |
|
Average assets during the period |
$ |
25,082 |
|
|
$ |
22,883 |
|
|
$ |
22,764 |
|
|
$ |
22,449 |
|
|
$ |
19,630 |
|
Average advisory fee during the period |
|
0.41 |
% |
|
|
0.41 |
% |
|
|
0.44 |
% |
|
|
0.44 |
% |
|
|
0.46 |
% |
Number of ETPs – end of the period |
|
244 |
|
|
|
254 |
|
|
|
269 |
|
|
|
268 |
|
|
|
457 |
|
|
|
|
|
|
|
|
PRODUCT CATEGORIES ($ in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity &
Currency |
|
|
|
|
|
|
Beginning of period assets |
$ |
19,823 |
|
|
$ |
20,074 |
|
|
$ |
19,713 |
|
|
$ |
18,204 |
|
|
$ |
16,689 |
|
Inflows/(outflows) |
|
1,316 |
|
|
|
592 |
|
|
|
(244 |
) |
|
|
511 |
|
|
|
611 |
|
Market appreciation/(depreciation) |
|
3,121 |
|
|
|
(843 |
) |
|
|
605 |
|
|
|
998 |
|
|
|
904 |
|
End of period assets |
$ |
24,260 |
|
|
$ |
19,823 |
|
|
$ |
20,074 |
|
|
$ |
19,713 |
|
|
$ |
18,204 |
|
Average assets during the period |
$ |
23,037 |
|
|
$ |
20,407 |
|
|
$ |
19,892 |
|
|
$ |
19,558 |
|
|
$ |
16,643 |
|
|
|
|
|
|
|
|
U.S. Equity |
|
|
|
|
|
|
Beginning of period assets |
$ |
12,159 |
|
|
$ |
17,746 |
|
|
$ |
16,296 |
|
|
$ |
15,903 |
|
|
$ |
15,759 |
|
Inflows/(outflows) |
|
(242 |
) |
|
|
(285 |
) |
|
|
458 |
|
|
|
241 |
|
|
|
108 |
|
Market appreciation/(depreciation) |
|
2,090 |
|
|
|
(5,302 |
) |
|
|
992 |
|
|
|
152 |
|
|
|
36 |
|
End of period assets |
$ |
14,007 |
|
|
$ |
12,159 |
|
|
$ |
17,746 |
|
|
$ |
16,296 |
|
|
$ |
15,903 |
|
Average assets during the period |
$ |
13,312 |
|
|
$ |
16,022 |
|
|
$ |
16,983 |
|
|
$ |
15,885 |
|
|
$ |
15,690 |
|
|
|
|
|
|
|
|
International Developed
Market Equity |
|
|
|
|
|
|
Beginning of period assets |
$ |
8,653 |
|
|
$ |
13,043 |
|
|
$ |
12,200 |
|
|
$ |
13,346 |
|
|
$ |
14,092 |
|
Inflows/(outflows) |
|
(964 |
) |
|
|
(1,100 |
) |
|
|
(139 |
) |
|
|
(1,011 |
) |
|
|
(736 |
) |
Market appreciation/(depreciation) |
|
1,158 |
|
|
|
(3,290 |
) |
|
|
982 |
|
|
|
(135 |
) |
|
|
(10 |
) |
End of period assets |
$ |
8,847 |
|
|
$ |
8,653 |
|
|
$ |
13,043 |
|
|
$ |
12,200 |
|
|
$ |
13,346 |
|
Average assets during the period |
$ |
8,783 |
|
|
$ |
11,474 |
|
|
$ |
12,640 |
|
|
$ |
12,409 |
|
|
$ |
13,628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
June 30, 2020 |
|
Mar. 31,2020 |
Dec. 31,2019 |
Sept. 30,2019 |
June 30,2019 |
Emerging Market
Equity |
|
|
|
|
|
|
Beginning of period assets |
$ |
4,610 |
|
|
$ |
6,417 |
|
|
$ |
5,713 |
|
|
$ |
5,981 |
|
|
$ |
5,644 |
|
Inflows/(outflows) |
|
(21 |
) |
|
|
65 |
|
|
|
198 |
|
|
|
176 |
|
|
|
344 |
|
Market appreciation/(depreciation) |
|
840 |
|
|
|
(1,872 |
) |
|
|
506 |
|
|
|
(444 |
) |
|
|
(7 |
) |
End of period assets |
$ |
5,429 |
|
|
$ |
4,610 |
|
|
$ |
6,417 |
|
|
$ |
5,713 |
|
|
$ |
5,981 |
|
Average assets during the period |
$ |
5,143 |
|
|
$ |
5,933 |
|
|
$ |
6,008 |
|
|
$ |
5,743 |
|
|
$ |
5,691 |
|
|
|
|
|
|
|
|
Fixed
Income |
|
|
|
|
|
|
Beginning of period assets |
$ |
3,527 |
|
|
$ |
3,585 |
|
|
$ |
3,337 |
|
|
$ |
3,946 |
|
|
$ |
3,692 |
|
Inflows/(outflows) |
|
(53 |
) |
|
|
21 |
|
|
|
218 |
|
|
|
(594 |
) |
|
|
235 |
|
Market appreciation/(depreciation) |
|
56 |
|
|
|
(79 |
) |
|
|
30 |
|
|
|
(15 |
) |
|
|
19 |
|
End of period assets |
$ |
3,530 |
|
|
$ |
3,527 |
|
|
$ |
3,585 |
|
|
$ |
3,337 |
|
|
$ |
3,946 |
|
Average assets during the period |
$ |
3,523 |
|
|
$ |
3,653 |
|
|
$ |
3,540 |
|
|
$ |
3,731 |
|
|
$ |
3,796 |
|
|
|
|
|
|
|
|
Leveraged &
Inverse |
|
|
|
|
|
|
Beginning of period assets |
$ |
883 |
|
|
$ |
995 |
|
|
$ |
1,002 |
|
|
$ |
989 |
|
|
$ |
1,060 |
|
Inflows/(outflows) |
|
312 |
|
|
|
12 |
|
|
|
(22 |
) |
|
|
11 |
|
|
|
(55 |
) |
Market appreciation/(depreciation) |
|
153 |
|
|
|
(124 |
) |
|
|
15 |
|
|
|
2 |
|
|
|
(16 |
) |
End of period assets |
$ |
1,348 |
|
|
$ |
883 |
|
|
$ |
995 |
|
|
$ |
1,002 |
|
|
$ |
989 |
|
Average assets during the period |
$ |
1,162 |
|
|
$ |
1,009 |
|
|
$ |
1,033 |
|
|
$ |
1,020 |
|
|
$ |
1,042 |
|
|
|
|
|
|
|
|
Alternatives |
|
|
|
|
|
|
Beginning of period assets |
$ |
244 |
|
|
$ |
359 |
|
|
$ |
419 |
|
|
$ |
434 |
|
|
$ |
515 |
|
Inflows/(outflows) |
|
(29 |
) |
|
|
(66 |
) |
|
|
(61 |
) |
|
|
(17 |
) |
|
|
(80 |
) |
Market appreciation/(depreciation) |
|
11 |
|
|
|
(49 |
) |
|
|
1 |
|
|
|
2 |
|
|
|
(1 |
) |
End of period assets |
$ |
226 |
|
|
$ |
244 |
|
|
$ |
359 |
|
|
$ |
419 |
|
|
$ |
434 |
|
Average assets during the period |
$ |
227 |
|
|
$ |
328 |
|
|
$ |
399 |
|
|
$ |
429 |
|
|
$ |
476 |
|
|
|
|
|
|
|
|
Closed ETPs |
|
|
|
|
|
|
Beginning of period assets |
$ |
424 |
|
|
$ |
1,396 |
|
|
$ |
1,301 |
|
|
$ |
1,586 |
|
|
$ |
1,661 |
|
Assets sold |
|
— |
|
|
|
(778 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Inflows/(outflows) |
|
(193 |
) |
|
|
225 |
|
|
|
(18 |
) |
|
|
(15 |
) |
|
|
(84 |
) |
Market appreciation/(depreciation) |
|
65 |
|
|
|
(399 |
) |
|
|
116 |
|
|
|
(89 |
) |
|
|
9 |
|
Fund closures |
|
(296 |
) |
|
|
(20 |
) |
|
|
(3 |
) |
|
|
(181 |
) |
|
|
— |
|
End of period assets |
$ |
— |
|
|
$ |
424 |
|
|
$ |
1,396 |
|
|
$ |
1,301 |
|
|
$ |
1,586 |
|
Average assets during the period |
$ |
502 |
|
|
$ |
993 |
|
|
$ |
1,363 |
|
|
$ |
1,531 |
|
|
$ |
1,609 |
|
|
|
|
|
|
|
|
Headcount |
|
214 |
|
|
|
210 |
|
|
|
208 |
|
|
|
212 |
|
|
|
214 |
|
Note: Previously issued statistics may be restated due to fund
closures and trade adjustments Source: WisdomTree
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
|
|
|
|
June 30, 2020 |
|
Dec. 31, 2019 |
|
(Unaudited) |
|
|
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ |
50,255 |
|
|
$ |
74,972 |
|
Securities owned, at fair value |
|
13,110 |
|
|
|
17,319 |
|
Accounts receivable |
|
24,372 |
|
|
|
26,838 |
|
Prepaid expenses |
|
5,621 |
|
|
|
3,724 |
|
Other current assets |
|
1,414 |
|
|
|
207 |
|
Total current assets |
|
94,772 |
|
|
|
123,060 |
|
Fixed assets, net |
|
7,835 |
|
|
|
8,127 |
|
Notes receivable |
|
— |
|
|
|
28,172 |
|
Securities held-to-maturity |
|
581 |
|
|
|
16,863 |
|
Deferred tax assets, net |
|
5,540 |
|
|
|
7,398 |
|
Investments |
|
11,192 |
|
|
|
11,192 |
|
Right of use assets – operating
leases |
|
17,230 |
|
|
|
18,161 |
|
Goodwill |
|
85,856 |
|
|
|
85,856 |
|
Intangible assets |
|
601,247 |
|
|
|
603,294 |
|
Other noncurrent assets |
|
184 |
|
|
|
983 |
|
Total assets |
$ |
824,437 |
|
|
$ |
903,106 |
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
LIABILITIES |
|
|
Current liabilities: |
|
|
Fund management and administration payable |
$ |
23,240 |
|
|
$ |
22,021 |
|
Compensation and benefits payable |
|
7,629 |
|
|
|
26,501 |
|
Deferred consideration – gold payments |
|
16,364 |
|
|
|
13,953 |
|
Securities sold, but not yet purchased, at fair value |
|
— |
|
|
|
582 |
|
Operating lease liabilities |
|
3,293 |
|
|
|
3,682 |
|
Income taxes payable |
|
2,277 |
|
|
|
3,372 |
|
Accounts payable and other liabilities |
|
9,376 |
|
|
|
8,930 |
|
Total current liabilities |
|
62,179 |
|
|
|
79,041 |
|
Convertible notes |
|
141,479 |
|
|
|
— |
|
Debt |
|
— |
|
|
|
175,956 |
|
Deferred consideration – gold payments |
|
182,420 |
|
|
|
159,071 |
|
Operating lease liabilities |
|
18,258 |
|
|
|
19,057 |
|
Total liabilities |
|
404,336 |
|
|
|
433,125 |
|
Preferred stock – Series A
Non-Voting Convertible, par value $0.01; 14.750 shares
authorized, issued and outstanding |
|
132,569 |
|
|
|
132,569 |
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY |
|
|
Common stock, par value $0.01;
250,000 shares authorized: |
|
|
Issued and outstanding: 149,796 and 155,264 at June 30, 2020
and December 31, 2019, respectively |
|
1,498 |
|
|
|
1,553 |
|
Additional paid-in capital |
|
325,406 |
|
|
|
352,658 |
|
Accumulated other comprehensive
income |
|
260 |
|
|
|
945 |
|
Accumulated deficit |
|
(39,632 |
) |
|
|
(17,744 |
) |
Total stockholders’ equity |
|
287,532 |
|
|
|
337,412 |
|
Total liabilities and
stockholders’ equity |
$ |
824,437 |
|
|
$ |
903,106 |
|
|
|
|
|
|
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands)
(Unaudited)
|
|
|
|
Six Months Ended |
|
June 30, 2020 |
June 30, 2019 |
Cash flows from operating
activities: |
|
|
Net (loss)/income |
$ |
(21,888 |
) |
|
$ |
11,303 |
|
Adjustments to reconcile net (loss)/income to net cash provided by
operating activities: |
|
|
Advisory fees received in gold and other precious metals |
|
(29,135 |
) |
|
|
(22,872 |
) |
Loss/(gain) on revaluation of deferred consideration – gold
payments |
|
25,566 |
|
|
|
(367 |
) |
Impairments |
|
19,672 |
|
|
|
572 |
|
Contractual gold payments |
|
7,823 |
|
|
|
6,208 |
|
Stock-based compensation |
|
6,159 |
|
|
|
6,207 |
|
Gain on sale –Canadian ETF business |
|
(2,877 |
) |
|
|
— |
|
Loss on extinguishment of debt |
|
2,387 |
|
|
|
— |
|
Amortization of right of use asset |
|
1,588 |
|
|
|
1,590 |
|
Amortization of issuance costs - former Credit Facility |
|
1,328 |
|
|
|
1,430 |
|
Deferred income taxes |
|
832 |
|
|
|
2,443 |
|
Depreciation and amortization |
|
507 |
|
|
|
533 |
|
Amortization of issuance costs - convertible notes |
|
115 |
|
|
|
— |
|
Paid-in-kind interest income |
|
— |
|
|
|
(1,223 |
) |
Other |
|
(83 |
) |
|
|
5 |
|
Changes in operating assets and liabilities: |
|
|
Securities owned, at fair value |
|
4,209 |
|
|
|
(222 |
) |
Accounts receivable |
|
4,461 |
|
|
|
1,833 |
|
Income taxes payable |
|
(1,046 |
) |
|
|
(44 |
) |
Prepaid expenses |
|
(2,016 |
) |
|
|
(1,746 |
) |
Gold and other precious metals |
|
20,882 |
|
|
|
16,318 |
|
Other assets |
|
(702 |
) |
|
|
(552 |
) |
Fund management and administration payable |
|
1,677 |
|
|
|
1,231 |
|
Compensation and benefits payable |
|
(18,431 |
) |
|
|
(3,938 |
) |
Securities sold, but not yet purchased, at fair value |
|
(582 |
) |
|
|
(1,155 |
) |
Operating lease liabilities |
|
(1,845 |
) |
|
|
(1,760 |
) |
Accounts payable and other liabilities |
|
781 |
|
|
|
(435 |
) |
Net cash provided by operating activities |
|
19,382 |
|
|
|
15,359 |
|
Cash flows from investing
activities: |
|
|
|
|
|
Purchase of fixed assets |
|
(224 |
) |
|
|
(15 |
) |
Funding of notes receivable |
|
— |
|
|
|
(1,540 |
) |
Proceeds from held-to-maturity securities maturing or called prior
to maturity |
|
16,365 |
|
|
|
39 |
|
Proceeds from the sale of our financial interests in
AdvisorEngine |
|
8,155 |
|
|
|
— |
|
Proceeds from sale of Canadian ETF business, net |
|
2,774 |
|
|
|
— |
|
Net cash provided by/(used in) investing activities |
|
27,070 |
|
|
|
(1,516 |
) |
Cash flows from financing
activities: |
|
|
|
|
|
Repayment of debt |
|
(179,000 |
) |
|
|
— |
|
Shares repurchased |
|
(26,444 |
) |
|
|
(2,107 |
) |
Dividends paid |
|
(10,270 |
) |
|
|
(10,191 |
) |
Convertible notes issuance costs |
|
(4,611 |
) |
|
|
— |
|
Proceeds from the issuance of convertible notes |
|
150,000 |
|
|
|
— |
|
Proceeds from exercise of stock options |
|
240 |
|
|
|
14 |
|
Net cash used in financing activities |
|
(70,085 |
) |
|
|
(12,284 |
) |
(Decrease)/increase in cash flows
due to changes in foreign exchange rate |
|
(1,084 |
) |
|
|
268 |
|
(Decrease)/increase in cash and
cash equivalents |
|
(24,717 |
) |
|
|
1,827 |
|
Cash and cash equivalents –
beginning of year |
|
74,972 |
|
|
|
77,784 |
|
Cash and cash equivalents –
year |
$ |
50,255 |
|
|
$ |
79,611 |
|
Supplemental disclosure
of cash flow information: |
|
|
|
|
|
Cash paid for taxes |
$ |
2,200 |
|
|
$ |
4,403 |
|
Cash paid for interest |
$ |
3,390 |
|
|
$ |
4,559 |
|
|
|
|
|
|
|
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 compensation, operating income, operating expenses,
income before income taxes, income tax expense, net income and
diluted earnings per share. We disclose adjusted
compensation, operating income, operating expenses, income before
income taxes, income tax expense, net income and diluted earnings
per share as non-GAAP financial measurements in order to report our
results exclusive of items that are non-recurring or not core to
our operating business. We believe presenting these non-GAAP
financial measures provides investors with a consistent way to
analyze our performance. 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
forward-looking price of gold may have a material impact on the
carrying value of the deferred consideration and our reported
financial results. We exclude this item when calculating our
non-GAAP financial measurements 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.
- Tax shortfalls and windfalls upon vesting and exercise of
stock-based compensation awards: GAAP requires the recognition of
tax windfalls and shortfalls within income tax expense. These
items arise upon the vesting and exercise of stock-based
compensation awards and the magnitude is directly correlated to the
number of awards vesting/exercised as well as the difference
between the price of our stock on the date the award was granted
and the date the award vested or was exercised. We exclude
these items when calculating our non-GAAP financial measurements as
they introduce volatility in earnings and are not core to our
operating business.
- Interest expense from the amortization of discount arising from
the bifurcation of the conversion option embedded in the
convertible notes: GAAP requires convertible instruments to
be separated into their liability and equity components by
allocating the issuance proceeds to each of these components.
The liability component for convertible instruments that qualify
for a derivative scope exception (applicable to our convertible
notes) is allocated proceeds equal to the estimated fair value of
similar debt without the conversion option. The difference
between the gross proceeds received from the issuance of the
convertible instrument and the proceeds allocated to the liability
component represents the residual amount that is classified in
equity. The discount arising from the recognition of the
residual amount classified in equity is amortized as interest
expense over the life of the instrument. We exclude this item
when calculating our non-GAAP financial measurements as it is
non-cash and distorts our actual cost of borrowing. In
addition, in June 2020, the FASB approved amendments to ASC 470-20,
Debt – Debt with Conversion and Other Options, Cash Conversion and
once issued, will include the elimination of the requirement to
bifurcate conversion options qualifying for a derivative scope
exception. Once effective, this interest expense will no longer be
recognized.
- Other items: Loss on extinguishment of debt, the release
of a deferred tax asset valuation allowance recognized on interest
carryforwards arising from our debt previously outstanding in the
United Kingdom, a gain arising from an adjustment to the estimated
fair value of consideration received from the exit of our
investment in AdvisorEngine, impairment charges, a gain recognized
upon sale of our Canadian ETF business, severance expense and
acquisition and disposition-related costs are excluded when
calculating our non-GAAP financial measurements.
- Adjusted effective income tax rate. We disclose our
adjusted effective income tax rate as a non-GAAP financial
measurement in order to report our effective income tax rate
exclusive of items that are non-recurring or not core to our
operating business. We believe reporting our adjusted
effective income tax rate provides investors with a consistent way
to analyze our income taxes. Our adjusted effective income
tax rate is calculated by dividing adjusted income tax expense by
adjusted income before income taxes. See above for
information regarding the items that are excluded.
- Gross margin and gross margin percentage. We disclose our
gross margin and gross margin percentage as non-GAAP financial
measurements because we believe they provide investors with a
consistent way to analyze the amount we retain after paying
third-party service providers to operate our ETPs. These
measures also assist us in analyzing the profitability of our
products. We define gross margin as total operating revenues
less fund management and administration expenses. Gross
margin percentage is calculated as gross margin divided by total
operating revenues.
- Adjusted operating income margin. We disclose adjusted
operating income margin as a non-GAAP financial measurement 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
SUBSIDIARIESGAAP to NON-GAAP RECONCILIATION
(CONSOLIDATED)(in
thousands)(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended |
Adjusted Net Income
and Diluted Earnings per Share: |
June 30,2020 |
|
Mar. 31,2020 |
Dec. 31,2019 |
Sept. 30,2019 |
June 30,2019 |
Net (loss)/income, as reported |
$ |
(13,250 |
) |
|
$ |
(8,638 |
) |
|
$ |
(25,880 |
) |
|
$ |
4,152 |
|
|
$ |
2,479 |
|
Add back: Loss on revaluation of deferred consideration |
|
23,358 |
|
|
|
2,208 |
|
|
|
5,354 |
|
|
|
6,306 |
|
|
|
4,037 |
|
Add back: Loss on extinguishment of debt, net of income taxes |
|
1,910 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Deduct: Release of a deferred tax asset valuation allowance
recognized on interest carryforwards arising from debt previously
outstanding in the United Kingdom |
|
(2,842 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back: Interest expense from the amortization of discount
arising from the bifurcation of the conversion option embedded in
the convertible notes, net of income taxes |
|
42 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Deduct: Gain arising from an adjustment to the estimated fair value
of consideration received from the exit of investment in
AdvisorEngine. |
|
(868 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back: Impairments, net of income taxes |
|
— |
|
|
|
19,672 |
|
|
|
30,138 |
|
|
|
— |
|
|
|
— |
|
Deduct: Gain recognized upon sale of Canadian ETF business |
|
— |
|
|
|
(2,877 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back: Severance expense, net of income taxes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,194 |
|
Add back: Tax shortfalls upon vesting and exercise of stock-based
compensation awards |
|
119 |
|
|
|
501 |
|
|
|
142 |
|
|
|
30 |
|
|
|
76 |
|
Add back: Acquisition and disposition-related costs, net of income
taxes |
|
25 |
|
|
|
358 |
|
|
|
353 |
|
|
|
154 |
|
|
|
27 |
|
Adjusted net income |
$ |
8,494 |
|
|
$ |
11,224 |
|
|
$ |
10,107 |
|
|
$ |
10,642 |
|
|
$ |
7,813 |
|
Weighted average common shares -
diluted |
|
166,634 |
|
|
|
167,561 |
|
|
|
167,203 |
|
|
|
167,163 |
|
|
|
167,249 |
|
Adjusted earnings per share -
diluted |
$ |
0.05 |
|
|
$ |
0.07 |
|
|
$ |
0.06 |
|
|
$ |
0.06 |
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Gross Margin and Gross
Margin Percentage: |
June 30,2020 |
|
Mar. 31,2020 |
Dec. 31,2019 |
Sept. 30,2019 |
June 30,2019 |
Operating revenues |
$ |
58,126 |
|
|
$ |
63,874 |
|
|
$ |
68,907 |
|
|
$ |
67,718 |
|
|
$ |
66,293 |
|
Less: Fund management and administration |
|
(14,461 |
) |
|
|
(14,485 |
) |
|
|
(15,650 |
) |
|
|
(15,110 |
) |
|
|
(15,576 |
) |
Gross margin |
$ |
43,665 |
|
|
$ |
49,389 |
|
|
$ |
53,257 |
|
|
$ |
52,608 |
|
|
$ |
50,717 |
|
Gross margin percentage |
|
75.1 |
% |
|
|
77.3 |
% |
|
|
77.3 |
% |
|
|
77.7 |
% |
|
|
76.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Adjusted Operating
Income and Adjusted OperatingIncome
Margin: |
June 30,2020 |
|
Mar. 31,2020 |
Dec. 31,2019 |
Sept. 30,2019 |
June 30,2019 |
Operating revenues |
$ |
58,126 |
|
|
$ |
63,874 |
|
|
$ |
68,907 |
|
|
$ |
67,718 |
|
|
$ |
66,293 |
|
|
|
|
|
|
|
|
Operating income |
$ |
11,797 |
|
|
$ |
15,634 |
|
|
$ |
14,809 |
|
|
$ |
16,131 |
|
|
$ |
11,911 |
|
Add back: Severance expense, before income taxes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,475 |
|
Add back: Acquisition and disposition-related costs, before
income taxes |
|
33 |
|
|
|
383 |
|
|
|
366 |
|
|
|
190 |
|
|
|
33 |
|
Adjusted operating income |
$ |
11,830 |
|
|
$ |
16,017 |
|
|
$ |
15,175 |
|
|
$ |
16,321 |
|
|
$ |
13,419 |
|
Adjusted operating income
margin |
|
20.4 |
% |
|
|
25.1 |
% |
|
|
22.0 |
% |
|
|
24.1 |
% |
|
|
20.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Adjusted Compensation
Expense: |
June 30,2020 |
|
Mar. 31,2020 |
Dec. 31,2019 |
Sept. 30,2019 |
June 30,2019 |
Compensation expense |
$ |
17,455 |
|
$ |
17,295 |
|
$ |
19,280 |
|
$ |
18,880 |
|
$ |
21,300 |
|
Deduct: Severance expense, before income taxes |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,475 |
) |
Adjusted compensation
expense |
$ |
17,455 |
|
$ |
17,295 |
|
$ |
19,280 |
|
$ |
18,880 |
|
$ |
19,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Adjusted Total
Operating Expenses: |
June 30,2020 |
|
Mar. 31,2020 |
Dec. 31,2019 |
Sept. 30,2019 |
June 30,2019 |
Total operating expenses |
$ |
46,329 |
|
|
$ |
48,240 |
|
|
$ |
54,098 |
|
|
$ |
51,587 |
|
|
$ |
54,382 |
|
Deduct: Severance expense, before income taxes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,475 |
) |
Deduct: Acquisition and disposition-related costs, before
income taxes |
|
(33 |
) |
|
|
(383 |
) |
|
|
(366 |
) |
|
|
(190 |
) |
|
|
(33 |
) |
Adjusted total operating
expenses |
$ |
46,296 |
|
|
$ |
47,857 |
|
|
$ |
53,732 |
|
|
$ |
51,397 |
|
|
$ |
52,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Adjusted Income Before
Income Taxes: |
June 30,2020 |
|
Mar. 31,2020 |
Dec. 31,2019 |
Sept. 30,2019 |
June 30,2019 |
(Loss)/income before income
taxes |
$ |
(14,054 |
) |
|
$ |
(11,009 |
) |
|
$ |
(22,355 |
) |
|
$ |
8,635 |
|
$ |
6,066 |
Add back: Loss on revaluation of deferred consideration |
|
23,358 |
|
|
|
2,208 |
|
|
|
5,354 |
|
|
|
6,306 |
|
|
4,037 |
Add back: Loss on extinguishment of debt |
|
2,387 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
Add back: Interest expense from the amortization of discount
arising from the bifurcation of the conversion option
embedded in the convertible notes, before income taxes |
|
55 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
Deduct: Gain arising from an adjustment to the estimated fair
value of consideration received from the exit of investment
in AdvisorEngine |
|
(868 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
Add back: Impairments, before income taxes |
|
— |
|
|
|
19,672 |
|
|
|
30,138 |
|
|
|
— |
|
|
— |
Add back: Loss recognized upon reduction of a
tax-related indemnification asset |
|
— |
|
|
|
5,981 |
|
|
|
— |
|
|
|
— |
|
|
— |
Deduct: Gain recognized upon sale of Canadian ETF business |
|
— |
|
|
|
(2,877 |
) |
|
|
— |
|
|
|
— |
|
|
— |
Add back: Acquisition and disposition-related costs, before
income taxes |
|
33 |
|
|
|
383 |
|
|
|
366 |
|
|
|
190 |
|
|
33 |
Add back: Severance expense, before income taxes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
1,475 |
Adjusted income before income
taxes |
$ |
10,911 |
|
|
$ |
14,358 |
|
|
$ |
13,503 |
|
|
$ |
15,131 |
|
$ |
11,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Adjusted Income Tax
Expense and Adjusted Effective Income Tax Rate: |
June 30,2020 |
Mar. 31,2020 |
Dec. 31,2019 |
Sept. 30,2019 |
June 30,2019 |
Adjusted income before income
taxes (above) |
$ |
10,911 |
|
$ |
14,358 |
|
|
$ |
13,503 |
|
|
$ |
15,131 |
|
|
$ |
11,611 |
|
|
|
|
|
|
|
Income tax (benefit)/expense |
$ |
(804 |
) |
$ |
(2,371 |
) |
|
$ |
3,525 |
|
|
$ |
4,483 |
|
|
$ |
3,587 |
|
Add back: Tax benefit arising from loss on extinguishment of
debt |
|
477 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back: Release of a deferred tax asset valuation allowance
recognized on interest carryforwards arising from debt
previously outstanding in the United Kingdom |
|
2,842 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back: Tax benefit arising from the amortization of
discount associated with the bifurcation of the conversion
option embedded in the convertible notes |
|
13 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back: Tax benefit arising from reduction of a tax-related
indemnification asset |
|
— |
|
|
5,981 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Deduct: Tax shortfalls upon vesting and exercise of
stock- based compensation awards |
|
(119 |
) |
|
(501 |
) |
|
|
(142 |
) |
|
|
(30 |
) |
|
|
(76 |
) |
Add back: Tax benefit arising from acquisition and
disposition-related costs |
|
8 |
|
|
25 |
|
|
|
13 |
|
|
|
36 |
|
|
|
6 |
|
Add back: Tax benefit arising from severance expense |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
281 |
|
Adjusted income tax expense |
$ |
2,417 |
|
$ |
3,134 |
|
|
$ |
3,396 |
|
|
$ |
4,489 |
|
|
$ |
3,798 |
|
Adjusted effective income tax
rate |
|
22.2 |
% |
|
21.8 |
% |
|
|
25.1 |
% |
|
|
29.7 |
% |
|
|
32.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
- the ultimate duration of the COVID-19 pandemic and its
short-term and long-term impact on our business and the global
economy;
- anticipated trends, conditions and investor sentiment in the
global markets and ETPs;
- anticipated levels of inflows into and outflows out of our
ETPs;
- our ability to deliver favorable rates of return to
investors;
- competition in our business;
- 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 operate and expand our business in
non-U.S. markets; and
- the effect of laws and regulations that apply to our
business.
Our business is subject to many risks and uncertainties,
including without limitation:
- declining prices of securities, gold and other precious metals
and other commodities can adversely affect our business by reducing
the market value of the assets we manage or causing WisdomTree ETP
investors to sell their fund shares and trigger redemptions;
- fluctuations in the amount and mix of our AUM, whether caused
by disruptions in the financial markets or otherwise, including but
not limited to a pandemic event such as COVID-19, 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;
- competitive pressures could reduce revenues and profit
margins;
- we derive a substantial portion of our revenues from a limited
number of products, and as a result, our operating results are
particularly exposed to investor sentiment toward investing in the
products’ strategies and our ability to maintain the AUM of these
products, as well as the performance of these products and
market-specific and political and economic risk;
- a significant portion of our AUM is held in products with
exposure to U.S. and international developed markets and we
therefore have exposure to domestic and foreign market conditions
and are subject to currency exchange rate risks;
- withdrawals or broad changes in investments in our ETPs by
investors with significant positions may negatively impact revenues
and operating margins;
- over the last few years, we have expanded our business
globally. This expansion subjects us to increased operational,
regulatory, financial and other risks;
- many of our ETPs have a limited track record, and poor
investment performance could cause our revenues to decline;
and
- we depend on third parties to provide many critical services to
operate our business and our ETPs. The failure of key vendors to
adequately provide such services could materially affect our
operating business and harm WisdomTree ETP investors.
Other factors, such as general economic conditions, including
currency exchange rate fluctuations, also may have an effect on the
results of our operations. For a more complete description of the
risks noted above and other risks that could cause our actual
results to differ from our current expectations, see “Risk Factors”
in our Annual Report on Form 10-K for the year ended
December 31, 2019 and Quarterly Report on Form 10-Q for the
quarter ended March 31, 2020.
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.
WisdomTree Investments (NASDAQ:WETF)
Historical Stock Chart
From May 2024 to Jun 2024
WisdomTree Investments (NASDAQ:WETF)
Historical Stock Chart
From Jun 2023 to Jun 2024