WisdomTree Investments, Inc. (NASDAQ: WETF) today reported
financial results for the second quarter of 2021.
$17.6 million net income ($16.81 million net income, as
adjusted), see “Non-GAAP Financial Measurements” for
additional information.
$73.9 billion of ending AUM, an increase of
6.3% arising from market appreciation and net inflows.
$0.9 billion of net inflows, driven by inflows
into our emerging markets equity, international developed market
equity, U.S. equity and fixed income products.
0.41% average global advisory fee, a decrease
of 1 basis point due to AUM mix shift.
$77.6 million of operating revenues, an
increase of 6.6% due to higher average AUM, partly offset by a
lower average global advisory fee.
79.1% gross margin1, a 0.4 point increase from the
previous quarter.
30.5% operating income margin, a 5.0 point
increase primarily due to higher revenues.
$150.0 million issuance of convertible senior notes due
2026, bearing interest at a rate of 3.25% and issued with
a conversion price of $11.04 per share. We used a portion of
the proceeds to repurchase our common stock and intend to use the
remainder of the net proceeds for working capital and other general
corporate purposes, which may include debt retirement, organic and
inorganic growth initiatives and common stock repurchases.
$31.9 million repurchase of 4.6 million shares of our
common stock, principally in connection with the issuance
of the convertible notes.
$0.03 quarterly dividend
declared, payable on August 25, 2021 to
stockholders of record as of the close of business on August 11,
2021.
Update from Jonathan Steinberg, WisdomTree
CEO |
“Many businesses across the financial services ecosystem are
struggling to balance legacy business models and the conflicts that
arise with fast moving technological advancements - not WisdomTree.
Our solid operating and financial results in the second
quarter demonstrate continued growth and strong execution across
our business today, along with exciting progress on our long-term
strategic initiatives, all while showing the efficiency and
scalability of our business. “We continue to strengthen our
position in areas of growing interest such as liquid alternatives,
ESG and model portfolios. We are also quickly establishing
expertise around digital assets, delivering the insights from our
pioneering work in regulated cryptocurrency exposures and our
broader vision for the applications of blockchain technology in the
form of investor-facing research and events. “The focus and
flexibility of our remote first business model have enabled
WisdomTree to attract and retain world-class talent, drive strong
operating results, and engage with our clients across different
modalities with an ever-expanding set of resources.”
|
Update from Jarrett Lilien, WisdomTree COO and
President |
“This was a strong quarter for WisdomTree, extending a string of
strong quarters, and we are continuing to build
momentum as we execute on our key growth initiatives. “We are
producing balance and quality in the mix of our global flows.
In the U.S., we are seeing strength in our Large Blend, Emerging
Markets and China funds. In Europe, our UCITs ETFs and Thematic
funds are standouts, and we are also experiencing growth in
industrial metals, copper, silver and even gold, while there
continues to be volatility in the gold market. “We are investing in
our future growth with 11 new fund launches and a number of
well-received product enhancements completed in the first half of
the year. We also launched ESG model portfolios and +Crypto
models this past quarter and continue to be optimistic about the
impact of models on our flows. “We are executing well on all
fronts, building momentum and are excited to enter the second half
of the year building on these strong results.” |
OPERATING AND FINANCIAL HIGHLIGHTS
|
Three Months Ended |
|
June 30, 2021 |
Mar. 31, 2021 |
Dec. 31, 2020 |
Sept. 30, 2020 |
June 30, 2020 |
Consolidated Operating Highlights ($ in
billions): |
|
|
|
|
|
AUM |
$ |
73.9 |
|
$ |
69.5 |
|
$ |
67.4 |
|
$ |
60.7 |
|
$ |
57.7 |
|
Net inflows/(outflows) |
$ |
0.9 |
|
$ |
1.3 |
|
$ |
0.9 |
|
$ |
(0.5 |
) |
$ |
0.1 |
|
Average AUM |
$ |
73.7 |
|
$ |
69.6 |
|
$ |
64.1 |
|
$ |
61.2 |
|
$ |
55.7 |
|
Average advisory fee |
|
0.41 |
% |
|
0.42 |
% |
|
0.41 |
% |
|
0.42 |
% |
|
0.41 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Highlights ($ in
millions, except per share amounts): |
|
|
|
|
|
Operating revenues |
$ |
77.6 |
|
$ |
72.8 |
|
$ |
67.1 |
|
$ |
64.6 |
|
$ |
58.1 |
|
Net income/(loss) |
$ |
17.6 |
|
$ |
15.1 |
|
$ |
(13.5 |
) |
$ |
(0.3 |
) |
$ |
(13.3 |
) |
Diluted earnings/(loss) per share |
$ |
0.11 |
|
$ |
0.09 |
|
$ |
(0.10 |
) |
$ |
(0.01 |
) |
$ |
(0.09 |
) |
Operating income margin |
|
30.5 |
% |
|
25.5 |
% |
|
19.2 |
% |
|
22.8 |
% |
|
20.3 |
% |
As
Adjusted (Non-GAAP1): |
|
|
|
|
|
Gross margin |
|
79.1 |
% |
|
78.7 |
% |
|
75.6 |
% |
|
76.5 |
% |
|
75.1 |
% |
Net income, as adjusted |
$ |
16.8 |
|
$ |
12.5 |
|
$ |
9.2 |
|
$ |
11.0 |
|
$ |
8.5 |
|
Diluted earnings per share, as adjusted |
$ |
0.10 |
|
$ |
0.08 |
|
$ |
0.06 |
|
$ |
0.07 |
|
$ |
0.05 |
|
RECENT BUSINESS DEVELOPMENTS
Company News
- In May 2021, Bryan Edmiston was appointed as Chief Financial
Officer, effective June 1, 2021.
- In June 2021, we completed a private offering of $150.0 million
in aggregate principal amount of 3.25% Convertible Senior Notes due
2026.
- In June 2021, we appointed Stockholm-based Björn Sandberg as
Director of Nordic Sales for WisdomTree Europe.
Product News
- In May 2021, we launched the WisdomTree Alternative Income Fund
(HYIN) on the CBOE; we launched the WisdomTree Efficient Core
family of ETFs on the NYSE, which includes the International
Efficient Core Fund (NTSI), the Emerging Markets Efficient Core
Fund (NTSE) and the renamed U.S. Efficient Core Fund (NTSX); we
launched +Crypto Model Portfolios for advisors in collaboration
with OnRamp Invest which features Gemini integration; and the
WisdomTree S&P 500 VIX Short-Term Futures 2.25x Daily Leveraged
(VIXL) underwent a change of index as part of volatility proofing
measures across the European product range.
- In June 2021, we launched the WisdomTree BioRevolution Fund
(WDNA) on the CBOE, leveraging data and thematic insights from Dr.
Jamie Metzl, one of the world’s leading technology futurists; we
launched the WisdomTree U.S. Growth & Momentum Fund (WGRO) on
the Nasdaq stock exchange; and we listed the WisdomTree Bitcoin ETP
(BTCW) and WisdomTree Ethereum ETP (ETHW) on Euronext exchanges in
Paris and Amsterdam.
- In July 2021, we listed the WisdomTree Enhanced Commodity
ex-Agriculture UCITS ETF – EUR Hedged (EXAG) on Börse Xetra.
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share
amounts) (Unaudited)
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2021 |
|
Mar. 31, 2021 |
|
Dec. 31, 2020 |
|
Sept. 30, 2020 |
|
June 30, 2020 |
|
June 30, 2021 |
|
June 30, 2020 |
Operating Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fees |
$ |
75,997 |
|
|
$ |
71,616 |
|
|
$ |
66,105 |
|
|
$ |
63,919 |
|
|
$ |
57,208 |
|
|
$ |
147,613 |
|
|
$ |
120,158 |
|
Other income |
|
1,606 |
|
|
|
1,214 |
|
|
|
954 |
|
|
|
721 |
|
|
|
918 |
|
|
|
2,820 |
|
|
|
1,842 |
|
Total revenues |
|
77,603 |
|
|
|
72,830 |
|
|
|
67,059 |
|
|
|
64,640 |
|
|
|
58,126 |
|
|
|
150,433 |
|
|
|
122,000 |
|
Operating
Expenses: |
|
|
|
|
|
|
|
Compensation and benefits |
|
20,331 |
|
|
|
22,627 |
|
|
|
20,827 |
|
|
|
19,098 |
|
|
|
17,455 |
|
|
|
42,958 |
|
|
|
34,750 |
|
Fund management and administration |
|
16,195 |
|
|
|
15,521 |
|
|
|
16,350 |
|
|
|
15,219 |
|
|
|
14,461 |
|
|
|
31,716 |
|
|
|
28,946 |
|
Marketing and advertising |
|
3,594 |
|
|
|
3,006 |
|
|
|
3,715 |
|
|
|
2,996 |
|
|
|
1,949 |
|
|
|
6,600 |
|
|
|
4,417 |
|
Sales and business development |
|
2,159 |
|
|
|
2,145 |
|
|
|
2,595 |
|
|
|
2,386 |
|
|
|
2,181 |
|
|
|
4,304 |
|
|
|
5,598 |
|
Contractual gold payments |
|
4,314 |
|
|
|
4,270 |
|
|
|
4,449 |
|
|
|
4,539 |
|
|
|
4,063 |
|
|
|
8,584 |
|
|
|
7,823 |
|
Professional fees |
|
1,921 |
|
|
|
2,013 |
|
|
|
1,322 |
|
|
|
950 |
|
|
|
1,357 |
|
|
|
3,934 |
|
|
|
2,630 |
|
Occupancy, communications and equipment |
|
1,266 |
|
|
|
1,475 |
|
|
|
1,622 |
|
|
|
1,611 |
|
|
|
1,643 |
|
|
|
2,741 |
|
|
|
3,194 |
|
Depreciation and amortization |
|
256 |
|
|
|
252 |
|
|
|
261 |
|
|
|
253 |
|
|
|
251 |
|
|
|
508 |
|
|
|
507 |
|
Third-party distribution fees |
|
2,130 |
|
|
|
1,343 |
|
|
|
1,291 |
|
|
|
1,233 |
|
|
|
1,340 |
|
|
|
3,473 |
|
|
|
2,695 |
|
Acquisition and disposition- related costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
33 |
|
|
|
— |
|
|
|
416 |
|
Other |
|
1,752 |
|
|
|
1,571 |
|
|
|
1,720 |
|
|
|
1,611 |
|
|
|
1,596 |
|
|
|
3,323 |
|
|
|
3,593 |
|
Total operating expenses |
|
53,918 |
|
|
|
54,223 |
|
|
|
54,152 |
|
|
|
49,896 |
|
|
|
46,329 |
|
|
|
108,141 |
|
|
|
94,569 |
|
Operating income |
|
23,685 |
|
|
|
18,607 |
|
|
|
12,907 |
|
|
|
14,744 |
|
|
|
11,797 |
|
|
|
42,292 |
|
|
|
27,431 |
|
Other
Income/(Expenses): |
|
|
|
|
|
|
|
Interest expense |
|
(2,567 |
) |
|
|
(2,296 |
) |
|
|
(2,694 |
) |
|
|
(2,511 |
) |
|
|
(2,044 |
) |
|
|
(4,863 |
) |
|
|
(4,463 |
) |
Gain/(loss) on revaluation of deferred consideration – gold
payments |
|
497 |
|
|
|
2,832 |
|
|
|
(22,385 |
) |
|
|
(8,870 |
) |
|
|
(23,358 |
) |
|
|
3,329 |
|
|
|
(25,566 |
) |
Interest income |
|
225 |
|
|
|
231 |
|
|
|
351 |
|
|
|
111 |
|
|
|
119 |
|
|
|
456 |
|
|
|
282 |
|
Impairments |
|
— |
|
|
|
(303 |
) |
|
|
— |
|
|
|
(3,080 |
) |
|
|
— |
|
|
|
(303 |
) |
|
|
(19,672 |
) |
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,387 |
) |
|
|
— |
|
|
|
(2,387 |
) |
Other gains and losses, net |
|
49 |
|
|
|
(5,893 |
) |
|
|
524 |
|
|
|
744 |
|
|
|
1,819 |
|
|
|
(5,844 |
) |
|
|
(688 |
) |
Income/(loss) before income
taxes |
|
21,889 |
|
|
|
13,178 |
|
|
|
(11,297 |
) |
|
|
1,138 |
|
|
|
(14,054 |
) |
|
|
35,067 |
|
|
|
(25,063 |
) |
Income tax expense/(benefit) |
|
4,259 |
|
|
|
(1,969 |
) |
|
|
2,200 |
|
|
|
1,408 |
|
|
|
(804 |
) |
|
|
2,290 |
|
|
|
(3,175 |
) |
Net
income/(loss) |
$ |
17,630 |
|
|
$ |
15,147 |
|
|
$ |
(13,497 |
) |
|
$ |
(270 |
) |
|
$ |
(13,250 |
) |
|
$ |
32,777 |
|
|
$ |
(21,888 |
) |
Earnings/(loss) per share –
basic |
$ |
0.112 |
|
|
$ |
0.092 |
|
|
|
($0.10)2 |
|
|
|
($0.01)2 |
|
|
($0.09 |
) |
|
$ |
0.202 |
|
|
($0.15)2 |
|
Earnings/(loss) per share –
diluted |
$ |
0.11 |
|
|
$ |
0.09 |
|
|
|
($0.10)2 |
|
|
|
($0.01)2 |
|
|
($0.09 |
) |
|
$ |
0.20 |
|
|
($0.15)2 |
|
Weighted average common shares –
basic |
|
145,542 |
|
|
|
145,649 |
|
|
|
145,096 |
|
|
|
145,564 |
|
|
|
151,623 |
|
|
|
145,652 |
|
|
|
152,071 |
|
Weighted average common shares –
diluted |
|
164,855 |
|
|
|
161,831 |
|
|
|
145,096 |
|
|
|
145,564 |
|
|
|
151,623 |
|
|
|
163,062 |
|
|
|
152,071 |
|
|
|
|
|
|
|
|
|
As Adjusted (Non-GAAP1) |
|
|
|
|
|
|
|
Income before income taxes |
$ |
21,253 |
|
|
$ |
15,583 |
|
|
$ |
11,504 |
|
|
$ |
13,242 |
|
|
$ |
10,911 |
|
|
|
|
Income tax expense |
$ |
4,458 |
|
|
$ |
3,079 |
|
|
$ |
2,281 |
|
|
$ |
2,205 |
|
|
$ |
2,417 |
|
|
|
|
Net income |
$ |
16,795 |
|
|
$ |
12,504 |
|
|
$ |
9,223 |
|
|
$ |
11,037 |
|
|
$ |
8,494 |
|
|
|
|
Earnings per share – diluted |
$ |
0.10 |
|
|
$ |
0.08 |
|
|
$ |
0.06 |
|
|
$ |
0.07 |
|
|
$ |
0.05 |
|
|
|
|
QUARTERLY HIGHLIGHTS
Operating Revenues
- Operating revenues increased 6.6% and 33.5% from the first
quarter of 2021 and second quarter of 2020, respectively, due to
higher average global AUM arising from market appreciation and net
inflows.
- Our average global advisory fee was 0.41%, 0.42% and 0.41%
during the second quarter of 2021, the first quarter of 2021 and
the second quarter of 2020, respectively.
Operating Expenses
- Operating expenses decreased 0.6% from the first quarter of
2021 primarily due to lower compensation arising from reduced
stock-based compensation and prior quarter seasonal payroll taxes,
partly offset by higher third-party distribution fees, marketing
expenses and fund management and administration costs.
- Operating expenses increased 16.4% from the second quarter of
2020 primarily due to higher incentive compensation and headcount,
fund management and administration costs, marketing expenses,
third-party distribution fees and professional fees.
Other Income/(Expenses)
- Interest expense increased 11.8% from the first quarter of 2021
primarily due to the issuance of $150.0 million convertible senior
notes due 2026. Interest expense increased 25.6% from the
second quarter of 2020 primarily due to a higher level of debt
outstanding and a higher effective interest rate.
- We recognized a non-cash gain on revaluation of deferred
consideration of $0.5 million during the second quarter of
2021. The gain was due to a flattening of the forward-looking
gold curve. The magnitude of any gain or loss recognized is
highly correlated to the magnitude of the change in the
forward-looking price of gold.
Income Taxes
- Our effective income tax rate for the second quarter of 19.5%
resulted in income tax expense of $4.3 million. Our tax rate
differs from the federal statutory rate of 21% primarily due to a
lower tax rate on foreign earnings.
- Our adjusted effective income tax rate was 21.0%1.
SIX MONTH HIGHLIGHTS
- Operating revenues increased 23.3% as compared to 2020 due to
higher average AUM.
- Operating expenses increased 14.4% as compared to 2020 largely
due to higher incentive compensation accruals and headcount, fund
management and administration costs, marketing expenses,
professional fees, third party distribution fees and contractual
gold payments. These increases were partly offset by lower
sales and business development expenses and occupancy
expenses.
- Significant items reported in other income/(expenses) in 2021
include a non-cash gain on revaluation of deferred consideration of
$3.3 million; a non-cash charge of $5.2 million 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 $0.4 million
recognized on our investment in Securrency, Inc. due to its recent
capital raise.
- Our effective income tax rate for 2021 of 6.5% resulted in
income tax expense of $2.3 million. Our tax rate differs from
the federal statutory rate of 21% primarily due to a tax benefit of
$5.2 million recognized in connection with the release of the
tax-related indemnification asset described above, a lower tax rate
on foreign earnings and a non-taxable gain on revaluation of
deferred consideration. These items were partly offset by tax
shortfalls associated with the vesting and exercise of stock-based
compensation awards and state and local taxes.
CONFERENCE CALL
WisdomTree will discuss its results and operational highlights
during a conference call on Friday, July 30, 2021 at 9:00 a.m. ET.
The call-in number is (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, cryptocurrency and
alternative strategies. WisdomTree currently has approximately
$74.3 billion in assets under management globally.
WisdomTree® is the marketing name for WisdomTree Investments,
Inc. and its subsidiaries worldwide.
_________________1 See “Non-GAAP Financial
Measurements.”2 Earnings/(loss) per share (“EPS”) is
calculated pursuant to the two-class method as it results in a
lower EPS amount as compared to the treasury stock method.
Contact Information:
Corporate CommunicationsJessica
Zaloom+1.917.267.3735 jzaloom@wisdomtree.com
WisdomTree Investments, Inc.Key Operating Statistics
(Unaudited)
|
Three Months Ended |
|
June 30,2021 |
|
Mar. 31,2021 |
|
Dec. 31,2020 |
|
Sept. 30,2020 |
|
June 30,2020 |
GLOBAL ETPs ($ in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period assets |
$ |
69,537 |
|
|
$ |
67,392 |
|
|
$ |
60,710 |
|
|
$ |
57,666 |
|
|
$ |
50,347 |
|
Inflows/(outflows) |
|
931 |
|
|
|
1,279 |
|
|
|
881 |
|
|
|
(477 |
) |
|
|
126 |
|
Market appreciation/(depreciation) |
|
3,484 |
|
|
|
866 |
|
|
|
5,801 |
|
|
|
3,567 |
|
|
|
7,489 |
|
Fund closures |
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(46 |
) |
|
|
(296 |
) |
End of period assets |
$ |
73,948 |
|
|
$ |
69,537 |
|
|
$ |
67,392 |
|
|
$ |
60,710 |
|
|
$ |
57,666 |
|
Average assets during the period |
$ |
73,658 |
|
|
$ |
69,589 |
|
|
$ |
64,106 |
|
|
$ |
61,200 |
|
|
$ |
55,746 |
|
Average advisory fee during the period |
|
0.41 |
% |
|
|
0.42 |
% |
|
|
0.41 |
% |
|
|
0.42 |
% |
|
|
0.41 |
% |
Revenue days |
|
91 |
|
|
|
90 |
|
|
|
92 |
|
|
|
92 |
|
|
|
91 |
|
Number of ETFs – end of the period |
|
318 |
|
|
|
313 |
|
|
|
309 |
|
|
|
305 |
|
|
|
311 |
|
|
|
|
|
|
|
|
U.S. LISTED ETFs ($ in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period assets |
$ |
42,163 |
|
|
$ |
38,517 |
|
|
$ |
33,310 |
|
|
$ |
31,362 |
|
|
$ |
28,920 |
|
Inflows/(outflows) |
|
1,130 |
|
|
|
1,343 |
|
|
|
919 |
|
|
|
575 |
|
|
|
(1,474 |
) |
Market appreciation/(depreciation) |
|
1,836 |
|
|
|
2,303 |
|
|
|
4,288 |
|
|
|
1,373 |
|
|
|
4,030 |
|
Fund closures |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(114 |
) |
End of period assets |
$ |
45,129 |
|
|
$ |
42,163 |
|
|
$ |
38,517 |
|
|
$ |
33,310 |
|
|
$ |
31,362 |
|
Average assets during the period |
$ |
44,183 |
|
|
$ |
40,706 |
|
|
$ |
35,926 |
|
|
$ |
33,002 |
|
|
$ |
30,651 |
|
Average advisory fee during the period |
|
0.40 |
% |
|
|
0.40 |
% |
|
|
0.40 |
% |
|
|
0.41 |
% |
|
|
0.41 |
% |
Number of ETFs – end of the period |
|
73 |
|
|
|
68 |
|
|
|
67 |
|
|
|
67 |
|
|
|
67 |
|
|
|
|
|
|
|
|
EUROPEAN LISTED ETPs ($
in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period assets |
$ |
27,374 |
|
|
$ |
28,875 |
|
|
$ |
27,400 |
|
|
$ |
26,304 |
|
|
$ |
21,427 |
|
Inflows/(outflows) |
|
(199 |
) |
|
|
(64 |
) |
|
|
(38 |
) |
|
|
(1,052 |
) |
|
|
1,600 |
|
Market appreciation/(depreciation) |
|
1,648 |
|
|
|
(1,437 |
) |
|
|
1,513 |
|
|
|
2,194 |
|
|
|
3,459 |
|
Fund closures |
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(46 |
) |
|
|
(182 |
) |
End of period assets |
$ |
28,819 |
|
|
$ |
27,374 |
|
|
$ |
28,875 |
|
|
$ |
27,400 |
|
|
$ |
26,304 |
|
Average assets during the period |
$ |
29,475 |
|
|
$ |
28,883 |
|
|
$ |
28,135 |
|
|
$ |
28,198 |
|
|
$ |
25,095 |
|
Average advisory fee during the period |
|
0.43 |
% |
|
|
0.44 |
% |
|
|
0.42 |
% |
|
|
0.42 |
% |
|
|
0.41 |
% |
Number of ETPs – end of the period |
|
245 |
|
|
|
245 |
|
|
|
242 |
|
|
|
238 |
|
|
|
244 |
|
|
|
|
|
|
|
|
PRODUCT CATEGORIES ($ in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity &
Currency |
|
|
|
|
|
|
Beginning of period assets |
$ |
23,657 |
|
|
$ |
25,879 |
|
|
$ |
25,176 |
|
|
$ |
24,246 |
|
|
$ |
19,818 |
|
Inflows/(outflows) |
|
(318 |
) |
|
|
(660 |
) |
|
|
(296 |
) |
|
|
(1,112 |
) |
|
|
1,308 |
|
Market appreciation/(depreciation) |
|
1,433 |
|
|
|
(1,562 |
) |
|
|
999 |
|
|
|
2,042 |
|
|
|
3,120 |
|
End of period assets |
$ |
24,772 |
|
|
$ |
23,657 |
|
|
$ |
25,879 |
|
|
$ |
25,176 |
|
|
$ |
24,246 |
|
Average assets during the period |
$ |
25,577 |
|
|
$ |
25,296 |
|
|
$ |
25,598 |
|
|
$ |
25,949 |
|
|
$ |
23,048 |
|
|
|
|
|
|
|
|
U.S. Equity |
|
|
|
|
|
|
Beginning of period assets |
$ |
20,019 |
|
|
$ |
18,367 |
|
|
$ |
15,612 |
|
|
$ |
13,997 |
|
|
$ |
12,151 |
|
Inflows/(outflows) |
|
199 |
|
|
|
218 |
|
|
|
395 |
|
|
|
897 |
|
|
|
(241 |
) |
Market appreciation/(depreciation) |
|
1,076 |
|
|
|
1,434 |
|
|
|
2,360 |
|
|
|
718 |
|
|
|
2,087 |
|
End of period assets |
$ |
21,294 |
|
|
$ |
20,019 |
|
|
$ |
18,367 |
|
|
$ |
15,612 |
|
|
$ |
13,997 |
|
Average assets during the period |
$ |
20,989 |
|
|
$ |
19,320 |
|
|
$ |
17,070 |
|
|
$ |
15,159 |
|
|
$ |
13,324 |
|
|
|
|
|
|
|
|
Emerging Market
Equity |
|
|
|
|
|
|
Beginning of period assets |
$ |
10,477 |
|
|
$ |
8,539 |
|
|
$ |
5,979 |
|
|
$ |
5,413 |
|
|
$ |
4,600 |
|
Inflows/(outflows) |
|
529 |
|
|
|
1,662 |
|
|
|
1,399 |
|
|
|
257 |
|
|
|
(25 |
) |
Market appreciation/(depreciation) |
|
511 |
|
|
|
276 |
|
|
|
1,161 |
|
|
|
309 |
|
|
|
838 |
|
End of period assets |
$ |
11,517 |
|
|
$ |
10,477 |
|
|
$ |
8,539 |
|
|
$ |
5,979 |
|
|
$ |
5,413 |
|
Average assets during the period |
$ |
11,010 |
|
|
$ |
9,875 |
|
|
$ |
7,250 |
|
|
$ |
5,917 |
|
|
$ |
5,131 |
|
|
Three Months Ended |
|
June 30, 2021 |
|
Mar. 31,2021 |
|
Dec. 31,2020 |
|
Sept. 30,2020 |
|
June 30,2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
International Developed
Market Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period assets |
$ |
9,991 |
|
|
$ |
9,414 |
|
|
$ |
8,621 |
|
|
$ |
8,839 |
|
|
$ |
8,659 |
|
Inflows/(outflows) |
|
397 |
|
|
|
17 |
|
|
|
(191 |
) |
|
|
(587 |
) |
|
|
(965 |
) |
Market appreciation/(depreciation) |
|
405 |
|
|
|
560 |
|
|
|
984 |
|
|
|
369 |
|
|
|
1,145 |
|
End of period assets |
$ |
10,793 |
|
|
$ |
9,991 |
|
|
$ |
9,414 |
|
|
$ |
8,621 |
|
|
$ |
8,839 |
|
Average assets during the period |
$ |
10,529 |
|
|
$ |
9,796 |
|
|
$ |
8,931 |
|
|
$ |
8,835 |
|
|
$ |
8,780 |
|
|
|
|
|
|
|
|
Fixed
Income |
|
|
|
|
|
|
Beginning of period assets |
$ |
3,261 |
|
|
$ |
3,324 |
|
|
$ |
3,630 |
|
|
$ |
3,530 |
|
|
$ |
3,527 |
|
Inflows/(outflows) |
|
168 |
|
|
|
10 |
|
|
|
(330 |
) |
|
|
76 |
|
|
|
(53 |
) |
Market appreciation/(depreciation) |
|
28 |
|
|
|
(73 |
) |
|
|
24 |
|
|
|
24 |
|
|
|
56 |
|
End of period assets |
$ |
3,457 |
|
|
$ |
3,261 |
|
|
$ |
3,324 |
|
|
$ |
3,630 |
|
|
$ |
3,530 |
|
Average assets during the period |
$ |
3,354 |
|
|
$ |
3,253 |
|
|
$ |
3,472 |
|
|
$ |
3,605 |
|
|
$ |
3,523 |
|
|
|
|
|
|
|
|
Leveraged &
Inverse |
|
|
|
|
|
|
Beginning of period assets |
$ |
1,521 |
|
|
$ |
1,478 |
|
|
$ |
1,425 |
|
|
$ |
1,345 |
|
|
$ |
896 |
|
Inflows/(outflows) |
|
(2 |
) |
|
|
(5 |
) |
|
|
(125 |
) |
|
|
(9 |
) |
|
|
311 |
|
Market appreciation/(depreciation) |
|
173 |
|
|
|
48 |
|
|
|
178 |
|
|
|
89 |
|
|
|
138 |
|
End of period assets |
$ |
1,692 |
|
|
$ |
1,521 |
|
|
$ |
1,478 |
|
|
$ |
1,425 |
|
|
$ |
1,345 |
|
Average assets during the period |
$ |
1,666 |
|
|
$ |
1,555 |
|
|
$ |
1,430 |
|
|
$ |
1,476 |
|
|
$ |
1,164 |
|
|
|
|
|
|
|
|
Cryptocurrency |
|
|
|
|
|
|
Beginning of period assets |
$ |
377 |
|
|
$ |
168 |
|
|
$ |
33 |
|
|
$ |
15 |
|
|
$ |
5 |
|
Inflows/(outflows) |
|
8 |
|
|
|
36 |
|
|
|
48 |
|
|
|
15 |
|
|
|
8 |
|
Market appreciation/(depreciation) |
|
(156 |
) |
|
|
173 |
|
|
|
87 |
|
|
|
3 |
|
|
|
2 |
|
End of period assets |
$ |
229 |
|
|
$ |
377 |
|
|
$ |
168 |
|
|
$ |
33 |
|
|
$ |
15 |
|
Average assets during the period |
$ |
300 |
|
|
$ |
264 |
|
|
$ |
79 |
|
|
$ |
27 |
|
|
$ |
11 |
|
|
|
|
|
|
|
|
Alternatives |
|
|
|
|
|
|
Beginning of period assets |
$ |
227 |
|
|
$ |
214 |
|
|
$ |
229 |
|
|
$ |
225 |
|
|
$ |
244 |
|
Inflows/(outflows) |
|
(44 |
) |
|
|
— |
|
|
|
(26 |
) |
|
|
(4 |
) |
|
|
(29 |
) |
Market appreciation/(depreciation) |
|
11 |
|
|
|
13 |
|
|
|
11 |
|
|
|
8 |
|
|
|
10 |
|
End of period assets |
$ |
194 |
|
|
$ |
227 |
|
|
$ |
214 |
|
|
$ |
229 |
|
|
$ |
225 |
|
Average assets during the period |
$ |
228 |
|
|
$ |
223 |
|
|
$ |
224 |
|
|
$ |
226 |
|
|
$ |
226 |
|
|
|
|
|
|
|
|
Closed ETPs |
|
|
|
|
|
|
Beginning of period assets |
$ |
7 |
|
|
$ |
9 |
|
|
$ |
5 |
|
|
$ |
56 |
|
|
$ |
447 |
|
Inflows/(outflows) |
|
(6 |
) |
|
|
1 |
|
|
|
7 |
|
|
|
(10 |
) |
|
|
(188 |
) |
Market appreciation/(depreciation) |
|
3 |
|
|
|
(3 |
) |
|
|
(3 |
) |
|
|
5 |
|
|
|
93 |
|
Fund closures |
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(46 |
) |
|
|
(296 |
) |
End of period assets |
$ |
— |
|
|
$ |
7 |
|
|
$ |
9 |
|
|
$ |
5 |
|
|
$ |
56 |
|
Average assets during the period |
$ |
5 |
|
|
$ |
7 |
|
|
$ |
7 |
|
|
$ |
6 |
|
|
$ |
538 |
|
|
|
|
|
|
|
|
Headcount |
|
227 |
|
|
|
227 |
|
|
|
217 |
|
|
|
211 |
|
|
|
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, 2021 |
|
Dec. 31, 2020 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
167,635 |
|
|
$ |
73,425 |
|
Securities owned, at fair value |
|
58,806 |
|
|
|
34,895 |
|
Accounts receivable |
|
34,800 |
|
|
|
29,455 |
|
Income taxes receivable |
|
948 |
|
|
|
— |
|
Prepaid expenses |
|
6,327 |
|
|
|
3,827 |
|
Other current assets |
|
288 |
|
|
|
259 |
|
Total current assets |
|
268,804 |
|
|
|
141,861 |
|
Fixed assets, net |
|
7,247 |
|
|
|
7,579 |
|
Securities held-to-maturity |
|
370 |
|
|
|
451 |
|
Deferred tax assets, net |
|
5,628 |
|
|
|
8,063 |
|
Investments |
|
14,238 |
|
|
|
8,112 |
|
Right of use assets – operating
leases |
|
16,213 |
|
|
|
16,327 |
|
Goodwill |
|
85,856 |
|
|
|
85,856 |
|
Intangible assets |
|
601,247 |
|
|
|
601,247 |
|
Other noncurrent assets |
|
348 |
|
|
|
180 |
|
Total assets |
$ |
999,951 |
|
|
$ |
869,676 |
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
LIABILITIES |
|
|
Current liabilities: |
|
|
Fund management and administration payable |
$ |
18,592 |
|
|
$ |
19,564 |
|
Compensation and benefits payable |
|
15,447 |
|
|
|
22,803 |
|
Deferred consideration – gold payments |
|
16,101 |
|
|
|
17,374 |
|
Operating lease liabilities |
|
3,326 |
|
|
|
3,135 |
|
Income taxes payable |
|
— |
|
|
|
916 |
|
Accounts payable and other liabilities |
|
11,318 |
|
|
|
10,207 |
|
Total current liabilities |
|
64,784 |
|
|
|
73,999 |
|
Convertible notes |
|
317,336 |
|
|
|
166,646 |
|
Deferred consideration – gold
payments |
|
210,605 |
|
|
|
212,763 |
|
Operating lease liabilities |
|
16,920 |
|
|
|
17,434 |
|
Total liabilities |
|
609,645 |
|
|
|
470,842 |
|
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: 145,114 and 148,716 at June 30, 2021 and
December 31, 2020, respectively |
|
1,451 |
|
|
|
1,487 |
|
Additional paid-in capital |
|
285,002 |
|
|
|
317,075 |
|
Accumulated other comprehensive
income |
|
1,155 |
|
|
|
1,102 |
|
Accumulated deficit |
|
(29,871 |
) |
|
|
(53,399 |
) |
Total stockholders’ equity |
|
257,737 |
|
|
|
266,265 |
|
Total liabilities and
stockholders’ equity |
$ |
999,951 |
|
|
$ |
869,676 |
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands)
(Unaudited)
|
Six Months Ended |
|
June 30, 2021 |
|
June 30, 2020 |
Cash flows from operating
activities: |
|
|
|
|
|
Net income/(loss) |
$ |
32,777 |
|
|
$ |
(21,888 |
) |
Adjustments to reconcile net income/(loss) to net cash (used
in)/provided by operating activities: |
|
|
|
|
|
Advisory fees received in gold, other precious metals and
cryptocurrencies |
|
(39,341 |
) |
|
|
(29,135 |
) |
Contractual gold payments |
|
8,584 |
|
|
|
7,823 |
|
Stock-based compensation |
|
5,264 |
|
|
|
6,159 |
|
Deferred income taxes |
|
3,367 |
|
|
|
832 |
|
(Gain)/loss on revaluation of deferred consideration – gold
payments |
|
(3,329 |
) |
|
|
25,566 |
|
Amortization of right of use asset |
|
1,340 |
|
|
|
1,588 |
|
Amortization of issuance costs - convertible notes |
|
899 |
|
|
|
115 |
|
Depreciation and amortization |
|
508 |
|
|
|
507 |
|
Impairments |
|
303 |
|
|
|
19,672 |
|
Gain on sale – Canadian ETF business |
|
— |
|
|
|
(2,877 |
) |
Loss on extinguishment of debt |
|
— |
|
|
|
2,387 |
|
Amortization of issuance costs - former credit facility |
|
— |
|
|
|
1,328 |
|
Other |
|
(372 |
) |
|
|
(83 |
) |
Changes in operating assets and liabilities: |
|
|
Securities owned, at fair value |
|
(23,911 |
) |
|
|
4,209 |
|
Accounts receivable |
|
(2,622 |
) |
|
|
4,461 |
|
Prepaid expenses |
|
(2,497 |
) |
|
|
(2,016 |
) |
Gold, other precious metals and cryptocurrencies |
|
27,959 |
|
|
|
20,882 |
|
Other assets |
|
(202 |
) |
|
|
(702 |
) |
Fund management and administration payable |
|
(896 |
) |
|
|
1,677 |
|
Compensation and benefits payable |
|
(7,396 |
) |
|
|
(18,431 |
) |
Income taxes receivable/payable |
|
(1,852 |
) |
|
|
(1,046 |
) |
Securities sold, but not yet purchased, at fair value |
|
— |
|
|
|
(582 |
) |
Operating lease liabilities |
|
(1,658 |
) |
|
|
(1,845 |
) |
Accounts payable and other liabilities |
|
858 |
|
|
|
781 |
|
Net cash (used in)/provided by operating activities |
|
(2,217 |
) |
|
|
19,382 |
|
|
|
|
Cash flows from investing
activities: |
|
|
Purchase of investments |
|
(5,750 |
) |
|
|
— |
|
Purchase of fixed assets |
|
(173 |
) |
|
|
(224 |
) |
Proceeds from held-to-maturity securities maturing or called prior
to maturity |
|
77 |
|
|
|
16,365 |
|
Proceeds from the sale of the Company’s financial interests in
AdvisorEngine Inc |
|
— |
|
|
|
8,155 |
|
Proceeds from sale of Canadian ETF business, net |
|
— |
|
|
|
2,774 |
|
Net cash (used in)/provided by investing activities |
|
(5,846 |
) |
|
|
27,070 |
|
|
|
|
Cash flows from financing
activities: |
|
|
Shares repurchased |
|
(34,506 |
) |
|
|
(26,444 |
) |
Dividends paid |
|
(9,865 |
) |
|
|
(10,270 |
) |
Convertible notes issuance costs |
|
(4,297 |
) |
|
|
(4,611 |
) |
Repayment of debt |
|
— |
|
|
|
(179,000 |
) |
Proceeds from the issuance of convertible notes |
|
150,000 |
|
|
|
150,000 |
|
Proceeds from exercise of stock options |
|
815 |
|
|
|
240 |
|
Net cash provided by/(used in) financing activities |
|
102,147 |
|
|
|
(70,085 |
) |
Increase/(decrease) in cash flows
due to changes in foreign exchange rate |
|
126 |
|
|
|
(1,084 |
) |
Increase/(decrease) in cash and
cash equivalents |
|
94,210 |
|
|
|
(24,717 |
) |
Cash and cash equivalents –
beginning of year |
|
73,425 |
|
|
|
74,972 |
|
Cash and cash equivalents – end
of period |
$ |
167,635 |
|
|
$ |
50,255 |
|
Supplemental disclosure
of cash flow information: |
|
|
Cash paid for taxes |
$ |
5,846 |
|
|
$ |
2,200 |
|
Cash paid for interest |
$ |
3,719 |
|
|
$ |
3,390 |
|
Non-GAAP Financial Measurements
In an effort to provide additional information regarding our
results as determined by GAAP, we also disclose certain non-GAAP
information which we believe provides useful and meaningful
information. Our management reviews these non-GAAP financial
measurements when evaluating our financial performance and results
of operations; therefore, we believe it is useful to provide
information with respect to these non-GAAP measurements so as to
share this perspective of management. Non-GAAP measurements do not
have any standardized meaning, do not replace nor are superior to
GAAP financial measurements and are unlikely to be comparable to
similar measures presented by other companies. These non-GAAP
financial measurements should be considered in the context with our
GAAP results. The non-GAAP financial measurements contained in this
press release include:
• Adjusted income before income taxes, income tax
expense, net income and diluted earnings per share. We
disclose adjusted 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 and changes in the discount rate used
to compute the present value of the annual payment obligations 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.
- Other items: Unrealized gains recognized on our
investment in Securrency, impairment charges, interest expense from
the amortization of discount arising from the bifurcation of the
conversion option embedded in the convertible notes (prior to
January 1, 2021, the effective date of Accounting Standards Update
2020-06, Debt – Debt with Conversion and Other Options, Cash
Conversion), a 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 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.
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 30,2021 |
|
Mar. 31,2021 |
|
Dec. 31,2020 |
|
Sept. 30,2020 |
|
June 30,2020 |
Net income/(loss), as reported |
$ |
17,630 |
|
|
$ |
15,147 |
|
|
$ |
(13,497 |
) |
|
$ |
(270 |
) |
|
$ |
(13,250 |
) |
Deduct/Add back: (Gain)/loss on revaluation of deferred
consideration |
|
(497 |
) |
|
|
(2,832 |
) |
|
|
22,385 |
|
|
|
8,870 |
|
|
|
23,358 |
|
Deduct: Unrealized gain recognized on our investment in Securrency,
net of income taxes |
|
(105 |
) |
|
|
(179 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Deduct/Add back: Tax (windfalls)/shortfalls upon vesting and
exercise of stock-based compensation awards |
|
(233 |
) |
|
|
123 |
|
|
|
21 |
|
|
|
50 |
|
|
|
119 |
|
Add back: Impairments, net of income taxes (where applicable) |
|
— |
|
|
|
245 |
|
|
|
— |
|
|
|
2,326 |
|
|
|
— |
|
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 |
|
— |
|
|
|
— |
|
|
|
314 |
|
|
|
286 |
|
|
|
42 |
|
Deduct: Gain arising from an adjustment to the estimated fair value
of consideration received from the exit of our investment in
AdvisorEngine |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(225 |
) |
|
|
(868 |
) |
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: Acquisition and disposition-related costs, net of income
taxes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
25 |
|
Adjusted net income |
$ |
16,795 |
|
|
$ |
12,504 |
|
|
$ |
9,223 |
|
|
$ |
11,037 |
|
|
$ |
8,494 |
|
Weighted average common shares -
diluted |
|
164,855 |
|
|
|
161,831 |
|
|
|
161,138 |
|
|
|
160,876 |
|
|
|
166,634 |
|
Adjusted earnings per share -
diluted |
$ |
0.10 |
|
|
$ |
0.08 |
|
|
$ |
0.06 |
|
|
$ |
0.07 |
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Gross Margin and Gross
Margin Percentage: |
June 30,2021 |
|
Mar. 31,2021 |
|
Dec. 31,2020 |
|
Sept. 30,2020 |
|
June 30,2020 |
Operating revenues |
$ |
77,603 |
|
|
$ |
72,830 |
|
|
$ |
67,059 |
|
|
$ |
64,640 |
|
|
$ |
58,126 |
|
Less: Fund management and administration |
|
(16,195 |
) |
|
|
(15,521 |
) |
|
|
(16,350 |
) |
|
|
(15,219 |
) |
|
|
(14,461 |
) |
Gross margin |
$ |
61,408 |
|
|
$ |
57,309 |
|
|
$ |
50,709 |
|
|
$ |
49,421 |
|
|
$ |
43,665 |
|
Gross margin percentage |
|
79.1 |
% |
|
|
78.7 |
% |
|
|
75.6 |
% |
|
|
76.5 |
% |
|
|
75.1 |
% |
|
Three Months Ended |
Adjusted Income Before
Income Taxes: |
June 30,2021 |
|
Mar. 31,2021 |
|
Dec. 31,2020 |
|
Sept. 30,2020 |
|
June 30,2020 |
Income/(loss) before income taxes |
$ |
21,889 |
|
|
$ |
13,178 |
|
|
$ |
(11,297 |
) |
|
$ |
1,138 |
|
|
$ |
(14,054 |
) |
Deduct/Add back: (Gain)/loss on revaluation of deferred
consideration |
|
(497 |
) |
|
|
(2,832 |
) |
|
|
22,385 |
|
|
|
8,870 |
|
|
|
23,358 |
|
Deduct: Unrealized gain recognized on our investment in Securrency,
before income taxes |
|
(139 |
) |
|
|
(237 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back: Loss recognized upon reduction of a tax-related
indemnification asset |
|
— |
|
|
|
5,171 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back: Impairments, before income taxes |
|
— |
|
|
|
303 |
|
|
|
— |
|
|
|
3,080 |
|
|
|
— |
|
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 |
|
— |
|
|
|
— |
|
|
|
416 |
|
|
|
379 |
|
|
|
55 |
|
Deduct: Gain arising from an adjustment to the estimated fair value
of consideration received from the exit of our investment in
AdvisorEngine |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(225 |
) |
|
|
(868 |
) |
Add back: Loss on extinguishment of debt, before income taxes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,387 |
|
Add back: Acquisition and disposition-related costs, before income
taxes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
33 |
|
Adjusted income before income
taxes |
$ |
21,253 |
|
|
$ |
15,583 |
|
|
$ |
11,504 |
|
|
$ |
13,242 |
|
|
$ |
10,911 |
|
|
Three Months Ended |
Adjusted Income Tax
Expense and Adjusted Effective Income Tax Rate:
|
June 30,2021 |
|
Mar. 31,2021 |
|
Dec. 31,2020 |
|
Sept. 30,2020 |
|
June 30,2020 |
Adjusted income before income taxes (above) |
$ |
21,253 |
|
|
$ |
15,583 |
|
|
$ |
11,504 |
|
|
$ |
13,242 |
|
|
$ |
10,911 |
|
Income tax expense/(benefit) |
$ |
4,259 |
|
|
$ |
(1,969 |
) |
|
$ |
2,200 |
|
|
$ |
1,408 |
|
|
$ |
(804 |
) |
Add back/(deduct): Tax windfalls/(shortfalls) upon vesting and
exercise of stock-based compensation awards |
|
233 |
|
|
|
(123 |
) |
|
|
(21 |
) |
|
|
(50 |
) |
|
|
(119 |
) |
Deduct: Tax expense on unrealized gain recognized on our investment
in Securrency |
|
(34 |
) |
|
|
(58 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back: Tax benefit arising from reduction of a tax-related
indemnification asset |
|
— |
|
|
|
5,171 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back: Tax benefit arising from impairments |
|
— |
|
|
|
58 |
|
|
|
— |
|
|
|
754 |
|
|
|
— |
|
Add back: Tax benefit arising from the amortization of discount
associated with the bifurcation of the conversion option embedded
in the convertible notes |
|
— |
|
|
|
— |
|
|
|
102 |
|
|
|
93 |
|
|
|
13 |
|
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 acquisition and
disposition-related costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8 |
|
Adjusted income tax expense |
$ |
4,458 |
|
|
$ |
3,079 |
|
|
$ |
2,281 |
|
|
$ |
2,205 |
|
|
$ |
2,417 |
|
Adjusted effective income tax
rate |
|
21.0 |
% |
|
|
19.8 |
% |
|
|
19.8 |
% |
|
|
16.7 |
% |
|
|
22.2 |
% |
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:
- adverse market developments arising from the COVID-19 pandemic
could negatively impact our assets under management, resulting in a
decline in our revenues and other potential operational
challenges;
- 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 or, increase the cost of
borrowing upon a refinancing;
- competitive pressures could reduce revenues and profit
margins;
- we derive a substantial portion of our revenues from a limited
number of products, and as a result, our operating results are
particularly exposed to investor sentiment toward investing in the
products’ strategies and our ability to maintain the AUM of these
products, as well as the performance of these products and
market-specific and political and economic risk;
- a significant portion of our AUM is held in products with
exposure to U.S. and international developed markets and we
therefore have exposure to domestic and foreign market conditions
and are subject to currency exchange rate risks;
- withdrawals or broad changes in investments in our ETPs by
investors with significant positions may negatively impact revenues
and operating margins;
- over the last few years, we have expanded our business
internationally. 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, 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.
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