WisdomTree Investments, Inc. (NASDAQ: WETF) today reported
financial results for the third quarter of 2021.
$5.8 million of net income
($16.31 million net income, as
adjusted), see “Non-GAAP Financial Measurements” for
additional information.
$72.8 billion of ending AUM, a decrease of 1.6%
arising from market depreciation, partly offset by net inflows.
$0.5 billion of net inflows, primarily driven
by inflows into our international developed market equity and U.S.
equity products.
0.41% average global advisory fee, an increase
of 1 basis point due to AUM mix shift.
$78.1 million of operating revenues, an
increase of 3.1% due to higher average AUM and a higher average
global advisory fee.
80.6% gross
margin1, essentially unchanged from the
previous quarter.
31.0% operating income margin, essentially
unchanged from the previous quarter.
$0.03 quarterly dividend
declared, payable on November 24, 2021 to
stockholders of record as of the close of business on November 10,
2021.
Update from Jonathan Steinberg,
WisdomTree CEO
“WisdomTree’s positive momentum continued through Q3 with another
quarter of organic growth and strong execution alongside our
longer-term strategic initiatives. The $550 million of net inflows
in the third quarter marked our fourth straight quarter of net
inflows, and our year-to-date 6.5% pace of annualized organic
growth reflects a significant upward change from recent prior
years.“The key takeaway of this quarter – and the past several
quarters – is that our success today is being driven by the breadth
and depth of our product lineup, unlike in years past. WisdomTree
is the recipient of multiple industry awards for our solutions,
people and technologies, a testament to the strength and focus of
our business model, especially while operating as a remote-first
company. I am proud of what we’ve accomplished and excited for
where WisdomTree is headed.” |
Update from Jarrett Lilien, WisdomTree
COO and President
“I’m pleased to report that WisdomTree continued its strong
execution and organic growth in the third quarter and year-to-date.
Our U.S. business is generating organic growth of nearly 13%
year-to-date with five straight quarters of inflows, with recent
success in equities and fixed income, including our U.S. Efficient
Core fund which received a 5-star rating by Morningstar in
September. We see runway for continued organic growth as our
managed models business –already a meaningful driver of growth –
continues to gain traction and our new model wins scale up.“In
Europe, our UCITS ETF franchise also continues to gain traction
with twelve consecutive months of positive flows with over $1.2
billion of inflows year to date. In Q3, that success was
complemented by the launch of our Carbon ETP in late August which
has already grown to over $200 million in assets under management
today. The pipeline for new fund launches in both the U.S. and
Europe remains robust, and I look forward to sharing additional
successes with you next quarter.“In the digital assets space, the
WisdomTree Enhanced Commodity Strategy Fund (GCC) was the first ETF
in the U.S. to add bitcoin futures as part of the fund mix, and our
position in our European crypto ETPs remains strong. Our
accomplishments also include launching our +Crypto Model Portfolio
for advisers in collaboration with OnRamp Invest which features
Gemini integration. We are excited to get this product to market
and look forward to implementations with additional partners in the
future.“We are executing well on all fronts, building momentum and
are excited to continue to build on our strong results.” |
OPERATING AND FINANCIAL HIGHLIGHTS
|
Three Months Ended |
|
Sept. 30,2021 |
June 30,2021 |
Mar. 31,2021 |
Dec. 31,2020 |
Sept. 30,2020 |
Consolidated Operating Highlights ($ in
billions): |
|
|
|
|
|
AUM |
$ |
72.8 |
|
$ |
73.9 |
|
$ |
69.5 |
|
$ |
67.4 |
|
$ |
60.7 |
|
Net inflows/(outflows) |
$ |
0.5 |
|
$ |
0.9 |
|
$ |
1.3 |
|
$ |
0.9 |
|
$ |
(0.5 |
) |
Average AUM |
$ |
74.6 |
|
$ |
73.7 |
|
$ |
69.6 |
|
$ |
64.1 |
|
$ |
61.2 |
|
Average advisory fee2 |
|
0.41 |
% |
|
0.40 |
% |
|
0.41 |
% |
|
0.40 |
% |
|
0.41 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Highlights ($ in millions, except
per share amounts): |
|
|
|
|
|
Operating revenues2 |
$ |
78.1 |
|
$ |
75.8 |
|
$ |
71.3 |
|
$ |
65.7 |
|
$ |
63.7 |
|
Net income/(loss) |
$ |
5.8 |
|
$ |
17.6 |
|
$ |
15.1 |
|
$ |
(13.5 |
) |
$ |
(0.3 |
) |
Diluted earnings/(loss) per share |
$ |
0.04 |
|
$ |
0.11 |
|
$ |
0.09 |
|
$ |
(0.10 |
) |
$ |
(0.01 |
) |
Operating income margin |
|
31.0 |
% |
|
31.3 |
% |
|
26.1 |
% |
|
19.7 |
% |
|
23.1 |
% |
As
Adjusted (Non-GAAP1): |
|
|
|
|
|
Gross margin2 |
|
80.6 |
% |
|
81.0 |
% |
|
80.4 |
% |
|
77.2 |
% |
|
77.5 |
% |
Net income, as adjusted |
$ |
16.3 |
|
$ |
16.8 |
|
$ |
12.5 |
|
$ |
9.2 |
|
$ |
11.0 |
|
Diluted earnings per share, as adjusted |
$ |
0.10 |
|
$ |
0.10 |
|
$ |
0.08 |
|
$ |
0.06 |
|
$ |
0.07 |
|
|
|
|
|
|
|
RECENT BUSINESS DEVELOPMENTS
Company News
- In September
2021, we announced the addition of our Siegel-WisdomTree Longevity
& Global Equity Model Portfolios to the Morgan Stanley Select
UMA platform; and we were named “Best Mixed-Allocation ETF Issuer
($100M+)” at the ETF Express US Awards 2021.
- In October 2021,
we partnered with Federal Life Insurance Company to provide
customized model portfolios that combine traditional assets like
stocks and bonds with crypto assets like bitcoin and ether, in
collaboration with OnRamp Invest; we won a total of three
categories at the Mutual Fund Industry and ETF Awards 2021; and we
contracted with Say Technologies to better engage with individual
shareholders.
Product News
- In August 2021, we listed the
WisdomTree ex-State-Owned Enterprises ESG-screened UCITS ETF (XSOE)
on the London Stock Exchange, Borsa Italiana and Börse Xetra; we
listed the WisdomTree Carbon ETP (CARB) on the London Stock
Exchange; and we applied an ESG screen to the WisdomTree Cloud
Computing UCITS ETF (WCLD).
- In September 2021, we listed the
WisdomTree Carbon ETP (CARB) on the Borsa Italiana and Börse Xetra;
and we applied an ESG screen to the WisdomTree Artificial
Intelligence UCITS ETF (WTAI) and the WisdomTree AT1 Coco Bond
UCITS ETF (CCBO).
- In October 2021, we launched the
WisdomTree Target Range Fund (GTR) on the NASDAQ; the WisdomTree
Enhanced Commodity Strategy Fund (GCC) became the first ETF to add
bitcoin futures exposure; and we listed an unhedged share class of
the WisdomTree Enhanced Commodity ex-Agriculture UCITS ETF (WXAG)
on the London Stock Exchange and Börse Xetra.
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share
amounts) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
Sept. 30,2021 |
June 30,2021 |
Mar. 31,2021 |
Dec. 31,2020 |
Sept. 30,2020 |
|
Sept. 30,2021 |
Sept. 30,2020 |
Operating
Revenues: |
|
|
|
|
|
|
|
|
|
|
Advisory fees2 |
$ |
76,400 |
|
|
$ |
74,169 |
|
|
$ |
70,042 |
|
|
$ |
64,697 |
|
|
$ |
63,028 |
|
|
$ |
220,611 |
|
|
$ |
181,697 |
|
Other income |
|
1,712 |
|
|
|
1,606 |
|
|
|
1,214 |
|
|
|
954 |
|
|
|
721 |
|
|
|
4,532 |
|
|
|
2,563 |
|
Total revenues |
|
78,112 |
|
|
|
75,775 |
|
|
|
71,256 |
|
|
|
65,651 |
|
|
|
63,749 |
|
|
|
225,143 |
|
|
|
184,260 |
|
Operating
Expenses: |
|
|
|
|
|
|
|
Compensation and benefits |
|
22,027 |
|
|
|
20,331 |
|
|
|
22,627 |
|
|
|
20,827 |
|
|
|
19,098 |
|
|
|
64,985 |
|
|
|
53,848 |
|
Fund management and administration2 |
|
15,181 |
|
|
|
14,367 |
|
|
|
13,947 |
|
|
|
14,942 |
|
|
|
14,328 |
|
|
|
43,495 |
|
|
|
41,785 |
|
Marketing and advertising |
|
2,925 |
|
|
|
3,594 |
|
|
|
3,006 |
|
|
|
3,715 |
|
|
|
2,996 |
|
|
|
9,525 |
|
|
|
7,413 |
|
Sales and business development |
|
2,935 |
|
|
|
2,159 |
|
|
|
2,145 |
|
|
|
2,595 |
|
|
|
2,386 |
|
|
|
7,239 |
|
|
|
7,984 |
|
Contractual gold payments |
|
4,250 |
|
|
|
4,314 |
|
|
|
4,270 |
|
|
|
4,449 |
|
|
|
4,539 |
|
|
|
12,834 |
|
|
|
12,362 |
|
Professional fees |
|
1,583 |
|
|
|
1,921 |
|
|
|
2,013 |
|
|
|
1,322 |
|
|
|
950 |
|
|
|
5,517 |
|
|
|
3,580 |
|
Occupancy, communications and equipment |
|
1,163 |
|
|
|
1,266 |
|
|
|
1,475 |
|
|
|
1,622 |
|
|
|
1,611 |
|
|
|
3,904 |
|
|
|
4,805 |
|
Depreciation and amortization |
|
185 |
|
|
|
256 |
|
|
|
252 |
|
|
|
261 |
|
|
|
253 |
|
|
|
693 |
|
|
|
760 |
|
Third-party distribution fees |
|
1,873 |
|
|
|
2,130 |
|
|
|
1,343 |
|
|
|
1,291 |
|
|
|
1,233 |
|
|
|
5,346 |
|
|
|
3,928 |
|
Acquisition and disposition- related costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
416 |
|
Other |
|
1,787 |
|
|
|
1,752 |
|
|
|
1,571 |
|
|
|
1,720 |
|
|
|
1,611 |
|
|
|
5,110 |
|
|
|
5,204 |
|
Total operating expenses |
|
53,909 |
|
|
|
52,090 |
|
|
|
52,649 |
|
|
|
52,744 |
|
|
|
49,005 |
|
|
|
158,648 |
|
|
|
142,085 |
|
Operating income |
|
24,203 |
|
|
|
23,685 |
|
|
|
18,607 |
|
|
|
12,907 |
|
|
|
14,744 |
|
|
|
66,495 |
|
|
|
42,175 |
|
Other
Income/(Expenses): |
|
|
|
|
|
|
|
Interest expense |
|
(3,729 |
) |
|
|
(2,567 |
) |
|
|
(2,296 |
) |
|
|
(2,694 |
) |
|
|
(2,511 |
) |
|
|
(8,592 |
) |
|
|
(6,974 |
) |
Gain/(loss) on revaluation of deferred consideration – gold
payments |
|
1,737 |
|
|
|
497 |
|
|
|
2,832 |
|
|
|
(22,385 |
) |
|
|
(8,870 |
) |
|
|
5,066 |
|
|
|
(34,436 |
) |
Interest income |
|
689 |
|
|
|
225 |
|
|
|
231 |
|
|
|
351 |
|
|
|
111 |
|
|
|
1,145 |
|
|
|
393 |
|
Impairments |
|
(15,853 |
) |
|
|
— |
|
|
|
(303 |
) |
|
|
— |
|
|
|
(3,080 |
) |
|
|
(16,156 |
) |
|
|
(22,752 |
) |
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,387 |
) |
Other losses and gains, net |
|
(714 |
) |
|
|
49 |
|
|
|
(5,893 |
) |
|
|
524 |
|
|
|
744 |
|
|
|
(6,558 |
) |
|
|
56 |
|
Income/(loss) before income
taxes |
|
6,333 |
|
|
|
21,889 |
|
|
|
13,178 |
|
|
|
(11,297 |
) |
|
|
1,138 |
|
|
|
41,400 |
|
|
|
(23,925 |
) |
Income tax
expense/(benefit) |
|
500 |
|
|
|
4,259 |
|
|
|
(1,969 |
) |
|
|
2,200 |
|
|
|
1,408 |
|
|
|
2,790 |
|
|
|
(1,767 |
) |
Net
income/(loss) |
$ |
5,833 |
|
|
$ |
17,630 |
|
|
$ |
15,147 |
|
|
$ |
(13,497 |
) |
|
$ |
(270 |
) |
|
$ |
38,610 |
|
|
$ |
(22,158 |
) |
Earnings/(loss) per share –
basic |
$ |
0.04 |
|
|
$ |
0.113 |
|
|
$ |
0.093 |
|
($0.10)3 |
($0.01)3 |
|
$ |
0.243 |
|
($0.16)3 |
Earnings/(loss) per share –
diluted |
$ |
0.04 |
|
|
$ |
0.11 |
|
|
$ |
0.09 |
|
($0.10)3 |
($0.01)3 |
|
$ |
0.24 |
|
($0.16)3 |
Weighted average common shares
– basic |
|
142,070 |
|
|
|
145,542 |
|
|
|
145,649 |
|
|
|
145,096 |
|
|
|
145,564 |
|
|
|
144,445 |
|
|
|
149,886 |
|
Weighted average common shares
– diluted |
|
159,213 |
|
|
|
164,855 |
|
|
|
161,831 |
|
|
|
145,096 |
|
|
|
145,564 |
|
|
|
161,706 |
|
|
|
149,886 |
|
|
|
|
|
|
|
|
|
As Adjusted
(Non-GAAP1) |
|
|
|
|
|
|
|
Income before income taxes |
$ |
20,991 |
|
|
$ |
21,253 |
|
|
$ |
15,583 |
|
|
$ |
11,504 |
|
|
$ |
13,242 |
|
|
|
Income tax expense |
$ |
4,674 |
|
|
$ |
4,458 |
|
|
$ |
3,079 |
|
|
$ |
2,281 |
|
|
$ |
2,205 |
|
|
|
Net income |
$ |
16,317 |
|
|
$ |
16,795 |
|
|
$ |
12,504 |
|
|
$ |
9,223 |
|
|
$ |
11,037 |
|
|
|
Earnings per share – diluted |
$ |
0.10 |
|
|
$ |
0.10 |
|
|
$ |
0.08 |
|
|
$ |
0.06 |
|
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
QUARTERLY HIGHLIGHTS
Operating Revenues
- Operating revenues increased 3.1% and
22.5% from the second quarter of 2021 and third quarter of 2020,
respectively, due to higher average global AUM.
- Our average global advisory fee was
0.41%, 0.40%2 and 0.41%2 during the third quarter of 2021, the
second quarter of 2021 and the third quarter of 2020,
respectively.
Operating Expenses
- Operating expenses increased 3.5% from
the second quarter of 2021 primarily due to higher incentive
compensation and headcount, fund management and administration
costs and sales and business development expenses, partly offset by
lower marketing expenses, professional fees and third-party
distribution fees.
- Operating expenses increased 10.0% from
the third quarter of 2020 primarily due to higher incentive
compensation and headcount, fund management and administration
costs, third-party distribution fees, professional fees and sales
and business development expenses, partly offset by lower occupancy
expenses and contractual gold payments.
Other Income/(Expenses)
- Interest expense increased 45.3% and
48.5% from the second quarter of 2021 and third quarter of 2020,
respectively, due to a higher level of debt outstanding, partly
offset by a lower effective interest rate.
- We recognized a non-cash gain on
revaluation of deferred consideration of $1.7 million during the
third quarter of 2021. The gain was due to lower forward-looking
gold prices. 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 income increased 206.2% and
520.7% from the second quarter of 2021 and third quarter of 2020,
respectively, due to an increase in our securities owned.
- During the third quarter of 2021, we
recognized an impairment charge of $15.9 million in connection with
the termination of our New York office lease. The impairment was
inclusive of the write-off of the right-of-use asset, leasehold
improvements and fixed assets, broker fees and a reduction in
operating lease liabilities.
- Other net losses were $0.7 million for
the third quarter of 2021. This quarter includes losses on our
securities owned of $1.3 million and a gain of $0.8 million related
to the remeasurement of contingent consideration payable to us from
the sale of our former Canadian ETF business. 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 and other miscellaneous items.
Income Taxes
- Our effective income tax rate for the
third quarter of 2021 of 7.9% resulted in income tax expense of
$0.5 million. Our tax rate differs from the federal statutory rate
of 21% primarily due to a lower tax rate on foreign earnings and a
non-taxable gain on revaluation of deferred consideration, partly
offset by higher non-deductible executive compensation.
- Our adjusted effective income tax rate
was 22.3%1.
NINE MONTH HIGHLIGHTS
- Operating revenues increased 22.2% as
compared to 2020 due to higher average AUM.
- Operating expenses increased 11.7% as
compared to 2020 primarily due to higher incentive compensation
accruals and headcount, marketing expenses, professional fees, fund
management and administration costs, third party distribution fees
and contractual gold payments. These increases were partly offset
by lower occupancy expenses and sales and business development
expenses.
- Significant items reported in other
income/(expenses) in 2021 include an increase in interest expense
of 23.2% due to a higher level of debt outstanding; a non-cash gain
on revaluation of deferred consideration of $5.1 million; an
increase in interest income of 191.3% due to an increase in our
securities owned; impairment charges of $16.2 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); losses on our securities owned of $2.2
million, a gain of $0.8 million related to the remeasurement of
contingent consideration payable to us from the sale of our former
Canadian ETF business; and a gain of $0.4 million recognized on our
investment in Securrency, Inc. due to its recent capital raise.
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 and other miscellaneous items.
- Our effective income tax rate for 2021
of 6.7% resulted in income tax expense of $2.8 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 non-deductible executive
compensation.
CONFERENCE CALL
WisdomTree will discuss its results and operational highlights
during a conference call on Friday, October 29, 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
$76.9 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 |
Advisory fees and fund management and administration expenses
previously reported have been voluntarily revised by us due to an
immaterial error correction. These line items have been reduced by
$1.8 million, $1.6 million, $1.4 million and $0.9 million for the
quarters ended June 30, 2021, March 31, 2021, December 31, 2020 and
September 30, 2020, respectively, and $2.4 million for the nine
months ended September 30, 2020 with no impact to net income. The
reductions represent the netting of expense reimbursements
collected on behalf of a third-party that were previously reported
on a gross basis in our Consolidated Statements of Operations.
Historical gross margin percentages, operating income margins and
our average advisory fees also have been revised. |
|
|
3 |
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. |
|
|
4 |
Cash flows from purchasing securities owned, at fair value of
$34,683 and selling securities owned, at fair value of $18,122
during the nine months ended September 30, 2020 that were not
acquired specifically for resale or associated with our business
activities have been reclassified from operating activities to
investing activities to conform to our current presentation in the
Consolidated Statements of Cash Flows. |
Contact Information: |
|
|
|
Investor Relations |
Media Relations |
Jeremy Campbell |
Jessica Zaloom |
+1.646.522.2602 |
+1.917.267.3735 |
Jeremy.campbell@wisdomtree.com |
jzaloom@wisdomtree.com |
|
|
|
WisdomTree Investments, Inc.Key Operating
Statistics (Unaudited) |
|
Three Months Ended |
|
Sept. 30,2021 |
|
June 30,2021 |
|
Mar. 31,2021 |
|
Dec. 31,2020 |
|
Sept. 30,2020 |
GLOBAL ETPs ($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period assets |
$ |
73,944 |
|
|
$ |
69,534 |
|
|
$ |
67,385 |
|
|
$ |
60,709 |
|
|
$ |
57,618 |
|
Inflows/(outflows) |
|
548 |
|
|
|
931 |
|
|
|
1,279 |
|
|
|
881 |
|
|
|
(485 |
) |
Market appreciation/(depreciation) |
|
(1,709 |
) |
|
|
3,483 |
|
|
|
870 |
|
|
|
5,795 |
|
|
|
3,622 |
|
Fund closures |
|
— |
|
|
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(46 |
) |
End of period assets |
$ |
72,783 |
|
|
$ |
73,944 |
|
|
$ |
69,534 |
|
|
$ |
67,385 |
|
|
$ |
60,709 |
|
Average assets during the period |
$ |
74,563 |
|
|
$ |
73,652 |
|
|
$ |
69,583 |
|
|
$ |
64,056 |
|
|
$ |
61,200 |
|
Average advisory fee during the period2 |
|
0.41 |
% |
|
|
0.40 |
% |
|
|
0.41 |
% |
|
|
0.40 |
% |
|
|
0.41 |
% |
Revenue days |
|
92 |
|
|
|
91 |
|
|
|
90 |
|
|
|
92 |
|
|
|
92 |
|
Number of ETFs – end of the period |
|
322 |
|
|
|
318 |
|
|
|
313 |
|
|
|
309 |
|
|
|
305 |
|
|
|
|
|
|
|
|
U.S. LISTED ETFs ($ in
millions) |
|
|
|
|
|
|
Beginning of period assets |
$ |
45,129 |
|
|
$ |
42,163 |
|
|
$ |
38,517 |
|
|
$ |
33,310 |
|
|
$ |
31,362 |
|
Inflows/(outflows) |
|
612 |
|
|
|
1,130 |
|
|
|
1,343 |
|
|
|
919 |
|
|
|
575 |
|
Market appreciation/(depreciation) |
|
(999 |
) |
|
|
1,836 |
|
|
|
2,303 |
|
|
|
4,288 |
|
|
|
1,373 |
|
Fund closures |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
End of period assets |
$ |
44,742 |
|
|
$ |
45,129 |
|
|
$ |
42,163 |
|
|
$ |
38,517 |
|
|
$ |
33,310 |
|
Average assets during the period |
$ |
45,508 |
|
|
$ |
44,184 |
|
|
$ |
40,705 |
|
|
$ |
35,925 |
|
|
$ |
33,003 |
|
Number of ETFs – end of the period |
|
73 |
|
|
|
73 |
|
|
|
68 |
|
|
|
67 |
|
|
|
67 |
|
|
|
|
|
|
|
|
EUROPEAN LISTED ETPs ($
in millions) |
|
|
|
|
|
|
Beginning of period assets |
$ |
28,815 |
|
|
$ |
27,371 |
|
|
$ |
28,868 |
|
|
$ |
27,399 |
|
|
$ |
26,256 |
|
Inflows/(outflows) |
|
(64 |
) |
|
|
(199 |
) |
|
|
(64 |
) |
|
|
(38 |
) |
|
|
(1,060 |
) |
Market appreciation/(depreciation) |
|
(710 |
) |
|
|
1,647 |
|
|
|
(1,433 |
) |
|
|
1,507 |
|
|
|
2,249 |
|
Fund closures |
|
— |
|
|
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(46 |
) |
End of period assets |
$ |
28,041 |
|
|
$ |
28,815 |
|
|
$ |
27,371 |
|
|
$ |
28,868 |
|
|
$ |
27,399 |
|
Average assets during the period |
$ |
29,055 |
|
|
$ |
29,468 |
|
|
$ |
28,878 |
|
|
$ |
28,131 |
|
|
$ |
28,197 |
|
Number of ETPs – end of the period |
|
249 |
|
|
|
245 |
|
|
|
245 |
|
|
|
242 |
|
|
|
238 |
|
|
|
|
|
|
|
|
PRODUCT CATEGORIES ($ in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity &
Currency |
|
|
|
|
|
|
Beginning of period assets |
$ |
24,772 |
|
|
$ |
23,657 |
|
|
$ |
25,880 |
|
|
$ |
25,176 |
|
|
$ |
24,246 |
|
Inflows/(outflows) |
|
(249 |
) |
|
|
(318 |
) |
|
|
(660 |
) |
|
|
(296 |
) |
|
|
(1,112 |
) |
Market appreciation/(depreciation) |
|
(697 |
) |
|
|
1,433 |
|
|
|
(1,563 |
) |
|
|
1,000 |
|
|
|
2,042 |
|
End of period assets |
$ |
23,826 |
|
|
$ |
24,772 |
|
|
$ |
23,657 |
|
|
$ |
25,880 |
|
|
$ |
25,176 |
|
Average assets during the period |
$ |
24,859 |
|
|
$ |
25,577 |
|
|
$ |
25,296 |
|
|
$ |
25,598 |
|
|
$ |
25,949 |
|
|
|
|
|
|
|
|
U.S. Equity |
|
|
|
|
|
|
Beginning of period assets |
$ |
21,285 |
|
|
$ |
20,018 |
|
|
$ |
18,367 |
|
|
$ |
15,612 |
|
|
$ |
13,997 |
|
Inflows/(outflows) |
|
351 |
|
|
|
190 |
|
|
|
218 |
|
|
|
395 |
|
|
|
897 |
|
Market appreciation/(depreciation) |
|
(253 |
) |
|
|
1,077 |
|
|
|
1,433 |
|
|
|
2,360 |
|
|
|
718 |
|
End of period assets |
$ |
21,383 |
|
|
$ |
21,285 |
|
|
$ |
20,018 |
|
|
$ |
18,367 |
|
|
$ |
15,612 |
|
Average assets during the period |
$ |
21,793 |
|
|
$ |
20,983 |
|
|
$ |
19,320 |
|
|
$ |
17,070 |
|
|
$ |
15,160 |
|
|
|
|
|
|
|
|
International Developed
Market Equity |
|
|
|
|
|
|
Beginning of period assets |
$ |
10,792 |
|
|
$ |
9,989 |
|
|
$ |
9,408 |
|
|
$ |
8,620 |
|
|
$ |
8,843 |
|
Inflows/(outflows) |
|
404 |
|
|
|
399 |
|
|
|
17 |
|
|
|
(191 |
) |
|
|
(586 |
) |
Market appreciation/(depreciation) |
|
(16 |
) |
|
|
404 |
|
|
|
564 |
|
|
|
979 |
|
|
|
363 |
|
End of period assets |
$ |
11,180 |
|
|
$ |
10,792 |
|
|
$ |
9,989 |
|
|
$ |
9,408 |
|
|
$ |
8,620 |
|
Average assets during the period |
$ |
11,146 |
|
|
$ |
10,526 |
|
|
$ |
9,791 |
|
|
$ |
8,928 |
|
|
$ |
8,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Sept. 30,2021 |
|
June 30,2021 |
|
Mar. 31,2021 |
|
Dec. 31,2020 |
|
Sept. 30,2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging Market
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period assets |
$ |
11,519 |
|
|
$ |
10,477 |
|
|
$ |
8,539 |
|
|
$ |
5,979 |
|
|
$ |
5,413 |
|
Inflows/(outflows) |
|
(149 |
) |
|
|
531 |
|
|
|
1,662 |
|
|
|
1,399 |
|
|
|
257 |
|
Market appreciation/(depreciation) |
|
(704 |
) |
|
|
511 |
|
|
|
276 |
|
|
|
1,161 |
|
|
|
309 |
|
End of period assets |
$ |
10,666 |
|
|
$ |
11,519 |
|
|
$ |
10,477 |
|
|
$ |
8,539 |
|
|
$ |
5,979 |
|
Average assets during the period |
$ |
11,038 |
|
|
$ |
11,012 |
|
|
$ |
9,875 |
|
|
$ |
7,249 |
|
|
$ |
5,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period assets |
$ |
3,441 |
|
|
$ |
3,246 |
|
|
$ |
3,308 |
|
|
$ |
3,606 |
|
|
$ |
3,507 |
|
Inflows/(outflows) |
|
115 |
|
|
|
168 |
|
|
|
10 |
|
|
|
(320 |
) |
|
|
76 |
|
Market appreciation/(depreciation) |
|
(26 |
) |
|
|
27 |
|
|
|
(72 |
) |
|
|
22 |
|
|
|
23 |
|
End of period assets |
$ |
3,530 |
|
|
$ |
3,441 |
|
|
$ |
3,246 |
|
|
$ |
3,308 |
|
|
$ |
3,606 |
|
Average assets during the period |
$ |
3,502 |
|
|
$ |
3,337 |
|
|
$ |
3,236 |
|
|
$ |
3,450 |
|
|
$ |
3,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leveraged &
Inverse |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period assets |
$ |
1,693 |
|
|
$ |
1,521 |
|
|
$ |
1,477 |
|
|
$ |
1,423 |
|
|
$ |
1,344 |
|
Inflows/(outflows) |
|
42 |
|
|
|
(2 |
) |
|
|
(5 |
) |
|
|
(125 |
) |
|
|
(10 |
) |
Market appreciation/(depreciation) |
|
(69 |
) |
|
|
174 |
|
|
|
49 |
|
|
|
179 |
|
|
|
89 |
|
End of period assets |
$ |
1,666 |
|
|
$ |
1,693 |
|
|
$ |
1,521 |
|
|
$ |
1,477 |
|
|
$ |
1,423 |
|
Average assets during the period |
$ |
1,717 |
|
|
$ |
1,666 |
|
|
$ |
1,556 |
|
|
$ |
1,429 |
|
|
$ |
1,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cryptocurrency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period assets |
$ |
229 |
|
|
$ |
377 |
|
|
$ |
167 |
|
|
$ |
33 |
|
|
$ |
15 |
|
Inflows/(outflows) |
|
12 |
|
|
|
8 |
|
|
|
36 |
|
|
|
48 |
|
|
|
15 |
|
Market appreciation/(depreciation) |
|
54 |
|
|
|
(156 |
) |
|
|
174 |
|
|
|
86 |
|
|
|
3 |
|
End of period assets |
$ |
295 |
|
|
$ |
229 |
|
|
$ |
377 |
|
|
$ |
167 |
|
|
$ |
33 |
|
Average assets during the period |
$ |
277 |
|
|
$ |
300 |
|
|
$ |
264 |
|
|
$ |
79 |
|
|
$ |
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period assets |
$ |
198 |
|
|
$ |
227 |
|
|
$ |
215 |
|
|
$ |
229 |
|
|
$ |
225 |
|
Inflows/(outflows) |
|
22 |
|
|
|
(39 |
) |
|
|
— |
|
|
|
(26 |
) |
|
|
(4 |
) |
Market appreciation/(depreciation) |
|
2 |
|
|
|
10 |
|
|
|
12 |
|
|
|
12 |
|
|
|
8 |
|
End of period assets |
$ |
222 |
|
|
$ |
198 |
|
|
$ |
227 |
|
|
$ |
215 |
|
|
$ |
229 |
|
Average assets during the period |
$ |
214 |
|
|
$ |
231 |
|
|
$ |
223 |
|
|
$ |
224 |
|
|
$ |
226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed
ETPs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period assets |
$ |
15 |
|
|
$ |
22 |
|
|
$ |
24 |
|
|
$ |
31 |
|
|
$ |
28 |
|
Inflows/(outflows) |
|
— |
|
|
|
(6 |
) |
|
|
1 |
|
|
|
(3 |
) |
|
|
(18 |
) |
Market appreciation/(depreciation) |
|
— |
|
|
|
3 |
|
|
|
(3 |
) |
|
|
(4 |
) |
|
|
67 |
|
Fund closures |
|
— |
|
|
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(46 |
) |
End of period assets |
$ |
15 |
|
|
$ |
15 |
|
|
$ |
22 |
|
|
$ |
24 |
|
|
$ |
31 |
|
Average assets during the period |
$ |
17 |
|
|
$ |
20 |
|
|
$ |
22 |
|
|
$ |
29 |
|
|
$ |
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Headcount |
|
235 |
|
|
|
227 |
|
|
$ |
227 |
|
|
|
217 |
|
|
|
211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
Sept. 30,2021 |
|
Dec. 31,2020 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
127,924 |
|
|
$ |
73,425 |
|
Securities owned, at fair value |
|
119,390 |
|
|
|
34,895 |
|
Accounts receivable |
|
32,092 |
|
|
|
29,455 |
|
Income taxes receivable |
|
146 |
|
|
|
— |
|
Prepaid expenses |
|
5,676 |
|
|
|
3,827 |
|
Other current assets |
|
407 |
|
|
|
259 |
|
Total current assets |
|
285,635 |
|
|
|
141,861 |
|
Fixed assets, net |
|
545 |
|
|
|
7,579 |
|
Securities
held-to-maturity |
|
331 |
|
|
|
451 |
|
Deferred tax assets, net |
|
7,636 |
|
|
|
8,063 |
|
Investments |
|
14,238 |
|
|
|
8,112 |
|
Right of use assets –
operating leases |
|
631 |
|
|
|
16,327 |
|
Goodwill |
|
85,856 |
|
|
|
85,856 |
|
Intangible assets |
|
601,247 |
|
|
|
601,247 |
|
Other noncurrent assets |
|
359 |
|
|
|
180 |
|
Total assets |
$ |
996,478 |
|
|
$ |
869,676 |
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
LIABILITIES |
|
|
Current liabilities: |
|
|
Fund management and administration payable |
$ |
22,273 |
|
|
$ |
19,564 |
|
Compensation and benefits payable |
|
24,411 |
|
|
|
22,803 |
|
Deferred consideration – gold payments |
|
15,961 |
|
|
|
17,374 |
|
Operating lease liabilities |
|
361 |
|
|
|
3,135 |
|
Income taxes payable |
|
— |
|
|
|
916 |
|
Accounts payable and other liabilities |
|
12,737 |
|
|
|
10,207 |
|
Total current liabilities |
|
75,743 |
|
|
|
73,999 |
|
Convertible notes |
|
317,979 |
|
|
|
166,646 |
|
Deferred consideration – gold
payments |
|
208,992 |
|
|
|
212,763 |
|
Operating lease
liabilities |
|
327 |
|
|
|
17,434 |
|
Total liabilities |
|
603,041 |
|
|
|
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: 145,150 and 148,716 at September 30, 2021
and December 31, 2020, respectively |
|
1,451 |
|
|
|
1,487 |
|
Additional paid-in
capital |
|
287,399 |
|
|
|
317,075 |
|
Accumulated other
comprehensive income |
|
853 |
|
|
|
1,102 |
|
Accumulated deficit |
|
(28,835 |
) |
|
|
(53,399 |
) |
Total stockholders’
equity |
|
260,868 |
|
|
|
266,265 |
|
Total liabilities and
stockholders’ equity |
$ |
996,478 |
|
|
$ |
869,676 |
|
|
|
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands)
(Unaudited)
|
Nine Months Ended |
|
Sept. 30,2021 |
|
Sept.
30,20204 |
Cash flows from
operating activities: |
|
|
Net income/(loss) |
$ |
38,610 |
|
|
(22,158 |
) |
Adjustments to reconcile net income/(loss) to net cash provided by
operating activities: |
|
|
Advisory fees received in gold, other precious metals and
cryptocurrencies |
|
(57,617 |
) |
|
(46,077 |
) |
Impairments |
|
16,156 |
|
|
22,752 |
|
Contractual gold payments |
|
12,834 |
|
|
12,362 |
|
Stock-based compensation |
|
7,661 |
|
|
9,003 |
|
(Gain)/loss on revaluation of deferred consideration – gold
payments |
|
(5,066 |
) |
|
34,436 |
|
Unrealized losses |
|
2,183 |
|
|
1,212 |
|
Amortization of right of use asset |
|
1,860 |
|
|
2,384 |
|
Amortization of issuance costs - convertible notes |
|
1,542 |
|
|
882 |
|
Deferred income taxes |
|
1,515 |
|
|
(961 |
) |
Gain on sale – Canadian ETF business, including remeasurement of
contingent consideration |
|
(787 |
) |
|
(2,877 |
) |
Depreciation and amortization |
|
693 |
|
|
760 |
|
Loss on extinguishment of debt |
|
— |
|
|
2,387 |
|
Amortization of issuance costs - former credit facility |
|
— |
|
|
1,328 |
|
Other |
|
(369 |
) |
|
(1,173 |
) |
Changes in operating assets and liabilities: |
|
|
Securities owned, at fair value |
|
(84 |
) |
|
94 |
|
Accounts receivable |
|
(1,273 |
) |
|
3,166 |
|
Prepaid expenses |
|
(1,888 |
) |
|
(1,325 |
) |
Gold, other precious metals and cryptocurrencies |
|
44,006 |
|
|
32,969 |
|
Other assets |
|
(315 |
) |
|
(341 |
) |
Fund management and administration payable |
|
2,868 |
|
|
735 |
|
Compensation and benefits payable |
|
1,756 |
|
|
(12,349 |
) |
Income taxes receivable/payable |
|
(1,050 |
) |
|
(3,399 |
) |
Securities sold, but not yet purchased, at fair value |
|
— |
|
|
(582 |
) |
Operating lease liabilities |
|
(15,462 |
) |
|
(2,778 |
) |
Accounts payable and other liabilities |
|
2,336 |
|
|
1,679 |
|
Net cash provided by operating activities |
|
50,109 |
|
|
32,129 |
|
|
|
|
Cash flows from
investing activities: |
|
|
Purchase of securities owned, at fair value |
|
(97,570 |
) |
|
(34,683 |
) |
Purchase of investments |
|
(5,750 |
) |
|
— |
|
Purchase of fixed assets |
|
(237 |
) |
|
(292 |
) |
Proceeds from sale of securities owned, at fair value |
|
10,976 |
|
|
18,122 |
|
Proceeds from held-to-maturity securities maturing or called prior
to maturity |
|
114 |
|
|
16,441 |
|
Proceeds from sale of the Company’s financial interests in
AdvisorEngine Inc. |
|
— |
|
|
9,592 |
|
Proceeds from sale of Canadian ETF business, net |
|
— |
|
|
2,774 |
|
Net cash (used in)/provided by investing activities |
|
(92,467 |
) |
|
11,954 |
|
Cash flows from
financing activities: |
|
|
Shares repurchased |
|
(34,506 |
) |
|
(30,979 |
) |
Dividends paid |
|
(14,662 |
) |
|
(15,207 |
) |
Convertible notes issuance costs |
|
(4,297 |
) |
|
(5,411 |
) |
Repayment of debt |
|
— |
|
|
(179,000 |
) |
Proceeds from the issuance of convertible notes |
|
150,000 |
|
|
175,250 |
|
Proceeds from exercise of stock options |
|
815 |
|
|
240 |
|
Net cash provided by/(used in) financing activities |
|
97,350 |
|
|
(55,107 |
) |
Decrease in cash flows due to
changes in foreign exchange rate |
|
(493 |
) |
|
(387 |
) |
Increase/(decrease) in cash
and cash equivalents |
|
54,499 |
|
|
(11,411 |
) |
Cash and cash equivalents –
beginning of year |
|
73,425 |
|
|
74,972 |
|
Cash and cash equivalents –
end of period |
$ |
127,924 |
|
|
63,561 |
|
Supplemental
disclosure of cash flow information: |
|
|
Cash paid for taxes |
$ |
7,332 |
|
|
7,650 |
|
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.
- Gains or losses on securities owned: We
account for our securities owned as trading securities which
requires these instruments to be measured at fair value with gains
and losses reported in net income. In the third quarter of 2021, we
began excluding these items when calculating our non-GAAP financial
measurements as these securities have become a more meaningful
percentage of total assets and the gains and losses introduce
volatility in earnings and are not core to our operating
business.
- 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: Remeasurement
of contingent consideration payable to us from the sale of our
former Canadian ETF business, 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
SUBSIDIARIES
GAAP to NON-GAAP RECONCILIATION
(CONSOLIDATED)(in
thousands)(Unaudited)
|
Three Months Ended |
Adjusted Net Income and Diluted Earnings per
Share: |
Sept. 30,2021 |
|
June 30,2021 |
|
Mar. 31,2021 |
|
Dec. 31,2020 |
|
Sept. 30,2020 |
Net income/(loss), as reported |
$ |
5,833 |
|
|
$ |
17,630 |
|
|
$ |
15,147 |
|
|
$ |
(13,497 |
) |
|
$ |
(270 |
) |
Deduct/Add back: (Gain)/loss on revaluation of deferred
consideration |
|
(1,737 |
) |
|
|
(497 |
) |
|
|
(2,832 |
) |
|
|
22,385 |
|
|
|
8,870 |
|
Add back: Impairments, net of income taxes (where applicable) |
|
12,002 |
|
|
|
— |
|
|
|
245 |
|
|
|
— |
|
|
|
2,326 |
|
Add back: Losses on securities owned, net of income taxes |
|
1,006 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Deduct: Remeasurement of contingent consideration – sale of former
Canadian ETF business |
|
(787 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Deduct/Add back: Tax (windfalls)/shortfalls upon vesting and
exercise of stock-based compensation awards |
|
— |
|
|
|
(233 |
) |
|
|
123 |
|
|
|
21 |
|
|
|
50 |
|
Deduct: Unrealized gain recognized on our investment in Securrency,
net of income taxes |
|
— |
|
|
|
(105 |
) |
|
|
(179 |
) |
|
|
— |
|
|
|
— |
|
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 |
|
Deduct: Gain arising from an adjustment to the estimated fair value
of consideration received from the exit of our investment in
AdvisorEngine |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(225 |
) |
Adjusted net income |
$ |
16,317 |
|
|
$ |
16,795 |
|
|
$ |
12,504 |
|
|
$ |
9,223 |
|
|
$ |
11,037 |
|
Weighted average common shares
- diluted |
|
159,213 |
|
|
|
164,855 |
|
|
|
161,831 |
|
|
|
161,138 |
|
|
|
160,876 |
|
Adjusted earnings per share -
diluted |
$ |
0.10 |
|
|
$ |
0.10 |
|
|
$ |
0.08 |
|
|
$ |
0.06 |
|
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Gross Margin and Gross
Margin Percentage: |
Sept. 30,2021 |
|
June 30,2021 |
|
Mar. 31,2021 |
|
Dec. 31,2020 |
|
Sept. 30,2020 |
Operating revenues2 |
$ |
78,112 |
|
|
$ |
75,775 |
|
|
$ |
71,256 |
|
|
$ |
65,651 |
|
|
$ |
63,749 |
|
Less: Fund management and administration2 |
|
(15,181 |
) |
|
|
(14,367 |
) |
|
|
(13,947 |
) |
|
|
(14,942 |
) |
|
|
(14,328 |
) |
Gross margin2 |
$ |
62,931 |
|
|
$ |
61,408 |
|
|
$ |
57,309 |
|
|
$ |
50,709 |
|
|
$ |
49,421 |
|
Gross margin percentage2 |
|
80.6 |
% |
|
|
81.0 |
% |
|
|
80.4 |
% |
|
|
77.2 |
% |
|
|
77.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Adjusted Income Before
Income Taxes: |
Sept. 30,2021 |
|
June 30,2021 |
|
Mar. 31,2021 |
|
Dec. 31,2020 |
|
Sept. 30,2020 |
Income/(loss) before income taxes |
$ |
6,333 |
|
|
$ |
21,889 |
|
|
$ |
13,178 |
|
|
$ |
(11,297 |
) |
|
$ |
1,138 |
|
Deduct/Add back: (Gain)/loss on revaluation of deferred
consideration |
|
(1,737 |
) |
|
|
(497 |
) |
|
|
(2,832 |
) |
|
|
22,385 |
|
|
|
8,870 |
|
Add back: Impairments, before income taxes |
|
15,853 |
|
|
|
— |
|
|
|
303 |
|
|
|
— |
|
|
|
3,080 |
|
Add back: Losses on securities owned, before income taxes |
|
1,329 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Deduct: Remeasurement of contingent consideration – sale of former
Canadian ETF business |
|
(787 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
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: 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 |
|
Deduct: Gain arising from an adjustment to the estimated fair value
of consideration received from the exit of our investment in
AdvisorEngine |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(225 |
) |
Adjusted income before income
taxes |
$ |
20,991 |
|
|
$ |
21,253 |
|
|
$ |
15,583 |
|
|
$ |
11,504 |
|
|
$ |
13,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Adjusted Income Tax
Expense and Adjusted Effective Income Tax Rate: |
Sept. 30,2021 |
|
June 30,2021 |
|
Mar 31,2021 |
|
Dec. 31,2020 |
|
Sept. 30,2020 |
Adjusted income before income taxes (above) |
$ |
20,991 |
|
|
$ |
21,253 |
|
|
$ |
15,583 |
|
|
$ |
11,504 |
|
|
$ |
13,242 |
|
Income tax
expense/(benefit) |
$ |
500 |
|
|
$ |
4,259 |
|
|
$ |
(1,969 |
) |
|
$ |
2,200 |
|
|
$ |
1,408 |
|
Add back: Tax benefit arising from impairments |
|
3,851 |
|
|
|
— |
|
|
|
58 |
|
|
|
— |
|
|
|
754 |
|
Add back: Tax benefit arising from losses on securities owned |
|
323 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back/(deduct): Tax windfalls/(shortfalls) upon vesting and
exercise of stock-based compensation awards |
|
— |
|
|
|
233 |
|
|
|
(123 |
) |
|
|
(21 |
) |
|
|
(50 |
) |
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 the amortization of discount
associated with the bifurcation of the conversion option embedded
in the convertible notes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
102 |
|
|
|
93 |
|
Adjusted income tax
expense |
$ |
4,674 |
|
|
$ |
4,458 |
|
|
$ |
3,079 |
|
|
$ |
2,281 |
|
|
$ |
2,205 |
|
Adjusted effective income tax
rate |
|
22.3 |
% |
|
|
21.0 |
% |
|
|
19.8 |
% |
|
|
19.8 |
% |
|
|
16.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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:
- 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 and our Quarterly Report on Form 10-Q for
the quarter ended June 30, 2021.
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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