WisdomTree Investments, Inc. (NASDAQ: WETF) today reported
financial results for the fourth quarter of 2021.
$11.2 million of net income
($15.71 million net income, as
adjusted), see “Non-GAAP Financial Measurements” for
additional information.
$77.5 billion of ending AUM, an increase of
6.5% arising from market appreciation and net inflows.
$1.9 billion of net inflows, primarily driven
by inflows into our fixed income, U.S. equity and international
developed market equity products.
0.40% average advisory fee, a decrease of 1
basis point due to AUM mix shift.
$79.2 million of operating revenues, an
increase of 1.4% due to higher average AUM.
80.5% gross margin1 is
essentially unchanged from the previous quarter.
28.5% operating income margin, a 2.5 point
decrease primarily due to higher operating expenses, partly offset
by higher revenues.
$0.03 quarterly dividend
declared, payable on February 23, 2022 to
stockholders of record as of the close of business on February 9,
2022.
Update from Jarrett Lilien, WisdomTree
COO and President
“We had a highly successful year in 2021 driven by smart
investments in growth, increased efficiency and disciplined P&L
management. This past quarter marked the fifth consecutive quarter
of organic growth. Our momentum has continued into the new year
with more than $500 million of inflows in January so far, even in
the face of a volatile market environment. As we look ahead to 2022
and beyond, we are entering a new chapter, one that leverages core
competencies and stays true to our core mission, vision and values.
It will be marked by a focus on strengthening and evolving our
business, capitalizing on our existing momentum and adding
additional fuel for future growth.” |
Update from Jonathan Steinberg,
WisdomTree CEO
“Over the past few years, WisdomTree in keeping with our
longstanding track record as an innovator and pioneer has, been
positioning itself for the next big structural shift toward a truly
digital financial services experience. Today I am very excited to
introduce WisdomTree Prime, our new blockchain-native financial
services mobile app, that will bring the look and feel that users
are accustomed to from traditional mobile apps, while also offering
the benefits of a digital financial services experience built on
DeFi principles of choice, transparency and inclusivity. WisdomTree
Prime is being built for saving, spending, and investing – in both
native crypto assets or in tokenized versions of mainstream
financial assets and blockchain enabled funds – where we expect
WisdomTree will be a product leader. We are playing for a much
larger role in the future of financial services and expect these
digital assets initiatives to generate new revenue streams that can
scale quickly and accelerate sustainable growth in the
long-run.” |
OPERATING AND FINANCIAL HIGHLIGHTS
|
Three Months Ended |
|
Dec. 31,2021 |
Sept. 30,2021 |
June 30,2021 |
Mar. 31,2021 |
Dec. 31,2020 |
Consolidated Operating Highlights ($ in
billions): |
|
|
|
|
|
AUM |
$ |
77.5 |
|
$ |
72.8 |
|
$ |
73.9 |
|
$ |
69.5 |
|
$ |
67.4 |
|
Net inflows/(outflows) |
$ |
1.9 |
|
$ |
0.5 |
|
$ |
0.9 |
|
$ |
1.3 |
|
$ |
0.9 |
|
Average AUM |
$ |
76.0 |
|
$ |
74.6 |
|
$ |
73.6 |
|
$ |
69.6 |
|
$ |
64.1 |
|
Average advisory fee |
|
0.40 |
% |
|
0.41 |
% |
|
0.40 |
% |
|
0.41 |
% |
|
0.40 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Highlights ($ in millions, except
per share amounts): |
|
|
|
|
|
Operating revenues |
$ |
79.2 |
|
$ |
78.1 |
|
$ |
75.8 |
|
$ |
71.3 |
|
$ |
65.7 |
|
Net income/(loss) |
$ |
11.2 |
|
$ |
5.8 |
|
$ |
17.6 |
|
$ |
15.1 |
|
$ |
(13.5 |
) |
Diluted earnings/(loss) per share |
$ |
0.07 |
|
$ |
0.04 |
|
$ |
0.11 |
|
$ |
0.09 |
|
$ |
(0.10 |
) |
Operating income margin |
|
28.5 |
% |
|
31.0 |
% |
|
31.3 |
% |
|
26.1 |
% |
|
19.7 |
% |
As
Adjusted (Non-GAAP1): |
|
|
|
|
|
Gross margin |
|
80.5 |
% |
|
80.6 |
% |
|
81.0 |
% |
|
80.4 |
% |
|
77.2 |
% |
Net income, as adjusted |
$ |
15.7 |
|
$ |
16.3 |
|
$ |
16.8 |
|
$ |
12.5 |
|
$ |
9.2 |
|
Diluted earnings per share, as adjusted |
$ |
0.10 |
|
$ |
0.10 |
|
$ |
0.10 |
|
$ |
0.08 |
|
$ |
0.06 |
|
RECENT BUSINESS DEVELOPMENTS
Company News
- In November 2021, we
expanded our global digital assets team, including hiring
anti-money laundering veteran John Davidson as Global Head of
Financial Crimes. With the recent additions, we now have a
dedicated team of professionals across the U.S., U.K., and Ireland
focused exclusively on technology, compliance, legal, product,
marketing, research and education, related to digital assets,
blockchain and decentralized finance.
- In December 2021, we
launched the following diversified crypto exposures: RWM WisdomTree
Crypto Index in the U.S., and a trio of crypto asset basket ETPs in
Europe: WisdomTree Crypto Mega Cap Equal Weight (MEGA), WisdomTree
Crypto Market (BLOC) and WisdomTree Crypto Altcoins (WALT); we were
named a 2021 Best Places to Work in Money Management by Pensions
& Investments; and were named ‘ETF Provider of the Year’ at the
2021 Funds Europe Awards.
- In January 2022, we
appointed Harold Singleton III to the Board of Directors.
Product News
- In November 2021,
the WisdomTree Battery Solutions UCITS ETF (VOLT) won the award for
‘Thematic ETF of the Year’ by ETF Stream; and we listed the
WisdomTree ex-State-Owned Enterprises ESG-screened UCITS ETF (XSOE)
on the SIX, the Swiss stock exchange.
- In December 2021, we
launched the WisdomTree Artificial Intelligence and Innovation Fund
(WTAI) on the CBOE; we completed forward share splits of 2:1 on the
WisdomTree U.S. Total Dividend Fund (DTD) and the WisdomTree U.S.
LargeCap Dividend Fund (DLN); we launched the WisdomTree Efficient
Gold Plus Gold Miners Strategy Fund (GDMN) on the CBOE; we
cross-listed the WisdomTree ex-State-Owned Enterprises ESG-screened
UCITS ETF (XSOE) on the Mexican Stock Exchange; the WisdomTree
Battery Solutions UCITS ETF (VOLT) won the award for ‘European Fund
Launch of the Year’ at the 2021 Funds Europe Awards; we launched
the WisdomTree Broad Commodities UCITS ETF (PCOM) on the London
Stock Exchange and Börse Xetra; we listed the WisdomTree
BioRevolution UCITS ETF (WDNA) on the London Stock Exchange and
Börse Xetra; and we worked with Bloomberg and MSCI to develop new
ESG screens to the following UCITS ETFs: the WisdomTree EUR
Aggregate Bond ESG Enhanced Yield UCITS ETF (YLD) and the
WisdomTree EUR Government Bond ESG Enhanced Yield UCITS ETF
(GOVE).
- In January 2022, we
restructured the WisdomTree U.S. Dividend ex-Financials Fund (DTN)
and International Dividend ex-Financials Fund (DOO) into the
WisdomTree U.S. AI Enhanced Value Fund (AIVL) and International AI
Enhanced Value Fund (AIVI) utilizing the Equity Machine
Intelligence (EMI) proprietary model of Voya available on the NYSE;
we launched the WisdomTree Broad Commodities UCITS ETF (PCOM) on
the Borsa Italiana; and we listed the WisdomTree BioRevolution
UCITS ETF (WDNA) on the Borsa Italiana.
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share
amounts) (Unaudited)
|
Three Months Ended |
|
Years Ended |
|
Dec. 31,2021 |
Sept. 30,2021 |
June 30,2021 |
Mar. 31,2021 |
Dec. 31,2020 |
Dec. 31,2021 |
Dec. 31,2020 |
Operating Revenues: |
|
|
|
|
|
|
|
Advisory fees2 |
$ |
77,441 |
|
$ |
76,400 |
|
$ |
74,169 |
|
$ |
70,042 |
|
$ |
64,697 |
|
$ |
298,052 |
|
$ |
246,395 |
|
Other income |
|
1,734 |
|
|
1,712 |
|
|
1,606 |
|
|
1,214 |
|
|
954 |
|
|
6,266 |
|
|
3,517 |
|
Total revenues |
|
79,175 |
|
|
78,112 |
|
|
75,775 |
|
|
71,256 |
|
|
65,651 |
|
|
304,318 |
|
|
249,912 |
|
Operating Expenses: |
|
|
|
|
|
|
|
Compensation and benefits |
|
23,178 |
|
|
22,027 |
|
|
20,331 |
|
|
22,627 |
|
|
20,827 |
|
|
88,163 |
|
|
74,675 |
|
Fund management and administration2 |
|
15,417 |
|
|
15,181 |
|
|
14,367 |
|
|
13,947 |
|
|
14,942 |
|
|
58,912 |
|
|
56,728 |
|
Marketing and advertising |
|
4,565 |
|
|
2,925 |
|
|
3,594 |
|
|
3,006 |
|
|
3,715 |
|
|
14,090 |
|
|
11,128 |
|
Sales and business development |
|
2,668 |
|
|
2,935 |
|
|
2,159 |
|
|
2,145 |
|
|
2,595 |
|
|
9,907 |
|
|
10,579 |
|
Contractual gold payments |
|
4,262 |
|
|
4,250 |
|
|
4,314 |
|
|
4,270 |
|
|
4,449 |
|
|
17,096 |
|
|
16,811 |
|
Professional fees |
|
2,099 |
|
|
1,583 |
|
|
1,921 |
|
|
2,013 |
|
|
1,322 |
|
|
7,616 |
|
|
4,902 |
|
Occupancy, communications and equipment |
|
725 |
|
|
1,163 |
|
|
1,266 |
|
|
1,475 |
|
|
1,622 |
|
|
4,629 |
|
|
6,427 |
|
Depreciation and amortization |
|
45 |
|
|
185 |
|
|
256 |
|
|
252 |
|
|
261 |
|
|
738 |
|
|
1,021 |
|
Third-party distribution fees |
|
1,830 |
|
|
1,873 |
|
|
2,130 |
|
|
1,343 |
|
|
1,291 |
|
|
7,176 |
|
|
5,219 |
|
Acquisition and disposition- related costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
416 |
|
Other |
|
1,823 |
|
|
1,787 |
|
|
1,752 |
|
|
1,571 |
|
|
1,720 |
|
|
6,933 |
|
|
6,924 |
|
Total operating expenses |
|
56,612 |
|
|
53,909 |
|
|
52,090 |
|
|
52,649 |
|
|
52,744 |
|
|
215,260 |
|
|
194,830 |
|
Operating income |
|
22,563 |
|
|
24,203 |
|
|
23,685 |
|
|
18,607 |
|
|
12,907 |
|
|
89,058 |
|
|
55,082 |
|
Other Income/(Expenses): |
|
|
|
|
|
|
|
Interest expense |
|
(3,740 |
) |
|
(3,729 |
) |
|
(2,567 |
) |
|
(2,296 |
) |
|
(2,694 |
) |
|
(12,332 |
) |
|
(9,668 |
) |
(Loss)/gain on revaluation of deferred consideration – gold
payments |
|
(3,048 |
) |
|
1,737 |
|
|
497 |
|
|
2,832 |
|
|
(22,385 |
) |
|
2,018 |
|
|
(56,821 |
) |
Interest income |
|
864 |
|
|
689 |
|
|
225 |
|
|
231 |
|
|
351 |
|
|
2,009 |
|
|
744 |
|
Impairments |
|
— |
|
|
(15,853 |
) |
|
— |
|
|
(303 |
) |
|
— |
|
|
(16,156 |
) |
|
(22,752 |
) |
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,387 |
) |
Other losses and gains, net |
|
(1,368 |
) |
|
(714 |
) |
|
49 |
|
|
(5,893 |
) |
|
524 |
|
|
(7,926 |
) |
|
580 |
|
Income/(loss) before income taxes |
|
15,271 |
|
|
6,333 |
|
|
21,889 |
|
|
13,178 |
|
|
(11,297 |
) |
|
56,671 |
|
|
(35,222 |
) |
Income
tax expense/(benefit) |
|
4,084 |
|
|
500 |
|
|
4,259 |
|
|
(1,969 |
) |
|
2,200 |
|
|
6,874 |
|
|
433 |
|
Net income/(loss) |
$ |
11,187 |
|
$ |
5,833 |
|
$ |
17,630 |
|
$ |
15,147 |
|
$ |
(13,497 |
) |
$ |
49,797 |
|
$ |
(35,655 |
) |
Earnings/(loss) per share – basic |
$ |
0.073 |
|
$ |
0.04 |
|
$ |
0.113 |
|
$ |
0.093 |
|
($0.10)3 |
$ |
0.313 |
|
($0.25)3 |
Earnings/(loss) per share – diluted |
$ |
0.07 |
|
$ |
0.04 |
|
$ |
0.11 |
|
$ |
0.09 |
|
($0.10)3 |
$ |
0.31 |
|
($0.25)3 |
Weighted
average common shares – basic |
|
142,070 |
|
|
142,070 |
|
|
145,542 |
|
|
145,649 |
|
|
145,096 |
|
|
143,847 |
|
|
148,682 |
|
Weighted
average common shares – diluted |
|
159,826 |
|
|
159,213 |
|
|
164,855 |
|
|
161,831 |
|
|
145,096 |
|
|
161,263 |
|
|
148,682 |
|
|
|
|
|
|
|
|
|
As Adjusted
(Non-GAAP1) |
|
|
|
|
|
|
|
Income before income taxes |
$ |
19,968 |
|
$ |
20,991 |
|
$ |
21,253 |
|
$ |
15,583 |
|
$ |
11,504 |
|
|
|
Income tax expense |
$ |
4,232 |
|
$ |
4,674 |
|
$ |
4,458 |
|
$ |
3,079 |
|
$ |
2,281 |
|
|
|
Net income |
$ |
15,736 |
|
$ |
16,317 |
|
$ |
16,795 |
|
$ |
12,504 |
|
$ |
9,223 |
|
|
|
Earnings per share – diluted |
$ |
0.10 |
|
$ |
0.10 |
|
$ |
0.10 |
|
$ |
0.08 |
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
|
QUARTERLY HIGHLIGHTS
Operating Revenues
- Operating revenues increased 1.4% and
20.6% from the third quarter of 2021 and fourth quarter of 2020,
respectively, due to higher average AUM.
- Our average advisory fee was 0.40%,
0.41% and 0.40% during the fourth quarter of 2021, the third
quarter of 2021 and the fourth quarter of 2020, respectively.
Operating Expenses
- Operating expenses increased 5.0% from
the third quarter of 2021 primarily due to higher marketing
expenses, incentive compensation and headcount and professional
fees, partly offset by lower occupancy expense.
- Operating expenses increased 7.3% from
the fourth quarter of 2020 primarily due to higher incentive
compensation and headcount, marketing expenses, fund management and
administration costs, professional fees and third-party
distribution fees, partly offset by lower occupancy and
depreciation expenses and contractual gold payments.
Other Income/(Expenses)
- Interest expense was essentially
unchanged from the third quarter of 2021. This expense increased
38.8% from the fourth quarter of 2020 due to a higher level of debt
outstanding, partly offset by a lower effective interest rate.
- We recognized a non-cash loss on
revaluation of deferred consideration of $3.0 million during the
fourth quarter of 2021. The loss was due to higher spot gold
prices, partly offset by 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.
- Interest income increased 25.4% and
146.2% from the third quarter of 2021 and fourth quarter of 2020,
respectively, due to an increase in our securities owned.
- Other net losses were $1.4 million for
the fourth quarter of 2021 and were primarily comprised of losses
on our securities owned. 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
fourth quarter of 2021 of 26.7% resulted in income tax expense of
$4.1 million. Our tax rate differs from the federal statutory rate
of 21% primarily due to a non-deductible loss on revaluation of
deferred consideration and state and local income taxes, partly
offset by a lower tax rate on foreign earnings.
- Our adjusted effective income tax rate
was 21.2%1.
ANNUAL HIGHLIGHTS
- Operating revenues increased 21.8% as
compared to 2020 due to higher average AUM and a 1 basis point
increase in our average advisory fee arising from AUM mix
shift.
- Operating expenses increased 10.5% as
compared to 2020 primarily due to higher incentive compensation
accruals and headcount, marketing expenses, professional fees,
third-party distribution fees and fund management and
administration costs. These increases were partly offset by lower
occupancy expense and contractual gold payments.
- Significant items reported in other
income/(expenses) in 2021 include an increase in interest expense
of 27.6% due to a higher level of debt outstanding; a non-cash gain
on revaluation of deferred consideration of $2.0 million; an
increase in interest income of 170.0% 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 $3.8
million; a gain of $0.8 million related to the remeasurement of
contingent consideration payable to us from the sale of our
Canadian ETF business; and a gain of $0.4 million recognized on our
investment in Securrency, Inc. 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 12.1% resulted in income tax expense of $6.9 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
and a lower tax rate on foreign earnings. 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, January 28, 2022 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 over $76 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 for the year ended December 31, 2020 have been
voluntarily revised by us due to an immaterial error correction.
These line items have been reduced by $3.8 million 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.
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
($36,444) and selling securities owned, at fair value of $18,703
during the year ended December 31, 2020 that were not acquired
specifically for resale or associated with our business activities
have been reclassified from operating activities to investing
activities to conform to our current presentation in the
Consolidated Statements of Cash Flows.
Contact Information:
Investor Relations Jeremy
Campbell+1.646.522.2602Jeremy.campbell@wisdomtree.com |
|
Media RelationsJessica
Zaloom+1.917.267.3735jzaloom@wisdomtree.com |
WisdomTree Investments, Inc.
Key Operating Statistics (Unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
Dec. 31,2021 |
|
Sept. 30,2021 |
June 30,2021 |
Mar. 31,2021 |
Dec. 31,2020 |
GLOBAL ETPs ($ in millions) |
|
|
|
|
|
|
Beginning of period assets |
$ |
72,780 |
|
|
$ |
73,941 |
|
$ |
69,532 |
|
$ |
67,383 |
|
$ |
60,707 |
|
Inflows/(outflows) |
|
1,902 |
|
|
|
548 |
|
|
931 |
|
|
1,279 |
|
|
881 |
|
Market appreciation/(depreciation) |
|
2,811 |
|
|
|
(1,709 |
) |
|
3,482 |
|
|
870 |
|
|
5,795 |
|
Fund closures |
|
(15 |
) |
|
|
— |
|
|
(4 |
) |
|
— |
|
|
— |
|
End of period assets |
$ |
77,478 |
|
|
$ |
72,780 |
|
$ |
73,941 |
|
$ |
69,532 |
|
$ |
67,383 |
|
Average assets during the period |
$ |
75,990 |
|
|
$ |
74,556 |
|
$ |
73,621 |
|
$ |
69,575 |
|
$ |
64,053 |
|
Average advisory fee during the period |
|
0.40 |
% |
|
|
0.41 |
% |
|
0.40 |
% |
|
0.41 |
% |
|
0.40 |
% |
Revenue days |
|
92 |
|
|
|
92 |
|
|
91 |
|
|
90 |
|
|
92 |
|
Number of ETFs – end of the period |
|
329 |
|
|
|
322 |
|
|
318 |
|
|
313 |
|
|
309 |
|
|
|
|
|
|
|
|
U.S. LISTED ETFs ($ in millions) |
|
|
|
|
|
|
Beginning of period assets |
$ |
44,742 |
|
|
$ |
45,129 |
|
$ |
42,163 |
|
$ |
38,517 |
|
$ |
33,310 |
|
Inflows/(outflows) |
|
1,865 |
|
|
|
612 |
|
|
1,130 |
|
|
1,343 |
|
|
919 |
|
Market appreciation/(depreciation) |
|
1,618 |
|
|
|
(999 |
) |
|
1,836 |
|
|
2,303 |
|
|
4,288 |
|
Fund closures |
|
(15 |
) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
End of period assets |
$ |
48,210 |
|
|
$ |
44,742 |
|
$ |
45,129 |
|
$ |
42,163 |
|
$ |
38,517 |
|
Average assets during the period |
$ |
46,943 |
|
|
$ |
45,509 |
|
$ |
44,183 |
|
$ |
40,706 |
|
$ |
35,926 |
|
Number of ETFs – end of the period |
|
75 |
|
|
|
73 |
|
|
73 |
|
|
68 |
|
|
67 |
|
|
|
|
|
|
|
|
EUROPEAN LISTED ETPs ($ in millions) |
|
|
|
|
|
|
Beginning of period assets |
$ |
28,038 |
|
|
$ |
28,812 |
|
$ |
27,369 |
|
$ |
28,866 |
|
$ |
27,397 |
|
Inflows/(outflows) |
|
37 |
|
|
|
(64 |
) |
|
(199 |
) |
|
(64 |
) |
|
(38 |
) |
Market appreciation/(depreciation) |
|
1,193 |
|
|
|
(710 |
) |
|
1,646 |
|
|
(1,433 |
) |
|
1,507 |
|
Fund closures |
|
— |
|
|
|
— |
|
|
(4 |
) |
|
— |
|
|
— |
|
End of period assets |
$ |
29,268 |
|
|
$ |
28,038 |
|
$ |
28,812 |
|
$ |
27,369 |
|
$ |
28,866 |
|
Average assets during the period |
$ |
29,047 |
|
|
$ |
29,047 |
|
$ |
29,438 |
|
$ |
28,869 |
|
$ |
28,127 |
|
Number of ETPs – end of the period |
|
254 |
|
|
|
249 |
|
|
245 |
|
|
245 |
|
|
242 |
|
|
|
|
|
|
|
|
PRODUCT CATEGORIES ($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity & Currency |
|
|
|
|
|
|
Beginning of period assets |
$ |
23,826 |
|
|
$ |
24,772 |
|
$ |
23,657 |
|
$ |
25,880 |
|
$ |
25,177 |
|
Inflows/(outflows) |
|
(251 |
) |
|
|
(249 |
) |
|
(318 |
) |
|
(660 |
) |
|
(296 |
) |
Market appreciation/(depreciation) |
|
1,023 |
|
|
|
(697 |
) |
|
1,433 |
|
|
(1,563 |
) |
|
999 |
|
End of period assets |
$ |
24,598 |
|
|
$ |
23,826 |
|
$ |
24,772 |
|
$ |
23,657 |
|
$ |
25,880 |
|
Average assets during the period |
$ |
24,422 |
|
|
$ |
24,853 |
|
$ |
25,549 |
|
$ |
25,289 |
|
$ |
25,596 |
|
|
|
|
|
|
|
|
U.S. Equity |
|
|
|
|
|
|
Beginning of period assets |
$ |
21,383 |
|
|
$ |
21,285 |
|
$ |
20,018 |
|
$ |
18,367 |
|
$ |
15,612 |
|
Inflows/(outflows) |
|
783 |
|
|
|
351 |
|
|
190 |
|
|
218 |
|
|
395 |
|
Market appreciation/(depreciation) |
|
1,694 |
|
|
|
(253 |
) |
|
1,077 |
|
|
1,433 |
|
|
2,360 |
|
End of period assets |
$ |
23,860 |
|
|
$ |
21,383 |
|
$ |
21,285 |
|
$ |
20,018 |
|
$ |
18,367 |
|
Average assets during the period |
$ |
22,963 |
|
|
$ |
21,794 |
|
$ |
20,982 |
|
$ |
19,320 |
|
$ |
17,070 |
|
|
|
|
|
|
|
|
International Developed Market Equity |
|
|
|
|
|
|
Beginning of period assets |
$ |
11,178 |
|
|
$ |
10,790 |
|
$ |
9,988 |
|
$ |
9,406 |
|
$ |
8,618 |
|
Inflows/(outflows) |
|
440 |
|
|
|
404 |
|
|
399 |
|
|
17 |
|
|
(191 |
) |
Market appreciation/(depreciation) |
|
276 |
|
|
|
(16 |
) |
|
403 |
|
|
565 |
|
|
979 |
|
End of period assets |
$ |
11,894 |
|
|
$ |
11,178 |
|
$ |
10,790 |
|
$ |
9,988 |
|
$ |
9,406 |
|
Average assets during the period |
$ |
11,523 |
|
|
$ |
11,144 |
|
$ |
10,524 |
|
$ |
9,790 |
|
$ |
8,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Dec. 31,2021 |
|
Sept. 30,2021 |
June 30,2021 |
Mar. 31,2021 |
Dec. 31,2020 |
|
|
|
|
|
|
|
Emerging Market Equity |
|
|
|
|
|
|
Beginning of period assets |
$ |
10,666 |
|
|
$ |
11,519 |
|
$ |
10,477 |
|
$ |
8,539 |
|
$ |
5,979 |
|
Inflows/(outflows) |
|
(3 |
) |
|
|
(149 |
) |
|
531 |
|
|
1,662 |
|
|
1,399 |
|
Market appreciation/(depreciation) |
|
(288 |
) |
|
|
(704 |
) |
|
511 |
|
|
276 |
|
|
1,161 |
|
End of period assets |
$ |
10,375 |
|
|
$ |
10,666 |
|
$ |
11,519 |
|
$ |
10,477 |
|
$ |
8,539 |
|
Average assets during the period |
$ |
10,550 |
|
|
$ |
11,038 |
|
$ |
11,012 |
|
$ |
9,875 |
|
$ |
7,250 |
|
|
|
|
|
|
|
|
Fixed Income |
|
|
|
|
|
|
Beginning of period assets |
$ |
3,529 |
|
|
$ |
3,440 |
|
$ |
3,245 |
|
$ |
3,308 |
|
$ |
3,605 |
|
Inflows/(outflows) |
|
838 |
|
|
|
115 |
|
|
168 |
|
|
10 |
|
|
(320 |
) |
Market appreciation/(depreciation) |
|
(11 |
) |
|
|
(26 |
) |
|
27 |
|
|
(73 |
) |
|
23 |
|
End of period assets |
$ |
4,356 |
|
|
$ |
3,529 |
|
$ |
3,440 |
|
$ |
3,245 |
|
$ |
3,308 |
|
Average assets during the period |
$ |
4,118 |
|
|
$ |
3,502 |
|
$ |
3,337 |
|
$ |
3,236 |
|
$ |
3,449 |
|
|
|
|
|
|
|
|
Leveraged & Inverse |
|
|
|
|
|
|
Beginning of period assets |
$ |
1,666 |
|
|
$ |
1,693 |
|
$ |
1,521 |
|
$ |
1,477 |
|
$ |
1,423 |
|
Inflows/(outflows) |
|
11 |
|
|
|
42 |
|
|
(2 |
) |
|
(5 |
) |
|
(125 |
) |
Market appreciation/(depreciation) |
|
100 |
|
|
|
(69 |
) |
|
174 |
|
|
49 |
|
|
179 |
|
End of period assets |
$ |
1,777 |
|
|
$ |
1,666 |
|
$ |
1,693 |
|
$ |
1,521 |
|
$ |
1,477 |
|
Average assets during the period |
$ |
1,764 |
|
|
$ |
1,717 |
|
$ |
1,666 |
|
$ |
1,556 |
|
$ |
1,429 |
|
|
|
|
|
|
|
|
Cryptocurrency |
|
|
|
|
|
|
Beginning of period assets |
$ |
295 |
|
|
$ |
229 |
|
$ |
377 |
|
$ |
167 |
|
$ |
33 |
|
Inflows/(outflows) |
|
28 |
|
|
|
12 |
|
|
8 |
|
|
36 |
|
|
48 |
|
Market appreciation/(depreciation) |
|
34 |
|
|
|
54 |
|
|
(156 |
) |
|
174 |
|
|
86 |
|
End of period assets |
$ |
357 |
|
|
$ |
295 |
|
$ |
229 |
|
$ |
377 |
|
$ |
167 |
|
Average assets during the period |
$ |
406 |
|
|
$ |
277 |
|
$ |
300 |
|
$ |
264 |
|
$ |
79 |
|
|
|
|
|
|
|
|
Alternatives |
|
|
|
|
|
|
Beginning of period assets |
$ |
222 |
|
|
$ |
198 |
|
$ |
227 |
|
$ |
215 |
|
$ |
229 |
|
Inflows/(outflows) |
|
56 |
|
|
|
22 |
|
|
(39 |
) |
|
— |
|
|
(26 |
) |
Market appreciation/(depreciation) |
|
(17 |
) |
|
|
2 |
|
|
10 |
|
|
12 |
|
|
12 |
|
End of period assets |
$ |
261 |
|
|
$ |
222 |
|
$ |
198 |
|
$ |
227 |
|
$ |
215 |
|
Average assets during the period |
$ |
229 |
|
|
$ |
214 |
|
$ |
231 |
|
$ |
223 |
|
$ |
224 |
|
|
|
|
|
|
|
|
Closed ETPs |
|
|
|
|
|
|
Beginning of period assets |
$ |
15 |
|
|
$ |
15 |
|
$ |
22 |
|
$ |
24 |
|
$ |
31 |
|
Inflows/(outflows) |
|
— |
|
|
|
— |
|
|
(6 |
) |
|
1 |
|
|
(3 |
) |
Market appreciation/(depreciation) |
|
— |
|
|
|
— |
|
|
3 |
|
|
(3 |
) |
|
(4 |
) |
Fund closures |
|
(15 |
) |
|
|
— |
|
|
(4 |
) |
|
— |
|
|
— |
|
End of period assets |
$ |
— |
|
|
$ |
15 |
|
$ |
15 |
|
$ |
22 |
|
$ |
24 |
|
Average assets during the period |
$ |
15 |
|
|
$ |
17 |
|
$ |
20 |
|
$ |
22 |
|
$ |
29 |
|
|
|
|
|
|
|
|
Headcount |
|
241 |
|
|
|
235 |
|
|
227 |
|
|
227 |
|
|
217 |
|
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)
|
|
|
|
Dec. 31,2021 |
|
Dec. 31,2020 |
|
(Unaudited) |
|
ASSETS |
|
|
Current
assets: |
|
|
Cash and cash equivalents |
$ |
140,709 |
|
$ |
73,425 |
|
Securities owned, at fair value |
|
127,166 |
|
|
34,895 |
|
Accounts receivable |
|
31,864 |
|
|
29,455 |
|
Income taxes receivable |
|
— |
|
|
— |
|
Prepaid expenses |
|
3,952 |
|
|
3,827 |
|
Other current assets |
|
276 |
|
|
259 |
|
Total current assets |
|
303,967 |
|
|
141,861 |
|
Fixed
assets, net |
|
557 |
|
|
7,579 |
|
Securities held-to-maturity |
|
308 |
|
|
451 |
|
Deferred
tax assets, net |
|
8,881 |
|
|
8,063 |
|
Investments |
|
14,238 |
|
|
8,112 |
|
Right of
use assets – operating leases |
|
520 |
|
|
16,327 |
|
Goodwill |
|
85,856 |
|
|
85,856 |
|
Intangible assets |
|
601,247 |
|
|
601,247 |
|
Other
noncurrent assets |
|
361 |
|
|
180 |
|
Total
assets |
$ |
1,015,935 |
|
$ |
869,676 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
LIABILITIES |
|
|
Current
liabilities: |
|
|
Fund management and administration payable |
$ |
20,661 |
|
$ |
19,564 |
|
Compensation and benefits payable |
|
32,782 |
|
|
22,803 |
|
Deferred consideration – gold payments |
|
16,739 |
|
|
17,374 |
|
Operating lease liabilities |
|
209 |
|
|
3,135 |
|
Income taxes payable |
|
3,979 |
|
|
916 |
|
Accounts payable and other liabilities |
|
9,297 |
|
|
10,207 |
|
Total current liabilities |
|
83,667 |
|
|
73,999 |
|
Convertible notes |
|
318,624 |
|
|
166,646 |
|
Deferred
consideration – gold payments |
|
211,323 |
|
|
212,763 |
|
Operating lease liabilities |
|
328 |
|
|
17,434 |
|
Total
liabilities |
$ |
613,942 |
|
|
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: 145,107 and 148,716 at December 31, 2021
and December 31, 2020, respectively |
|
1,451 |
|
|
1,487 |
|
Additional paid-in capital |
|
289,736 |
|
|
317,075 |
|
Accumulated other comprehensive income |
|
682 |
|
|
1,102 |
|
Accumulated deficit |
|
(22,445 |
) |
|
(53,399 |
) |
Total
stockholders’ equity |
|
269,424 |
|
|
266,265 |
|
Total
liabilities and stockholders’ equity |
$ |
1,015,935 |
|
$ |
869,676 |
|
|
|
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands)
(Unaudited)
|
|
|
|
Years Ended |
|
Dec. 31,2021 |
Dec. 31,
20204 |
Cash flows from operating activities: |
|
|
Net income/(loss) |
$ |
49,797 |
|
$ |
(35,655 |
) |
Adjustments to reconcile net income/(loss) to net cash provided by
operating activities: |
|
|
Advisory fees received in gold and other precious metals |
|
(74,970 |
) |
|
(62,416 |
) |
Contractual gold payments |
|
17,096 |
|
|
16,811 |
|
Impairments |
|
16,156 |
|
|
22,752 |
|
Stock-based compensation |
|
9,998 |
|
|
11,706 |
|
Unrealized losses |
|
3,781 |
|
|
— |
|
Amortization of issuance costs – convertible notes |
|
2,187 |
|
|
1,710 |
|
(Gain)/loss on revaluation of deferred consideration – gold
payments |
|
(2,018 |
) |
|
56,821 |
|
Amortization of right of use asset |
|
1,950 |
|
|
3,182 |
|
Gain on sale – Canadian ETF business |
|
(787 |
) |
|
(2,877 |
) |
Depreciation and amortization |
|
738 |
|
|
1,021 |
|
Deferred income taxes |
|
316 |
|
|
(2,192 |
) |
Loss on extinguishment of debt |
|
— |
|
|
2,387 |
|
Amortization of issuance costs – former credit facility |
|
— |
|
|
1,328 |
|
Other |
|
(272 |
) |
|
(990 |
) |
Changes in operating assets and liabilities: |
|
|
Securities owned, at fair value |
|
(66 |
) |
|
(14 |
) |
Accounts receivable |
|
(3,506 |
) |
|
(193 |
) |
Prepaid expenses |
|
(139 |
) |
|
(159 |
) |
Gold and other precious metals |
|
57,417 |
|
|
45,087 |
|
Other assets |
|
(394 |
) |
|
107 |
|
Fund management and administration payable |
|
1,348 |
|
|
(2,264 |
) |
Compensation and benefits payable |
|
10,242 |
|
|
(3,804 |
) |
Income taxes payable |
|
3,101 |
|
|
(2,441 |
) |
Securities sold, but not yet purchased, at fair value |
|
— |
|
|
(582 |
) |
Operating lease liabilities |
|
(15,560 |
) |
|
(3,517 |
) |
Accounts payable and other liabilities |
|
(1,097 |
) |
|
1,328 |
|
Net cash provided by operating activities |
|
75,318 |
|
|
47,136 |
|
Cash flows from investing activities: |
|
|
Purchase of securities owned, at fair value |
|
(115,526 |
) |
|
(36,444 |
) |
Purchase of investments |
|
(5,750 |
) |
|
— |
|
Purchase of fixed assets |
|
(293 |
) |
|
(472 |
) |
Proceeds from the sale of securities owned, at fair value |
|
19,441 |
|
|
18,703 |
|
Proceeds from the sale of Canadian ETF business, net, including
receipt of contingent consideration |
|
2,360 |
|
|
2,774 |
|
Proceeds from held-to-maturity securities maturing or called prior
to maturity |
|
136 |
|
|
16,488 |
|
Proceeds from the sale of the Company’s financial interests in
AdvisorEngine Inc. |
|
— |
|
|
9,592 |
|
Net cash (used in)/provided by investing activities |
|
(99,632 |
) |
|
10,641 |
|
Cash flows from financing activities: |
|
|
Shares repurchased |
|
(34,506 |
) |
|
(31,197 |
) |
Dividends paid |
|
(19,459 |
) |
|
(20,113 |
) |
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 |
|
|
292 |
|
Net cash provided by/(used in) financing activities |
|
92,553 |
|
|
(60,179 |
) |
(Decrease)/increase in cash flow due to changes in foreign exchange
rate |
|
(955 |
) |
|
855 |
|
Net
increase/(decrease) in cash and cash equivalents |
|
67,284 |
|
|
(1,547 |
) |
Cash and
cash equivalents—beginning of year |
|
73,425 |
|
|
74,972 |
|
Cash and
cash equivalents—end of year |
$ |
140,709 |
|
$ |
73,425 |
|
|
|
|
Supplemental disclosure of cash flow
information: |
|
|
Cash paid for taxes |
$ |
8,456 |
|
$ |
10,131 |
|
Cash paid for interest |
$ |
9,898 |
|
$ |
7,088 |
|
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
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 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: |
Dec. 31,2021 |
|
Sept. 30,2021 |
June 30,2021 |
Mar. 31,2021 |
Dec. 31,2020 |
Net income/(loss), as reported |
$ |
11,187 |
|
|
$ |
5,833 |
|
$ |
17,630 |
|
$ |
15,147 |
|
$ |
(13,497 |
) |
Add back/Deduct: Loss/(gain) on revaluation of deferred
consideration |
|
3,048 |
|
|
|
(1,737 |
) |
|
(497 |
) |
|
(2,832 |
) |
|
22,385 |
|
Add back: Losses on securities owned, net of income taxes |
|
1,501 |
|
|
|
1,006 |
|
|
— |
|
|
— |
|
|
— |
|
Add back: Impairments, net of income taxes (where applicable) |
|
— |
|
|
|
12,002 |
|
|
— |
|
|
245 |
|
|
— |
|
Deduct: Remeasurement of contingent consideration – sale of
Canadian ETF business |
|
— |
|
|
|
(787 |
) |
|
— |
|
|
— |
|
|
— |
|
Deduct/Add back: Tax (windfalls)/shortfalls upon vesting and
exercise of stock-based compensation awards |
|
— |
|
|
|
— |
|
|
(233 |
) |
|
123 |
|
|
21 |
|
Deduct: Unrealized gain recognized on 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 |
|
Adjusted
net income |
$ |
15,736 |
|
|
$ |
16,317 |
|
$ |
16,795 |
|
$ |
12,504 |
|
$ |
9,223 |
|
Weighted
average common shares - diluted |
|
159,826 |
|
|
|
159,213 |
|
|
164,855 |
|
|
161,831 |
|
|
161,138 |
|
Adjusted
earnings per share - diluted |
$ |
0.10 |
|
|
$ |
0.10 |
|
$ |
0.10 |
|
$ |
0.08 |
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Gross Margin and Gross
Margin Percentage: |
Dec. 31,2021 |
|
Sept. 30,2021 |
June 30,2021 |
Mar. 31,2021 |
Dec. 31,2020 |
Operating revenues |
$ |
79,175 |
|
|
$ |
78,112 |
|
$ |
75,775 |
|
$ |
71,256 |
|
$ |
65,651 |
|
Less: Fund management and administration |
|
(15,417 |
) |
|
|
(15,181 |
) |
|
(14,367 |
) |
|
(13,947 |
) |
|
(14,942 |
) |
Gross
margin |
$ |
63,758 |
|
|
$ |
62,931 |
|
$ |
61,408 |
|
$ |
57,309 |
|
$ |
50,709 |
|
Gross
margin percentage |
|
80.5 |
% |
|
|
80.6 |
% |
|
81.0 |
% |
|
80.4 |
% |
|
77.2 |
% |
|
|
|
|
|
|
|
|
Three Months Ended |
Adjusted Income Before
Income Taxes: |
Dec. 31,2021 |
|
Sept. 30,2021 |
June 30,2021 |
Mar. 31,2021 |
Dec. 31,2020 |
Income/(loss) before income taxes
|
$ |
15,271 |
|
$ |
6,333 |
|
$ |
21,889 |
|
$ |
13,178 |
|
$ |
(11,297 |
) |
Add back/Deduct: Loss/(gain) on revaluation of deferred
consideration |
|
3,048 |
|
|
(1,737 |
) |
|
(497 |
) |
|
(2,832 |
) |
|
22,385 |
|
Add back: Losses on securities owned, before income taxes |
|
1,649 |
|
|
1,329 |
|
|
— |
|
|
— |
|
|
— |
|
Add back: Impairments, before income taxes |
|
— |
|
|
15,853 |
|
|
— |
|
|
303 |
|
|
— |
|
Deduct: Remeasurement of contingent consideration – sale of
Canadian ETF business |
|
— |
|
|
(787 |
) |
|
— |
|
|
— |
|
|
— |
|
Deduct: Unrealized gain recognized on 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 |
|
Adjusted income before income
taxes |
$ |
19,968 |
|
$ |
20,991 |
|
$ |
21,253 |
|
$ |
15,583 |
|
$ |
11,504 |
|
|
|
|
|
|
|
|
|
Three Months Ended |
Adjusted Income Tax
Expense and Adjusted Effective Income Tax Rate: |
Dec. 31,2021 |
|
Sept. 30,2021 |
June 30,2021 |
Mar 31,2021 |
Dec. 31,2020 |
Adjusted income before income taxes (above) |
$ |
19,968 |
|
|
$ |
20,991 |
|
$ |
21,253 |
|
$ |
15,583 |
|
$ |
11,504 |
|
|
|
|
|
|
|
|
Income
tax expense/(benefit) |
$ |
4,084 |
|
|
$ |
500 |
|
$ |
4,259 |
|
$ |
(1,969 |
) |
$ |
2,200 |
|
Add back: Tax benefit arising from impairments |
|
— |
|
|
|
3,851 |
|
|
— |
|
|
58 |
|
|
— |
|
Add back: Tax benefit arising from losses on securities owned |
|
148 |
|
|
|
323 |
|
|
— |
|
|
— |
|
|
— |
|
Add back/(Deduct): Tax windfalls/(shortfalls) upon vesting and
exercise of stock-based compensation awards |
|
— |
|
|
|
— |
|
|
233 |
|
|
(123 |
) |
|
(21 |
) |
Deduct: Tax expense on unrealized gain recognized on 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 |
|
Adjusted
income tax expense |
$ |
4,232 |
|
|
$ |
4,674 |
|
$ |
4,458 |
|
$ |
3,079 |
|
$ |
2,281 |
|
Adjusted
effective income tax rate |
|
21.2 |
% |
|
|
22.3 |
% |
|
21.0 |
% |
|
19.8 |
% |
|
19.8 |
% |
|
|
|
|
|
|
|
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;
- whether we will experience future growth;
- 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 implement our digital assets
strategy, including WisdomTree Prime, and achieve its
objectives;
- 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;
- 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; and
- actions of activist stockholders against us could be disruptive
and costly and may cause uncertainty about the strategic direction
of our business.
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 Reports on Form 10-Q for
the quarters ended June 30, 2021 and September 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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