WisdomTree Investments, Inc. (NASDAQ: WETF) today reported
financial results for the first quarter of 2022.
($10.3) million net loss ($14.1
(1)
million net income, as adjusted), see “Non-GAAP
Financial Measurements” for additional information.
$17.0 million non-cash charge associated with
the revaluation of deferred consideration – gold payments.
$79.4 billion of ending AUM, an increase of
2.5% arising from net inflows and market appreciation.
$1.3 billion of net inflows, primarily driven
by inflows into our fixed income and U.S. equity products, partly
offset by outflows from our commodity products.
0.40% average advisory fee, unchanged from the
previous quarter.
$78.4 million of operating revenues, a decrease
of 1.0% due to two fewer revenue days in the quarter, partly offset
by higher average AUM.
80.2% gross
margin(1),
essentially unchanged from the previous quarter.
22.6% operating income margin
(25.7%(1)
as adjusted), a 5.9 point decrease (2.8 point
decrease, as adjusted(1)) primarily due to higher operating
expenses. Our unadjusted operating income margin is impacted by
$2.4 million of expenses incurred in responding to the activist
campaign by ETFS Capital Limited and Lion Point Capital, LP
(collectively, the “Investor Group”), as evidenced by their
Schedule 13D, initially filed January 24, 2022, and thereafter
amended (the “activist campaign”).
$0.03 quarterly dividend
declared, payable on May 25, 2022 to stockholders
of record as of the close of business on May 11, 2022.
Update from Jonathan Steinberg,
WisdomTree CEO
“This quarter marked WisdomTree’s sixth consecutive quarter of
organic growth, strong earnings results and record assets under
management. It is important to note that the robust organic growth
and sustainable momentum we are experiencing today did not happen
overnight, but rather has been the result of executing on the
vision and strategy we laid out over the course of many years of
diversifying the business, developing world class tools for
advisors and launching a solutions platform into the key driver of
growth it is today. Just as our strong execution has yielded
today’s robust business with $3 billion of net inflows
year-to-date, our strong execution on future opportunities with
large addressable markets such as managed models and digital assets
will further accelerate WisdomTree’s growth in the years to
come.” |
Update from Jarrett Lilien, WisdomTree
COO and President
“Managed model portfolios have grown into a WisdomTree success
story, with platform AUM at over $2 billion in only two years, and
roughly 12% of US ETF inflows from managed model strategies, up
from 10% in the second half of last year. Model flows are recurring
in nature and stackable on top of our current inflow profile. We
are excited about the trajectory of our models franchise and
anticipate a long, lucrative growth runway ahead.For WisdomTree, I
see another major success story on the horizon: being a first mover
in digital assets. The mission is simple: first, bring crypto
exposures into the mainstream financial ecosystem through ETPs and
separate accounts; and second, bring mainstream financial assets
into the digital world through blockchain-enabled funds and
tokenized assets. Viewed this way, digital assets are a natural
extension of what we do – delivering our investors best structured
access to various asset classes. We have the vision, we have the
products, we have the new D2C channel with WisdomTree Prime™, and
we are excited to execute on this massive opportunity.” |
OPERATING AND FINANCIAL HIGHLIGHTS
|
Three Months Ended |
|
Mar. 31,2022 |
Dec. 31,2021 |
Sept. 30,2021 |
June 30,2021 |
Mar. 31,2021 |
Consolidated Operating
Highlights ($ in billions): |
|
|
|
|
|
AUM |
$ |
79.4 |
|
$ |
77.5 |
|
$ |
72.8 |
|
$ |
73.9 |
|
$ |
69.5 |
|
Net inflows |
$ |
1.3 |
|
$ |
1.9 |
|
$ |
0.5 |
|
$ |
0.9 |
|
$ |
1.3 |
|
Average AUM |
$ |
77.8 |
|
$ |
76.0 |
|
$ |
74.5 |
|
$ |
73.6 |
|
$ |
69.6 |
|
Average advisory fee |
|
0.40 |
% |
|
0.40 |
% |
|
0.41 |
% |
|
0.40 |
% |
|
0.41 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial
Highlights ($ in millions, except per share
amounts): |
|
|
|
|
|
Operating revenues |
$ |
78.4 |
|
$ |
79.2 |
|
$ |
78.1 |
|
$ |
75.8 |
|
$ |
71.3 |
|
Net (loss)/income |
$ |
(10.3 |
) |
$ |
11.2 |
|
$ |
5.8 |
|
$ |
17.6 |
|
$ |
15.1 |
|
Diluted (loss)/earnings per share |
$ |
(0.08 |
) |
$ |
0.07 |
|
$ |
0.04 |
|
$ |
0.11 |
|
$ |
0.09 |
|
Operating income margin |
|
22.6 |
% |
|
28.5 |
% |
|
31.0 |
% |
|
31.3 |
% |
|
26.1 |
% |
As Adjusted
(Non-GAAP(1)): |
|
|
|
|
|
Gross margin |
|
80.2 |
% |
|
80.5 |
% |
|
80.6 |
% |
|
81.0 |
% |
|
80.4 |
% |
Net income, as adjusted |
$ |
14.1 |
|
$ |
15.7 |
|
$ |
16.3 |
|
$ |
16.8 |
|
$ |
12.5 |
|
Diluted earnings per share, as adjusted |
$ |
0.09 |
|
$ |
0.10 |
|
$ |
0.10 |
|
$ |
0.10 |
|
$ |
0.08 |
|
Operating income margin, as adjusted |
|
25.7 |
% |
|
28.5 |
% |
|
31.0 |
% |
|
31.3 |
% |
|
26.1 |
% |
|
|
|
|
|
|
RECENT BUSINESS DEVELOPMENTS
Company News
- In February 2022,
our Board of Directors authorized an increase and extension to our
existing stock repurchase program.
- In March 2022, our Board of
Directors adopted a limited duration stockholder rights plan.
- Also in March 2022, we promoted Ben
Wallach and Heather Reisner to strengthen our ESG focus with
customer-focused product innovation in the U.S.; and we won three
ETF Express European Awards 2022: Best Leveraged & Inverse ETF
Issuer (Including ETNs), Best Thematic ETF Issuer ($100M+) and Best
European Equity ETF Issuer ($100M-$1BN).
Product News
- In February 2022, we
launched the WisdomTree Battery Value Chain and Innovation Fund
(WBAT) on the CBOE; we launched the WisdomTree New Economy Real
Estate UCITS ETF (WTRE) on the London Stock Exchange, Börse Xetra
and Borsa Italiana; and we cross-listed the WisdomTree Crypto
Market ETP (BLOC) and the WisdomTree Crypto Altcoins ETP (WALT) on
Euronext exchanges in Paris, France and Amsterdam, the
Netherlands.
- In March 2022, we
executed a 1:2 reverse share split on the WisdomTree Floating Rate
Treasury fund (USFR); we launched the WisdomTree Efficient Gold
Plus Equity Strategy Fund (GDE) on the CBOE; we launched the
WisdomTree S&P 500 (WSPX), the WisdomTree EURO STOXX 50 (WS5X)
and the WisdomTree FTSE MIB (WMIB) on Borsa Italiana and the
WisdomTree STOXX Europe Travel & Leisure 2x Daily Leveraged
(2TRV), the WisdomTree STOXX Europe Travel & Leisure 2x Daily
Short (2STR), the WisdomTree STOXX Europe Automobiles 2x Daily
Leveraged (2CAR) and the WisdomTree STOXX Europe Oil & Gas 2x
Daily Short (2OIG) on the London Stock Exchange, Börse Xetra and
Borsa Italiana; we listed Swiss Franc (CHF) trading lines for the
WisdomTree Bitcoin ETP (BTCW) and the WisdomTree Ethereum ETP
(ETHW) listed on SIX; we launched the WisdomTree Solana ETP (SOLW),
the WisdomTree Cardano ETP (ADAW) and the WisdomTree Polkadot ETP
(DOTW) on Börse Xetra, SIX and Euronext in Paris, France and
Amsterdam, the Netherlands; and the WisdomTree Emerging Markets
ex-State Owned Enterprises ESG Screened UCITS ETF (XSOE) won in the
‘Innovative Newcomer ETF’ category at the XENIX ETF awards
2022.
- In April 2022, the
WisdomTree New Economy Real Estate Fund (WTRE) was restructured
from the WisdomTree Global ex-U.S. Real Estate Fund (DRW); we
launched our Portfolio and Growth Solutions to address the needs of
RIAs and IBDs to help scale and grow their businesses; we launched
a pair of thematic metals ETPs: the WisdomTree Battery Metals ETP
(WATT) and the WisdomTree Energy Transition Metals ETP (WENT) on
the London Stock Exchange, Börse Xetra and Borsa Italiana; we
cross-listed the WisdomTree AT1 CoCo Bond UCITS ETF (COCB) and the
WisdomTree Cybersecurity UCITS ETF (WCBR) in Mexico; we
cross-listed the WisdomTree USD Floating Rate Treasury Bond UCITS
ETF (TFRN) on Borsa Italiana; we cross-listed the WisdomTree Global
Quality Dividend Growth UCITS ETF (GGRW) on Börse Xetra; and we
launched the WisdomTree Recycling Decarbonisation UCITS ETF (WRCY)
on the London Stock Exchange, Börse Xetra and Borsa Italiana.
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share
amounts)(Unaudited)
|
|
|
Three Months Ended |
|
Mar. 31,2022 |
|
Dec. 31,2021 |
|
Sept. 30,2021 |
|
June 30,2021 |
|
Mar. 31,2021 |
|
Operating
Revenues: |
|
|
|
|
|
Advisory fees |
$ |
76,517 |
|
|
$ |
77,441 |
|
|
$ |
76,400 |
|
|
$ |
74,169 |
|
|
$ |
70,042 |
|
Other income |
|
1,851 |
|
|
|
1,734 |
|
|
|
1,712 |
|
|
|
1,606 |
|
|
|
1,214 |
|
Total revenues |
|
78,368 |
|
|
|
79,175 |
|
|
|
78,112 |
|
|
|
75,775 |
|
|
|
71,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses: |
|
|
|
|
|
Compensation and benefits |
|
24,787 |
|
|
|
23,178 |
|
|
|
22,027 |
|
|
|
20,331 |
|
|
|
22,627 |
|
Fund management and administration |
|
15,494 |
|
|
|
15,417 |
|
|
|
15,181 |
|
|
|
14,367 |
|
|
|
13,947 |
|
Marketing and advertising |
|
4,023 |
|
|
|
4,565 |
|
|
|
2,925 |
|
|
|
3,594 |
|
|
|
3,006 |
|
Sales and business development |
|
2,609 |
|
|
|
2,668 |
|
|
|
2,935 |
|
|
|
2,159 |
|
|
|
2,145 |
|
Contractual gold payments |
|
4,450 |
|
|
|
4,262 |
|
|
|
4,250 |
|
|
|
4,314 |
|
|
|
4,270 |
|
Professional fees |
|
4,459 |
|
|
|
2,099 |
|
|
|
1,583 |
|
|
|
1,921 |
|
|
|
2,013 |
|
Occupancy, communications and equipment |
|
753 |
|
|
|
725 |
|
|
|
1,163 |
|
|
|
1,266 |
|
|
|
1,475 |
|
Depreciation and amortization |
|
47 |
|
|
|
45 |
|
|
|
185 |
|
|
|
256 |
|
|
|
252 |
|
Third-party distribution fees |
|
2,212 |
|
|
|
1,830 |
|
|
|
1,873 |
|
|
|
2,130 |
|
|
|
1,343 |
|
Other |
|
1,845 |
|
|
|
1,823 |
|
|
|
1,787 |
|
|
|
1,752 |
|
|
|
1,571 |
|
Total operating expenses |
|
60,679 |
|
|
|
56,612 |
|
|
|
53,909 |
|
|
|
52,090 |
|
|
|
52,649 |
|
Operating income |
|
17,689 |
|
|
|
22,563 |
|
|
|
24,203 |
|
|
|
23,685 |
|
|
|
18,607 |
|
|
|
|
|
|
|
Other
Income/(Expenses): |
|
|
|
|
|
Interest expense |
|
(3,732 |
) |
|
|
(3,740 |
) |
|
|
(3,729 |
) |
|
|
(2,567 |
) |
|
|
(2,296 |
) |
(Loss)/gain on revaluation of deferred consideration—gold
payments |
|
(17,018 |
) |
|
|
(3,048 |
) |
|
|
1,737 |
|
|
|
497 |
|
|
|
2,832 |
|
Interest income |
|
794 |
|
|
|
864 |
|
|
|
689 |
|
|
|
225 |
|
|
|
231 |
|
Impairments |
|
— |
|
|
|
— |
|
|
|
(15,853 |
) |
|
|
— |
|
|
|
(303 |
) |
Other losses and gains, net |
|
(24,707 |
) |
|
|
(1,368 |
) |
|
|
(714 |
) |
|
|
49 |
|
|
|
(5,893 |
) |
(Loss)/income before
income taxes |
|
(26,974 |
) |
|
|
15,271 |
|
|
|
6,333 |
|
|
|
21,889 |
|
|
|
13,178 |
|
Income tax
(benefit)/expense |
|
(16,713 |
) |
|
|
4,084 |
|
|
|
500 |
|
|
|
4,259 |
|
|
|
(1,969 |
) |
|
|
|
|
|
|
Net
(loss)/income |
$ |
(10,261 |
) |
|
$ |
11,187 |
|
|
$ |
5,833 |
|
|
$ |
17,630 |
|
|
$ |
15,147 |
|
|
|
|
|
|
|
(Loss)/earnings per
share—basic |
$ |
(0.08 |
) |
(2) |
$ |
0.07 |
(2) |
|
$ |
0.04 |
|
|
$ |
0.11 |
(2) |
|
$ |
0.09 |
(2) |
(Loss)/earnings per
share—diluted |
$ |
(0.08 |
) |
(2) |
$ |
0.07 |
|
|
$ |
0.04 |
|
|
$ |
0.11 |
|
|
$ |
0.09 |
|
Weighted average
common shares–basic |
|
142,782 |
|
|
|
142,070 |
|
|
|
142,070 |
|
|
|
145,542 |
|
|
|
145,649 |
|
Weighted average
common shares—diluted |
|
142,782 |
|
|
|
159,826 |
|
|
|
159,213 |
|
|
|
164,855 |
|
|
|
161,831 |
|
|
|
|
|
|
|
As
Adjusted
(Non-GAAP(1)) |
|
|
|
|
|
Total operating expenses |
$ |
58,244 |
|
|
$ |
56,612 |
|
|
$ |
53,909 |
|
|
$ |
52,090 |
|
|
$ |
52,649 |
|
Operating income |
$ |
20,124 |
|
|
$ |
22,563 |
|
|
$ |
24,203 |
|
|
$ |
23,685 |
|
|
$ |
18,607 |
|
Income before income taxes |
$ |
17,674 |
|
|
$ |
19,968 |
|
|
$ |
20,991 |
|
|
$ |
21,253 |
|
|
$ |
15,583 |
|
Income tax expense |
$ |
3,888 |
|
|
$ |
4,232 |
|
|
$ |
4,674 |
|
|
$ |
4,458 |
|
|
$ |
3,079 |
|
Net income |
$ |
14,063 |
|
|
$ |
15,736 |
|
|
$ |
16,317 |
|
|
$ |
16,795 |
|
|
$ |
12,504 |
|
Earnings per share—diluted |
$ |
0.09 |
|
|
$ |
0.10 |
|
|
$ |
0.10 |
|
|
$ |
0.10 |
|
|
$ |
0.08 |
|
|
|
|
|
|
|
QUARTERLY HIGHLIGHTS
Operating Revenues
- Operating revenues decreased 1.0% from
the fourth quarter of 2021 due to two fewer revenue days in the
quarter, partly offset by higher average AUM.
- Operating revenues increased 10.0% from
the first quarter of 2021 due to higher average AUM, partly offset
by a lower average advisory fee.
- Our average advisory fee was 0.40%,
0.40% and 0.41% during the first quarter of 2022, the fourth
quarter of 2021 and the first quarter of 2021, respectively.
Operating Expenses
- Operating expenses increased 7.2% from
the fourth quarter of 2021 primarily due to $2.4 million of
professional fees incurred in response to the activist campaign,
higher compensation expense arising from seasonal payroll taxes and
higher third-party distribution fees. These increases were partly
offset by lower marketing expenses.
- Operating expenses increased 15.3% from
the first quarter of 2021 primarily due to $2.4 million of
professional fees incurred in response to the activist campaign,
higher compensation arising from increased headcount, higher fund
management and administration costs, as well as higher marketing
expenses, third-party distribution fees and sales and business
development expenses. These increases were partly offset by lower
occupancy expenses.
Other Income/(Expenses)
- Interest expense was essentially
unchanged from the fourth quarter of 2021. This expense increased
62.5% from the first quarter of 2021 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 $17.0 million during the
first quarter of 2022. The loss was due to higher 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 decreased 8.1% from the
fourth quarter of 2021 and increased 243.7% from first quarter of
2021 due to a change in our securities owned.
- Other net losses were $24.7 million for
the first quarter of 2022. The quarter includes a non-cash charge
of $19.9 million upon the release of tax-related indemnification
assets arising from a favorable resolution of certain tax audits as
well as the expiration of the statute of limitations (an equal and
offsetting benefit was recognized in income tax expense). This
quarter also includes losses on our securities owned of $5.1
million. 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
first quarter of 2022 was 62.0% resulting in an income tax benefit
of $16.7 million. Our tax rate differs from the federal statutory
rate of 21% primarily due to a reduction in unrecognized tax
benefits associated with the release of the tax-related
indemnification asset described above, a lower tax rate on foreign
earnings and tax windfalls associated with the vesting of
stock-based compensation awards. These items were partly offset by
a non-taxable loss on revaluation of deferred consideration and an
increase in the deferred tax asset valuation allowance on losses
recognized on securities owned.
- Our adjusted effective income tax rate
was 20.4%(1).
CONFERENCE CALL
WisdomTree will discuss its results and operational highlights
during a conference call on Friday, April 29, 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 $77.8 billion
in assets under management globally.
WisdomTree® is the marketing name for WisdomTree Investments,
Inc. and its subsidiaries worldwide.
(1) |
See “Non-GAAP Financial Measurements.” |
|
|
(2) |
Earnings/(loss) per share (“EPS”)
is calculated pursuant to the two-class method as it results in a
lower EPS amount as compared to the treasury stock method. |
|
|
(3) |
Cash flows from purchasing
securities owned, at fair value of ($1,657) and selling securities
owned, at fair value of $1,232 during the three months ended March
31, 2021 that were not acquired specifically for resale or
associated with our business activities have been reclassified from
operating activities to investing activities to conform to our
current presentation in the Consolidated Statements of Cash
Flows. |
Contact Information: |
|
|
|
Investor
Relations |
Media
Relations |
Jeremy Campbell |
Jessica Zaloom |
+1.646.522.2602 |
+1.917.267.3735 |
Jeremy.campbell@wisdomtree.com |
jzaloom@wisdomtree.com |
WisdomTree Investments, Inc.
Key Operating
Statistics (Unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
Mar. 31,2022 |
|
Dec. 31,2021 |
|
Sept. 30,2021 |
|
June 30,2021 |
|
Mar. 31,2021 |
GLOBAL
ETPs ($ in millions) |
|
|
|
|
|
Beginning of period assets |
$ |
77,471 |
|
|
$ |
72,774 |
|
|
$ |
73,935 |
|
|
$ |
69,527 |
|
|
$ |
67,383 |
|
Inflows/(outflows) |
|
1,314 |
|
|
|
1,908 |
|
|
|
547 |
|
|
|
932 |
|
|
|
1,268 |
|
Market appreciation/(depreciation) |
|
618 |
|
|
|
2,804 |
|
|
|
(1,708 |
) |
|
|
3,480 |
|
|
|
876 |
|
Fund closures |
|
— |
|
|
|
(15 |
) |
|
|
— |
|
|
|
(4 |
) |
|
|
— |
|
End of period assets |
$ |
79,403 |
|
|
$ |
77,471 |
|
|
$ |
72,774 |
|
|
$ |
73,935 |
|
|
$ |
69,527 |
|
Average assets during the period |
$ |
77,813 |
|
|
$ |
75,986 |
|
|
$ |
74,544 |
|
|
$ |
73,615 |
|
|
$ |
69,570 |
|
Average advisory fee during the period |
|
0.40 |
% |
|
|
0.40 |
% |
|
|
0.41 |
% |
|
|
0.40 |
% |
|
|
0.41 |
% |
Revenue days |
|
90 |
|
|
|
92 |
|
|
|
92 |
|
|
|
91 |
|
|
|
90 |
|
Number of ETFs—end of the period |
|
341 |
|
|
|
329 |
|
|
|
322 |
|
|
|
318 |
|
|
|
313 |
|
|
|
|
|
|
|
|
U.S.
LISTED ETFs ($ in millions) |
|
|
|
|
|
Beginning of period assets |
$ |
48,210 |
|
|
$ |
44,742 |
|
|
$ |
45,129 |
|
|
$ |
42,163 |
|
|
$ |
38,517 |
|
Inflows/(outflows) |
|
2,250 |
|
|
|
1,865 |
|
|
|
612 |
|
|
|
1,130 |
|
|
|
1,343 |
|
Market appreciation/(depreciation) |
|
(1,838 |
) |
|
|
1,618 |
|
|
|
(999 |
) |
|
|
1,836 |
|
|
|
2,303 |
|
Fund closures |
|
— |
|
|
|
(15 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
End of period assets |
$ |
48,622 |
|
|
$ |
48,210 |
|
|
$ |
44,742 |
|
|
$ |
45,129 |
|
|
$ |
42,163 |
|
Average assets during the period |
$ |
47,506 |
|
|
$ |
46,944 |
|
|
$ |
45,506 |
|
|
$ |
44,183 |
|
|
$ |
40,706 |
|
Number of ETFs—end of the period |
|
77 |
|
|
|
75 |
|
|
|
73 |
|
|
|
73 |
|
|
|
68 |
|
|
|
|
|
|
|
|
EUROPEAN
LISTED ETPs ($ in millions) |
|
|
|
|
|
Beginning of period assets |
$ |
29,261 |
|
|
$ |
28,032 |
|
|
$ |
28,806 |
|
|
$ |
27,364 |
|
|
$ |
28,866 |
|
Inflows/(outflows) |
|
(936 |
) |
|
|
43 |
|
|
|
(65 |
) |
|
|
(198 |
) |
|
|
(75 |
) |
Market appreciation/(depreciation) |
|
2,456 |
|
|
|
1,186 |
|
|
|
(709 |
) |
|
|
1,644 |
|
|
|
(1,427 |
) |
Fund closures |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
|
|
— |
|
End of period assets |
$ |
30,781 |
|
|
$ |
29,261 |
|
|
$ |
28,032 |
|
|
$ |
28,806 |
|
|
$ |
27,364 |
|
Average assets during the period |
$ |
30,307 |
|
|
$ |
29,042 |
|
|
$ |
29,038 |
|
|
$ |
29,432 |
|
|
$ |
28,864 |
|
Number of ETPs—end of the period |
|
264 |
|
|
|
254 |
|
|
|
249 |
|
|
|
245 |
|
|
|
245 |
|
|
|
|
|
|
|
|
PRODUCT
CATEGORIES ($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity &
Currency |
|
|
|
|
|
|
Beginning of period assets |
$ |
24,598 |
|
|
$ |
23,825 |
|
|
$ |
24,772 |
|
|
$ |
23,656 |
|
|
$ |
25,880 |
|
Inflows/(outflows) |
|
(1,058 |
) |
|
|
(246 |
) |
|
|
(249 |
) |
|
|
(318 |
) |
|
|
(672 |
) |
Market appreciation/(depreciation) |
|
2,761 |
|
|
|
1,019 |
|
|
|
(698 |
) |
|
|
1,434 |
|
|
|
(1,552 |
) |
End of period assets |
$ |
26,301 |
|
|
$ |
24,598 |
|
|
$ |
23,825 |
|
|
$ |
24,772 |
|
|
$ |
23,656 |
|
Average assets during the period |
$ |
25,893 |
|
|
$ |
24,423 |
|
|
$ |
24,850 |
|
|
$ |
25,550 |
|
|
$ |
25,290 |
|
|
|
|
|
|
|
|
U.S.
Equity |
|
|
|
|
|
|
Beginning of period assets |
$ |
23,860 |
|
|
$ |
21,383 |
|
|
$ |
21,285 |
|
|
$ |
20,019 |
|
|
$ |
18,367 |
|
Inflows/(outflows) |
|
779 |
|
|
|
784 |
|
|
|
351 |
|
|
|
191 |
|
|
|
218 |
|
Market appreciation/(depreciation) |
|
(901 |
) |
|
|
1,693 |
|
|
|
(253 |
) |
|
|
1,075 |
|
|
|
1,434 |
|
End of period assets |
$ |
23,738 |
|
|
$ |
23,860 |
|
|
$ |
21,383 |
|
|
$ |
21,285 |
|
|
$ |
20,019 |
|
Average assets during the period |
$ |
23,141 |
|
|
$ |
22,964 |
|
|
$ |
21,791 |
|
|
$ |
20,982 |
|
|
$ |
19,320 |
|
|
|
|
|
|
|
|
International
Developed Market Equity |
|
|
|
|
|
|
Beginning of period assets |
$ |
11,888 |
|
|
$ |
11,174 |
|
|
$ |
10,785 |
|
|
$ |
9,984 |
|
|
$ |
9,406 |
|
Inflows/(outflows) |
|
97 |
|
|
|
440 |
|
|
|
403 |
|
|
|
399 |
|
|
|
17 |
|
Market appreciation/(depreciation) |
|
(566 |
) |
|
|
274 |
|
|
|
(14 |
) |
|
|
402 |
|
|
|
561 |
|
End of period assets |
$ |
11,419 |
|
|
$ |
11,888 |
|
|
$ |
11,174 |
|
|
$ |
10,785 |
|
|
$ |
9,984 |
|
Average assets during the period |
$ |
11,539 |
|
|
$ |
11,518 |
|
|
$ |
11,140 |
|
|
$ |
10,520 |
|
|
$ |
9,786 |
|
|
Three Months Ended |
|
Mar. 31,2022 |
|
Dec. 31,2021 |
|
Sept. 30,2021 |
|
June 30,2021 |
|
Mar. 31,2021 |
|
|
|
|
|
|
|
Emerging Market
Equity |
|
|
|
|
|
|
Beginning of period assets |
$ |
10,375 |
|
|
$ |
10,666 |
|
|
$ |
11,519 |
|
|
$ |
10,477 |
|
|
$ |
8,539 |
|
Inflows/(outflows) |
|
189 |
|
|
|
(3 |
) |
|
|
(149 |
) |
|
|
530 |
|
|
|
1,663 |
|
Market appreciation/(depreciation) |
|
(573 |
) |
|
|
(288 |
) |
|
|
(704 |
) |
|
|
512 |
|
|
|
275 |
|
End of period assets |
$ |
9,991 |
|
|
$ |
10,375 |
|
|
$ |
10,666 |
|
|
$ |
11,519 |
|
|
$ |
10,477 |
|
Average assets during the period |
$ |
10,116 |
|
|
$ |
10,550 |
|
|
$ |
11,038 |
|
|
$ |
11,012 |
|
|
$ |
9,875 |
|
|
|
|
|
|
|
|
Fixed
Income |
|
|
|
|
|
|
Beginning of period assets |
$ |
4,354 |
|
|
$ |
3,528 |
|
|
$ |
3,439 |
|
|
$ |
3,244 |
|
|
$ |
3,308 |
|
Inflows/(outflows) |
|
1,242 |
|
|
|
837 |
|
|
|
115 |
|
|
|
168 |
|
|
|
10 |
|
Market appreciation/(depreciation) |
|
(178 |
) |
|
|
(11 |
) |
|
|
(26 |
) |
|
|
27 |
|
|
|
(74 |
) |
End of period assets |
$ |
5,418 |
|
|
$ |
4,354 |
|
|
$ |
3,528 |
|
|
$ |
3,439 |
|
|
$ |
3,244 |
|
Average assets during the period |
$ |
4,690 |
|
|
$ |
4,117 |
|
|
$ |
3,500 |
|
|
$ |
3,335 |
|
|
$ |
3,234 |
|
|
|
|
|
|
|
|
Leveraged &
Inverse |
|
|
|
|
|
|
Beginning of period assets |
$ |
1,775 |
|
|
$ |
1,663 |
|
|
$ |
1,691 |
|
|
$ |
1,519 |
|
|
$ |
1,477 |
|
Inflows/(outflows) |
|
(2 |
) |
|
|
11 |
|
|
|
41 |
|
|
|
(2 |
) |
|
|
(4 |
) |
Market appreciation/(depreciation) |
|
83 |
|
|
|
101 |
|
|
|
(69 |
) |
|
|
174 |
|
|
|
46 |
|
End of period assets |
$ |
1,856 |
|
|
$ |
1,775 |
|
|
$ |
1,663 |
|
|
$ |
1,691 |
|
|
$ |
1,519 |
|
Average assets during the period |
$ |
1,830 |
|
|
$ |
1,761 |
|
|
$ |
1,715 |
|
|
$ |
1,664 |
|
|
$ |
1,554 |
|
|
|
|
|
|
|
|
Cryptocurrency |
|
|
|
|
|
|
Beginning of period assets |
$ |
357 |
|
|
$ |
295 |
|
|
$ |
229 |
|
|
$ |
377 |
|
|
$ |
167 |
|
Inflows/(outflows) |
|
37 |
|
|
|
28 |
|
|
|
12 |
|
|
|
8 |
|
|
|
36 |
|
Market appreciation/(depreciation) |
|
(11 |
) |
|
|
34 |
|
|
|
54 |
|
|
|
(156 |
) |
|
|
174 |
|
End of period assets |
$ |
383 |
|
|
$ |
357 |
|
|
$ |
295 |
|
|
$ |
229 |
|
|
$ |
377 |
|
Average assets during the period |
$ |
324 |
|
|
$ |
406 |
|
|
$ |
277 |
|
|
$ |
300 |
|
|
$ |
264 |
|
|
|
|
|
|
|
|
Alternatives |
|
|
|
|
|
|
Beginning of period assets |
$ |
261 |
|
|
$ |
222 |
|
|
$ |
198 |
|
|
$ |
227 |
|
|
$ |
215 |
|
Inflows/(outflows) |
|
29 |
|
|
|
56 |
|
|
|
22 |
|
|
|
(39 |
) |
|
|
— |
|
Market appreciation/(depreciation) |
|
3 |
|
|
|
(17 |
) |
|
|
2 |
|
|
|
10 |
|
|
|
12 |
|
End of period assets |
$ |
293 |
|
|
$ |
261 |
|
|
$ |
222 |
|
|
$ |
198 |
|
|
$ |
227 |
|
Average assets during the period |
$ |
275 |
|
|
$ |
229 |
|
|
$ |
214 |
|
|
$ |
231 |
|
|
$ |
223 |
|
|
|
|
|
|
|
|
Closed
ETPs |
|
|
|
|
|
|
Beginning of period assets |
$ |
3 |
|
|
$ |
18 |
|
|
$ |
17 |
|
|
$ |
24 |
|
|
$ |
24 |
|
Inflows/(outflows) |
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
(5 |
) |
|
|
— |
|
Market appreciation/(depreciation) |
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
2 |
|
|
|
— |
|
Fund closures |
|
— |
|
|
|
(15 |
) |
|
|
— |
|
|
|
(4 |
) |
|
|
— |
|
End of period assets |
$ |
4 |
|
|
$ |
3 |
|
|
$ |
18 |
|
|
$ |
17 |
|
|
$ |
24 |
|
Average assets during the period |
$ |
5 |
|
|
$ |
18 |
|
|
$ |
19 |
|
|
$ |
21 |
|
|
$ |
24 |
|
|
|
|
|
|
|
|
Headcount |
|
253 |
|
|
|
241 |
|
|
|
235 |
|
|
|
227 |
|
|
|
227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
Mar. 31,2022 |
|
Dec. 31,2021 |
|
(Unaudited) |
|
|
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ |
110,395 |
|
|
$ |
140,709 |
|
Securities owned, at fair value |
|
133,846 |
|
|
|
127,166 |
|
Accounts receivable |
|
35,191 |
|
|
|
31,864 |
|
Prepaid expenses |
|
6,177 |
|
|
|
3,952 |
|
Income taxes receivable |
|
244 |
|
|
|
— |
|
Other current assets |
|
327 |
|
|
|
276 |
|
Total current assets |
|
286,180 |
|
|
|
303,967 |
|
Fixed assets, net |
|
559 |
|
|
|
557 |
|
Indemnification
receivable |
|
1,452 |
|
|
|
21,925 |
|
Securities
held-to-maturity |
|
290 |
|
|
|
308 |
|
Deferred tax assets, net |
|
3,734 |
|
|
|
8,881 |
|
Investments |
|
20,938 |
|
|
|
14,238 |
|
Right of use assets—operating
leases |
|
424 |
|
|
|
520 |
|
Goodwill |
|
85,856 |
|
|
|
85,856 |
|
Intangible assets |
|
601,247 |
|
|
|
601,247 |
|
Other noncurrent assets |
|
357 |
|
|
|
361 |
|
Total assets |
$ |
1,001,037 |
|
|
$ |
1,037,860 |
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
LIABILITIES |
|
|
Current liabilities: |
|
|
Fund management and administration payable |
$ |
23,795 |
|
|
$ |
20,661 |
|
Compensation and benefits payable |
|
8,986 |
|
|
|
32,782 |
|
Deferred consideration—gold payments |
|
17,882 |
|
|
|
16,739 |
|
Operating lease liabilities |
|
244 |
|
|
|
209 |
|
Income taxes payable |
|
— |
|
|
|
3,979 |
|
Accounts payable and other liabilities |
|
15,979 |
|
|
|
9,297 |
|
Total current liabilities |
|
66,886 |
|
|
|
83,667 |
|
Convertible notes |
|
319,269 |
|
|
|
318,624 |
|
Deferred consideration—gold
payments |
|
227,295 |
|
|
|
211,323 |
|
Operating lease
liabilities |
|
189 |
|
|
|
328 |
|
Other noncurrent
liabilities |
|
1,452 |
|
|
|
21,925 |
|
Total liabilities |
|
615,091 |
|
|
|
635,867 |
|
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: 146,560 and 145,107 at March 31, 2022 and
December 31, 2021, respectively |
|
1,466 |
|
|
|
1,451 |
|
Additional paid-in
capital |
|
284,421 |
|
|
|
289,736 |
|
Accumulated other
comprehensive income |
|
196 |
|
|
|
682 |
|
Accumulated deficit |
|
(32,706 |
) |
|
|
(22,445 |
) |
Total stockholders’
equity |
|
253,377 |
|
|
|
269,424 |
|
Total liabilities and
stockholders’ equity |
$ |
1,001,037 |
|
|
$ |
1,037,860 |
|
|
|
|
WISDOMTREE INVESTMENTS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Mar. 31,2022 |
|
Mar.
31,2021(3) |
Cash flows
from operating activities: |
|
|
|
|
|
|
|
Net (loss)/income |
$ |
(10,261 |
) |
|
$ |
15,147 |
|
Adjustments to reconcile net (loss)/income to net cash (used
in)/provided by operating activities: |
|
|
Loss/(gain) on revaluation of deferred consideration—gold
payments |
|
17,018 |
|
|
|
(2,832 |
) |
Advisory and license fees paid in gold, other precious metals and
cryptocurrency |
|
(16,052 |
) |
|
|
(19,757 |
) |
Deferred income taxes |
|
5,273 |
|
|
|
2,904 |
|
Losses on securities owned, at fair value |
|
5,142 |
|
|
|
549 |
|
Contractual gold payments |
|
4,450 |
|
|
|
4,270 |
|
Stock-based compensation |
|
2,936 |
|
|
|
3,143 |
|
Amortization of issuance costs—convertible notes |
|
645 |
|
|
|
429 |
|
Amortization of right of use asset |
|
89 |
|
|
|
697 |
|
Depreciation and amortization |
|
47 |
|
|
|
252 |
|
Impairments |
|
— |
|
|
|
303 |
|
Other |
|
163 |
|
|
|
(235 |
) |
Changes in operating assets and liabilities: |
|
|
Accounts receivable |
|
(3,710 |
) |
|
|
290 |
|
Prepaid expenses |
|
(2,264 |
) |
|
|
(362 |
) |
Gold and other precious metals |
|
11,959 |
|
|
|
14,166 |
|
Other assets |
|
(52 |
) |
|
|
5 |
|
Fund management and administration payable |
|
3,199 |
|
|
|
(1,470 |
) |
Compensation and benefits payable |
|
(23,690 |
) |
|
|
(14,245 |
) |
Income taxes receivable/payable |
|
(4,228 |
) |
|
|
(1,028 |
) |
Operating lease liabilities |
|
(97 |
) |
|
|
(918 |
) |
Accounts payable and other liabilities |
|
6,741 |
|
|
|
982 |
|
Net cash (used in)/provided by operating activities |
|
(2,692 |
) |
|
|
2,290 |
|
Cash flows
from investing activities: |
|
|
Purchase of securities owned, at fair value |
|
(25,461 |
) |
|
|
(1,657 |
) |
Purchase of investments |
|
(6,863 |
) |
|
|
(5,500 |
) |
Purchase of fixed assets |
|
(54 |
) |
|
|
(103 |
) |
Proceeds from the sale of securities owned, at fair value |
|
13,639 |
|
|
|
1,232 |
|
Proceeds from held-to-maturity securities maturing or called prior
to maturity |
|
18 |
|
|
|
38 |
|
Net cash used in investing activities |
|
(18,721 |
) |
|
|
(5,990 |
) |
Cash flows
from financing activities: |
|
|
Dividends paid |
|
(4,842 |
) |
|
|
(4,937 |
) |
Shares repurchased |
|
(3,394 |
) |
|
|
(2,630 |
) |
Proceeds from exercise of stock options |
|
— |
|
|
|
379 |
|
Net cash used in financing activities |
|
(8,236 |
) |
|
|
(7,188 |
) |
Decrease in cash
flow due to changes in foreign exchange rate |
|
(665 |
) |
|
|
(235 |
) |
Net decrease in
cash and cash equivalents |
|
(30,314 |
) |
|
|
(11,123 |
) |
Cash and cash
equivalents—beginning of period |
|
140,709 |
|
|
|
73,425 |
|
Cash and cash
equivalents—end of period |
$ |
110,395 |
|
|
$ |
62,302 |
|
|
|
|
Supplemental disclosure of cash flow
information: |
|
|
|
|
|
|
|
Cash paid for taxes |
$ |
2,123 |
|
|
$ |
1,278 |
|
Cash paid for interest |
$ |
— |
|
|
$ |
— |
|
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 Operating Income, Operating Expenses, Income
Before Income Taxes, Income Tax Expense, Net Income and Diluted
Earnings per Share
We disclose adjusted operating income, operating expenses,
income before income taxes, income tax expense, net income and
diluted earnings per share as non-GAAP financial measurements in
order to report our results exclusive of items that are
non-recurring or not core to our operating business. We believe
presenting these non-GAAP financial measurements provides investors
with a consistent way to analyze our performance. These non-GAAP
financial measurements 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 windfalls and shortfalls
upon vesting and exercise of stock-based compensation
awards: GAAP requires the recognition of tax windfalls and
shortfalls within income tax expense. These items arise upon the
vesting and exercise of stock-based compensation awards and the
magnitude is directly correlated to the number of awards
vesting/exercised as well as the difference between the price of
our stock on the date the award was granted and the date the award
vested or was exercised. We exclude these items when calculating
our non-GAAP financial measurements as they introduce volatility in
earnings and are not core to our operating business.
Other items:
Unrealized gains and losses recognized on our investments, changes
in the deferred tax asset valuation allowance on securities owned,
expenses incurred in response to the activist campaign, impairment
charges and the remeasurement of contingent consideration payable
to us from the sale of our Canadian ETF business.
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: |
Mar. 31,2022 |
|
Dec. 31,2021 |
|
Sept. 30,2021 |
|
June 30,2021 |
|
Mar. 31,2021 |
|
|
|
|
|
|
|
Net (loss)/income, as reported |
$ |
(10,261 |
) |
|
$ |
11,187 |
|
|
$ |
5,833 |
|
|
$ |
17,630 |
|
|
$ |
15,147 |
|
Add back/Deduct: Loss/(gain) on revaluation of deferred
consideration |
|
17,018 |
|
|
|
3,048 |
|
|
|
(1,737 |
) |
|
|
(497 |
) |
|
|
(2,832 |
) |
Add back: Increase in deferred tax asset valuation allowance on
securities owned |
|
2,010 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back: Losses on securities owned, net of income taxes |
|
3,893 |
|
|
|
1,501 |
|
|
|
1,006 |
|
|
|
— |
|
|
|
— |
|
Add back: Expenses incurred in response to the activist campaign,
net of income taxes |
|
1,844 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Deduct/Add back: Tax (windfalls)/shortfalls upon vesting and
exercise of stock-based compensation awards |
|
(565 |
) |
|
|
— |
|
|
|
— |
|
|
|
(233 |
) |
|
|
123 |
|
Add back/Deduct: Unrealized loss/(gain) recognized on our
investments, net of income taxes |
|
124 |
|
|
|
— |
|
|
|
— |
|
|
|
(105 |
) |
|
|
(179 |
) |
Add back: Impairments, net of income taxes (where applicable) |
|
— |
|
|
|
— |
|
|
|
12,002 |
|
|
|
— |
|
|
|
245 |
|
Deduct: Remeasurement of contingent consideration – sale of
Canadian ETF business |
|
— |
|
|
|
— |
|
|
|
(787 |
) |
|
|
— |
|
|
|
— |
|
Adjusted net income |
$ |
14,063 |
|
|
$ |
15,736 |
|
|
$ |
16,317 |
|
|
$ |
16,795 |
|
|
$ |
12,504 |
|
Weighted average common shares
- diluted |
|
158,335 |
|
|
|
159,826 |
|
|
|
159,213 |
|
|
|
164,855 |
|
|
|
161,831 |
|
Adjusted earnings per share -
diluted |
$ |
0.09 |
|
|
$ |
0.10 |
|
|
$ |
0.10 |
|
|
$ |
0.10 |
|
|
$ |
0.08 |
|
|
|
|
|
|
|
|
|
Three Months Ended |
Gross Margin and Gross
Margin Percentage: |
Mar. 31,2022 |
|
Dec. 31,2021 |
|
Sept. 30,2021 |
|
June 30,2021 |
|
Mar. 31,2021 |
|
|
|
|
|
|
|
Operating revenues |
$ |
78,368 |
|
|
$ |
79,175 |
|
|
$ |
78,112 |
|
|
$ |
75,775 |
|
|
$ |
71,256 |
|
Less: Fund management and administration |
|
(15,494 |
) |
|
|
(15,417 |
) |
|
|
(15,181 |
) |
|
|
(14,367 |
) |
|
|
(13,947 |
) |
Gross margin |
$ |
62,874 |
|
|
$ |
63,758 |
|
|
$ |
62,931 |
|
|
$ |
61,408 |
|
|
$ |
57,309 |
|
Gross margin percentage |
|
80.2 |
% |
|
|
80.5 |
% |
|
|
80.6 |
% |
|
|
81.0 |
% |
|
|
80.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Adjusted Operating
Income and Adjusted Operating Income
Margin: |
Mar. 31,2022 |
|
Dec. 31,2021 |
|
Sept. 30,2021 |
|
June 30,2021 |
|
Mar. 31,2021 |
|
|
|
|
|
|
|
Operating revenues |
$ |
78,368 |
|
|
$ |
79,175 |
|
|
$ |
78,112 |
|
|
$ |
75,775 |
|
|
$ |
71,256 |
|
Operating income |
$ |
17,689 |
|
|
$ |
22,563 |
|
|
$ |
24,203 |
|
|
$ |
23,685 |
|
|
$ |
18,607 |
|
Add back: Expenses incurred in response to the activist
campaign |
|
2,435 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted operating income |
$ |
20,124 |
|
|
$ |
22,563 |
|
|
$ |
24,203 |
|
|
$ |
23,685 |
|
|
$ |
18,607 |
|
Adjusted operating income
margin |
|
25.7 |
% |
|
|
28.5 |
% |
|
|
31.0 |
% |
|
|
31.3 |
% |
|
|
26.1 |
% |
|
Three Months Ended |
Adjusted
Total Operating Expenses: |
Mar. 31,2022 |
|
Dec. 31,2021 |
|
Sept. 30,2021 |
|
June 30,2021 |
|
Mar. 31,2021 |
|
|
|
|
|
|
|
Total operating expenses |
$ |
60,679 |
|
|
$ |
56,612 |
|
|
$ |
53,909 |
|
|
$ |
52,090 |
|
|
$ |
52,649 |
|
Deduct: Expenses incurred in response to the activist campaign |
|
(2,435 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted total operating expenses |
$ |
58,244 |
|
|
$ |
56,612 |
|
|
$ |
53,909 |
|
|
$ |
52,090 |
|
|
$ |
52,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Adjusted
Income Before Income Taxes: |
Mar. 31,2022 |
|
Dec. 31,2021 |
|
Sept. 30,2021 |
|
June 30,2021 |
|
Mar. 31,2021 |
|
|
|
|
|
|
|
(Loss)/income
before income taxes |
$ |
(26,974 |
) |
|
$ |
15,271 |
|
|
$ |
6,333 |
|
|
$ |
21,889 |
|
|
$ |
13,178 |
|
Add back/ Deduct: Loss/(gain) on revaluation of deferred
consideration |
|
17,018 |
|
|
|
3,048 |
|
|
|
(1,737 |
) |
|
|
(497 |
) |
|
|
(2,832 |
) |
Add back: Loss recognized upon reduction of a tax-related
indemnification asset |
|
19,890 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,171 |
|
Add back: Losses on securities owned |
|
5,142 |
|
|
|
1,649 |
|
|
|
1,329 |
|
|
|
— |
|
|
|
— |
|
Add back: Expenses incurred in response to the activist
campaign |
|
2,435 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back/(Deduct): Unrealized loss/(gain) recognized on
investments |
|
163 |
|
|
|
— |
|
|
|
— |
|
|
|
(139 |
) |
|
|
(237 |
) |
Add back: Impairments |
|
— |
|
|
|
— |
|
|
|
15,853 |
|
|
|
— |
|
|
|
303 |
|
Deduct: Remeasurement of contingent consideration – sale of
Canadian ETF business |
|
— |
|
|
|
— |
|
|
|
(787 |
) |
|
|
— |
|
|
|
— |
|
Adjusted income
before income taxes |
$ |
17,674 |
|
|
$ |
19,968 |
|
|
$ |
20,991 |
|
|
$ |
21,253 |
|
|
$ |
15,583 |
|
|
|
|
|
|
|
|
|
Three Months Ended |
Adjusted Income Tax
Expense and Adjusted Effective Income Tax Rate: |
Mar. 31,2022 |
|
Dec. 31,2021 |
|
Sept. 30,2021 |
|
June 30,2021 |
|
Mar 31,2021 |
|
|
|
|
|
|
|
Adjusted income before income taxes (above) |
$ |
17,674 |
|
|
$ |
19,968 |
|
|
$ |
20,991 |
|
|
$ |
21,253 |
|
|
$ |
15,583 |
|
Income tax
(benefit)/expense |
$ |
(16,713 |
) |
|
$ |
4,084 |
|
|
$ |
500 |
|
|
$ |
4,259 |
|
|
$ |
(1,969 |
) |
Add back: Tax benefit arising from reduction of a tax-related
indemnification asset |
|
19,890 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,171 |
|
Deduct: Increase in deferred tax asset valuation allowance on
securities owned |
|
(2,010 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back: Tax benefit arising from losses on securities owned |
|
1,249 |
|
|
|
148 |
|
|
|
323 |
|
|
|
— |
|
|
|
— |
|
Add back: Tax benefit arising from expenses incurred in response to
the activist campaign |
|
591 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Add back/(Deduct): Tax benefit/(expense) on unrealized losses and
gains on investments |
|
39 |
|
|
|
— |
|
|
|
— |
|
|
|
(34 |
) |
|
|
(58 |
) |
Add back: Tax benefit arising from impairments |
|
— |
|
|
|
— |
|
|
|
3,851 |
|
|
|
— |
|
|
|
58 |
|
Add back/(Deduct): Tax windfalls/(shortfalls) upon vesting and
exercise of stock-based compensation awards |
|
565 |
|
|
|
— |
|
|
|
— |
|
|
|
233 |
|
|
|
(123 |
) |
Adjusted income tax
expense |
$ |
3,611 |
|
|
$ |
4,232 |
|
|
$ |
4,674 |
|
|
$ |
4,458 |
|
|
$ |
3,079 |
|
Adjusted effective income tax
rate |
|
20.4 |
% |
|
|
21.2 |
% |
|
|
22.3 |
% |
|
|
21.0 |
% |
|
|
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, or the war in
Ukraine, 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 and their
success;
- 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, or the war in
Ukraine, 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, such as the Investor Group,
against us have been costly and may be disruptive and 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, 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.
WisdomTree Investments (NASDAQ:WETF)
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