Surpasses $100 Billion in Total AUM
520bps of Operating Margin Expansion vs. the
Prior Year
Diluted Earnings Per Share of $0.16 ($0.11, as
Adjusted)
13% Annualized Organic Growth Rate Across All
Products
WisdomTree, Inc. (NYSE: WT), a global financial innovator, today
reported financial results for the fourth quarter of 2023.
$19.1 million net income ($18.6(1) million net income, as
adjusted), see “Non-GAAP Financial Measurements” for additional
information.
$100.1 billion of ending AUM, an increase of 6.8% arising
primarily from market appreciation.
$0.3 billion of net outflows, primarily driven by
outflows from our fixed income and commodity products, partly
offset by inflows into our U.S. equity and emerging markets
products.
0.36% average advisory fee, unchanged from the prior
quarter.
$90.8 million of operating revenues, essentially
unchanged from the prior quarter.
79.7% gross margin(1), a 0.4 point decrease from the
prior quarter due to higher fund costs.
28.7% operating income margin, an 0.8 point decrease
compared to our operating margin of 29.5% in the prior quarter
primarily due to higher expenses.
Repurchase of Series C non-voting preferred shares
convertible into 13.1 million shares of common stock from Gold
Bullion Holdings (Jersey) Limited (“GBH”), a subsidiary of the
World Gold Council, for aggregate cash consideration of
approximately $84.4 million, with $40.0 million paid on the closing
date and the remainder of the purchase price payable in equal
annual installments on the first, second and third anniversaries of
the closing date, with no requirement to pay interest. The
repurchase price per share equated to $6.02 per share when taking
into consideration the interest-free financing element of the
transaction.
$0.03 quarterly dividend declared, payable on
February 28, 2024 to stockholders of record as of the close of
business on February 14, 2024.
Update from Jarrett Lilien, WisdomTree COO
and President
“In 2023, we generated over $10 billion of
net inflows and extended our positive inflow streak to three
consecutive years. This is the direct result of consistent hard
work and our success in deepening relationships with advisors – in
2023 we grew our client base by 20% and also saw a 20% increase in
the number of clients holding multiple WisdomTree products. Our
strategy to expand our client base while deepening wallet share
penetration, coupled with the success of our Portfolio Solutions
initiative, is compounding growth and proving to be a formula for
continued momentum in our organic growth for 2024 and years to
come.”
Update from Jonathan Steinberg, WisdomTree
CEO
“WisdomTree’s strong execution was on
display once again in 2023, as demonstrated by our industry-leading
organic growth. Our proactive management actions coupled with
continued scale benefits drove 540 basis points of adjusted
operating margin expansion year-over-year.
I’m thrilled that WisdomTree achieved $100
billion of global assets under management for the first time in
company history, and I’m confident that it will take significantly
less time to gather the next $100 billion in the years ahead – this
next phase for WisdomTree will be driven by continued organic
growth from adding new clients, the launch of new products,
deepening wallet share with models, and our continued leadership in
tokenization and blockchain-enabled finance.”
OPERATING AND FINANCIAL
HIGHLIGHTS
Three Months Ended
Dec. 31, 2023
Sept. 30, 2023
June 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Consolidated
Operating Highlights ($ in billions):
AUM—end of period
$
100.1
$
93.7
$
93.7
$
90.7
$
82.0
Net (outflows)/inflows
$
(0.3
)
$
2.0
$
2.3
$
6.3
$
5.3
Average AUM
$
96.6
$
95.7
$
91.6
$
87.5
$
77.6
Average advisory fee
0.36
%
0.36
%
0.36
%
0.36
%
0.36
%
Consolidated
Financial Highlights ($ in millions, except per share amounts):
Operating revenues
$
90.8
$
90.4
$
85.7
$
82.0
$
73.3
Net income/(loss)
$
19.1
$
13.0
$
54.3
$
16.2
$
(28.3
)
Diluted earnings/(loss) per share
$
0.16
$
0.07
$
0.32
$
0.10
$
(0.20
)
Operating income margin
28.7
%
29.5
%
21.2
%
20.2
%
16.0
%
As Adjusted
(Non-GAAP(1)):
Gross margin
79.7
%
80.1
%
79.3
%
79.1
%
76.9
%
Net income, as adjusted
$
18.6
$
18.0
$
14.9
$
11.2
$
7.0
Diluted earnings per share, as
adjusted
$
0.11
$
0.10
$
0.09
$
0.07
$
0.04
Operating income margin, as adjusted
28.7
%
29.5
%
26.9
%
21.4
%
16.0
%
RECENT BUSINESS DEVELOPMENTS
Company News
- In January 2024, our Board of Directors appointed (i) Smita
Conjeevaram to replace Win Neuger as Chair of the Compensation
Committee and (ii) Shamla Naidoo to replace Smita Conjeevaram as
Chair of the Nominating and Governance Committee of the Board of
Directors. Mr. Neuger will continue to serve as Chair of the Board
and a member of the Compensation Committee and Ms. Conjeevaram will
continue to serve as a member of the Nominating and Governance
Committee.
- In November 2023, we completed the repurchase of our Series C
non-voting preferred shares convertible into 13.1 million shares of
WisdomTree common stock from a subsidiary of the World Gold
Council.
- In December 2023, WisdomTree was named as a 2023 “Best Places
to Work in Money Management” by Pensions & Investments for the
fourth consecutive year; and we surpassed $100.0 billion in total
global assets under management.
Product News
- In November 2023, we launched the WisdomTree UK Quality
Dividend Growth UCITS ETF (UGRW) on the London Stock Exchange.
- In December 2023, we launched the WisdomTree Bianco Total
Return Fund (WTBN) on the NASDAQ; we launched the WisdomTree
Megatrends UCITS ETF (WMGT) on the London Stock Exchange and B�rse
Xetra; our UCITS ETF platform surpassed $5.0 billion in assets
under management; and we launched three blockchain-enabled funds
available on WisdomTree Prime™, each leveraging research insights
from Professor Jeremy Siegel, Senior Economist to WisdomTree.
- In January 2024, in the U.S. the WisdomTree Bitcoin Fund (BTCW)
launched on the Cboe BZX Exchange and in February 2024 the
management fee of BTCW was reduced by 5 basis points, lowering the
total expense ratio from 0.30% to 0.25%. For a six-month period
that commenced on January 11, 2024, the entire fee is being waived
for the first $1.0 billion of BTCW’s assets.
- In January 2024, we also launched the WisdomTree U.S. MidCap
Quality Growth Fund (MGRW) and the WisdomTree U.S. SmallCap Quality
Growth Fund (SGRW); and we listed the WisdomTree Megatrends UCITS
ETF (WMGT) on the Borsa Italiana. In addition, in Europe we reduced
fees for the WisdomTree European Physical Bitcoin ETP (BTCW) from
0.95% to 0.35%; fee reductions apply to our other ETPs in
WisdomTree’s European Crypto ETP range as well.
WISDOMTREE, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per
share amounts)
(Unaudited)
Three Months Ended
Years Ended
Dec. 31, 2023
Sept. 30, 2023
June 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Dec. 31, 2023
Dec. 31, 2022
Operating Revenues:
Advisory fees
$
86,988
$
86,598
$
82,004
$
77,637
$
70,913
$
333,227
$
293,632
Other income
3,856
3,825
3,720
4,407
2,397
15,808
7,713
Total revenues
90,844
90,423
85,724
82,044
73,310
349,035
301,345
Operating Expenses:
Compensation and benefits
27,860
27,955
26,319
27,398
24,831
109,532
97,897
Fund management and administration
18,445
18,023
17,727
17,153
16,906
71,348
64,761
Marketing and advertising
4,951
3,833
4,465
4,007
4,240
17,256
15,302
Sales and business development
3,881
3,383
3,326
2,994
3,407
13,584
11,871
Contractual gold payments
—
—
1,583
4,486
4,107
6,069
17,108
Professional fees
3,201
3,719
8,334
3,715
2,666
18,969
13,800
Occupancy, communications and
equipment
1,208
1,203
1,172
1,101
1,110
4,684
3,898
Depreciation and amortization
335
307
121
109
104
872
262
Third-party distribution fees
2,549
2,694
1,881
2,253
1,793
9,377
7,656
Other
2,379
2,601
2,615
2,257
2,427
9,852
8,705
Total operating expenses
64,809
63,718
67,543
65,473
61,591
261,543
241,260
Operating income
26,035
26,705
18,181
16,571
11,719
87,492
60,085
Other Income/(Expenses):
Interest expense
(3,758
)
(3,461
)
(4,021
)
(4,002
)
(3,736
)
(15,242
)
(14,935
)
Gain/(loss) on revaluation/termination of
deferred consideration—gold payments
—
—
41,361
20,592
(35,423
)
61,953
27,765
Interest income
1,225
791
1,000
1,083
945
4,099
3,320
Impairments
(339
)
(2,703
)
—
(4,900
)
—
(7,942
)
—
Loss on extinguishment of convertible
notes
—
—
—
(9,721
)
—
(9,721
)
—
Other gains and losses, net
1,602
(2,512
)
1,286
(2,007
)
(1,815
)
(1,631
)
(36,285
)
Income/(loss) before income taxes
24,765
18,820
57,807
17,616
(28,310
)
119,008
39,950
Income tax expense/(benefit)
5,688
5,836
3,555
1,383
(21
)
16,462
(10,734
)
Net income/(loss)
$
19,077
$
12,984
$
54,252
$
16,233
$
(28,289
)
$
102,546
$
50,684
Earnings/(loss) per share—basic
$
0.16(2
)
$
0.07(2
)
$
0.32(2
)
$
0.10(2
)
$
(0.20
)
$
0.66(2
)
$
0.31(2
)
Earnings/(loss) per share—diluted
$
0.16(2
)
$
0.07
$
0.32
$
0.10
$
(0.20
)
$
0.64(2
)
$
0.31(2
)
Weighted average common shares—basic
145,310
145,284
144,351
143,862
143,126
144,707
143,020
Weighted average common shares—diluted
171,703
177,140
170,672
159,887
143,126
170,413
158,914
As Adjusted
(Non-GAAP(1))
Total operating expenses
$
64,809
$
63,718
$
62,630
$
64,506
$
61,591
Operating income
$
26,035
$
26,705
$
23,094
$
17,538
$
11,719
Income before income taxes
$
23,908
$
23,902
$
19,752
$
14,485
$
8,615
Income tax expense
$
5,342
$
5,854
$
4,833
$
3,287
$
1,588
Net income
$
18,566
$
18,048
$
14,919
$
11,198
$
7,027
Earnings per share—diluted
$
0.11
$
0.10
$
0.09
$
0.07
$
0.04
Weighted average common shares—diluted
171,703
177,140
170,672
159,887
159,478
QUARTERLY HIGHLIGHTS
Operating Revenues
- Operating revenues were essentially unchanged from the third
quarter of 2023 and increased 23.9% from the fourth quarter of 2022
primarily due to higher average AUM.
- Our average advisory fee was 0.36% during the fourth quarter of
2023, the third quarter of 2023 and the fourth quarter of 2022,
respectively.
Operating Expenses
- Operating expenses increased 1.7% from the third quarter of
2023 primarily due to higher marketing expenses, sales and business
development expenses and fund management and administration costs.
These increases were partly offset by lower professional fees.
- Operating expenses increased 5.2% from the fourth quarter of
2022 primarily due to higher stock-based compensation and
headcount, fund management and administration costs, third party
distribution expenses and marketing expenses. These increases were
partly offset by the termination of our deferred consideration—gold
payments obligation on May 10, 2023.
Other Income/(Expenses)
- Interest expense increased 8.6% from the third quarter of 2023,
primarily due to the recognition of imputed interest on our
obligation payable to GBH. Interest expense was essentially
unchanged from the fourth quarter of 2022, as the increase related
to imputed interest on our obligation payable to GBH was offset by
a lower level of debt outstanding.
- Interest income increased 54.9% from the third quarter of 2023
and 29.6% from the fourth quarter of 2022 due to a higher level of
interest-earning assets.
- During the fourth quarter of 2023, we recognized a non-cash
impairment charge of $0.3 million on our investment in Securrency,
Inc., as we marked our investment to net realizable value in
connection with the closing of the sale of Securrency, Inc. to an
unrelated third party.
- Other gains and losses, net was a gain of $1.6 million for the
fourth quarter of 2023. This quarter includes gains of $0.5 million
and $1.0 million on our financial instruments and our investments,
respectively. Gains and losses also generally arise from the sale
of gold earned from management fees paid by our physically-backed
gold exchange-traded products (“ETPs”), foreign exchange
fluctuations and other miscellaneous items.
Income Taxes
- Our effective income tax rate for the fourth quarter of 2023
was 23.0%, resulting in income tax expense of $5.7 million. The
effective tax rate differs from the federal statutory rate of 21.0%
primarily due to non-deductible executive compensation and state
and local taxes, partly offset by a lower tax rate on foreign
earnings.
- Our adjusted effective income tax rate for the fourth quarter
was 22.3%(1).
ANNUAL HIGHLIGHTS
- Operating revenues increased 15.8% as compared to 2022 due to
higher average AUM and higher other income from large flows from
some of our European products, partly offset by a lower average
advisory fee.
- Operating expenses increased 8.4% as compared to 2022 primarily
due to higher stock-based compensation and headcount, fund
management and administration costs, professional fees, marketing
expenses, third-party distribution fees, sales and business
development expenses and other expenses. These increases were
partly offset by the termination of our deferred consideration—gold
payments obligation on May 10, 2023.
- Significant items reported in other income/(expense) in 2023
include: an increase in interest income of 23.5% due to a higher
level of interest-earning assets, a non-cash gain on
revaluation/termination of deferred consideration of $62.0 million
during the first and second quarters; loss on extinguishment of
convertible notes of $9.7 million arising from the repurchase of
$115.0 million in aggregate principal amount of our 4.25%
Convertible Senior Notes (the “2020 Notes”) in the first quarter;
non-cash impairment charges totaling $7.9 million, primarily on our
investments in Securrency, Inc.; a non-cash charge of $1.4 million
arising from the release of tax-related indemnification assets upon
the expiration of the statute of limitations (an equal and
offsetting benefit was recognized in income tax expense); and
losses on our financial instruments owned and investments of $0.7
million. Gains and losses also generally arise from the sale of
gold earned on management fees paid by our physically-backed gold
ETPs, foreign exchange fluctuations and other miscellaneous
items.
- Our effective income tax rate for 2023 was 13.8%, resulting in
income tax expense of $16.5 million. The effective tax rate differs
from the federal statutory rate of 21.0% primarily due to a
non-taxable gain on revaluation/termination of deferred
consideration, a reduction in unrecognized tax benefits associated
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 a non-deductible loss on extinguishment of the
2020 Notes during the first quarter of 2023, an increase in the
deferred tax asset valuation allowance on losses recognized on our
investments and non-deductible executive compensation.
CONFERENCE CALL DIAL-IN AND WEBCAST DETAILS
WisdomTree will discuss its results and operational highlights
during a live webcast on Friday, February 2, 2024 at 11:00 a.m. ET,
which can be accessed using the following link:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=CoAvcnGg.
Participants also can dial in using the following numbers: (877)
407-9210 or (201) 689-8049. Click here to access the participant
international toll-free access numbers. To avoid delays, we
encourage participants to log in or dial into the conference call
10 minutes ahead of the scheduled start time. All earnings
materials and the webcast can be accessed through WisdomTree’s
investor relations website at https://ir.wisdomtree.com. A replay
of the webcast will also be available shortly after the call.
About WisdomTree
WisdomTree is a global financial innovator, offering a
well-diversified suite of exchange-traded products (ETPs), models,
solutions and products leveraging blockchain-enabled technology. We
empower investors and consumers to shape their future and support
financial professionals to better serve their clients and grow
their businesses. WisdomTree is leveraging the latest financial
infrastructure to create products that provide access, transparency
and an enhanced user experience. Building on our heritage of
innovation, we are also developing and have launched
next-generation digital products, services and structures,
including digital or blockchain-enabled mutual funds and tokenized
assets, as well as our blockchain-native digital wallet, WisdomTree
Prime™.*
* The WisdomTree Prime digital wallet and digital asset services
are made available through WisdomTree Digital Movement, Inc. (NMLS
ID: 2372500) in select U.S. jurisdictions and may be limited where
prohibited by law. Visit https://www.wisdomtreeprime.com or the
WisdomTree Prime mobile app for more information.
WisdomTree currently has approximately $100.6 billion in assets
under management globally.
For more information about WisdomTree and WisdomTree Prime™,
visit: https://www.wisdomtree.com.
Please visit us on X, formerly known as Twitter, at
@WisdomTreeNews.
WisdomTree® is the marketing name for WisdomTree, Inc. and its
subsidiaries worldwide.
PRODUCTS AND SERVICES AVAILABLE VIA WISDOMTREE PRIME:
NOT FDIC INSURED | NO BANK GUARANTEE | NOT A BANK DEPOSIT |
MAY LOSE VALUE | NOT SIPC PROTECTED | NOT INSURED BY ANY GOVERNMENT
AGENCY
The products and services available through the WisdomTree Prime
app are not endorsed, indemnified or guaranteed by any regulatory
agency.
- See “Non-GAAP Financial Measurements.”
- 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. In addition, the three months and year
ended December 31, 2023 includes a gain of $7,966 recognized upon
the repurchase of our Series C non-voting preferred shares
convertible into 13.1 million shares of common stock from GBH,
which is excluded from net income, but required to be added to net
income to arrive at income available to common stockholders in the
calculation of EPS. This gain is excluded from our EPS when
computed on a non-GAAP basis.
WISDOMTREE, INC. AND
SUBSIDIARIES
KEY OPERATING
STATISTICS
(Unaudited)
Three Months Ended
Dec. 31, 2023
Sept. 30, 2023
June 30, 2023
Mar. 31, 2023
Dec. 31, 2022
GLOBAL ETPs ($ in
millions)
Beginning of period assets
$
93,735
$
93,666
$
90,740
$
81,993
$
70,878
(Outflows)/inflows
(255
)
1,983
2,327
6,341
5,264
Market appreciation/(depreciation)
6,644
(1,914
)
599
2,406
5,851
End of period assets
$
100,124
$
93,735
$
93,666
$
90,740
$
81,993
Average assets during the period
$
96,557
$
95,743
$
91,578
$
87,508
$
77,649
Average advisory fee during the period
0.36
%
0.36
%
0.36
%
0.36
%
0.36
%
Revenue days
92
92
91
90
92
Number of ETFs—end of the period
337
344
344
341
339
U.S. LISTED ETFs
($ in millions)
Beginning of period assets
$
68,018
$
65,903
$
61,283
$
55,973
$
48,043
(Outflows)/inflows
(67
)
3,601
3,249
4,012
4,232
Market appreciation/(depreciation)
4,535
(1,486
)
1,371
1,298
3,698
End of period assets
$
72,486
$
68,018
$
65,903
$
61,283
$
55,973
Average assets during the period
$
69,717
$
68,008
$
62,712
$
59,430
$
53,655
Number of ETFs—end of the period
76
80
80
80
79
EUROPEAN LISTED
ETPs ($ in millions)
Beginning of period assets
$
25,717
$
27,763
$
29,457
$
26,020
$
22,835
(Outflows)/inflows
(188
)
(1,618
)
(922
)
2,329
1,032
Market appreciation/(depreciation)
2,109
(428
)
(772
)
1,108
2,153
End of period assets
$
27,638
$
25,717
$
27,763
$
29,457
$
26,020
Average assets during the period
$
26,840
$
27,735
$
28,866
$
28,078
$
23,994
Number of ETPs—end of the period
261
264
264
261
260
PRODUCT
CATEGORIES ($ in millions)
U.S. Equity
Beginning of period assets
$
25,644
$
26,001
$
24,534
$
24,112
$
20,952
Inflows/(outflows)
487
864
414
(149
)
1,022
Market appreciation/(depreciation)
3,025
(1,221
)
1,053
571
2,138
End of period assets
$
29,156
$
25,644
$
26,001
$
24,534
$
24,112
Average assets during the period
$
26,844
$
26,501
$
24,732
$
24,725
$
23,492
Commodity & Currency
Beginning of period assets
$
20,465
$
22,384
$
24,924
$
22,097
$
19,561
(Outflows)/inflows
(449
)
(1,815
)
(1,513
)
2,003
796
Market appreciation/(depreciation)
1,320
(104
)
(1,027
)
824
1,740
End of period assets
$
21,336
$
20,465
$
22,384
$
24,924
$
22,097
Average assets during the period
$
21,254
$
22,278
$
24,033
$
23,807
$
20,345
Fixed Income
Beginning of period assets
$
21,797
$
20,215
$
18,708
$
15,273
$
11,695
(Outflows)/inflows
(715
)
1,671
1,471
3,513
3,392
Market appreciation/(depreciation)
115
(89
)
36
(78
)
186
End of period assets
$
21,197
$
21,797
$
20,215
$
18,708
$
15,273
Average assets during the period
$
21,889
$
20,965
$
19,185
$
17,176
$
13,962
Three Months Ended
Dec. 31, 2023
Sept. 30, 2023
June 30, 2023
Mar. 31, 2023
Dec. 31, 2022
International Developed Market
Equity
Beginning of period assets
$
13,902
$
13,423
$
11,433
$
10,195
$
9,183
Inflows/(outflows)
9
798
1,593
450
40
Market appreciation/(depreciation)
1,192
(319
)
397
788
972
End of period assets
$
15,103
$
13,902
$
13,423
$
11,433
$
10,195
Average assets during the period
$
14,267
$
13,873
$
12,276
$
10,879
$
10,000
Emerging Market Equity
Beginning of period assets
$
9,569
$
9,191
$
8,811
$
8,116
$
7,495
Inflows/(outflows)
412
451
329
486
(53
)
Market appreciation/(depreciation)
745
(73
)
51
209
674
End of period assets
$
10,726
$
9,569
$
9,191
$
8,811
$
8,116
Average assets during the period
$
9,833
$
9,652
$
8,998
$
8,666
$
7,770
Leveraged & Inverse
Beginning of period assets
$
1,781
$
1,864
$
1,785
$
1,754
$
1,523
(Outflows)/inflows
(59
)
(1
)
12
43
59
Market appreciation/(depreciation)
93
(82
)
67
(12
)
172
End of period assets
$
1,815
$
1,781
$
1,864
$
1,785
$
1,754
Average assets during the period
$
1,803
$
1,894
$
1,798
$
1,757
$
1,623
Cryptocurrency
Beginning of period assets
$
243
$
248
$
239
$
136
$
163
Inflows/(outflows)
28
10
(1
)
13
(4
)
Market appreciation/(depreciation)
143
(15
)
10
90
(23
)
End of period assets
$
414
$
243
$
248
$
239
$
136
Average assets during the period
$
325
$
238
$
236
$
190
$
152
Alternatives
Beginning of period assets
$
334
$
340
$
306
$
310
$
306
Inflows/(outflows)
32
5
22
(18
)
12
Market appreciation/(depreciation)
11
(11
)
12
14
(8
)
End of period assets
$
377
$
334
$
340
$
306
$
310
Average assets during the period
$
342
$
342
$
320
$
308
$
305
Headcount
303
299
291
279
273
Note: Previously issued statistics may be restated due to fund
closures and trade adjustments
Source: WisdomTree
WISDOMTREE, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands, except per
share amounts)
Dec. 31, 2023
Dec. 31, 2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
129,305
$
132,101
Financial instruments owned, at fair
value
58,722
126,239
Accounts receivable
35,473
30,549
Prepaid expenses
5,258
4,684
Other current assets
1,036
390
Total current assets
229,794
293,963
Fixed assets, net
427
544
Indemnification receivable
—
1,353
Securities held-to-maturity
230
259
Deferred tax assets, net
11,057
10,536
Investments
9,684
35,721
Right of use assets—operating leases
563
1,449
Goodwill
86,841
85,856
Intangible assets, net
605,082
603,567
Other noncurrent assets
459
571
Total assets
$
944,137
$
1,033,819
LIABILITIES AND STOCKHOLDERS’
EQUITY
LIABILITIES
Current liabilities:
Fund management and administration
payable
$
30,085
$
36,521
Compensation and benefits payable
38,111
24,121
Payable to Gold Bullion Holdings (Jersey)
Limited (“GBH”)
14,804
—
Income taxes payable
3,866
1,599
Operating lease liabilities
578
1,125
Convertible notes—current
—
59,197
Deferred consideration—gold payments
—
16,796
Accounts payable and other liabilities
15,772
9,075
Total current liabilities
103,216
148,434
Convertible notes—long term
274,888
262,019
Payable to GBH
24,328
—
Deferred consideration—gold payments
—
183,494
Operating lease liabilities
—
339
Other noncurrent liabilities
—
1,353
Total liabilities
402,432
595,639
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; 400,000
shares authorized:
Issued and outstanding: 150,330 and
146,517 at December 31, 2023 and 2022, respectively
1,503
1,465
Additional paid-in capital
312,440
291,847
Accumulated other comprehensive loss
(548
)
(1,420
)
Retained earnings
95,741
13,719
Total stockholders’ equity
409,136
305,611
Total liabilities and stockholders’
equity
$
944,137
$
1,033,819
WISDOMTREE, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(Unaudited)
Years Ended,
Dec. 31, 2023
Dec. 31, 2022
Cash flows from operating
activities:
Net income
$
102,546
$
50,684
Adjustments to reconcile net income to net
cash provided by operating activities
Gain on revaluation/termination of
deferred consideration—gold payments
(61,953
)
(27,765
)
Advisory and license fees paid in gold,
other precious metals and cryptocurrency
(49,400
)
(57,290
)
Stock-based compensation
16,190
10,385
Loss on extinguishment of convertible
notes
9,721
—
Impairments
7,942
—
Contractual gold payments
6,069
17,108
Amortization of issuance costs—convertible
notes
1,817
2,592
Amortization of right of use asset
1,285
963
Depreciation and amortization
872
262
Losses on financial instruments owned, at
fair value
517
16,516
Deferred income taxes
(481
)
(1,296
)
Imputed interest on payable to GBH
297
—
Losses on investments
242
—
Other
—
386
Changes in operating assets and
liabilities:
Accounts receivable
(6,212
)
(720
)
Prepaid expenses
(518
)
(808
)
Gold and other precious metals
42,150
41,847
Other assets
281
(309
)
Fund management and administration
payable
5,837
3,723
Compensation and benefits payable
1,209
4,485
Income taxes payable
2,260
(2,308
)
Operating lease liabilities
(1,284
)
(965
)
Accounts payable and other liabilities
6,213
(33
)
Net cash provided by operating
activities
85,600
57,457
Cash flows from investing
activities:
Purchase of financial instruments owned,
at fair value
(57,364
)
(67,734
)
Purchase of investments
(11,228
)
(21,863
)
Cash paid—software development
(2,149
)
(2,370
)
Cash paid—acquisition of Securrency
Transfers, Inc. (net of cash acquired)
(985
)
—
Purchase of fixed assets
(113
)
(220
)
Proceeds from the sale of financial
instruments owned, at fair value
123,564
52,115
Proceeds from the sale of investment in
Securrency, Inc.
28,818
—
Receipt of contingent consideration—Sale
of Canadian ETF business
1,477
—
Proceeds from held-to-maturity securities
maturing or called prior to maturity
29
45
Net cash provided by/(used in) investing
activities
82,049
(40,027
)
Cash flows from financing
activities:
Repurchase and maturity of convertible
notes
(184,272
)
—
Termination of deferred consideration—gold
payments
(50,005
)
—
Repurchase of Series C Non-Voting
Convertible Preferred Stock
(40,000
)
—
Dividends paid
(20,144
)
(19,362
)
Shares repurchased
(3,570
)
(3,418
)
Issuance costs—convertible notes
(3,548
)
—
Issuance costs—Series C Non-Voting
Convertible Preferred Stock
(97
)
—
Proceeds from the issuance of convertible
notes
130,000
—
Net cash used in financing activities
(171,636
)
(22,780
)
Increase/(decrease) in cash flow due to
changes in foreign exchange rate
1,191
(3,258
)
Net decrease in cash and cash
equivalents
(2,796
)
(8,608
)
Cash and cash equivalents—beginning of
year
132,101
140,709
Cash and cash equivalents—end of
period
$
129,305
$
132,101
Supplemental disclosure of cash flow
information:
Cash paid for income taxes
$
16,156
$
12,500
Cash paid for interest
$
10,709
$
12,313
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:
Gains or losses on financial instruments owned: We
account for our financial instruments owned as trading securities,
which requires these instruments to be measured at fair value with
gains and losses reported in net income. We exclude these items
when calculating our non-GAAP financial measurements as 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.
Imputed interest on our payable to the Gold Bullion Holdings
(Jersey) Limited (“GBH”): During the fourth quarter of 2023, we
repurchased our Series C Non-Voting Convertible Preferred Stock
which were convertible into 13.1 million shares of WisdomTree
common stock, from GBH, a subsidiary of the World Gold Council, for
aggregate cash consideration of approximately $84.4 million. Under
the terms of the transaction, we paid GBH $40.0 million on the
closing date, with the remainder of the purchase price payable in
equal annual installments on the first, second and third
anniversaries of the closing date, with no requirement to pay
interest. Under US GAAP, the obligation is recorded at its present
value utilizing a market rate of interest on the closing date of
7.0% and the corresponding discount is amortized as interest
expense pursuant to the effective interest method of accounting
over the life of the obligation. We exclude this item when
calculating our non-GAAP financial measurements as recognition of
interest expense is non-cash and contrary to the stated terms of
our obligation.
Other items: Unrealized gains or losses on the
revaluation/termination of deferred consideration—gold payments,
which we terminated in the second quarter of 2023, loss on
extinguishment of our convertible notes, impairments, remeasurement
of contingent consideration payable to us from the sale of our
former Canadian ETF business, unrealized gains and losses
recognized on our investments, changes in deferred tax asset
valuation allowance, expenses incurred in response to an activist
campaign and litigation expenses associated with certain provisions
of our Stockholder Rights Agreement dated as of March 17, 2023, as
amended, with Continental Stock Transfer & Trust Company, as
Rights Agent, 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.
GAAP to NON-GAAP
RECONCILIATION (CONSOLIDATED)
(in thousands)
(Unaudited)
Three Months Ended
Adjusted Net Income and Diluted
Earnings per Share:
Dec. 31, 2023
Sept. 30, 2023
June 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Net income/(loss), as reported
$
19,077
$
12,984
$
54,252
$
16,233
$
(28,289
)
(Deduct)/add back: (Gains)/losses on
financial instruments owned, net of income taxes
(370
)
1,479
762
(1,479
)
669
(Deduct)/add back: (Gains)/losses
recognized on investments, net of income taxes
(336
)
323
(2,346
)
2,966
469
(Deduct)/add back: (Decrease)/increase in
deferred tax asset valuation allowance on financial instruments
owned and investments
(280
)
1,234
(508
)
1,667
364
Add back: Impairments, net of income
taxes
257
2,046
—
3,710
—
Add back: Imputed interest on payable to
GBH, net of income taxes
224
—
—
—
—
(Deduct)/add back: Tax
(windfalls)/shortfalls upon vesting and exercise of stock-based
compensation awards
(6
)
(18
)
33
(185
)
—
(Deduct)/add back: (Gain)/loss on
revaluation/termination of deferred consideration—gold payments
—
—
(41,361
)
(20,592
)
35,423
Add back: Expenses incurred in response to
an activist campaign, net of income taxes
—
—
3,720
732
—
Add back: Litigation expenses associated
with certain provisions of the Stockholder Rights Agreement, net of
income taxes
—
—
367
—
—
Add back: Loss on extinguishment of
convertible notes, net of income taxes
—
—
—
9,623
—
Deduct: Remeasurement of contingent
consideration—sale of former Canadian ETF business
—
—
—
(1,477
)
—
Deduct: Decrease in deferred tax asset
valuation allowance on net operating losses of a European
subsidiary
—
—
—
—
(1,609
)
Adjusted net income
$
18,566
$
18,048
$
14,919
$
11,198
$
7,027
Weighted average common shares—diluted
171,703
177,140
170,672
159,887
159,478
Adjusted earnings per share—diluted
$
0.11
$
0.10
$
0.09
$
0.07
$
0.04
Three Months Ended
Gross Margin and Gross Margin
Percentage:
Dec. 31, 2023
Sept. 30, 2023
June 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Operating revenues
$
90,844
$
90,423
$
85,724
$
82,044
$
73,310
Less: Fund management and
administration
(18,445
)
(18,023
)
(17,727
)
(17,153
)
(16,906
)
Gross margin
$
72,399
$
72,400
$
67,997
$
64,891
$
56,404
Gross margin percentage
79.7
%
80.1
%
79.3
%
79.1
%
76.9
%
Three Months Ended
Adjusted Operating Income and Adjusted
Operating Income Margin:
Dec. 31, 2023
Sept. 30, 2023
June 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Operating revenues
$
90,844
$
90,423
$
85,724
$
82,044
$
73,310
Operating income
$
26,035
$
26,705
$
18,181
$
16,571
$
11,719
Add back: Expenses incurred in response to
an activist campaign
—
—
4,913
967
—
Adjusted operating income
$
26,035
$
26,705
$
23,094
$
17,538
$
11,719
Adjusted operating income margin
28.7
%
29.5
%
26.9
%
21.4
%
16.0
%
Three Months Ended
Adjusted Total Operating
Expenses:
Dec. 31, 2023
Sept. 30, 2023
June 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Total operating expenses
$
64,809
$
63,718
$
67,543
$
65,473
$
61,591
Deduct: Expenses incurred in response to
an activist campaign
—
—
(4,913
)
(967
)
—
Adjusted total operating expenses
$
64,809
$
63,718
$
62,630
$
64,506
$
61,591
Three Months Ended
Adjusted Income Before Income
Taxes:
Dec. 31, 2023
Sept. 30, 2023
June 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Income/(loss) before income taxes
$
24,765
$
18,820
$
57,807
$
17,616
$
(28,310
)
(Deduct)/add back: (Gains)/losses
recognized on investments
(1,003
)
426
(3,099
)
3,918
619
(Deduct)/add back: (Gains)/losses on
financial instruments owned
(489
)
1,953
1,007
(1,954
)
883
Add back: Impairments
339
2,703
—
4,900
—
Add back: Imputed interest on payable to
GBH
296
—
—
—
—
(Deduct)/add back: (Gain)/loss on
revaluation/termination of deferred consideration—gold payments
—
—
(41,361
)
(20,592
)
35,423
Add back: Expenses incurred in response to
an activist campaign
—
—
4,913
967
—
Add back: Litigation expenses associated
with certain provisions of the Stockholder Rights Agreement
—
—
485
—
—
Add back: Loss on extinguishment of
convertible notes
—
—
—
9,721
—
Deduct: Remeasurement of contingent
consideration—sale of former Canadian ETF business
—
—
—
(1,477
)
—
Add back: Loss recognized upon reduction
of a tax-related indemnification asset
—
—
—
1,386
—
Adjusted income before income taxes
$
23,908
$
23,902
$
19,752
$
14,485
$
8,615
Three Months Ended
Adjusted Income Tax Expense and
Adjusted Effective Income Tax Rate:
Dec. 31, 2023
Sept. 30, 2023
June 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Adjusted income before income taxes
(above)
$
23,908
$
23,902
$
19,752
$
14,485
$
8,615
Income tax expense/(benefit)
$
5,688
$
5,836
$
3,555
$
1,383
$
(21
)
(Deduct)/add back: Tax (expense)/benefit
on gains and losses on investments
(667
)
103
(753
)
952
150
Add back/(deduct): Decrease/(increase) in
deferred tax asset valuation allowance on financial instruments
owned and investments
280
(1,234
)
508
(1,667
)
(364
)
(Deduct)/add back: Tax (expense)/benefit
arising from (gains)/losses on financial instruments owned
(119
)
474
245
(475
)
214
Add back: Tax benefit arising from
impairments
82
657
—
1,190
—
Add back: Tax benefit on imputed
interest
72
—
—
—
—
Add back/(deduct): Tax
windfalls/(shortfalls) upon vesting and exercise of stock-based
compensation awards
6
18
(33
)
185
—
Add back: Tax benefit arising from
expenses incurred in response to an activist campaign
—
—
1,193
235
—
Add back: Tax benefit arising from
litigation expenses associated with certain provisions of the
Stockholder Rights Agreement
—
—
118
—
—
Add back: Decrease in deferred tax asset
valuation allowance on net operating losses of a European
subsidiary
—
—
—
—
1,609
Add back: Tax benefit arising from
extinguishment of convertible notes
—
—
—
98
—
Add back: Tax benefit arising from
reduction of a tax-related indemnification asset
—
—
—
1,386
—
Adjusted income tax expense
$
5,342
$
5,854
$
4,833
$
3,287
$
1,588
Adjusted effective income tax rate
22.3
%
24.5
%
24.5
%
22.7
%
18.4
%
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 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:
- 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
potential for 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 strategy relating to
digital assets and blockchain-enabled financial services, including
WisdomTree Prime™, and achieve its objectives;
- our ability to successfully operate and expand our business in
non-U.S. markets;
- the effect of laws and regulations that apply to our business;
and
- actions of activist stockholders.
Our business is subject to many risks and uncertainties,
including without limitation:
- declining prices of securities, gold and other precious metals
and other commodities and changes in interest rates and general
market conditions 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 or war conflict, 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;
- we face increased operational, regulatory, financial and other
risks as a result of conducting our business internationally;
- 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, which 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,
2022.
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.
Category: Business Update
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240202727388/en/
Investor Relations Jeremy Campbell +1.646.522.2602
jeremy.campbell@wisdomtree.com
Corporate Communications Jessica Zaloom +1.917.267.3735
jzaloom@wisdomtree.com
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