WisdomTree Announces First Quarter 2024 Results

April 26, 2024

NEW YORK–(BUSINESS WIRE)–WisdomTree, Inc. (NYSE: WT), a global financial innovator, today reported financial results for the first quarter of 2024.

$22.1 million of net income ($20.3(1) million of net income, as adjusted), see “Non-GAAP Financial Measurements” for additional information.

$107.2 billion of ending AUM, an increase of 7.1% from the prior quarter arising from market appreciation and net inflows.

$2.0 billion of net inflows, primarily driven by inflows into our international developed equity and U.S. equity products.

0.36% average advisory fee, unchanged from the prior quarter.

$96.8 million of operating revenues, an increase of 6.6% from the prior quarter primarily due to higher average AUM.

79.4% gross margin(1), a 0.3 point decrease from the prior quarter due to higher fund costs.

28.9% operating income margin (29.6%(1) as adjusted), a 0.2 point increase (0.9 point increase, as adjusted(1)) compared to our operating margin of 28.7% in the prior quarter primarily due to higher revenues.

$0.03 quarterly dividend declared, payable on May 22, 2024 to stockholders of record as of the close of business on May 8, 2024.

Update from Jonathan Steinberg, WisdomTree CEO

“It has been a great start to the year with record AUM, nearly $2 billion of net inflows, and 820 basis points of margin expansion (as adjusted), driving a 71% increase in our earnings per share as compared to the first quarter of last year. Importantly, we expect that momentum to continue as we are executing on our key initiatives to drive the next $100 billion of assets under management: traction in our ETP lineup, an expanding models footprint, and leadership in the secular shift toward tokenization of financial assets.

We achieved several key milestones in the quarter, including the receipt of a trust charter from the New York State Department of Financial Services – the premier regulator for digital asset businesses in the U.S. – and the launch of our debit card to WisdomTree Prime™ users. This key combination not only expands our geographic footprint but also allows us to offer value-added services to our customer base. We continue to believe that tokenized assets and blockchain-enabled finance represent a growth opportunity for WisdomTree, and this quarter’s accomplishments are yet another positive step in unlocking new customers, new markets and new revenue streams.”

Update from Jarrett Lilien, WisdomTree COO and President

“We are pleased to report that we are delivering strong operating margin expansion and earnings growth, demonstrating our scalable operating model and ability to leverage our AUM growth. We are confident that we have the right strategy, the right products, the right team and the right culture to continue to create value for our clients and stockholders in the long term. We remain extremely bullish about 2024 and beyond as we continue to drive organic growth, expand our margins, and lead the industry’s evolution in tokenized assets and blockchain-enabled finance.

For a number of years, we have been alone talking about many of the themes driving our growth, including our diversified product suite, models and the potential of tokenization and blockchain-enabled finance – but now we have company. If you want to know what the industry is going to do tomorrow, look at what WisdomTree is doing today.”

OPERATING AND FINANCIAL HIGHLIGHTS

Three Months Ended

Mar. 31,
2024

Dec. 31,
2023

Sept. 30,
2023

June 30,
2023

Mar. 31,
2023

Consolidated Operating Highlights ($ in billions):

AUM—end of period

$

107.2

$

100.1

$

93.7

$

93.7

$

90.7

Net inflows/(outflows)

$

2.0

$

(0.3)

$

2.0

$

2.3

$

6.3

Average AUM

$

102.4

$

96.6

$

95.7

$

91.6

$

87.5

Average advisory fee

0.36%

0.36%

0.36%

0.36%

0.36%

Consolidated Financial Highlights ($ in millions, except per share amounts):

Operating revenues

$

96.8

$

90.8

$

90.4

$

85.7

$

82.0

Net income

$

22.1

$

19.1

$

13.0

$

54.3

$

16.2

Diluted earnings per share

$

0.13

$

0.16

$

0.07

$

0.32

$

0.10

Operating income margin

28.9%

28.7%

29.5%

21.2%

20.2%

As Adjusted (Non-GAAP(1)):

Gross margin

79.4%

79.7%

80.1%

79.3%

79.1%

Net income, as adjusted

$

20.3

$

18.6

$

18.0

$

14.9

$

11.2

Diluted earnings per share, as adjusted

$

0.12

$

0.11

$

0.10

$

0.09

$

0.07

Operating income margin, as adjusted

29.6%

28.7%

29.5%

26.9%

21.4%

RECENT BUSINESS DEVELOPMENTS

Company News

  • In February 2024, we launched the WisdomTree Prime™ Visa Debit Card, a digital and physical card enabling users to spend outside the WisdomTree Prime app.
  • In March 2024, we were named ‘Best Leveraged & Inverse ETF Issuer ($1bn+)’ at the ETF Express European ETF Awards and ‘Best ETF Provider’ at the Diaman Quant Awards in Italy; we were granted a charter from the New York State Department of Financial Services (DFS) to operate as a limited purpose trust company under the New York Banking Law; and the Board of Directors extended our existing limited duration stockholder rights plan, as amended.

Product News

  • In February 2024, we cross-listed the WisdomTree Megatrends UCITS ETF (WMGT) on the SIX; and the WisdomTree Cybersecurity UCITS ETF (WCBR) was named ‘Best Thematic and Sector ETF’ at the Le Revenu Awards 2024 in France.
  • In March 2024, we launched the WisdomTree 1-3 Year Laddered Treasury Fund (USSH) and the 7-10 Year Laddered Treasury Fund (USIN) on the Nasdaq; we celebrated the 10-year anniversary of the WisdomTree Floating Rate Treasury Fund (USFR); the European cryptocurrency ETP range surpassed $800 million in AUM; the WisdomTree Emerging Markets Small Cap Dividend UCITS ETF (DGSE) was named ‘Best Emerging Markets Equity ETF’ at the Mountain View Fund Awards 2024 in Germany; and the WisdomTree Artificial Intelligence UCITS ETF (WTAI) was named ‘Best Equity ETF’ at the Money Mate Awards in Italy.
  • In April 2024, we launched the WisdomTree Energy Transition and Rare Earths Miners UCITS ETF (RARE) on the London Stock Exchange, Börse Xetra and Borsa Italiana; we launched the WisdomTree US Quality Growth UCITS ETF (QGRW) on the London Stock Exchange, Börse Xetra and Borsa Italiana; and we cross-listed a distributing class of the WisdomTree Global Quality Dividend Growth UCITS (GGRW) on the Borsa Italiana.

 

WISDOMTREE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

Three Months Ended

Mar. 31,
2024

Dec. 31,
2023

Sept. 30,
2023

June 30,
2023

Mar. 31,
2023

Operating Revenues:

Advisory fees

$

92,501

$

86,988

$

86,598

$

82,004

$

77,637

Other income

4,337

3,856

3,825

3,720

4,407

Total revenues

96,838

90,844

90,423

85,724

82,044

Operating Expenses:

Compensation and benefits

31,054

27,860

27,955

26,319

27,398

Fund management and administration

19,962

18,445

18,023

17,727

17,153

Marketing and advertising

4,408

4,951

3,833

4,465

4,007

Sales and business development

3,611

3,881

3,383

3,326

2,994

Contractual gold payments

—

—

—

1,583

4,486

Professional fees

3,630

3,201

3,719

8,334

3,715

Occupancy, communications and equipment

1,210

1,208

1,203

1,172

1,101

Depreciation and amortization

383

335

307

121

109

Third-party distribution fees

2,307

2,549

2,694

1,881

2,253

Other

2,323

2,379

2,601

2,615

2,257

Total operating expenses

68,888

64,809

63,718

67,543

65,473

Operating income

27,950

26,035

26,705

18,181

16,571

Other Income/(Expenses):

Interest expense.

(4,128)

(3,758)

(3,461)

(4,021)

(4,002)

Gain on revaluation/termination of deferred consideration—gold payments

—

—

—

41,361

20,592

Interest income

1,398

1,225

791

1,000

1,083

Impairments

—

(339)

(2,703)

—

(4,900)

Loss on extinguishment of convertible notes

—

—

—

—

(9,721)

Other gains and losses, net

2,592

1,602

(2,512)

1,286

(2,007)

Income before income taxes

27,812

24,765

18,820

57,807

17,616

Income tax expense

5,701

5,688

5,836

3,555

1,383

Net income

$

22,111

$

19,077

$

12,984

$

54,252

$

16,233

Earnings per share—basic

$

0.14(2)

$

0.16(2)

$

0.07(2)

$

0.32(2)

$

0.10(2)

Earnings per share—diluted

$

0.13

$

0.16(2)

$

0.07

$

0.32

$

0.10

Weighted average common shares—basic

146,464

145,310

145,284

144,351

143,862

Weighted average common shares—diluted

165,268

171,703

177,140

170,672

159,887

As Adjusted (Non-GAAP(1))

Total operating expenses

$

68,193

$

64,809

$

63,718

$

62,630

$

64,506

Operating income

$

28,645

$

26,035

$

26,705

$

23,094

$

17,538

Income before income taxes

$

26,987

$

23,908

$

23,902

$

19,752

$

14,485

Income tax expense

$

6,731

$

5,342

$

5,854

$

4,833

$

3,287

Net income

$

20,256

$

18,566

$

18,048

$

14,919

$

11,198

Earnings per share—diluted

$

0.12

$

0.11

$

0.10

$

0.09

$

0.07

Weighted average common shares—diluted

165,268

171,703

177,140

170,672

159,887

QUARTERLY HIGHLIGHTS

Operating Revenues

  • Operating revenues increased 6.6% and 18.0% from the fourth quarter of 2023 and the first quarter of 2023, respectively, primarily due to higher average AUM.
  • Our average advisory fee was 0.36% during each of the first quarter of 2024, the fourth quarter of 2023 and the first quarter of 2023.

Operating Expenses

  • Operating expenses increased 6.3% from the fourth quarter of 2023 primarily due to higher compensation arising from payroll taxes, benefits and other items in connection with the payment of year-end bonuses, as well as higher fund management and administration costs and professional fees. These increases were partly offset by lower marketing expenses, sales and business development expenses and third-party distribution fees.
  • Operating expenses increased 5.2% from the first quarter of 2023 primarily due to higher incentive and stock-based compensation expense and increased headcount, as well as higher fund management and administration costs. These increases were partly offset by the termination of the deferred consideration—gold payments obligation on May 10, 2023.

Other Income/(Expenses)

  • Interest expense increased 9.8% from the fourth quarter of 2023 primarily due to the recognition of a full quarter of imputed interest on our obligation payable to Gold Bullion Holdings (Jersey) Limited (“GBH”), a subsidiary of the World Gold Council, in connection with our repurchase in November 2023 of our Series C Non-Voting Convertible Preferred Stock. Interest expense increased 3.1% from the first quarter of 2023 due to the recognition of imputed interest on our obligation payable to GBH, partly offset by a lower level of debt outstanding.
  • Interest income increased 14.1% and 29.1% from the fourth quarter of 2023 and first quarter of 2023, respectively, due to a higher level of interest-earning assets.
  • Other gains and losses, net was a gain of $2.6 million for the first quarter of 2024. This quarter includes gains of $2.1 million and $0.1 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 first quarter of 2024 was 20.5%, 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 the decrease in the deferred tax asset valuation allowance on losses recognized on the Company’s financial instruments owned, tax windfalls associated with the vesting of stock-based compensation awards and a lower tax rate on foreign earnings. These items were partly offset by state and local income taxes.
  • Our adjusted effective income tax rate for the first quarter of 2024 was 24.9%(1).

About WisdomTree

WisdomTree is a global financial innovator, offering a well-diversified suite of exchange-traded products (ETPs), models, solutions and products leveraging blockchain 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.