WisdomTree Announces Fourth Quarter 2024 Results

WisdomTree, Inc. (NYSE: WT), a global financial innovator, today reported financial results for the fourth quarter of 2024.

$27.3 million of net income ($25.3(1) million of net income, as adjusted). See “Non-GAAP Financial Measurements” for additional information.

$109.8 billion of ending AUM, a decrease of 2.5% from the prior quarter arising from market depreciation and net outflows.

($0.3) billion of net outflows, primarily driven by outflows from our emerging markets, commodity and fixed income products, partly offset by inflows into our U.S. equity and cryptocurrency products.

0.36% average advisory fee, a 1 basis point decrease from the prior quarter.

0.39% adjusted revenue yield(2), unchanged from the prior quarter.

$110.7 million of operating revenues, a decrease of 2.2% from the prior quarter due to lower other revenues. The prior quarter included $3.7 million of other revenues related to legal and other expenses expected to be covered by insurance that were incurred in connection with a settlement with the U.S. Securities and Exchange Commission (the “SEC”) regarding certain statements about the ESG screening process for three ETFs advised by WisdomTree Asset Management, Inc. (the “SEC ESG Settlement”).

79.3% gross margin(1), a 1.5 point decrease from the prior quarter due to higher non-recurring costs associated with the migration of custody, fund accounting, fund administration, ETF services and securities lending to Bank of New York Mellon (“BNY”) during the quarter (the “BNY Custody Migration”).

31.7% operating income margin, a 4.3 point decrease (5.6 point decrease, as adjusted(1)) compared to our operating margin of 36.0% (37.3%, as adjusted(1)) in the prior quarter primarily due to higher expenses, including those associated with the BNY Custody Migration and seasonally higher discretionary spending. We also recognized approximately $1.0 million of costs remaining under one of our WisdomTree Prime-related contracts as we transition away from this service provider while continuing to expand our internal capabilities to further enhance the platform.

$0.03 quarterly dividend declared, payable on February 26, 2025 to stockholders of record as of the close of business on February 12, 2025.

Update from Jonathan Steinberg, WisdomTree CEO

“In 2024, we focused on disciplined execution, delivering a 73% increase in adjusted EPS fueled by higher AUM, an expansion in our revenue yield, margin expansion, and stock repurchases. Looking ahead to 2025, I am confident WisdomTree will continue leveraging increased client engagement and the growing traction of our models business to drive top-line growth. At the same time, we will remain disciplined in executing margin expansion, proactive in accretive capital deployment, and focused on driving strategic innovation to position the company for accelerated growth.”

Update from Jarrett Lilien, WisdomTree COO and President

“The formula for sustainable long-term growth includes expanding WisdomTree’s client base and deepening engagement. We executed well on both initiatives, growing both the number of clients using WisdomTree products by 5% while also increasing the number of WisdomTree products held by each client by 4%. We will continue that momentum into 2025, leveraging our broad product lineup, our robust solutions offerings and our expertise to further expand our client relationships and grow AUM.”

OPERATING AND FINANCIAL HIGHLIGHTS

Three Months Ended

Dec. 31,
2024

Sept. 30,
2024

June 30,
2024

Mar. 31,
2024

Dec. 31,
2023

Consolidated Operating Highlights ($ in billions):

AUM—end of period

109.8

112.6

109.7

107.2

100.1

Net (outflows)/inflows

(0.3

)

(2.4

)

0.3

2.0

(0.3

)

Average AUM

112.3

110.4

108.5

102.5

96.6

Average advisory fee

0.36%

0.37%

0.36%

Adjusted revenue yield(2)

0.39%

0.40%

0.38%

0.37%

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

Operating revenues

110.7

113.2

107.0

96.8

90.8

Net income/(loss)

27.3

(4.5

)

21.8

22.1

19.1

Diluted earnings/(loss) per share

0.18

(0.13

)

0.13

0.16

Operating income margin

31.7%

36.0%

31.3%

28.9%

28.7%

As Adjusted (Non-GAAP(1)):

Operating revenues, as adjusted

110.5

109.5

107.0

96.4

90.8

Gross margin

79.3%

80.8%

81.2%

79.3%

79.7%

Net income, as adjusted

25.3

28.8

27.1

20.3

18.6

Diluted earnings per share, as adjusted

0.17

0.18

0.16

0.12

0.11

Operating income margin, as adjusted

31.7%

37.3%

35.3%

29.7%

28.7%

RECENT BUSINESS DEVELOPMENTS

Company News

In January 2025, Smita Conjeevaram was appointed as Chair of the Board of Directors of WisdomTree, Inc., succeeding Win Neuger, who will continue to serve on the Board. In December 2024, WisdomTree was named a 2024 “Best Places to Work in Money Management” by Pensions Investments for the fifth consecutive year and the eighth year since the award was created. WisdomTree was ranked second within the large employer category for managers with 100-499 employees, the third consecutive year earning a ranking among the top five employers. In Europe, we concluded 2024 as the leading provider of Crypto ETP flows, recording $520 million in net new flows. The WisdomTree Crypto ETP range exceeded $1.5 billion in assets under management (AUM), driven primarily by WisdomTree Physical Bitcoin (BTCW). BTCW surpassed $1 billion in AUM, led the European market for bitcoin ETP flows with $232 million in net new flows, and marked its 5-year anniversary in December 2024.

Product News

In November 2024, we launched the WisdomTree Global Efficient Core UCITS ETF (NTSG) on Deutsche Börse Xetra, the London Stock Exchange and Borsa Italiana, and the WisdomTree Physical XRP ETP (XRPW) on the Deutsche Börse Xetra, the Swiss Stock Exchange SIX and Euronext exchanges in Paris and Amsterdam. In January 2025, we launched the WisdomTree Strategic Metals UCITS ETF (WENU) on Deutsche Börse Xetra, the London Stock Exchange and Borsa Italiana alongside Euro-currency hedged and GBP-currency hedged share classes. In addition, in January 2025, the Siegel-WisdomTree Moderate, Longevity and Global Equity Model Portfolios became available on the UBS Financial Services Inc. separately managed account platform, providing over 85,000 advisors access to WisdomTree’s custom models.

WISDOMTREE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

Three Months Ended

Years Ended

Dec. 31,
2024

Sept. 30,
2024

June 30,
2024

Mar. 31,
2024

Dec. 31,
2023

Dec. 31,
2024

Dec. 31,
2023

Operating Revenues:

Advisory fees

102,264

101,659

98,938

92,501

86,988

395,362

333,227

Other revenues

8,433

11,509

8,096

4,337

3,856

32,375

15,808

Total revenues

110,697

113,168

107,034

96,838

90,844

427,737

349,035

Operating Expenses:

Compensation and benefits

30,032

29,405

30,790

31,054

27,860

121,281

109,532

Fund management and administration

22,858

21,004

20,139

19,962

18,445

83,963

71,348

Marketing and advertising

6,117

4,897

5,110

4,408

4,951

20,532

17,256

Sales and business development

4,101

3,465

3,640

3,611

3,881

14,817

13,584

Contractual gold payments

—

6,069

Professional fees

4,559

6,315

6,594

3,630

3,201

21,098

18,969

Occupancy, communications and equipment

1,423

1,397

1,314

1,210

1,208

5,344

4,684

Depreciation and amortization

504

447

418

383

335

1,752

872

Third-party distribution fees

3,161

2,983

2,687

2,307

2,549

11,138

9,377

Other

2,902

2,463

2,831

2,323

2,379

10,519

9,852

Total operating expenses

75,657

72,376

73,523

68,888

64,809

290,444

261,543

Operating income

35,040

40,792

33,511

27,950

26,035

137,293

87,492

Other Income/(Expenses):

Interest expense

(5,616

)

(5,027

)

(4,140

)

(4,128

)

(3,758)

(18,911

)

(15,242

)

Gain on revaluation/termination of deferred consideration—gold payments

—

61,953

Interest income

2,147

1,795

1,438

1,398

1,225

6,778

4,099

Impairments

—

(339)

—

(7,942

)

Loss on extinguishment of convertible notes

—

(30,632

)

—

(30,632

)

(9,721

)

Other gains and losses, net

2,627

(3,062

)

(1,283

)

2,592

1,602

874

(1,631

)

Income before Income taxes

34,198

3,866

29,526

27,812

24,765

95,402

119,008

Income tax expense

6,890

8,351

7,767

5,701

5,688

28,709

16,462

Net income/(loss)

27,308

(4,485

)

21,759

22,111

19,077

66,693

102,546

Earnings/(loss) per share—basic

0.19

(0.13)(3

)

0.13(3

)

0.14(3

)

0.16(3)

0.34(3

)

0.66(3

)

Earnings/(loss) per share—diluted

0.18

(0.13)(3

)

0.13

0.16(3)

0.33(3

)

0.64(3

)

Weighted average common shares—basic

141,275

143,929

146,896

146,464

145,310

144,630

144,707

Weighted average common shares—diluted

147,612

143,929

166,359

165,268

171,703

158,844

170,413

As Adjusted (Non-GAAP(1))

Total revenues

110,505

109,507

107,034

96,385

90,844

Total operating expenses

75,465

68,715

69,252

67,740

64,809

Operating income

35,040

40,792

37,782

28,645

26,035

Income before Income taxes

33,033

37,187

36,083

26,987

23,908

Income tax expense

7,753

9,049

9,008

6,731

5,342

Net income

25,280

28,768

27,075

20,256

18,566

Earnings per share—diluted

0.17

0.18

0.16

0.12

0.11

Weighted average common shares—diluted

147,612

156,745

166,359

165,268

171,703

QUARTERLY HIGHLIGHTS

Operating Revenues

Operating revenues decreased 2.2% from the third quarter of 2024 due to lower other revenues as the prior quarter included $3.7 million of other revenues related to legal and other expenses incurred in connection with the SEC ESG Settlement that are expected to be covered by insurance. Operating revenues increased 21.9% from the fourth quarter of 2023 due to higher average AUM and higher other revenues attributable to our European listed exchange-traded products (“ETPs”). Our average advisory fee was 0.36%, 0.37% and 0.36% during the fourth quarter of 2024, the third quarter of 2024 and the fourth quarter of 2023, respectively.

Operating Expenses

Operating expenses increased 4.5% from the third quarter of 2024 primarily due to seasonally higher discretionary spending, including marketing and sales-related expenses. In addition, higher fund management expenses arose from non-recurring costs related to the BNY Custody Migration and we recognized approximately $1.0 million of costs remaining under one of our WisdomTree Prime-related contracts as we transition away from this service provider while continuing to expand our internal capabilities to further enhance the platform. These increases were partly offset by lower professional fees incurred in the fourth quarter related to the SEC ESG Settlement. Operating expenses increased 16.7% from the fourth quarter of 2023 primarily due to higher fund management and administration costs, compensation, professional fees and marketing expenses.

Other Income/(Expenses)

Interest expense increased 11.7% and 49.4% from the third quarter of 2024 and fourth quarter of 2023, respectively, due to a higher level of debt outstanding, partly offset by a lower average interest rate. The increase from the fourth quarter of 2023 also is 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 income increased 19.6% and 75.3% from the third quarter of 2024 and the fourth 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 fourth quarter of 2024. This included net gains of $2.3 million on our financial instruments owned and net losses of $0.5 million on our investments. Gains and losses also generally arise from the sale of gold and crypto earned from management fees paid by our physically-backed gold and crypto ETPs, foreign exchange fluctuations and other miscellaneous items.

Income Taxes

Our effective income tax rate for the fourth quarter of 2024 was 20.1%, resulting in income tax expense of $6.8 million. The effective tax rate differs from the federal statutory rate of 21.0% primarily due to a favorable tax adjustment to the non-deductible loss on extinguishment of convertible notes and a lower tax rate on foreign earnings. Our adjusted effective income tax rate for the fourth quarter of 2024 was 23.5%(1).

ANNUAL HIGHLIGHTS

Operating revenues increased 22.5% as compared to 2023 due to higher average AUM and higher other revenues attributable to our European listed ETPs. In addition, operating revenues include $4.3 million of other revenues related to legal and other related expenses incurred in connection with the SEC ESG Settlement that are expected to be covered by insurance. Operating expenses increased 11.1% as compared to 2023 primarily due to higher incentive and stock-based compensation expense and increased headcount, fund management and administration costs, marketing expenses, sales and business development expenses, third-party distribution fees, as well as higher depreciation and amortization. Operating expenses during the year ended December 31, 2024 also include $4.3 million of legal and other related expenses expected to be covered by insurance that were incurred in connection with the SEC ESG Settlement. These increases were partly offset by lower contractual gold payments. Significant items reported in other income/(expense) in 2024 include: a loss on extinguishment of convertible notes of $30.6 million arising from the repurchase of $104.2 million aggregate principal amount of our 5.75% convertible senior notes due 2028; a civil money penalty of $4.0 million in connection with the SEC ESG Settlement; an increase in interest expense of 24.1% due to imputed interest on our obligation payable to GBH and higher level of debt outstanding, partly offset by a lower average interest rate; an increase in interest income of 65.4% due to an increase in our interest-earning assets; net gains on our financial instruments owned of $4.9 million; and losses on our investments of $1.1 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 2024 was 30.1%, resulting in an income tax expense of $28.7 million. Our tax rate differs from the federal statutory rate of 21.0% primarily due to a non-deductible loss on extinguishment of convertible notes, a non-deductible civil money penalty of $4.0 million in connection with the SEC ESG Settlement and non-deductible executive compensation. These items were partly offset by a lower tax rate on foreign earnings.

CONFERENCE CALL DIAL-IN AND WEBCAST DETAILS

WisdomTree will discuss its results and operational highlights during a live webcast on Friday, January 31, 2025 at 11:00 a.m. ET, which can be accessed using the following link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=VyP1taaA.

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 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® and institutional platform, WisdomTree Connect™.*

* The WisdomTree Prime digital wallet and digital asset services and WisdomTree Connect institutional platform are made available through WisdomTree Digital Movement, Inc., a federally registered money services business, state-licensed money transmitter and financial technology company (NMLS ID: 2372500) or WisdomTree Digital Trust Company, LLC, in select U.S. jurisdictions and may be limited where prohibited by law. WisdomTree Digital Trust Company, LLC is chartered as a limited purpose Trust company by the New York State Department of Financial Services to engage in virtual currency business. Visit https://www.wisdomtreeprime.com, the WisdomTree Prime mobile app or https://wisdomtreeconnect.com for more information.

WisdomTree currently has approximately $113.5 billion in assets under management globally.

For more information about WisdomTree, WisdomTree Connect and WisdomTree Prime, visit: https://www.wisdomtree.com.

Please visit us on X at @WisdomTreeNews.

WisdomTree® is the marketing name for WisdomTree, Inc. and its subsidiaries worldwide.

PRODUCTS AND SERVICES AVAILABLE VIA WISDOMTREE PRIME:

The products and services available through the WisdomTree Prime app and WisdomTree Connect are not endorsed, indemnified or guaranteed by any regulatory agency.

______________

(1)

See “Non-GAAP Financial Measurements.”

(2)

Adjusted revenue yield is computed by dividing our annualized adjusted operating revenues as reported in the GAAP to Non-GAAP Reconciliation herein by our average AUM during the period.

(3)

Earnings 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 ended September 30, 2024 and year ended December 31, 2024 include a loss of $11,375 recognized upon the repurchase of our Series A Non-Voting Convertible Preferred stock convertible into approximately 14.75 million shares of common stock from ETFS Capital Limited and $1,868 of stock repurchase excise taxes. The three months ended December 31, 2023 includes a gain of $7,966 recognized upon the repurchase of our Series C Non-Voting Convertible Preferred stock convertible into approximately 13.1 million shares of common stock from GBH. These items are excluded from net income, but are required to be added to net income to arrive at income available to common stockholders in the calculation of EPS. These items are excluded from our EPS when computed on a non-GAAP basis.

WISDOMTREE, INC. AND SUBSIDIARIES

KEY OPERATING STATISTICS

(Unaudited)

Three Months Ended

Dec. 31,
2024

Sept. 30,
2024

June 30,
2024

Mar. 31,
2024

Dec. 31,
2023

GLOBAL ETPs ($ in millions)

Beginning of period assets

112,577

109,686

107,230

100,124

93,735

(Outflows)/inflows

(281

)

(2,395

)

340

1,988

(255

)

Market (depreciation)/appreciation

(2,517

)

5,286

2,116

5,118

6,644

End of period assets

109,779

112,577

109,686

107,230

100,124

Average assets during the period

112,349

110,369

108,479

102,461

96,641

Average advisory fee during the period

0.36

0.37

0.36

Revenue days

Number of ETPs—end of the period

353

352

350

338

337

U.S. LISTED ETFs ($ in millions)

Beginning of period assets

81,267

79,722

78,087

72,486

68,018

(Outflows)/inflows

(40

)

(1,650

)

1,106

1,983

(67

)

Market (depreciation)/appreciation

(2,132

)

3,195

529

3,618

4,535

End of period assets

79,095

81,267

79,722

78,087

72,486

Average assets during the period

80,661

80,335

78,523

74,831

69,801

Number of ETFs—end of the period

EUROPEAN LISTED ETPs ($ in millions)

Beginning of period assets

31,310

29,964

29,143

27,638

25,717

(Outflows)/inflows

(241

)

(745

)

(766

)

(188

)

Market (depreciation)/appreciation

(385

)

2,091

1,587

1,500

2,109

End of period assets

30,684

31,310

29,964

29,143

27,638

Average assets during the period

31,688

30,034

29,956

27,630

26,840

Number of ETPs—end of the period

275

274

272

261

PRODUCT CATEGORIES ($ in millions)

U.S. Equity

Beginning of period assets

34,643

31,834

31,670

29,156

25,643

Inflows

1,099

328

221

536

487

Market (depreciation)/appreciation

(328

)

2,481

(57

)

1,978

3,026

End of period assets

35,414

34,643

31,834

31,670

29,156

Average assets during the period

35,714

33,175

31,339

30,154

26,928

Commodity Currency

Beginning of period assets

23,034

21,987

21,944

21,336

20,466

Outflows

(440

)

(741

)

(1,499

)

(460

)

(449

)

Market (depreciation)/appreciation

(688

)

1,788

1,542

1,068

1,319

End of period assets

21,906

23,034

21,987

21,944

21,336

Average assets during the period

22,989

22,016

22,437

20,837

21,254

Fixed Income

Beginning of period assets

20,767

21,430

21,218

21,197

21,797

(Outflows)/inflows

(387

)

(897

)

236

(14

)

(715

)

Market (depreciation)/appreciation

(337

)

234

(24

)

115

End of period assets

20,043

20,767

21,430

21,218

21,197

Average assets during the period

20,398

21,135

21,277

21,082

21,889

Three Months Ended

Dec. 31,
2024

Sept. 30,
2024

June 30,
2024

Mar. 31,
2024

Dec. 31,
2023

International Developed Market Equity

Beginning of period assets

18,075

19,385

18,103

15,103

13,902

Inflows/(outflows)

(1,391

)

1,253

1,597

Market (depreciation)/appreciation

(536

)

1,403

1,192

End of period assets

17,602

18,075

19,385

18,103

15,103

Average assets during the period

17,716

18,636

18,809

16,691

14,267

Emerging Market Equity

Beginning of period assets

12,452

11,875

11,189

10,726

9,569

(Outflows)/inflows

(908

)

(20

)

217

412

Market (depreciation)/appreciation

(1,076

)

597

629

246

745

End of period assets

10,468

12,452

11,875

11,189

10,726

Average assets during the period

11,407

12,083

11,448

10,900

9,833

Leveraged Inverse

Beginning of period assets

2,082

1,922

1,828

1,815

1,781

(Outflows)/inflows

(69

)

(18

)

(50

)

(59

)

Market (depreciation)/appreciation

(89

)

112

End of period assets

1,924

2,082

1,922

1,828

1,815

Average assets during the period

2,032

1,962

1,905

1,792

1,803

Cryptocurrency

Beginning of period assets

1,054

838

874

414

243

Inflows

315

201

158

Market appreciation /(depreciation)

543

(111

)

302

143

End of period assets

1,912

1,054

838

874

414

Average assets during the period

1,599

917

856

614

325

Alternatives

Beginning of period assets

470

415

404

377

334

Inflows

Market (depreciation)/appreciation

)

End of period assets

510

470

415

404

377

Average assets during the period

494

445

408

391

342

Headcount

313

314

304

300

303

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,
2024

Dec. 31,
2023

(Unaudited)

ASSETS

Current assets:

Cash, cash equivalents and restricted cash

181,191

129,305

Financial instruments owned, at fair value

85,439

58,722

Accounts receivable

44,866

35,473

Prepaid expenses

5,340

5,258

Other current assets

1,542

1,036

Total current assets

318,378

229,794

Fixed assets, net

336

427

Securities held-to-maturity

206

230

Deferred tax assets, net

11,656

11,057

Investments

8,922

9,684

Right of use assets—operating leases

880

563

Goodwill

86,841

Intangible assets, net

605,896

605,082

Other noncurrent assets

425

459

Total assets

1,033,540

944,137

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES

Current liabilities:

Fund management and administration payable

31,135

30,085

Compensation and benefits payable

39,701

38,111

Payable to Gold Bullion Holdings (Jersey) Limited (“GBH”)

14,804

Income taxes payable

724

3,866

Operating lease liabilities

709

578

Accounts payable and other liabilities

22,124

15,772

Total current liabilities

109,197

103,216

Convertible notes—long term

512,033

274,888

Payable to GBH

12,159

24,328

Operating lease liabilities—long term

171

—

Total liabilities

633,560

402,432

Preferred stock:

Series A Non-Voting Convertible, par value $0.01; Zero and 14.750 shares authorized, issued and outstanding at December 31, 2024 and December 31, 2023, respectively

—

132,569

STOCKHOLDERS’ EQUITY

Common stock, par value $0.01; 400,000 shares authorized:

Issued and outstanding: 146,102 and 150,330 at December 31, 2024 and December 31, 2023, respectively

1,461

1,503

Additional paid-in capital

270,303

312,440

Accumulated other comprehensive loss

(1,607

)

(548

)

Retained earnings

129,823

95,741

Total stockholders’ equity

399,980

409,136

Total liabilities and stockholders’ equity

1,033,540

944,137

WISDOMTREE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Years Ended
December 31,

2024

2023

Cash flows from operating activities:

Net income

66,693

102,546

Adjustments to reconcile net income to net cash provided by operating activities:

Advisory and license fees paid in gold, other precious metals and cryptocurrency

(53,452

)

(49,400

)

Loss on extinguishment of convertible notes

30,632

9,721

Stock-based compensation

20,691

16,190

(Gains)/losses on financial instruments owned, at fair value

(4,851

)

517

Imputed interest on payable to GBH

2,635

297

Amortization of issuance costs—convertible notes

1,893

1,817

Depreciation and amortization

1,752

872

Amortization of right of use asset

1,304

1,285

Losses on investments

1,135

242

Deferred income taxes

(398

)

(481

)

Gain on revaluation/termination of deferred consideration—gold payments

—

(61,953

)

Impairments

—

7,942

Contractual gold payments

—

6,069

Other

—

Changes in operating assets and liabilities:

Accounts receivable

(9,036

)

(6,212

)

Prepaid expenses

(107

)

(518

)

Gold and other precious metals

52,640

42,150

Other assets

(247

)

281

Fund management and administration payable

1,290

5,837

Compensation and benefits payable

1,937

1,209

Income taxes payable

(3,126

)

2,260

Operating lease liabilities

(1,320

)

(1,284

)

Accounts payable and other liabilities

3,396

6,213

Net cash provided by operating activities

113,461

85,600

Cash flows from investing activities:

Purchase of financial instruments owned, at fair value

(69,439

)

(57,364

)

Cash paid—software development

(2,336

)

(2,149

)

Purchase of investments

(674

)

(11,228

)

Purchase of fixed assets

(141

)

(113

)

Cash paid—acquisition of Securrency Transfers, Inc. (net of cash acquired)

—

(985

)

Proceeds from the sale of financial instruments owned, at fair value

48,126

123,564

Proceeds from the exit of investments

565

28,818

Proceeds from held-to-maturity securities maturing or called prior to maturity

Receipt of contingent consideration—Sale of Canadian ETF business

—

1,477

Net cash (used in)/provided by investing activities

(23,875

)

82,049

Cash flows from financing activities:

Repurchase of Series A Non-Voting Convertible Preferred Stock

(143,812

)

—

Repurchase and maturity of convertible notes

(132,713

)

(184,272

)

Common stock repurchased

(62,870

)

(3,570

)

Dividends paid

(19,002

)

(20,144

)

Cash paid to GBH

(14,804

)

—

Issuance costs—convertible notes

(7,667

)

(3,548

)

Repurchase costs—Series A Non-Voting Convertible Preferred Stock

(132

)

—

Proceeds from the issuance of convertible notes

345,000

130,000

Repurchase of Series C Non-Voting Convertible Preferred Stock

—

(40,000

)

Termination of deferred consideration—gold payments

—

(50,005

)

Issuance costs—Series C Non-Voting Convertible Preferred Stock

—

(97

)

Net cash used in financing activities

(36,000

)

(171,636

)

Decrease/(increase) in cash flow due to changes in foreign exchange rate

(1,700

)

1,191

Net increase/(decrease) in cash, cash equivalents and restricted cash

51,886

(2,796

)

Cash, cash equivalents and restricted cash—beginning of year

129,305

132,101

Cash, cash equivalents and restricted cash—end of period

181,191

129,305

Supplemental disclosure of cash flow information:

Cash paid for income taxes

32,218

16,156

Cash paid for interest

12,350

10,709

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 they 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 Revenues, Operating Income, Operating Expenses, Income Before Income Taxes, Income Tax Expense, Net Income and Diluted Earnings per Share

We disclose adjusted revenues, 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:

Legal and other related expenses expected to be covered by insurance: We have incurred $4.3 million of legal and other related expenses in connection with the SEC ESG Settlement that are expected to be covered by insurance. GAAP requires that such covered expenses be reported gross in the income statement such that revenues are recorded to offset expenses incurred. We offset the revenues and related expenses when calculating our non-GAAP financial measurements as the gross presentation serves to overstate our revenues and expenses recognized in the ordinary course of business.

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 of stock-based compensation awards: GAAP requires the recognition of tax windfalls and shortfalls within income tax expense. These items arise upon the vesting 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 was convertible into approximately 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: Losses on extinguishment of convertible notes, a civil money penalty in connection with the SEC ESG Settlement, gains and losses recognized on our investments, changes in deferred tax asset valuation allowance, expenses incurred in response to an activist campaign and impairments 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 adjusted operating revenues less fund management and administration expenses. Gross margin percentage is calculated as gross margin divided by total adjusted operating revenues.

GAAP to NON-GAAP RECONCILIATION (CONSOLIDATED)

(in thousands)

(Unaudited)

Three Months Ended

Adjusted Net Income and Diluted Earnings per Share:

Dec. 31,
2024

Sept. 30,
2024

June 30,
2024

Mar. 31,
2024

Dec. 31,
2023

Net income/(loss), as reported

27,308

(4,485

)

21,759

22,111

19,077

(Deduct)/add back: (Gains)/losses on financial instruments owned, net of income taxes

(1,722

)

(607

)

220

(1,562

)

(370

)

Add back: Loss on extinguishment of convertible notes, net of income taxes

(718

)

30,128

—

Add back: Imputed interest on payable to GBH, net of income taxes

451

528

513

504

224

(Deduct)/add back: (Decrease)/increase in deferred tax asset valuation allowance on financial instruments owned and investments

(428

)

(335

)

391

(531

)

(280

)

Add back/(deduct): Losses/(gains) recognized on investments, net of income taxes

389

(436

)

998

(93

)

(336

)

Add back: Civil money penalty in connection with SEC ESG Settlement

—

4,000

—

(Deduct)/add back: Tax (windfalls)/shortfalls upon vesting of stock-based compensation awards

—

(25

)

(40

)

(699

)

Add back: Expenses incurred in response to an activist campaign, net of income taxes

—

3,234

526

—

Add back: Impairments, net of income taxes

—

257

Adjusted net income

25,280

28,768

27,075

20,256

18,566

Weighted average common shares—diluted

147,612

156,745

166,359

165,268

171,703

Adjusted earnings per share—diluted

0.17

0.18

0.16

0.12

0.11

Three Months Ended

Gross Margin and Gross Margin Percentage:

Dec. 31,
2024

Sept. 30,
2024

June 30,
2024

Mar. 31,
2024

Dec. 31,
2023

Operating revenues

110,697

113,168

107,034

96,838

90,844

Less: Legal and other related expenses expected to be covered by insurance

(192

)

(3,661

)

—

(453

)

—

Operating revenues, as adjusted

110,505

109,507

107,034

96,385

90,844

Less: Fund management and administration

(22,858

)

(21,004

)

(20,139

)

(19,962

)

(18,445

)

Gross margin

87,647

88,503

86,895

76,423

72,399

Gross margin percentage

79.3

80.8

81.2

79.3

79.7

Three Months Ended

Adjusted Operating Revenues, Operating Income and Adjusted Operating Income Margin:

Dec. 31,
2024

Sept. 30,
2024

June 30,
2024

Mar. 31,
2024

Dec. 31,
2023

Operating revenues

110,697

113,168

107,034

96,838

90,844

Deduct: Legal and other related expenses expected to be covered by insurance

(192

)

(3,661

)

—

(453

)

—

Operating revenues, as adjusted

110,505

109,507

107,034

96,385

90,844

Operating income

35,040

40,792

33,511

27,950

26,035

Add back: Expenses incurred in response to an activist campaign

—

4,271

695

—

Adjusted operating income

35,040

40,792

37,782

28,645

26,035

Adjusted operating income margin

31.7

37.3

35.3

29.7

28.7

Three Months Ended

Adjusted Total Operating Expenses:

Dec. 31,
2024

Sept. 30,
2024

June 30,
2024

Mar. 31,
2024

Dec. 31,
2023

Total operating expenses

75,657

72,376

73,523

68,888

64,809

Deduct: Legal and other related expenses expected to be covered by insurance

(192

)

(3,661

)

—

(453

)

—

Deduct: Expenses incurred in response to an activist campaign

—

(4,271

)

(695

)

—

Adjusted total operating expenses

75,465

68,715

69,252

67,740

64,809

Three Months Ended

Adjusted Income Before Income Taxes:

Dec. 31,
2024

Sept. 30,
2024

June 30,
2024

Mar. 31,
2024

Dec. 31,
2023

Income before Income taxes

34,198

3,866

29,526

27,812

24,765

(Deduct)/add back: (Gains)/losses on financial instruments owned

(2,275

)

(802

)

291

(2,063

)

(489

)

Add back: Imputed interest on payable to GBH

596

697

677

666

296

Add back/(deduct): Losses/(gains) recognized on investments

514

(576

)

1,318

(123

)

(1,003

)

Add back: Loss on extinguishment of convertible notes

—

30,632

—

Add back: Civil money penalty in connection with SEC ESG Settlement

—

4,000

—

Add back: Expenses incurred in response to an activist campaign

—

4,271

695

—

Add back: Impairments

—

339

Adjusted income before income taxes

33,033

37,817

36,083

26,987

23,908

Three Months Ended

Adjusted Income Tax Expense and Adjusted Effective Income Tax Rate:

Dec. 31,

2024

Sept. 30,

2024

June 30,

2024

Mar. 31,

2024

Dec. 31,

2023

Adjusted income before income taxes (above)

33,033

37,817

36,083

26,987

23,908

Income tax expense

6,890

8,351

7,767

5,701

5,688

Add back: Tax benefit arising from extinguishment of convertible notes

718

504

—

(Deduct)/add back: Tax (expense)/benefit arising from (gains)losses on financial instruments owned

(553

)

(195

)

(501

)

(119

)

Add back/(deduct): Decrease/(increase) in deferred tax asset valuation allowance on financial instruments owned and investments

428

335

(391

)

531

280

Add back: Tax benefit on imputed interest

145

169

164

162

Add back/(deduct): Tax benefit/(expense) on losses/(gains) on investments

125

(140

)

320

(30

)

(667

)

Add back/(deduct): Tax windfalls/(shortfalls) upon vesting of stock-based compensation awards

—

699

Add back: Tax benefit arising from expenses incurred in response to an activist campaign

—

1,037

169

—

Add back: Tax benefit arising from impairments

—

Adjusted income tax expense

7,753

9,049

9,008

6,731

5,342

Adjusted effective income tax rate

23.5

23.9

25.0

24.9

22.3

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 WisdomTree Connect™, 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 events such as a pandemic or war, geopolitical conflicts, political events, acts of terrorism and other matters beyond our control, 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, and as we expand our digital assets product offerings and services beyond our existing ETP business; 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, 2023, and in subsequent reports filed with or furnished to the SEC.

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

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