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Share Name | Share Symbol | Market | Type |
---|---|---|---|
WisdomTree Inc | NYSE:WT | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.2799 | -2.89% | 9.4001 | 9.61 | 9.42 | 9.61 | 603,785 | 21:15:18 |
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
Product News
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 Expenses
Other Income/(Expenses)
Income Taxes
ANNUAL HIGHLIGHTS
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 $100.6 billion in assets under management globally.
For more information about WisdomTree and WisdomTree Prime™, visit: https://www.wisdomtree.com.
Please visit us on X, formerly known as Twitter, at @WisdomTreeNews.
WisdomTree® is the marketing name for WisdomTree, Inc. and its subsidiaries worldwide.
PRODUCTS AND SERVICES AVAILABLE VIA WISDOMTREE PRIME:
NOT FDIC INSURED | NO BANK GUARANTEE | NOT A BANK DEPOSIT | MAY LOSE VALUE | NOT SIPC PROTECTED | NOT INSURED BY ANY GOVERNMENT AGENCY
The products and services available through the WisdomTree Prime app are not endorsed, indemnified or guaranteed by any regulatory agency.
WISDOMTREE, INC. AND SUBSIDIARIES
KEY OPERATING STATISTICS
(Unaudited)
Three Months Ended
Dec. 31, 2023
Sept. 30, 2023
June 30, 2023
Mar. 31, 2023
Dec. 31, 2022
GLOBAL ETPs ($ 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:
Our business is subject to many risks and uncertainties, including without limitation:
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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