WisdomTree Announces First Quarter 2021 Results – Diluted Earnings Per Share of $0.09 ($0.08, as adjusted)
Rhea-AI Impact
Rhea-AI Sentiment
Rhea-AI Summary
WisdomTree Investments reported a strong financial performance for Q1 2021, achieving $15.1 million in net income and $72.8 million in operating revenues, marking an increase of 8.6% year-over-year. The company's assets under management (AUM) reached $69.5 billion, up 3.2% from the previous quarter, driven by $1.3 billion in net inflows. Operating margins expanded, with gross margins at 78.7% and operating income margin at 25.5%. A $0.03 dividend was declared, payable on May 26, 2021.
Positive
- Net income increased to $15.1 million.
- Operating revenues rose to $72.8 million, up 8.6% from the prior year.
- AUM reached $69.5 billion, a 3.2% increase due to net inflows.
- Net inflows of $1.3 billion were driven by emerging markets equity.
- Gross margin improved to 78.7%, up 3.1 points quarter-over-quarter.
Negative
- Operating expenses increased 12.4% year-over-year, impacting profitability.
NEW YORK, April 30, 2021 (GLOBE NEWSWIRE) -- WisdomTree Investments, Inc. (NASDAQ: WETF) today reported financial results for the first quarter of 2021.
Update from Jarrett Lilien, WisdomTree President and COO
“We continue to deliver on our plan to invest in growth and our people, as well as drive efficiencies in the business. Our first quarter results make clear that we are executing well on all fronts. We generated strong organic growth with Overall, top-line growth led to one of our best all-around quarters, with strong revenues and expanding operating margins and net income. Our team remains focused and dedicated to exceptional execution. This, and the breadth and diversified mix of our business, gives us confidence that our momentum is sustainable.” |
Update from Jonathan Steinberg, WisdomTree CEO
“The takeaways from this quarter are simple: continued growth, momentum and strong execution. As I have said before, WisdomTree is operating with even greater speed, efficiency and inclusion in our new, remote-first orientation. Our results are clear evidence of this. In the crypto asset space, we have been laser focused on execution. In March, we filed for the WisdomTree Bitcoin Trust with the SEC. Earlier this month, we cross-listed our European-domiciled WisdomTree Bitcoin ETP (BTCW) in Germany, appointed Coinbase Custody as a custodian and received approval to passport BTCW in the European Union (EU), allowing for a wider audience to access and invest in the product. Just yesterday, we launched a physically backed Ethereum ETP (ETHW) in Europe. Additionally, we’ve made advancements in our blockchain initiatives. In the U.S., we filed for the WisdomTree Digital Short-Term Treasury Fund with the SEC, leveraging Securrency’s technology. We also invested in Securrency’s Series B funding round, as we believe their team is uniquely suited to lead in blockchain-based fintech and regtech going forward. Our ongoing financial commitment reaffirms the strength of our support and partnership in shaping the future of financial services with Securrency and our fellow investors.” |
OPERATING AND FINANCIAL HIGHLIGHTS
| Three Months Ended | |||||||||||||||
| Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | |||||||||||
| Consolidated Operating Highlights ($ in billions): | |||||||||||||||
| AUM | $ | 69.5 | $ | 67.4 | $ | 60.7 | $ | 57.7 | $ | 50.3 | |||||
| Net inflows/(outflows) | $ | 1.3 | $ | 0.9 | $ | (0.5 | ) | $ | 0.1 | $ | (0.5 | ) | |||
| Average AUM | $ | 69.6 | $ | 64.1 | $ | 61.2 | $ | 55.7 | $ | 60.2 | |||||
| Average advisory fee | 0.42 | % | 0.41 | % | 0.42 | % | 0.41 | % | 0.42 | % | |||||
| Consolidated Financial Highlights ($ in millions, except per share amounts): | |||||||||||||||
| Operating revenues | $ | 72.8 | $ | 67.1 | $ | 64.6 | $ | 58.1 | $ | 63.9 | |||||
| Net income/(loss) | $ | 15.1 | $ | (13.5 | ) | $ | (0.3 | ) | $ | (13.3 | ) | $ | (8.6 | ) | |
| Diluted earnings/(loss) per share | $ | 0.09 | $ | (0.10 | ) | $ | (0.01 | ) | $ | (0.09 | ) | $ | (0.06 | ) | |
| Operating income margin | 25.5 | % | 19.2 | % | 22.8 | % | 20.3 | % | 24.5 | % | |||||
| As Adjusted (Non-GAAP1): | |||||||||||||||
| Gross margin | 78.7 | % | 75.6 | % | 76.5 | % | 75.1 | % | 77.3 | % | |||||
| Net income, as adjusted | $ | 12.5 | $ | 9.2 | $ | 11.0 | $ | 8.5 | $ | 11.2 | |||||
| Diluted earnings per share, as adjusted | $ | 0.08 | $ | 0.06 | $ | 0.07 | $ | 0.05 | $ | 0.07 | |||||
| Operating income margin, as adjusted | 25.5 | % | 19.2 | % | 22.8 | % | 20.4 | % | 25.1 | % | |||||
RECENT BUSINESS DEVELOPMENTS
Company News
|
WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
| Three Months Ended | |||||||||||||||||||
| Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | |||||||||||||||
| Operating Revenues: | |||||||||||||||||||
| Advisory fees | $ | 71,616 | $ | 66,105 | $ | 63,919 | $ | 57,208 | $ | 62,950 | |||||||||
| Other income | 1,214 | 954 | 721 | 918 | 924 | ||||||||||||||
| Total revenues | 72,830 | 67,059 | 64,640 | 58,126 | 63,874 | ||||||||||||||
| Operating Expenses: | |||||||||||||||||||
| Compensation and benefits | 22,627 | 20,827 | 19,098 | 17,455 | 17,295 | ||||||||||||||
| Fund management and administration | 15,521 | 16,350 | 15,219 | 14,461 | 14,485 | ||||||||||||||
| Marketing and advertising | 3,006 | 3,715 | 2,996 | 1,949 | 2,468 | ||||||||||||||
| Sales and business development | 2,145 | 2,595 | 2,386 | 2,181 | 3,417 | ||||||||||||||
| Contractual gold payments | 4,270 | 4,449 | 4,539 | 4,063 | 3,760 | ||||||||||||||
| Professional fees | 2,013 | 1,322 | 950 | 1,357 | 1,273 | ||||||||||||||
| Occupancy, communications and equipment | 1,475 | 1,622 | 1,611 | 1,643 | 1,551 | ||||||||||||||
| Depreciation and amortization | 252 | 261 | 253 | 251 | 256 | ||||||||||||||
| Third-party distribution fees | 1,343 | 1,291 | 1,233 | 1,340 | 1,355 | ||||||||||||||
| Acquisition and disposition-related costs | — | — | — | 33 | 383 | ||||||||||||||
| Other | 1,571 | 1,720 | 1,611 | 1,596 | 1,997 | ||||||||||||||
| Total operating expenses | 54,223 | 54,152 | 49,896 | 46,329 | 48,240 | ||||||||||||||
| Operating income | 18,607 | 12,907 | 14,744 | 11,797 | 15,634 | ||||||||||||||
| Other Income/(Expenses): | |||||||||||||||||||
| Interest expense | (2,296 | ) | (2,694 | ) | (2,511 | ) | (2,044 | ) | (2,419 | ) | |||||||||
| Gain/(loss) on revaluation of deferred consideration – gold payments | 2,832 | (22,385 | ) | (8,870 | ) | (23,358 | ) | (2,208 | ) | ||||||||||
| Interest income | 231 | 351 | 111 | 119 | 163 | ||||||||||||||
| Impairments | (303 | ) | — | (3,080 | ) | — | (19,672 | ) | |||||||||||
| Loss on extinguishment of debt | — | — | — | (2,387 | ) | — | |||||||||||||
| Other gains and losses, net | (5,893 | ) | 524 | 744 | 1,819 | (2,507 | ) | ||||||||||||
| Income/(loss) before income taxes | 13,178 | (11,297 | ) | 1,138 | (14,054 | ) | (11,009 | ) | |||||||||||
| Income tax (benefit)/expense | (1,969 | ) | 2,200 | 1,408 | (804 | ) | (2,371 | ) | |||||||||||
| Net income/(loss) | $ | 15,147 | $ | (13,497 | ) | $ | (270 | ) | $ | (13,250 | ) | $ | (8,638 | ) | |||||
| Earnings/(loss) per share – basic | ( | ( | ( | ( | |||||||||||||||
| Earnings/(loss) per share – diluted | ( | ( | ( | ( | |||||||||||||||
| Weighted average common shares – basic | 145,649 | 145,096 | 145,564 | 151,623 | 152,519 | ||||||||||||||
| Weighted average common shares – diluted | 161,831 | 145,096 | 145,564 | 151,623 | 152,519 | ||||||||||||||
| As Adjusted (Non-GAAP1) | |||||||||||||||||||
| Total operating expenses | $ | 54,223 | $ | 54,152 | $ | 49,896 | $ | 46,296 | $ | 47,857 | |||||||||
| Operating income | $ | 18,607 | $ | 12,907 | $ | 14,744 | $ | 11,830 | $ | 16,017 | |||||||||
| Income before income taxes | $ | 15,583 | $ | 11,504 | $ | 13,242 | $ | 10,911 | $ | 14,358 | |||||||||
| Income tax expense | $ | 3,079 | $ | 2,281 | $ | 2,205 | $ | 2,417 | $ | 3,134 | |||||||||
| Net income | $ | 12,504 | $ | 9,223 | $ | 11,037 | $ | 8,494 | $ | 11,224 | |||||||||
| Earnings per share – diluted | $ | 0.08 | $ | 0.06 | $ | 0.07 | $ | 0.05 | $ | 0.07 | |||||||||
QUARTERLY HIGHLIGHTS
Operating Revenues
- Operating revenues increased
8.6% and14.0% from the fourth quarter of 2020 and first quarter of 2020, respectively, due to higher average global AUM arising from market appreciation and net inflows. - Our average global advisory fee was
0.42% ,0.41% and0.42% during the first quarter of 2021, the fourth quarter of 2020 and the first quarter of 2020, respectively.
Operating Expenses
- Operating expenses were essentially unchanged from the fourth quarter of 2020. Higher compensation, due to seasonal payroll taxes, and higher professional fees from our digital assets initiative, were offset by lower fund management and administration costs as the prior quarter included costs arising from Brexit and fund rebalances, as well as lower marketing and sales and business development expenses.
- Operating expenses increased
12.4% from the first quarter of 2020 due to higher incentive compensation, fund management and administration costs, professional fees, contractual gold payments and marketing expenses, partly offset by lower sales and business development and other expenses.
Other Income/(Expenses)
- Interest expense declined
14.8% from the fourth quarter of 2020 upon the early adoption of a new accounting standard applicable to our convertible notes, which became effective January 1, 2021 and eliminated the requirement to bifurcate certain conversion options embedded in convertible instruments. Previously, the discount arising from bifurcation was amortized as interest expense over the life of the instrument. Interest expense declined5.1% from the first quarter of 2020 primarily due to lower levels of debt outstanding. - We recognized a non-cash gain on revaluation of deferred consideration of
$2.8 million during the first quarter of 2021. The gain was due to a decline in spot gold prices, partly offset by a steepening of the forward-looking gold curve. The magnitude of any gain or loss recognized is highly correlated to the magnitude of the change in the forward-looking price of gold. - During the quarter, we recognized an impairment charge of
$0.3 million upon exiting our London office. - Other net losses were
$5.9 million for the quarter. The quarter includes the release of a tax-related indemnification asset of$5.2 million upon the expiration of the statute of limitations related to our acquisition of ETFS in 2018. An equal and offsetting benefit has been recognized in income tax expense. The quarter also includes an unrealized gain of$0.2 million recognized on our investment in Securrency due to its recent capital raise. Gains and losses also generally arise from the sale of gold earned from management fees paid by our physically-backed gold ETPs, foreign exchange fluctuations, securities owned and other miscellaneous items.
Income Taxes
- We recorded an income tax benefit of
$2.0 million in the quarter primarily due to the release of the tax-related indemnification asset described above, a non-taxable gain on revaluation of deferred consideration and a lower tax rate on foreign earnings, partly offset by tax shortfalls associated with the vesting and exercise of stock-based compensation awards. - Our adjusted effective income tax rate was
19.8% 1.
CONFERENCE CALL
WisdomTree will discuss its results and operational highlights during a conference call on Friday, April 30, 2021 at 9:00 a.m. ET. The call-in number is (877) 303-7209. Anyone outside the U.S. or Canada should call (970) 315-0420. The slides used during the presentation will be available at http://ir.wisdomtree.com. For those unable to join the conference call at the scheduled time, an audio replay will be available on http://ir.wisdomtree.com.
ABOUT WISDOMTREE
WisdomTree Investments, Inc., through its subsidiaries in the U.S. and Europe (collectively, “WisdomTree”), is an ETF and ETP sponsor and asset manager headquartered in New York. WisdomTree offers products covering equity, commodity, fixed income, leveraged and inverse, currency and alternative strategies. WisdomTree currently has approximately
WisdomTree® is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.
| 1 | See “Non-GAAP Financial Measurements.” | |
| 2 | Earnings/(loss) per share (“EPS”) is calculated pursuant to the two-class method as it results in a lower EPS amount as compared to the treasury stock method. | |
Contact Information:
Corporate Communications
Jessica Zaloom
+1.917.267.3735
jzaloom@wisdomtree.com
| WisdomTree Investments, Inc. Key Operating Statistics (Unaudited) | Three Months Ended | ||||||||||||||||||
| Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | |||||||||||||||
| GLOBAL ETPs ($ in millions) | |||||||||||||||||||
| Beginning of period assets | $ | 67,392 | $ | 60,710 | $ | 57,666 | $ | 50,347 | $ | 63,615 | |||||||||
| Assets sold | — | — | — | — | (778 | ) | |||||||||||||
| Inflows/(outflows) | 1,279 | 881 | (477 | ) | 126 | (536 | ) | ||||||||||||
| Market appreciation/(depreciation) | 866 | 5,898 | 3,567 | 7,489 | (11,934 | ) | |||||||||||||
| Fund closures | — | (97 | ) | (46 | ) | (296 | ) | (20 | ) | ||||||||||
| End of period assets | $ | 69,537 | $ | 67,392 | $ | 60,710 | $ | 57,666 | $ | 50,347 | |||||||||
| Average assets during the period | $ | 69,552 | $ | 64,125 | $ | 61,216 | $ | 55,708 | $ | 60,189 | |||||||||
| Average advisory fee during the period | 0.42 | % | 0.41 | % | 0.42 | % | 0.41 | % | 0.42 | % | |||||||||
| Revenue days | 90 | 92 | 92 | 91 | 91 | ||||||||||||||
| Number of ETFs – end of the period | 313 | 309 | 305 | 311 | 331 | ||||||||||||||
| U.S. LISTED ETFs ($ in millions) | |||||||||||||||||||
| Beginning of period assets | $ | 38,517 | $ | 33,310 | $ | 31,362 | $ | 28,920 | $ | 40,600 | |||||||||
| Inflows/(outflows) | 1,343 | 919 | 575 | (1,474 | ) | (1,273 | ) | ||||||||||||
| Market appreciation/(depreciation) | 2,303 | 4,385 | 1,373 | 4,030 | (10,397 | ) | |||||||||||||
| Fund closures | — | (97 | ) | — | (114 | ) | (10 | ) | |||||||||||
| End of period assets | $ | 42,163 | $ | 38,517 | $ | 33,310 | $ | 31,362 | $ | 28,920 | |||||||||
| Average assets during the period | $ | 40,673 | $ | 36,002 | $ | 32,984 | $ | 30,626 | $ | 36,940 | |||||||||
| Average advisory fee during the period | 0.40 | % | 0.40 | % | 0.41 | % | 0.41 | % | 0.43 | % | |||||||||
| Number of ETFs – end of the period | 68 | 67 | 67 | 67 | 77 | ||||||||||||||
| INTERNATIONAL LISTED ETPs ($ in millions) | |||||||||||||||||||
| Beginning of period assets | $ | 28,875 | $ | 27,400 | $ | 26,304 | $ | 21,427 | $ | 23,015 | |||||||||
| Assets sold | — | — | — | — | (778 | ) | |||||||||||||
| Inflows/(outflows) | (64 | ) | (38 | ) | (1,052 | ) | 1,600 | 737 | |||||||||||
| Market appreciation/(depreciation) | (1,437 | ) | 1,513 | 2,194 | 3,459 | (1,537 | ) | ||||||||||||
| Fund closures | — | — | (46 | ) | (182 | ) | (10 | ) | |||||||||||
| End of period assets | $ | 27,374 | $ | 28,875 | $ | 27,400 | $ | 26,304 | $ | 21,427 | |||||||||
| Average assets during the period | $ | 28,879 | $ | 28,123 | $ | 28,232 | $ | 25,082 | $ | 23,249 | |||||||||
| Average advisory fee during the period | 0.44 | % | 0.42 | % | 0.42 | % | 0.41 | % | 0.40 | % | |||||||||
| Number of ETPs – end of the period | 245 | 242 | 238 | 244 | 254 | ||||||||||||||
| PRODUCT CATEGORIES ($ in millions) | |||||||||||||||||||
| Commodity & Currency | |||||||||||||||||||
| Beginning of period assets | $ | 26,047 | $ | 25,122 | $ | 24,191 | $ | 19,748 | $ | 19,947 | |||||||||
| Inflows/(outflows) | (624 | ) | (254 | ) | (1,106 | ) | 1,325 | 622 | |||||||||||
| Market appreciation/(depreciation) | (1,389 | ) | 1,179 | 2,037 | 3,118 | (821 | ) | ||||||||||||
| End of period assets | $ | 24,034 | $ | 26,047 | $ | 25,122 | $ | 24,191 | $ | 19,748 | |||||||||
| Average assets during the period | $ | 25,555 | $ | 25,676 | $ | 25,878 | $ | 22,964 | $ | 20,302 | |||||||||
| U.S. Equity | |||||||||||||||||||
| Beginning of period assets | $ | 18,367 | $ | 15,612 | $ | 13,997 | $ | 12,151 | $ | 17,732 | |||||||||
| Inflows/(outflows) | 218 | 395 | 897 | (241 | ) | (285 | ) | ||||||||||||
| Market appreciation/(depreciation) | 1,434 | 2,360 | 718 | 2,087 | (5,296 | ) | |||||||||||||
| End of period assets | $ | 20,019 | $ | 18,367 | $ | 15,612 | $ | 13,997 | $ | 12,151 | |||||||||
| Average assets during the period | $ | 19,293 | $ | 17,050 | $ | 15,141 | $ | 13,302 | $ | 16,011 | |||||||||
| Emerging Market Equity | |||||||||||||||||||
| Beginning of period assets | $ | 8,539 | $ | 5,979 | $ | 5,413 | $ | 4,600 | $ | 6,400 | |||||||||
| Inflows/(outflows) | 1,662 | 1,399 | 257 | (25 | ) | 69 | |||||||||||||
| Market appreciation/(depreciation) | 276 | 1,161 | 309 | 838 | (1,869 | ) | |||||||||||||
| End of period assets | $ | 10,477 | $ | 8,539 | $ | 5,979 | $ | 5,413 | $ | 4,600 | |||||||||
| Average assets during the period | $ | 9,871 | $ | 7,249 | $ | 5,917 | $ | 5,129 | $ | 5,919 | |||||||||
| Three Months Ended | |||||||||||||||||||
| Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | |||||||||||||||
| International Developed Market Equity | |||||||||||||||||||
| Beginning of period assets | $ | 9,414 | $ | 8,621 | $ | 8,839 | $ | 8,659 | $ | 13,011 | |||||||||
| Inflows/(outflows) | 17 | (191 | ) | (587 | ) | (965 | ) | (1,097 | ) | ||||||||||
| Market appreciation/(depreciation) | 560 | 984 | 369 | 1,145 | (3,255 | ) | |||||||||||||
| End of period assets | $ | 9,991 | $ | 9,414 | $ | 8,621 | $ | 8,839 | $ | 8,659 | |||||||||
| Average assets during the period | $ | 9,793 | $ | 8,930 | $ | 8,835 | $ | 8,779 | $ | 11,453 | |||||||||
| Fixed Income | |||||||||||||||||||
| Beginning of period assets | $ | 3,324 | $ | 3,630 | $ | 3,530 | $ | 3,527 | $ | 3,585 | |||||||||
| Inflows/(outflows) | 10 | (330 | ) | 76 | (53 | ) | 21 | ||||||||||||
| Market appreciation/(depreciation) | (73 | ) | 24 | 24 | 56 | (79 | ) | ||||||||||||
| End of period assets | $ | 3,261 | $ | 3,324 | $ | 3,630 | $ | 3,530 | $ | 3,527 | |||||||||
| Average assets during the period | $ | 3,253 | $ | 3,472 | $ | 3,605 | $ | 3,523 | $ | 3,653 | |||||||||
| Leveraged & Inverse | |||||||||||||||||||
| Beginning of period assets | $ | 1,487 | $ | 1,430 | $ | 1,350 | $ | 896 | $ | 1,138 | |||||||||
| Inflows/(outflows) | (4 | ) | (118 | ) | (9 | ) | 312 | 12 | |||||||||||
| Market appreciation/(depreciation) | 45 | 175 | 89 | 142 | (254 | ) | |||||||||||||
| End of period assets | $ | 1,528 | $ | 1,487 | $ | 1,430 | $ | 1,350 | $ | 896 | |||||||||
| Average assets during the period | $ | 1,564 | $ | 1,436 | $ | 1,482 | $ | 1,169 | $ | 1,147 | |||||||||
| Alternatives | |||||||||||||||||||
| Beginning of period assets | $ | 214 | $ | 229 | $ | 225 | $ | 244 | $ | 358 | |||||||||
| Inflows/(outflows) | — | (26 | ) | (4 | ) | (29 | ) | (66 | ) | ||||||||||
| Market appreciation/(depreciation) | 13 | 11 | 8 | 10 | (48 | ) | |||||||||||||
| End of period assets | $ | 227 | $ | 214 | $ | 229 | $ | 225 | $ | 244 | |||||||||
| Average assets during the period | $ | 223 | $ | 224 | $ | 226 | $ | 226 | $ | 328 | |||||||||
| Closed ETPs | |||||||||||||||||||
| Beginning of period assets | $ | — | $ | 87 | $ | 121 | $ | 522 | $ | 1,444 | |||||||||
| Assets sold | — | — | — | — | (778 | ) | |||||||||||||
| Inflows/(outflows) | — | 6 | (1 | ) | (198 | ) | 188 | ||||||||||||
| Market appreciation/(depreciation) | — | 4 | 13 | 93 | (312 | ) | |||||||||||||
| Fund closures . | — | (97 | ) | (46 | ) | (296 | ) | (20 | ) | ||||||||||
| End of period assets | $ | — | $ | — | $ | 87 | $ | 121 | $ | 522 | |||||||||
| Average assets during the period | $ | — | $ | 88 | $ | 132 | $ | 616 | $ | 1,376 | |||||||||
| Headcount | 227 | 217 | 211 | 214 | 210 | ||||||||||||||
Note: Previously issued statistics may be restated due to fund closures and trade adjustments
Source: WisdomTree
WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
| Mar. 31, 2021 | Dec. 31, 2020 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 62,302 | $ | 73,425 | |||
| Securities owned, at fair value | 34,771 | 34,895 | |||||
| Accounts receivable | 30,341 | 29,455 | |||||
| Income taxes receivable | 126 | — | |||||
| Prepaid expenses | 4,187 | 3,827 | |||||
| Other current assets | 237 | 259 | |||||
| Total current assets | 131,964 | 141,861 | |||||
| Fixed assets, net | 7,432 | 7,579 | |||||
| Securities held-to-maturity | 411 | 451 | |||||
| Deferred tax assets, net | 6,215 | 8,063 | |||||
| Investments | 13,849 | 8,112 | |||||
| Right of use assets – operating leases | 15,841 | 16,327 | |||||
| Goodwill | 85,856 | 85,856 | |||||
| Intangible assets | 601,247 | 601,247 | |||||
| Other noncurrent assets | 180 | 180 | |||||
| Total assets | $ | 862,995 | $ | 869,676 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| LIABILITIES | |||||||
| Current liabilities: | |||||||
| Fund management and administration payable | $ | 17,980 | $ | 19,564 | |||
| Compensation and benefits payable | 8,568 | 22,803 | |||||
| Deferred consideration – gold payments | 15,637 | 17,374 | |||||
| Operating lease liabilities | 2,958 | 3,135 | |||||
| Income taxes payable | — | 916 | |||||
| Accounts payable and other liabilities | 11,415 | 10,207 | |||||
| Total current liabilities | 56,558 | 73,999 | |||||
| Convertible notes | 171,163 | 166,646 | |||||
| Deferred consideration – gold payments | 211,509 | 212,763 | |||||
| Operating lease liabilities | 17,012 | 17,434 | |||||
| Total liabilities | 456,242 | 470,842 | |||||
| Preferred stock – Series A Non-Voting Convertible, par value | 132,569 | 132,569 | |||||
| STOCKHOLDERS’ EQUITY | |||||||
| Common stock, par value | |||||||
| Issued and outstanding: 149,811 and 148,716 at March 31, 2021 and December 31, 2020, respectively . | 1,498 | 1,487 | |||||
| Additional paid-in capital | 314,274 | 317,075 | |||||
| Accumulated other comprehensive income | 985 | 1,102 | |||||
| Accumulated deficit . | (42,573 | ) | (53,399 | ) | |||
| Total stockholders’ equity | 274,184 | 266,265 | |||||
| Total liabilities and stockholders’ equity | $ | 862,995 | $ | 869,676 | |||
WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| Three Months Ended | ||||||||
| Mar. 31, 2021 | Mar. 31, 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income/(loss) | $ | 15,147 | $ | (8,638 | ) | |||
| Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities: | ||||||||
| Advisory fees received in gold, other precious metals and bitcoin | (19,757 | ) | (13,860 | ) | ||||
| Contractual gold payments | 4,270 | 3,760 | ||||||
| Stock-based compensation | 3,143 | 3,239 | ||||||
| Deferred income taxes | 2,904 | 4,526 | ||||||
| (Gain)/loss on revaluation of deferred consideration – gold payments . | (2,832 | ) | 2,208 | |||||
| Amortization of right of use asset | 697 | 798 | ||||||
| Amortization of issuance costs - convertible notes | 429 | — | ||||||
| Impairments | 303 | 19,672 | ||||||
| Depreciation and amortization | 252 | 256 | ||||||
| Gain on sale – Canadian ETF business | — | (2,877 | ) | |||||
| Amortization of issuance costs - former credit facility | — | 723 | ||||||
| Other | (235 | ) | (31 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Securities owned, at fair value | 124 | (2,942 | ) | |||||
| Accounts receivable | 290 | 5,850 | ||||||
| Prepaid expenses | (362 | ) | (616 | ) | ||||
| Gold, other precious metals and bitcoin | 14,166 | 9,838 | ||||||
| Other assets | 5 | 139 | ||||||
| Fund management and administration payable | (1,470 | ) | 537 | |||||
| Compensation and benefits payable | (14,245 | ) | (22,688 | ) | ||||
| Income taxes receivable/payable | (1,028 | ) | (2,032 | ) | ||||
| Securities sold, but not yet purchased, at fair value | — | (112 | ) | |||||
| Operating lease liabilities | (918 | ) | (926 | ) | ||||
| Accounts payable and other liabilities | 982 | 542 | ||||||
| Net cash provided by/(used in) operating activities | 1,865 | (2,634 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Purchase of investments | (5,500 | ) | — | |||||
| Purchase of fixed assets | (103 | ) | (50 | ) | ||||
| Proceeds from held-to-maturity securities maturing or called prior to maturity | 38 | 6,030 | ||||||
| Proceeds from sale of Canadian ETF business, net | — | 2,774 | ||||||
| Net cash (used in)/provided by investing activities | (5,565 | ) | 8,754 | |||||
| Cash flows from financing activities: | ||||||||
| Dividends paid | (4,937 | ) | (5,136 | ) | ||||
| Shares repurchased | (2,630 | ) | (1,495 | ) | ||||
| Repayment of debt | — | (5,000 | ) | |||||
| Proceeds from exercise of stock options | 379 | 240 | ||||||
| Net cash used in financing activities | (7,188 | ) | (11,391 | ) | ||||
| Decrease in cash flows due to changes in foreign exchange rate | (235 | ) | (1,272 | ) | ||||
| Decrease in cash and cash equivalents | (11,123 | ) | (6,543 | ) | ||||
| Cash and cash equivalents – beginning of year | 73,425 | 74,972 | ||||||
| Cash and cash equivalents – end of period | $ | 62,302 | $ | 68,429 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for taxes | $ | 1,278 | $ | 1,147 | ||||
| Cash paid for interest | $ | — | $ | 2,312 | ||||
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 measures provides investors with a consistent way to analyze our performance. These non-GAAP financial measures exclude the following:
- Unrealized gains or losses on the revaluation of deferred consideration: Deferred consideration is an obligation we assumed in connection with the ETFS acquisition that is carried at fair value. This item represents the present value of an obligation to pay fixed ounces of gold into perpetuity and is measured using forward-looking gold prices. Changes in the forward-looking price of gold and changes in the discount rate used to compute the present value of the annual payment obligations may have a material impact on the carrying value of the deferred consideration and our reported financial results. We exclude this item when calculating our non-GAAP financial measurements as it is not core to our operating business. The item is not adjusted for income taxes as the obligation was assumed by a wholly-owned subsidiary of ours that is based in Jersey, a jurisdiction where we are subject to a zero percent tax rate.
- Tax shortfalls and windfalls upon vesting and exercise of stock-based compensation awards: GAAP requires the recognition of tax windfalls and shortfalls within income tax expense. These items arise upon the vesting and exercise of stock-based compensation awards and the magnitude is directly correlated to the number of awards vesting/exercised as well as the difference between the price of our stock on the date the award was granted and the date the award vested or was exercised. We exclude these items when calculating our non-GAAP financial measurements as they introduce volatility in earnings and are not core to our operating business.
- Other items: Impairment charges, an unrealized gain recognized on our investment in Securrency, interest expense from the amortization of discount arising from the bifurcation of the conversion option embedded in the convertible notes (prior to January 1, 2021, the effective date of Accounting Standards Update 2020-06, Debt – Debt with Conversion and Other Options, Cash Conversion), a loss on extinguishment of debt, the release of a deferred tax asset valuation allowance recognized on interest carryforwards arising from our debt previously outstanding in the United Kingdom, a gain arising from an adjustment to the estimated fair value of consideration received from the exit of our investment in AdvisorEngine, a gain recognized upon the sale of our Canadian ETF business and acquisition and disposition-related costs are excluded when calculating our non-GAAP financial measurements.
- Unrealized gains or losses on the revaluation of deferred consideration: Deferred consideration is an obligation we assumed in connection with the ETFS acquisition that is carried at fair value. This item represents the present value of an obligation to pay fixed ounces of gold into perpetuity and is measured using forward-looking gold prices. Changes in the forward-looking price of gold and changes in the discount rate used to compute the present value of the annual payment obligations may have a material impact on the carrying value of the deferred consideration and our reported financial results. We exclude this item when calculating our non-GAAP financial measurements as it is not core to our operating business. The item is not adjusted for income taxes as the obligation was assumed by a wholly-owned subsidiary of ours that is based in Jersey, a jurisdiction where we are subject to a zero percent tax rate.
- 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.
- Adjusted operating income margin. We disclose adjusted operating income margin as a non-GAAP financial measurement in order to report our operating income margin exclusive of items that are non-recurring or not core to our operating business.
WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES
GAAP to NON-GAAP RECONCILIATION (CONSOLIDATED)
(in thousands)
(Unaudited)
| Three Months Ended | |||||||||||||||||||
| Adjusted Net Income and Diluted Earnings per Share: | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | ||||||||||||||
Net income/(loss), as reported | $ | 15,147 | $ | (13,497 | ) | $ | (270 | ) | $ | (13,250 | ) | $ | (8,638 | ) | |||||
| Deduct/Add back: (Gain)/loss on revaluation of deferred consideration | (2,832 | ) | 22,385 | 8,870 | 23,358 | 2,208 | |||||||||||||
| Deduct: Unrealized gain recognized on our investment in Securrency, net of income taxes | (179 | ) | — | — | — | — | |||||||||||||
| Add back: Impairments, net of income taxes (where applicable) | 245 | — | 2,326 | — | 19,672 | ||||||||||||||
| Add back: Tax shortfalls upon vesting and exercise of stock-based compensation awards | 123 | 21 | 50 | 119 | 501 | ||||||||||||||
| Add back: Interest expense from the amortization of discount arising from the bifurcation of the conversion option embedded in the convertible notes, net of income taxes | — | 314 | 286 | 42 | — | ||||||||||||||
| Deduct: Gain arising from an adjustment to the estimated fair value of consideration received from the exit of investment in AdvisorEngine | — | — | (225 | ) | (868 | ) | — | ||||||||||||
| Add back: Loss on extinguishment of debt, net of income taxes | — | — | — | 1,910 | — | ||||||||||||||
| Deduct: Release of a deferred tax asset valuation allowance recognized on interest carryforwards arising from debt previously outstanding in the United Kingdom | — | — | — | (2,842 | ) | — | |||||||||||||
| Deduct: Gain recognized upon the sale of Canadian ETF business | — | — | — | — | (2,877 | ) | |||||||||||||
| Add back: Acquisition and disposition-related costs, net of income taxes | — | — | — | 25 | 358 | ||||||||||||||
| Adjusted net income | $ | 12,504 | $ | 9,223 | $ | 11,037 | $ | 8,494 | $ | 11,224 | |||||||||
| Weighted average common shares - diluted | 161,831 | 161,138 | 160,876 | 166,634 | 167,561 | ||||||||||||||
| Adjusted earnings per share - diluted | $ | 0.08 | $ | 0.06 | $ | 0.07 | $ | 0.05 | $ | 0.07 | |||||||||
| Three Months Ended | |||||||||||||||||||
| Gross Margin and Gross Margin Percentage: | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | ||||||||||||||
| Operating revenues | $ | 72,830 | $ | 67,059 | $ | 64,640 | $ | 58,126 | $ | 63,874 | |||||||||
| Less: Fund management and administration | (15,521 | ) | (16,350 | ) | (15,219 | ) | (14,461 | ) | (14,485 | ) | |||||||||
| Gross margin | $ | 57,309 | $ | 50,709 | $ | 49,421 | $ | 43,665 | $ | 49,389 | |||||||||
| Gross margin percentage | 78.7 | % | 75.6 | % | 76.5 | % | 75.1 | % | 77.3 | % | |||||||||
| Three Months Ended | |||||||||||||||||||
| Adjusted Operating Income and Adjusted Operating Income Margin: | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | ||||||||||||||
| Operating revenues | $ | 72,830 | $ | 67,059 | $ | 64,640 | $ | 58,126 | $ | 63,874 | |||||||||
| Operating income | $ | 18,607 | $ | 12,907 | $ | 14,744 | $ | 11,797 | $ | 15,634 | |||||||||
| Add back: Acquisition and disposition-related costs, before income taxes | — | — | — | 33 | 383 | ||||||||||||||
| Adjusted operating income | $ | 18,607 | $ | 12,907 | $ | 14,744 | $ | 11,830 | $ | 16,017 | |||||||||
| Adjusted operating income margin | 25.5 | % | 19.2 | % | 22.8 | % | 20.4 | % | 25.1 | % | |||||||||
| Three Months Ended | |||||||||||||||||||
| Adjusted Total Operating Expenses: | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | ||||||||||||||
| Total operating expenses | $ | 54,223 | $ | 54,152 | $ | 49,896 | $ | 46,329 | $ | 48,240 | |||||||||
| Deduct: Acquisition and disposition-related costs, before income taxes | — | — | — | (33 | ) | (383 | ) | ||||||||||||
| Adjusted total operating expenses | $ | 54,223 | $ | 54,152 | $ | 49,896 | $ | 46,296 | $ | 47,857 | |||||||||
| Three Months Ended | |||||||||||||||||||
| Adjusted Income Before Income Taxes: | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | ||||||||||||||
| Income/(loss) before income taxes | $ | 13,178 | $ | (11,297 | ) | $ | 1,138 | $ | (14,054 | ) | $ | (11,009 | ) | ||||||
| Deduct/Add back: (Gain)/loss on revaluation of deferred consideration | (2,832 | ) | 22,385 | 8,870 | 23,358 | 2,208 | |||||||||||||
| Add back: Loss recognized upon reduction of a tax-related indemnification asset | 5,171 | — | — | — | 5,981 | ||||||||||||||
| Deduct: Unrealized gain recognized on our investment in Securrency, before income taxes | (237 | ) | — | — | — | — | |||||||||||||
| Add back: Impairments, before income taxes | 303 | — | 3,080 | — | 19,672 | ||||||||||||||
| Add back: Interest expense from the amortization of discount arising from the bifurcation of the conversion option embedded in the convertible notes, before income taxes | — | 416 | 379 | 55 | — | ||||||||||||||
| Deduct: Gain arising from an adjustment to the estimated fair value of consideration received from the exit of investment in AdvisorEngine | — | — | (225 | ) | (868 | ) | — | ||||||||||||
| Add back: Loss on extinguishment of debt, before income taxes | — | — | — | 2,387 | — | ||||||||||||||
| Deduct: Gain recognized upon sale of Canadian ETF business | — | — | — | — | (2,877 | ) | |||||||||||||
| Add back: Acquisition and disposition-related costs, before income taxes | — | — | — | 33 | 383 | ||||||||||||||
| Adjusted income before income taxes | $ | 15,583 | $ | 11,504 | $ | 13,242 | $ | 10,911 | $ | 14,358 | |||||||||
| Three Months Ended | |||||||||||||||||||
| Adjusted Income Tax Expense and Adjusted Effective Income Tax Rate: | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | ||||||||||||||
| Adjusted income before income taxes (above) | $ | 15,583 | $ | 11,504 | $ | 13,242 | $ | 10,911 | $ | 14,358 | |||||||||
| Income tax (benefit)/expense | $ | (1,969 | ) | $ | 2,200 | $ | 1,408 | $ | (804 | ) | $ | (2,371 | ) | ||||||
| Add back: Tax benefit arising from reduction of a tax-related indemnification asset | 5,171 | — | — | — | 5,981 | ||||||||||||||
| Deduct: Tax shortfalls upon vesting and exercise of stock-based compensation awards | (123 | ) | (21 | ) | (50 | ) | (119 | ) | (501 | ) | |||||||||
| Deduct: Tax expense on unrealized gain recognized on our investment in Securrency | (58 | ) | — | — | — | — | |||||||||||||
| Add back: Tax benefit arising from impairments . | 58 | — | 754 | — | — | ||||||||||||||
| Add back: Tax benefit arising from the amortization of discount associated with the bifurcation of the conversion option embedded in the convertible notes | — | 102 | 93 | 13 | — | ||||||||||||||
| Add back: Tax benefit arising from loss on extinguishment of debt | — | — | — | 477 | — | ||||||||||||||
| Add back: Release of a deferred tax asset valuation allowance recognized on interest carryforwards arising from debt previously outstanding in the United Kingdom | — | — | — | 2,842 | — | ||||||||||||||
| Add back: Tax benefit arising from acquisition and disposition-related costs | — | — | — | 8 | 25 | ||||||||||||||
| Adjusted income tax expense | $ | 3,079 | $ | 2,281 | $ | 2,205 | $ | 2,417 | $ | 3,134 | |||||||||
| Adjusted effective income tax rate | 19.8 | % | 19.8 | % | 16.7 | % | 22.2 | % | 21.8 | % | |||||||||
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, the risks described below. If one or more of these or other risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this press release completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.
In particular, forward-looking statements in this press release may include statements about
- the ultimate duration of the COVID-19 pandemic and its short-term and long-term impact on our business and the global economy;
- anticipated trends, conditions and investor sentiment in the global markets and ETPs;
- anticipated levels of inflows into and outflows out of our ETPs;
- our ability to deliver favorable rates of return to investors;
- competition in our business;
- our ability to develop new products and services;
- our ability to maintain current vendors or find new vendors to provide services to us at favorable costs;
- our ability to successfully operate and expand our business in non-U.S. markets; and
- the effect of laws and regulations that apply to our business.
Our business is subject to many risks and uncertainties, including without limitation:
- adverse market developments arising from the COVID-19 pandemic could negatively impact our assets under management, resulting in a decline in our revenues and other potential operational challenges;
- declining prices of securities, gold and other precious metals and other commodities can adversely affect our business by reducing the market value of the assets we manage or causing WisdomTree ETP investors to sell their fund shares and trigger redemptions;
- fluctuations in the amount and mix of our AUM, whether caused by disruptions in the financial markets or otherwise, including but not limited to a pandemic event such as COVID-19, may negatively impact revenues and operating margins, and may impede our ability to refinance our debt upon maturity or, increase the cost of borrowing upon a refinancing;
- competitive pressures could reduce revenues and profit margins;
- we derive a substantial portion of our revenues from a limited number of products, and as a result, our operating results are particularly exposed to investor sentiment toward investing in the products’ strategies and our ability to maintain the AUM of these products, as well as the performance of these products and market-specific and political and economic risk;
- a significant portion of our AUM is held in products with exposure to U.S. and international developed markets and we therefore have exposure to domestic and foreign market conditions and are subject to currency exchange rate risks;
- withdrawals or broad changes in investments in our ETPs by investors with significant positions may negatively impact revenues and operating margins;
- over the last few years, we have expanded our business internationally. This expansion subjects us to increased operational, regulatory, financial and other risks;
- many of our ETPs have a limited track record, and poor investment performance could cause our revenues to decline; and
- 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.
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, 2020.
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.
FAQ
What were WisdomTree's Q1 2021 earnings results?
WisdomTree reported a net income of $15.1 million and operating revenues of $72.8 million for Q1 2021.
How did AUM perform in Q1 2021 for WETF?
The assets under management (AUM) for WisdomTree reached $69.5 billion, an increase of 3.2% from the previous quarter.
What is the significance of the $1.3 billion net inflows reported by WETF?
The $1.3 billion net inflows highlight strong demand, particularly for emerging markets equity products.
When is WisdomTree's dividend payable?
The declared dividend of $0.03 per share is payable on May 26, 2021.
WETF
:WETF
WETF Rankings
WETF Latest News
Oct 28, 2022
WisdomTree Wins Best US Fixed Income ETF Issuer ($1bn-$5bn) at ETF Express US Awards 2022
Oct 28, 2022
WisdomTree Announces Third Quarter 2022 Results - Diluted Earnings Per Share of $0.50 ($0.06, as adjusted)