WETF - Earnings call transcript Q4 2017

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Operator

Good day, ladies and gentlemen, and welcome to the WisdomTree Q4 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded for replay purposes. It is now my pleasure to hand the conference over to Mr. Jason Weyeneth, Director of Investor Relations. begin. may you Sir,

Jason Weyeneth

morning. Good you. Thank

report Reform Before materially we presentation available forward-looking our to, disclaimer actual on and Securities to within year of XX, but A factors could to including, the I'd does today's presentation. results like cause Litigation Private set risks in statements. the statements, of the the WisdomTree's XX-K not forward-looking contain to not section Form meaning limited reference annual the for ended of This in XXXX. XXXX. the number in differ no legal results of forward-looking Risk begin, Act from WisdomTree presentation undertake Factors statements this duty any in forth December may update assumes and discussed

my Amit the to call Now to turn over Muni. it's WisdomTree's pleasure CFO,

Amit Muni

billion end DXJ, quarter. X has strongest and our right The shows. billion quarterly recent call Most Thank our the significant quickly movement. other through the result morning, that January. for of drove $XX.X ETF remarks on the strength then flows the offset we the XXXX. of hedge middle fourth operating John so chart The are due to at provide categories, Global thinking truck how the our will grew MacAlpine, operating $X.X dollar's the x U.S. initiatives, that in we for through call data some discuss diversification you, good for I'll The market Jason, already known, some guidance and hedge largely go flow to and continued some of item the Slide on total to trends, and Distribution everyone. from make the is reflects X, our closing about primarily Kurt our Head comments the positive before Beginning over USA decline AUM which outflows flows open continued around turn euro to years quarter, versus I'll in Q&A. key and quarter, on as

we are next into strength. to we dig can Turning where the flow slide, seeing

quarter, During had Strategies continued $XXX aggregate demand non-U.S. SmallCap the for million. we inflows which saw of strong

ever Our ETF of -- managers. continues suite record impressive and by performance million strongest active driven inflows to quarter of fixed versus which $XXX passive AGGY, build had sophisticated with the the income an domestic track most benchmarks

hedged fourth was fairly hedged dollar stable sentiment the During every out took WisdomTree $X.XX flow team. category. that with currency into dollar quarter, hedge again towards improved This market the the sentiment DXJ briefly challenges in a strength and when turns, the sentiment went driven the Japan. of Japan had our we are the flows currency and illustrates the lead that given competitive we

across producing of are over I'd ago, This the experiencing, laid XX of record of around funds discuss a we've quarters inflows. now part which a ETFs, and slide. momentum the on strategies, the next quarter also than we like solutions, new We made diversified flows, last channels, generating our strategy investments year believe fund broad with direct is the result technology to the $XX of generating XX portal of and million greater range different show XX diversification, record a inflows and inflows. which is distribution several we out

the which digital like taken big ETFs with and goal, TD. and increase investing These the out one into advisers. seeing -- solutions in these includes and flows end and results Investing deepen actions more to have lastly, with make to form. could technology building quarter in new our distribution portfolios, rolled out starting optimizing efforts build Harnessing the we base. diversify now advisors to in We have like tools, and steps This announced of take WisdomTree an active platform targeted. program asset have our initiatives our relationship data recently grow we ETFs helps to adviser they our we relationship channels initiatives are distribution our

can the flow in several accelerated has in slide, on net you top past the this chart breadth see As months. the

a funds increase seen in significant the have basis. with We daily on creations of number a

funds Over X in and X past saw increased X to years in average, we X the on fourth basis. January. recently to far on nearly quarter so That a daily funds X funds create has the

These funds past the in make X reflecting strategic annualized years, core bottom million a growth over tactical net fourth exposures. more of These of core funds addition, ETF during the $X can up rate, XX% XX% which a billion including inflows years inflows see generated strategic core inflows the funds, this well X generated representing ago. a AUM flows $XXX record slide. strategic versus In our in quarter, of organic as now our These XX% have chart net than AUM as funds for XX strategic quarter. more of core into you in greater U.S. the combination the translated on

very believe continue We focus and driving diversified efforts and are are to encouraged our accelerated it. on these of flows initiatives will signs by that we

was our page to or $X.X X. for last $XXX,XXX adjusted for X Revenues increased turning of quarter results items. XX% to million. year the $XX.X fourth financial million the Net on Now from unusual income quarter,

with AdvisorEngine. our our we and fees, Securities, associated of of option an announced the quarter, loan ETF agreement acquisition incurred During advisor $X.X million with

cost incurred well the of a tax We reform result international rate tax deferred our the value write-down as nondeductability in a asset. new and the to our The assets the elevated as of reflected down our also tax losses write rules. as tax quarter charge deferred the of of transaction segment $XXX,XXX the

compensation in expense. events fourth quarter, occurred We up some also drove we the have specific

is result the of period. change portion recognized total portion the stock a planned, record in quarter, relates The the recorded in the over vesting we incur and in charges more in The reduced compensation it and compensation. cash, less the the made compensation expense we bonus This expense quarter first an employees, to This but incentive In incentive fourth initially the also award writing to as We in future is result over as X expense incentive not what in a periods. higher an which year change determination in stock, would had higher years. vest towards cash typically to we compensation than of a periods. cash change current expense the in stock-based we mix so bonus the did fourth future how just expense. X-year

rules, key incentive several as of initiatives, important quarter, And the Second, milestones, in involving the certain of January, originally compensation maximize awards, reform of to tax the well accelerated the the we executives. deductibility of key lastly, scheduled pool recognize in of for strategic the vesting the we tax hiring the award. achievement to increase because order company the stock in to as vest

the is I'd U.S. include Now does the items existing our our guidance slide. with the expense ETF on on Business walking our with the not This down starting segment income like guidance for business Securities to XXXX next thoughts our and line to turn and compensation. Starting transaction. statements,

of compensation XX% XX% to is to XX% XXXX. down U.S. in be which We revenues, in range from the of expect

fund give operating For margin margin. as gross guidance fund cost, gross we included revenue cost sharing. operating and third-party Historically,

part and accurate are revenues, no a like sharing decision include relationships more Therefore, of with Group, arrangement forward of including key really Schwab going fund operating Given gross the longer distribution-related to third-party it's since our advisor and PD gross as model. cost we it's platforms margins will marketing our fee with success margin, only cost. Compass less the because

to be gross revised the near-term. XX% margin expect We in the

between Third-party and are distribution today, each X.X% X.X% range and quarter, X% revenues to AUM of revenues sharing depending the cost of upon with expect our approximately it growth of partners. we

each and gross guidance on We sharing will give quarter. continue third-party to updating both margin

continued a to in competitive other growth. long-term investments ETF is leadership maintain To important nominal it in expect to also the increase in We business our costs. industry, overhead drive and fast-growing position our make

We investments $X solutions. abilities, and our which through specifically expanding on adviser this million $X AdvisorEngine. million focus focused growth initiatives, build on technology our our will advisor-oriented expect around to on Continuing to in distribution year initiatives, distribution invest strategic technology to

we the make this We invest our manage will awareness product launching and X to X well strategic base. to in the addition, balances and right photos In believe cost brand new as XXXX. in investments continue amount need to as ETFs

oversees. now Turning

segment losses in international of $XX we and which Again, improving XXXX. will are international losses them Our expect is prior million million to to to our immediately a segment $X Securities this have transaction, profitable. make ETF the

basis, our consolidated of consolidated Our U.S. tax ETF Securities approximately be the nondeductibility losses. be to After transaction, rate our XX% XX% because a is and will expected of XX%. tax the on rate foreign

we and is is at give you an are The and close, to of on a quarter. well is transaction. to like end process its Securities I'd expected the the on way Now ETF going well first proceeding sometime the which integration update

earnings the contribution approximately our give We XXXX. updated has and announced Their will next previously in $XX deal are at call, their on as $XX.X billion. guidance AUM but stands and increased the of of meantime, we synergies million in the with income of in announced target our net we business now

so Now quarter. an results update our far on this

by up strong X continued nearly inflows is we've million and seen January, those of yesterday, net flow driven while on continuation with excluding of $XX HEDJ to have As diversity waited U.S. the billion market our of a strength, approximately AUM funds. inflows, $XXX DXJ in

industry. One the months of firms in the strongest

to the over call the Head our beyond of discuss key behind Kurt and diversity -- like turn momentum. Global drivers several to I'd Distribution flow the of Now MacAlpine, to improved

Kurt MacAlpine

everyone. morning, Good

driving net have one Since of released in in the rollout can considerably step-change to late or net of our we hot officially part and up was program, flows flows As Jon of bought be DXJ flows. picked category ETFs, $X.X which this of the four attributed money with our has XXXX. XX increase mentioned, in our in Legally new across the adviser diversification categories solutions HEDJ, October those X, last the the excluding September no and in billion majority months.

strategic the we we program, distribution, built wanted with in launched quarters you You've lot we we the did the spend, the build and effort to new program into solutions heard primary some mind. the investments. to provide last that with objectives a within few X When this over about it visibility

platforms the told developed help What us and our To their relevant is a support today. we business on else they're in anything easier available. with with was collaboration expand designed this, to product prospects ideas. ensure wanted business and program, relative and clients providing that want building that to deeper beyond to to second, we build wanted we to and relationships us; it prospects in most with advisors differentiated challenges new our what they X make facing we needed clients achieve focused it and and In for do program a First, headwind they we or with best things.

Evolve So starting with from the top Client the Experience.

they their an technology working to with evolve part are how need and offering. their First, as better a clients incorporates they that of offer experience core

increase them. looking Second, so share their attention to wallet ways they to they're with practice create for and and clients the are additional existing more focus capacity can struggling on

there that for differentiate looking and depending better new their many age, done their to recognize new seeking or ways scale requisition businesses. and evolve data embrace Faced, have at to and or historically. how how demanding to teams are to Sixth need to and invest struggling they their themselves there operate more their out their not on products. expand to working business and wanted legacy that the looking business commoditized and clients offering win we internally. Robo-advisers becoming and technology to clients for involve that to seventh, by Fourth, ways Third, themselves more looking by than are the there attract their retire. and age, they're business And position recognize they for is way they

the unrivaled that the in offer topics today. As slide, else asset address on program there market facing. provide by we are available our they that the clients from a are see program to other that are directly are you managers, of we from things our challenges that solutions diagram look We've got at can new the the each anything beyond two focused chance on,

academics. technology and examples ourselves best user-friendly clients designed adviser not leading based delivered our and and is providing on entire are industry-leading the with scalable and as partnering and The manner differentiating that empower, by We words technology and platform we compared with advisor we topics a solutions are would with direct are world-leading from, differentiating elements to the details you. I they've I with two with hear share to most talk them. to relevant in brainstorm the and the but problem-solve be each to like on access won't the the of through prospects to experts program, all you the of identified

Section. Deliver the under Results First, Uncommon Investment

love Portfolio for Digital how their capability over the In strong rolled One we they at heard their launch the platforms after launched, of Developer. there that incredibly we or not product, clients them expectations portfolio. the X understand demand much named that DPD tools provide In how their is even adoption they first immediately portfolio in the runs, tool the XXXX we marketplace the Digital in months did other aggressive response, unit most a This demonstrates new tool, to complaints with our exceeding tool. but they holdings alongside from or out Portfolio was we've a this. for most fit, frequent like had Construction have

the free fourth planning in with easy-to-execute Ameritrade already delivered generated can Clients, time portfolios of for more help on significant theses feedback taking so solution. we solution. thoughts with the quarter client The and positive Hopefully Despite the made advisor open-architecture achieve helped we Business of launching, experienced provided business, some we to that that portfolios the Existing Advisors from the open-architecture just asking has platform beta service. his are experienced actions the capital and the like and into the and very and model that platform. More you us investing increase outsourced flows. now solutions call side a been have the Do strong of glimpse this high-level platforms to to breadth and on in model have our with year-end. they of TD investment program overview spend suite Jona to up net on under available primary X into them adoption quarter, blend flows on from an have provided positive we've the financial of a a alpha We the this are and selling. been with we've advisors compelling, our I products would to the investment net over discuss portfolios us turn Second,

Jonathan Steinberg

Thank you. Good morning, everyone.

The of distribution couple word in ETF run of Ameritrade $XX incredible billion TD and acquisition combination Securities the our under securities immediate in have the rate of descriptor of an year-end. end September, November, October program makes of the in at announced relationship We launch the December AdvisorEngine's with solution juncture the transformative with XXXX. ETF $XXX WisdomTree deal for will have When the with and months, in the appropriate scale revenues. of assets the management in of Europe nearly closes next million acquisition of

largest have and ETF will second and is the transformed business will important also European in been the Our risks. since We'll materially Europe our been reducing succeeded transformed. in have most the WETF diversifying business have market second and world, concentration

rallied. goal better. past yet deal few have U.S. While the to benefits commodities have our closed, It hasn't seems seen would as the have dollar months lows been over the and slid been multiyear couldn't and clear timing other prices

in making synchronized manner transaction in to accelerate As this demand expect increase, for global many more ETPs a for the I attractive. commodity is to expected years, growth even first time

addition of the space bought months. will $X.XX be In merits at shares. the this the deal strategic ETF of the transaction the financial first accretive least in merits strong in strategic deal, it together, XX and the [indiscernible] was BlackRock since Taking best done the to

to XX. Turning Slide

made investments were other XDXJ flow by recent asset driving we diversification the start. are points have Amit in X in to around off and or While how growth the an by they of flows seeing. want regardless we've vintages. and reiterate the market is faster funds, XXXX been particularly Inflows of Securities products benefits and organic I years, both Kurt. and the distribution, ETF emerging the is some evident undeniable. of The strengthening been cut United made the the broad It's I'm we by transactions, even QX you States. number years and to highest data diversification about levels are in here optimistic fund classes of excited HEDJ in the broader

In powerful innovator. product terms remains WisdomTree a development, of

important and on entire of breath. platform. new addition data model distribution when platform and inclusion played development, Ameritrade's marketplace. key ETF the In and to smart TD in was XX commission of flow the majority platform, representing the One product role investments free in has a funds distribution the improving offerings a nearly also have WisdomTree the XX%

positioning WisdomTree tools with an for a $XXX and for flows will Our about that impact would in Advisors. of the goals XXXX, facilitate dramatically driving we've management across WisdomTree. a technology, of prospecting, business. asset the CRM deeper AdvisorEngine. among And October this make hundreds managers. broad and with and have quarters possible range of acquisition their losers program technology we for help This over envision up-selling brings been deal wealth product transformational XX,XXX client had billion built diversification, it since which determining assets improve over this initiatives more The X,XXX acquisitions X in Advisors. we AdvisorEngine, tremendous In flow cross-selling not past considerable the opportunity X past planning progress juncture XXXX, financial has platform already without the over suite importance across the the for the help on fostered based industry platform lot enhanced particular, forms, into revolutionizing a and opportunity advising AdvisorEngine X for was how represents in At In relationships We've FAA's millions new of the talked inflows and play on decade. funds will to launch. to winners the

feedback advisor see since discussed, our positively we and solutions tool, of flows. construction portfolio program, excellent including received As WisdomTree impacting September our Kurt this has the distinctive DPD, launch can

best on creating funds leverage a success very there of by the early, number be and our efforts to a lot of to still basis. as a daily captured While seem

next Let's U.S. XX ETF focus of opportunity. of globally big aggressive the approach industry flows our never positioned on flows over complete the the years. to trillion accomplishment exploded $XX year's on $X to industry. global to in in XXXX. growth been billion the better massive to for trillion picture. expect the global I We've This illustrated to the ETF $XXX the capitalize

the open to call questions. let's Now

Operator

our come Crédit of from will line And Siegenthaler Instructions]. Suisse. [Operator with first Craig question

Craig Siegenthaler

so ETF the to up think wanted on to wins more Should just we you in have to better expect assumption AUM see XXXX, more of conservative So a flows in in Or really year? set start do and it's like AdvisorEngine. show first this XXXX?

Amit Muni

you'll it's in and sure. would think I 'XX see some for over accelerated time,

WisdomTree You from incredibly sort around and of, engagement know team a positive. been platform also the the traction transaction growth, has reaction the the the has advisor cycle been incredible. reaction it is AdvisorEngine, that industry, by from their sales efforts long and juncture to in But industry and to And their is from is considerable buy lead took should lead and it to significantly WisdomTree, small And growth. even and to But team, a model a organic juncture to larger for with revenue then standpoint AdvisorEngine. should than just faster resources. away negotiate from opportunities juncture AdvisorEngine, cross-selling also juncture to the

all and So grow year time. over should in this totality accelerate

Craig Siegenthaler

like And with opportunities additional China run the having I some add behind products the And emerging it. China we a better your also and of to wins noticed to XXX index [indiscernible] saw EM X good team in and here specifically? is really market on we Ameritrade? on suite Is products. also are the follow-up and with seeing a And China is to S&P sales want run. China really Got there traction platform, good your these

Jonathan Steinberg

Jonah. is This

see absolutely the just lot in I me say broadly. of EMEA first would Let question, interest answer and we're a

part the along effect on A-shares the China, particular are fund as to based in data includes becomes low both funds, folks need extremely China very get the for in And are interest with, broadest in index. eight-shares unique you that is to of saw the data global we the significant market really, is China that from XXXX go-to We and that China and China X base. the and in industry. it risk and data enterprises XXX, ownership. broad of that XXX as allocate removing beta be exposure equity market. China. We S&P Chinese cap for recently mentioned, a to in launched state exists, could the China a think China to bigger exposure flows two a way greater really on That's China, seeing And those

are So year are of fund, People last excited horizon by emerging we I S very very we XXXX Market O them on are MSI the E. data as beat points. and that the broad to that's which Emerging about direction basis X well, markets the X Index about both would excited discover starting just say

Kurt MacAlpine

of present X funds then which Around platforms. the XXX on on seen second we and S&P the on platforms, is part was of different of adoption just MacAlpine enterprise placed the Ameritrade it's platform Craig, you've yesterday, on for And been your data has Kurt these trading. And And on question, the placement here. recently. strong suite the part TD commission-free many reason China the as of

So as as base gain the variety launched fund of in anticipate December. asset traction are that fund volumes platforms continue a we that grows. we just know, so on growing quite will to The strong, is that trading nicely, you

Amit Muni

-- just add of a couple thing. me And let so

XXX the the first, China So ever beta launched. is first fund true

of any be indexes, on say narrow of true is way the any to the beta. can't considered You other beta, they're too based ETFs,

of about ago was market certainly then old X, it's you spoke couple prepared very again, so strongly year X,X, well. The exciting. China fund So on remarks, if speed we've but DGS about are X We've has fast to this And years ago, also years my with most created, which be said or off an but emerging just that not ever I you first also start. faster do -- launches than trading. had. is DDM to as are you're the beta, And only its that enterprises, to vintages. not opened And creating incredibly and funds, and XXX, it's not of in it's X to which often has couple but you, weeks often have is earlier a seeing data launched a going

So standpoint funds referring new particularly thanks we very firm powerful fee-compression and both encouraging, historically the it's in funds your and at creating sheer But I doing a of at that's what a the same from question. standpoint at for are see the time. breadth was to what and fee firm the to

Operator

the And our Citigroup. Bill next comes question of on line with Katz

William Katz

ETF that well was quick the Just Securities. on could of a very had sort said the just it's you question be. John, a you set shows at pending maybe mentioned which But and of the about sure what apples transaction. I $X.XX mixing you accretion, at looking it oranges, $X.XX. And time

I shift So I the -- using the subtle a am assets is versus bit a what's of the -- couple so mishearing? what is think one guidance? level that, similar there in you're in little around just there questions today, guess of a just is of I Or

Jonathan Steinberg

in number, change that opposed The no the numbers was year XXXX is XX-month amount. there to gave No, as the guidance. we calendar

We probably the been at guidance call. there's the first transaction. in no look guidance the upgrading So when announced we after from the quarter transaction change closes

William Katz

But it. based today's not AUM, is on AUM, Got again that right?

Jonathan Steinberg

correct. That's

William Katz

picture longer-term big the on just then question, Jonah, forecast sort and flows. for thanks Okay, of

some about these out the think you But little you seen prior you've calls? your against about $XX growth incremental as close semi-billion for aggregate some in what So in here flows, you more the potentially franchise, an business U.S. looks is of industry. rounded market for quick recently? versus share math this laid can gap catalyst well. there we've that of Is the a incremental share X% do like How the assumptions to versus have the market do maybe in you the mentioned again your

Jonathan Steinberg

Yes.

So, headwinds one and with, HEDJ. I both we've seen massive know that's answered with DXJ

our are that need of the the another that early targets growth masking but just tools. out, the great also, So data I we of and beyond to that marry very leverage lots these still significant are It point absolute you is are when platforms of I've laid a and still that There hit. by firm. sort of marketing, to to with on some is leverage for match encouraged lot that of you see days. taking am out the starting potential, digital seeing numbers the

tried all -- things to lot on repeated, to One in just so to activity and the totality much have We so things a we -- sense just was efforts of in this we've new the the are have it's you a and that products, but of past, we had feeling market last what we in we of do that still in whether that the doing. come. years, over the definitely call, recent of of this undertaken couple wanted because around better we the recent share we're take growing early

category to more. years, income would be If good do domestic contribute XX you want XX prior to better in next the a years and the in fixed

just to some from relatively So funds, this the S&P been another new alts like broad then over liquid to funds alts. to liquid about very But are establish. I And before to years. I've starting mean, of group said from we see the X, And over X X, last a difficulty launching, are thing yesterday put-right suite the the technology. go is X, one we know new launch mean, that, the participation complement and many new just the the one excited that time take the to these to standpoints, of it the we you Russel past we've launched is and of is changes the they XXXX category. products put-right decade into fund. things there I XXX

team off out all, a and to are new and in have past been tools rolled chance real you an But backing that way of full additional as think taking see have advantage learning team the will interact how I am and it our of to market leverage as I the our them a with clients in us way. are guidance. net sales no

revenues of the like goals translate, in or I've model think, the more. said the still into like the flow the the of I more, the which business And X% firm. flows to plan, the that's or something and past, aspirational business of So we something XX%

Operator

our Surinder And next question line from of come Thind the with will Jeffrey's.

Surinder Thind

why start with question making. the AdvisorEngine. one-year having you point, be remaining the it -- on to versus some why provide color you're to maybe buy there's option this out Obviously, years? X around, understand, out or a the stake or that to versus option not investments me longer, could maybe appears something be Can the like What remaining wait waiting help optimistic at some a to of having year? the steak the one I'd year, reason year, about that good delta a to spot

Amit Muni

you one relevant is story of to investment, new Thank act this be, has of, the this analysts follows your future. and One, think investment sort the for an for chance really question. we on you for the as tax a the

WisdomTree with as So income us than, and not but easy as smaller statements. as our BlackRock. a significantly large through is start-up let's firm, It's AdvisorEngine, say, a small put for a to

better basis for have and option XXXX how peak We after and XXXX in this. the to us allows and certainly the avoid do of the we going-forward that. losses we think creative are So think in it's be gets losses on losses a to we so most

terms didn't In option, we longer-term control it. a of

themselves and agree well are shareholders they of understand. liquidity that. the They dealing get at the an and of our but working sell with are now us, benefit to at to thing with easy You AdvisorEngine actually not together, them discretion management for and partnered we teams it's

a So balance. it's just

public shareholders options, security flexible infinite we you structuring in and but to sensitive of as have and could are entrepreneurs was I sort with sophisticated If an with is of what creative juncture it would really and had quite represented terms quite think we financing be corporate are company the dealing are AdvisorEngine deals that in better, ATF represented.

are to party we So manager Vanguard. and involved. and asset to easy be. trying an But size our it compete BlackRock being with Every isn't trying

Surinder Thind

in other and provided related question decided actually around for one-time That's the you've color change is, here. to in use quarter. stock-based to And around with two comp pulled comp the Understood. you around cash Amit comp. question or of I that being think more expense helpful. items was or that And a then also the how perhaps, cash much mix. very some the so-called Any stock-based color the then the the past Amit, forward

second stock-based Maybe this that a mix so just going color that. how new you think is to I any level done guys around guys think time general, about the about? if and this have think And there forward, you in is comp,

Amit Muni

Sure.

as mentioned we changed XXXX, historically did mix, better just moved So then you've see now. take noted because low expect reason We sort how the unusual, to expense was think, normal in to I so I period, them of, again future was seen, cash. study I bonus expect say, shift felt we we've XXXX, As in are would I we any did ranging you of expense when of results, our Usually of back so the 'XX. into in our a it, it that were shifting sort In it's as makes. in sort it the it base right? sort tools, things in was like become for But more the after had would I XXXX. wouldn't environment, that.

as the we accelerate have change then of -- the we far accelerated, guidance we year. or within get that not if we how been As makes, would beginning do much

over garden the of the [ph] above that's end So XX% presets the site. top rally that

acceleration far January December. As stock awards, the of shifted to we roughly that was about from as the $XXX,XXX

Surinder Thind

big just Understood. item. of picture final a And then of question, kind more one a

few the just of talked a Jon and at product forward and pipeline? back, products lot how a a But what get guys to Obviously, were noted think In about, going How stuff. you for beginning traction you and has should point? as and about launched, investment year of years lot new launching about outlook stuff. are and been this made and your should terms the think of we pipeline we recently this

Jonathan Steinberg

So X think we've Amit gave about I the X done some already. to guidance year, funds X for

alts very, good our talked tell am the the fixed very feeling how excited I'm about about income. for We you and can't I prowess have, and liquid our -- I

to it. Our I be feel good seems so creativity really undiminished, about

you for competition. quarries, I very a quarries would hard think And aggressive continue. healthy really more But rest to mix. about some say, think made with that and always keep of we efficient ETF. this would I we'll the us XXXX in funds. pace -- we keep is ask funds, every and XXXX and guys means into in to disciplined while, into, It the try create we We Now industry Active once so WisdomTree. recently since been nothing firm a We've I in We cycles, the changed. has close launch run we launched

us on as You bases more are see going well. do to those

the So strengths great again, firm. of one of really the core

Operator

question will next of line Carrier America. of from the Bank Michael with our And come

Jeffrey Ambrosi

Mike. for Jeff is This

Just is on I if your the those will international when on be segment mind that. losses. guess, deductible,

profitable. become able So once those deductible, of kind that be turn wealth we've the accumulating been businesses on that recognize we'll them. to Then will

matter timing. it's So a just of

standalone can. So to And we as profitability soon are get as a on Amit? driving basis they the these businesses

Amit Muni

look discrete we those on the ETF the with have basis. holistic international each Securities Obviously becomes at international but of transaction, to a businesses segment profitable, one

Jonathan Steinberg

you not business referring what were to And as profitable?

Amit Muni

European existing Our platform.

Jeffrey Ambrosi

Right.

Operator

And the from of with our KBW. question will come Lee line Robert next

Robert Lee

Maybe this I is of this maybe, Can understand up going is you before. the little INVESCO to from advisor the maybe solutions, Jona, targets following acquired market. advisor a you solutions, us advisor made things. gem other some bit mean, -- step, and on the which of different comment help back

head addition many In and the into for market platform. the advisor to years

targeting competitively are a get similar trying marketplace? of how just a with solution of those same I'm think some sense advisor others of to versus kind you with strategy So the that

Kurt MacAlpine

is MacAlpine Kurt the Just to here. clarify this question,

of solution to jumpstart relative AdvisorEngine, the a with totality program? referring to the You were

Robert Lee

sign like technology Well, of them and are to it's to being use and the that many seems also as mean, really up. your models well. more delivery advisor to I of able trying their capture it competitors of technology drive

Jonathan Steinberg

Okay.

think AdvisorEngine, program. a about of is subset taking the which full more Here solutions you're I

against against Gem So just Step it and AdvisorEngine, let's Envestnet. taking

And stack even one really is the that it's Envestnet, that broader be AdvisorEngine are itself prospecting advisors to Robo. new much easy is know, for tech legacy -- So it or allows more our Robo to because put, what the two but enhancements us is from excited, which you more is way last button that's late the And on all Robo. including billing, aspects a sort important today, Gem the Robo the of WisdomTree got Step creates it's not AdvisorEngine AdvisorEngine on But about own and issues, more not future of, Envestnet. a scalable. or the in portfolio. is. built tech but were model is full platform, in XXXXs year started visionary, flexible really a versus they technology and and They the built in digital

And their so for. from as intuitiveness usability a there's sponsors with them, do gotten tremendous we are the and we of tech who in opportunity frustration with of ETF sliver base from asset we compete competing client into only to the the and that hear what the then they're think Robo, have going

Robert Lee

then And question the transaction. Okay. follow-up maybe on pending a just

as that, expectation given be there's once maybe, it? about some in tax of going that for with kind part curious, it change maybe in this will And of any thought changes paying any I'm financing there your second on, taxes think Just of benefits? are how tax-deductible just created Or should down a this? assuming the debt, we comes forward? about goodwill

Amit Muni

looking transaction taxes the around. we optimize we So are currently going to at how to are the be structuring

are the some tax reform on going waiting clarification on. are of that We all rules we

we'll be in ETF would So that of same, as financing rate. debt sheet, given Security as we we'll as balance when tax million as the how XX And about cash expect transaction, more the close well how shareholders. of combination the and talk transaction, the that are our far it's stock we still that, shares the to

Operator

will line Mac Gabelli. with Sykes the question next come our from of And

Macrae Sykes

the than about should Is growth overall local percentage terms in you products? that the we from but of know to industry your flows know industry way of the bulk commoditized flows point out are Is me-too going the parse industry, more beta versus how differentiated ETF flows the at coming more from solutions? that smart also think products. this into list And faster data away of we rate, any I there your trends?

Jonathan Steinberg

incredibly Lou been wants ETF to investor when standpoint, world of and returns. strong market strong taken Nothing business share. from this, beta dynamic very, data The important is, is Kurt few or sponsor a in an act the in the always I would very the to in most of marketplace versus the had we've add has they've of always say number part launched, largest always the the alternatives. really changed from we had

history value. a have We creating of

new lots of are historically and are We seeing value. both funds, creating

where create beta, or on is line over and the side really the models and doing the on better, cycles, share marry started always models opportunity into given We smart and just You incorporate amount right revenues learning of last there And modern going they more growth now their exposures beta educational now. that straight -- is we that and ever your how advisor come for an the of of mean, beta time taking are I an only place exponentially out portfolio. be there's ticket have to the smart how beta are they will versus choice educating to get to come and leverage alpha of of either you one just expectations their it not you even mutual market share won't first come that to And is I've process marketplace. tremendous that they industry exponentially demanding ETFs what -- from educating better. recently numbers is beta be on value. point in flows are and the market active their those seeing and a funds funds doing that the have. are smart sophisticated a But beta from spent in or it's

side some data. data. of WisdomTree the has our And then let say, Floating-rate me business. about is the treasuries encouraged XXX very I'm China is on So other data. side,

data have chosen can space, we play to the we So in be where first.

anyway, So for are pie. competing whole the we

Kurt MacAlpine

them product advisers. increasing industry-leading deeper technology, those we tools in solutions that us when found, we we products, industry things Just a that other academics, we these are from barrier we strategies are allowing quality of data avenues more that of and our And can to Advisors. to program, get share with to we the the single that the believe driver as tie And our platforms in it to methodologies. that investment products, with and we we are strongly making start When front but is, flows, our the just to with of conversations are with go October we better one you've with to and go forms AdvisorEngine, because driver activities, investment we seen another the firms, the and to thing X majority Advisors, flows you well, from of alpha-generating or part of or our X leading that -- quite marry this front to investments has found of solutions is, back important single processes world-leading have deeper most driver adviser that's are uptick seeing year our many found onward. you we believe having been to in an of it have on the that

Luciano Siracusano

the cycle. And momentum this time Luciano, these in beta is and we late a when you are factors. outperforming typically is see economic This

of exposures factor. The surprise look actual also into come that nice an it people in is So play other at that flows can are beta, WisdomTree to huge thing we different going give shouldn't as into you parts that if factors the about you data cycle.

is need And XXX% industry. beta, feed eventually to that's places, much risks the the to for in is actually so XXX% away the time. because me the of the into ETF that also say low And coming other money would great, coming money data there being fact will feed that it's I because is take go is key how low into

Macrae Sykes

them, about, of done don't any job can they call just through and a digital ETFs, platforms but this, some Facebook about you at last et seen had TD thinking their you really media maybe cetera. sort of in embracing on in how platforms, trading of, getting you're embracing about your social talked nice especially I talk relationships -- iteration media, think you've are the well? how and I've the from as engagements Have And the we've social

Kurt MacAlpine

question So is broadly. I marketing more guess the the efforts if about

think markets. I Equestrian other true firm two apply like which in or to TD, for Schwab also is Armand benefits or X there's

one of it reduce the that we them allows friction pain Advisors, do the points to advises that us hear the the of so some trading, of cost from business around of is doing So with one complexities rebalancing.

XX in not like on only TD the commission-free seven only commission-free are we a TD, we So of able example models funds, offer to platform. the thing the also but named have

our efforts, media of which accessing we distribution, also and efforts, terms sales our wholesale social and it's are digital in teams So investment engagements. how are our and advisors, of strategy a model a of our marketing combination combination advertising,

been WisdomTree would us. social suit a is say, for So very strong really for I

like and top-end, marketing market. the If Advisors. at it's I you followers part broader of the are of decile of are we a But effort definitely things are we it's the LinkedIn, of YouTube and kind to the to using industry engage just that Twitter, platforms and that on in top distribution absolute number mean, bringing that, we look

Operator

come will Blair. Shutler of question line from the with Chris next our And William

Christopher Shutler

for Just that thoughts and to think factor to new out a I on something BlackRock. factor is rolled box thoughts your wanted the you thing being Is and your there? First, you by would get want the good MSCI get classifications industry? system support or

Luciano Siracusano

again. is Luciano awareness think, a education around WisdomTree. increases anything I factors, And plus This net and is for that

away from smart We beta five style the toward Morningstar are year moving of a this actually the boxes factor. major over ago, notion were marketing,

of that's a the a more curve view going the to just a space decade as doesn't following us that So saw strategy message trend We key think And much coming is index learning validation investment by a really that's folks a is led we make modern a a for are and halfway and over marketing going into the innovations been predominantly alpha option, ago. of what predominant And a surprise that that the it's forward. other all of year. there decade who our now. accelerate ago. actually third in providers direction It interesting we part being were last lot

Christopher Shutler

us only the a other one, in-home models selecting advisor most home what the kind office in believe channel you not could of may perfect -- I the that rough versus the of in have you just FA data, is the sense today AUM the give know but AGM most a funds? today? products have the a office channel, you of model sense, do you sort And Okay. are have individual of, in, much

Kurt MacAlpine

there's really So models. in two our mix, of terms types of asset

about as Jona doing trades. of they of mentioned office, full If I a models paper that, the had where well. the lot historically, discussion lot the there's as there's pretty overly large you guidance showing been a a models are which quite is the well legacy home have think using And are models models, mutual in before, kind just of, in beta then say started would beta, smart see towards simplistic, away blending those more alpha. they funds. are alpha from large where We've mindset, we shift to areas. modern this mindset a And a modern

that Advisors throughout marketplace some and has has now frequently. part adoption these So pretty more have them and this our our models use space of a given is are What drive we in but start field really of our see history, experience placement. track strong nascent waiting WisdomTree more the these record, today, the it's platforms to to

DXJ were present opted seen in seen -- predominantly instances hedging the are those still allocation most And to models, so of with are default you of in the that these legacy the currency models had our use are in appears terms the those and that as those to HEDJ models. the still In describe are where in see the we Of model exposures. DXJ/HEDJ fact is their They as forms core the category. beta-focused. as in defaults those the core of importantly, those headphones often models. present only or it

Operator

come And our line of Sachs. Blostein will Goldman question Alexander next from the with

Ryan Bailey

actually Bailey. This Ryan is

your U.S. in HEDJ, business you're about seems terms was at it firstly So ask quarter, flows, and of that on I least. what DXJ focused wanted this to

DXJ margins, high So beyond and might think incidental how pretty about of XXXX, that is, change had profitability? considering you a what HEDJ percentage typically overall do those wondering AUM? how as that WisdomTree's And I'm had

Jonathan Steinberg

franchises important towards to his quarter, you of and franchises, part as opening we So a hedged in the the positive about WisdomTree. currently I'll almost of -- DXJ first burst flow those investment are Japan In it incredibly referenced took fourth some -- into and momentary remarks, Amit of the talk HEDJ the XX% sentiment had the category.

Europe in are sheet in contributors a So when and basis, as that been stream why the reason which we a time, great have dollar an to attention into those in UM's change be for and and potential, a in early that's followed Japan talk long the pink WisdomTree stock. think sheer about are are to this think for particular funds quarter I the such they're been tractors, emphasis breadth to us daily is will that was step when great Katz try ex-DXJ/HEDJ maybe margin of those mean, we and made not moments really favor, we we growing tractors the to just the or really the we who to and a following strong indicator creating currency, they've to on bring Bill of

I forms the your to eye which keep when but collapse we XXXX, end though seeing are thing in indicator So taking or X years. tied between around efforts that recent in $X.XX coming that But the future and strive and look flows, demonstrated models share and at things good seeing funds. of words value is, maybe the have the other feels $XXX you that that the our the feel million ideas XX of of types are I been is to X to dollar, are a an If and exposures I would on metric. very sort solutions to discount greatness the and of growth of similarity and franchise-leading on don't WisdomTree what a are over at those incredibly aunt, you're extraordinary me we something trading it about what it and there would largest chain, was words to our the a also feel doing. the coming last we we're to an the today is

Ryan Bailey

two maybe guess, Amit. And Understood. modeling I questions, quick

doesn't was expense take G&A? should the think about guessing And a million that based prior maybe $X.X we cost, it $XX ETF million split those to mainly in I'm we accretion but have how question, from across benefit the from, I any items. should savings? of it's XXXX As guess, we on tax transaction-related of then Security something comp, that

Amit Muni

Sure.

So paid in the transaction. all of we've the does professional as number, are any far the that so with accretion, is connection in $X.X that fees, advisers just X we is it after-tax million benefit get. so those an tax that the And include would as

Operator

of next Harkin from our come the And will UBS. from Brent question line

Brent Harkin

of the that this, First if hit just on what rate impact you would And and question, if stock-based a be? tax impact the include clean-up so, does apologies but that guide, comp?

Jonathan Steinberg

what has tax because to you just able should incremental you follow gave of tax that comp that. of supplemental it and related into in remember investing and that comp, a as stock-based account We take to are of because the stock-based information, potential a is tax bit appendix, and that we we rules account It you we an the around future that that's at gave, information but look if take be keep of that. articles the value the the into does if tax stock-based I'm the as comp, assuming track in little new that do

Brent Harkin

to. the not is because really you I the should a that. so sure so into Okay, appendix take said guide little of and to refer was basically account bit excluding we trying I'm it

Jonathan Steinberg

little on what of at public. supplement back end it, is the a at the and already best assumed it's we the then bit look thing impact, do We talk every of can but tax quarter to that

Brent Harkin

Fair last enough. for one Than me.

lot makes point increase starving for the acceleration one off could of spoke those, best some muscles, obviously giving you through them deals stock-based milestones, But comp -- he a pulling believe that you was of the put if great to maybe guys on PGI, walk which some implications. sense but the of also full You be to. if would XQ, I said in you comp maybe based yield that incentive obviously, those of since could you're tax

Jonathan Steinberg

the the would when that X summary the securities That the plus in, we biggest use. that was ETF rewarded give we really TD, points that you a all goes challenger of AdvisorEngine this are big team highlights deserves the be for. I'm of to the be

Operator

come with question Housum our Northcoast the next line will And of Keith from Research.

Keith Housum

Just two items. housekeeping

Securities ETF million $XX is of on the transaction, benefit expect in you and to slightly are in realize target I any synergies, identified you million XXXX? cost included that On of have noticed that $X your

Amit Muni

is. it Yes,

Keith Housum

Okay, it is? all of

Amit Muni

Yes.

Keith Housum

model, As switch gears guys it. time of over that. remember the sort a increase just AdvisorEngine. also revenue Got expect And such to us, as If primarily to right, AdvisorEngine remind I AUM, as from I provide to you distribution in to but

we if can bit 'XX? think have about What about AdvisorEngine, 'XX, you actually in that. in terms can should options So of scope give about as a us think around how little a you if happens you the you is that

Amit Muni

Sure.

talk so So we our total of trend and revenue in traction billions see we expect time the part increments When take as the Advisors other did would would the business how effort option, just revenues. to wouldn't from to enhanced that. some start engine as we included consolidate as exercise of model coming have revenue we so -- see will Advisors as things we engined about over a be a that, sweatsuit will to start scale as grayscale acquisition we general with long-term that have there juncture be by

Keith Housum

or is opportunity spoken X. million you. for $XX and any million willow Got writers dollars

Amit Muni

that giving not on No, right guidance we're now. any

Operator

Ladies and focusing time this are we the all gentlemen, is today.

So this WisdomTree now Mr. Officer. time, to I'll over at Chief Executive the hand Jonathan conference back Steinberg,

closing or remarks. comments Some

Jonathan Steinberg

Just want you. for speak to interest thank Thank and time to all your of next quarter. and I you, will you

Operator

in may our disconnect. day. thank a today's and for program This gentlemen, participation your and have does wonderful conference. conclude you you Ladies Everybody,

WisdomTree (WT) 2 Feb 182017 Q4 Earnings call transcript