WT - Earnings call 1 2023 | WisdomTree, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the WisdomTree First Quarter 2023 Earnings Call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to our host, Jessica Zaloom, Head of Corporate Communications. Thank you.

You may begin.

Jessica Zaloom

Good morning.

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

Now over it Bryan is my WisdomTree's pleasure to turn the Edmiston. to call CFO,

Bryan Edmiston

you, everyone. Thank welcome, and Jessica,

me Let Jono updates on expense sharing our guidance the for before our turning business. for first additional over results and quarter, begin the with Jarrett on by along commentary call our to

marks income, products assets first gathered a our categories. quarter third growth quarters, and primarily flows the generated balanced between organic in our listed XX% to net into the generating our positive Flows well start annualized XX commodity, emerging now a best of billion been There's strong were with flow year, U.S. and $X.X European First flows consecutive translates equity having quarter flows, in history. our quarter rate. international markets fixed and

the record positive ended flows, also at level, AUM but the quarter new quarter, a a from primarily Our market up $XX.X from milestone and billion, prior almost XX% favorable movements.

higher billion, the positive having $XX.X AUM of slightly movement. from from market currently at stands Our further benefited end March,

an XX% average due increase our from of the Next AUM. quarter slide. to Revenues $XX fourth higher million, were

income products. upon movement flows $XX.X the changes million $X.XX some income, share. flows other due to change net these quarter-over-quarter of or was higher depending large recognized AUM into also may of velocity from Adjusted listed our European revenue from a products. This arising market or We stemming

nonoperating recognized of as after-tax on exclude loss of results non-GAAP noncash as million well our $X.X $X.X a of notes million our a commitment convertible gold for other payments $XX.X and gain losses. the net million extinguishment Our future in

Next slide.

were expenses benefits elevated The operating in taxes, compensation was of year-end report to due connection quarter. with payroll other adjusted X.X% in experienced quarter of the items we we compensation first amount and up in the seasonality bonuses. for the the contributor Our payment largest as

Next slide.

few a guidance. Now on our comments forecasted expense

our in flows, our peers from as We strong margin in range range income of guidance compensation drivers price share start now variability performance to are considers our the the We end of narrowing $XXX to range incentive relation year. as forecasted with increasing given our million our low the and compensation compensation to million. estimate The the well performance. by operating including magnitude operating to $XXX revenue,

Given of range. start the we to anticipate end high strong this the trending the toward year,

million in was spending Our first $XX.X discretionary quarter. the

spending year first We in are uptick a $XX of an the guidance anticipate million in million gross reiterating full marketing reported of our XX.X% to we margin $XX discretionary quarter. as spend. We

fall depending for our product or of in other our upon are may which the European of anticipated listed We income, magnitude the uncertain changes of launches, products market XX% year, margin flows maintaining gross and guidance conditions. rise given

gold million, remain levels. expense $XX prices flat contractual be is at gold to Our assuming payment current forecasted

gold is us As is this on measured prices. paying and annual a an on expense basis upon reminder, based ounces gold based X,XXX average of monthly

first million quarter. Our expense was in third-party the distribution $X.X

end guidance our $X currently the of full million. of trending to high $X are toward approximately million We year

this that million in settled notes our we of and coming $XXX XX.X% be are Our guidance adjusted million were XX%. this tax quarter, for The second $XXX convertible will in outstanding of remaining the maintaining In rate of quarter. refinanced due was past quarter, June tax the rate notes we our year.

to estimated now be to interest to Our is the I turn cost I million which Jarrett. all quarter call $X.X second should forward. That's have. then $X.X will going reduce million, the over per for quarter

Robert Lilien

and Good Bryan, morning, Thanks, everyone.

QX continues growth our best-in-class Our XX% X was annualized year best of rate of seventh was stands inflows. best-in-class. X organic continue we quarter XX% growth to XXXX's To strong product company the inflows QX in and our with of quarter quarter our year, best generated consecutive best quarter QX $X.X was net this our categories. results to at in of peers. XXth year history. showcase history. perspective, give depth last Last and versus had and now breadth, in of major inflows last be year organic QX our great momentum. fifth net company billion some third

Our at wirehouses, gain manner in available RIAs. suite turnkey to and continues momentum independent now a managed model and broker-dealers is

our to advisers now models an financial at AUM the ended $XX across in QX available now U.S. We $XX.X fact, over In with all-time and stands billion. are XX,XXX AUM, high billion nearly

and ETP of We well efficient margins north incremental scalable with models have an and XX%. in business our model

both overall normalizing flows will growth operating drive from Continued margins. higher and AUM markets

Finally, recent to validated approach our market methodical assets blockchain-enabled and has finance. turmoil tokenized

of tokens me it Ether. over the In to we continue all, business. And WisdomTree of Bitcoin its blockchain-enabled to perform and remain excited Jono. about turn We our suite with momentum, Prime that, funds, drive we and upcoming launch and excited and and are about let positive golden dollar

Jonathan Steinberg

the get lot, Jarrett. I WisdomTree at what changed over a asked years. Thank has you,

net total, showcases I WisdomTree our X funds XX% that where for different really XX% billion up X with X we nearly that of more of strong had flow. quarters the than in quarter, made third the its products generating funds $X to first positive had very quarter Back inflows, that what's today, our quarter represent of but XXX half in today. but strongest Contrast global XXXX, of our think the strongest inflows in of net took top the X funds firm. inflows, only

franchise. will in an and App tokenization on suite X crypto and I steady a by throughout dollar for model $X best Our in securities the QX, blockchain-enabled of finance. Citi pleased in customers of product ever-expanding WisdomTree and European like track fund back between to be strong both report growth remains products continue our trillion am where XXXX. of March our direct am that quarter on tokenized revenues our forecast WisdomTree and our initial digital precipice leader Bitcoin gold to suite our its a to and the cements trillion and and organic invest report performance, acquisition launch beyond I tokens We're in of funds, inflows that in that on in of since across back launching solutions our business Store had as XXXX able XXXX. suite confident also digital recently and strong blockchain-enabled published Prime, Ether. and our broad the $X that wallet, will

momentum a we the new we've years, the and appeal. then But and Throughout finance use innovation model some the for lineup lift. In technologies. have for its is and strong market-leading Jeremy iterative, in WisdomTree enhance as turn from to set the of of the will optionality beginning. XXXX, driven is in future for the that, of our features of sum, several I platform but WisdomTree excited QX blockchain-enabled The our is cases franchise, past Prime, capabilities with not are out continually product one really questions not just is others Campbell, Investor am I just end that you our try take WisdomTree we line, it's products I our all With new you on year. With tokenization track. static continue, and speed. furthers Prime the Over later great to growth right platform believe getting call over net to operator, developed expect bound platform WisdomTree these launch and the Relations, by up flows early Prime's to to this can of shareholders. the Head our

Jeremy Campbell

Jono, morning, Thanks, everybody. good right. All and

and over I we our Q&A to not our community, to the Before the as discussing and focused going generally results questions just shareholders our your be on proxy-related call business ask turn will keep matters. analyst then from to quarterly Say

Global investors and retail the do see Investment today? Jeremy is question capitalized fixed looking first question on Chief yield Say The where advisers are a WisdomTree how within And income where the Officer. is, our environment you from directed towards Schwartz, has allocating in platform for market our shareholders

Jeremy Schwartz

now weren't allocations of fixed have we've still with success the the with X interest, the the lot Universal we seen in short because offer bond has start beyond come inflows collaborated and a of interest in of segment. firm benefiting. core the But and a a our this has curve, for great market of interest ago, this treasury, particularly for and in as But can Great of But bonds. we total the cycles for one hiking over the exposure as books, been of successes Voya lot that's yield the the been the is started year, of at clearly, USFR USFR core growth big bond only AUM enhanced Clearly, and the and a been not of and also on that ETF, we those question, yield-enhanced launch WisdomTree has Voya that. and sub-adviser billion exposure a Jeremy. developing you great was bonds in fund. yield us, Thanks both bring decade really far stage lot income to high solution combining rates. treasury just rate recent than center and any issuing yield inverted market duration this $X floating this a further our that, less is at there there

X% a to something with And solution we yield to our to more core, us over duration add add interest enhanced high-yield other real yields, enhanced our that of We indexes in lot today, continue combined find yields robust that when give for want fundamental see back offer to proprietary portfolios. people value. a

a international over say long-stated And of the asked has starting certainly are this Jono emerging developing income, for has we've all high year, of markets is fixed high ever markets market international. robust had see and what yield types for strategies, before. us goal as what to about our and diversification year, more environments emerging really we a yields is emphasized, having $X.X this and we see solution particularly than for Beyond question inflows lot dividend really, high-yield in and billion about been

Jeremy Campbell

give our cut happen the flow some rates, stay profile hikes the and to if for you then think positive our ETF? question much, how in color here presents to U.S. total And second then that do any, rate I'm as if and color some you and But And beginning you headwind the can think will Lilien, of Fed a the what are maybe add Great. question, do President flows COO, well. WisdomTree? to is, second floating to Jarrett going Jeremy, on ask

Jeremy Schwartz

pause a the used we market shall that X% then historically. around grow like in rates pencil rising markets. banks. And is futures about in aren't keep banks what deposits fixed see because how see over paying a but be causing use and for nothing banks, USFR USFR money still to to slow are yields funds, move Well, but that opportunities in competing a the stay fears In and to and income interest There clearly, all it And bringing billion. level a robustly. to might XX in duration feds develops, flows surge actually and portfolios. ways, really because been those appropriate success how investment might it's beyond the hold now cases not huge and in been for $X for from XX of term in the markets walk still above rates tactically it taken you going I where higher starting treasuries many paying the the banks The to as ultra-short is in necessarily market, in some for futures year X%. next those started months, to another segment this saying managing next a hike from week assets away to clearly cash talking but our be paying bank around deposits of of cuts they're great it's think team use but really funds And the almost -- months could year-to-date longer, safety

rate think those And yields, for with rates higher to even I so time checking be a going and during us counts, higher over spending cycle. some that's cut traditional

think I there. can USFR still market share gain So

easier it type Now Prime this, exposures about longer rate, off of WisdomTree term, is like floating making all treasury or vehicle to other spend this treasuries.

the we use to extend success. recent offering expand helping USFR so cases, And the for both and is digital look forward what

Robert Lilien

comments, a similar Jeremy view from advisers, a cash income the because Yes. some this product. XX% that cash to X% cash, as it was as we're to alternative, depending talking roughly on a allocates but average maybe fixed just different important adding the with market. And And smart Other view When is to do perspective. saying. really to USFR as adviser

So core and either a way, it's holding which portfolio. of a long-term whether fixed part sticky cash income alternative, makes smart it any or

contributor being product, QX as at where year, addition, moves, we is have In when major this. that and conversation our to of of to in out flows. be WisdomTree a we can moves all we the in proof of the products that of really now And conversation. of look suite money last and broad USFR a the are money part When was

best even half slowdown history. third as QX, with the Jeremy in we've our some year said, yet inflows As that about year, but the ago, a quarter XX-year was pace had this

USFR So shifted other was discussions which our and to was flows and sticky funds what product you good. that in remains suite, saw

where So coming launch. remains WisdomTree mentioned. our advisers, a holdings core Prime important of is a it holders, range exciting Digital as bottom part line, USFR XX%. be we And will experience of our holding XX% holding for that part between Prime WisdomTree an arsenal. thing cash just USFR, it's core and on just that But product our can tells for Jeremy another us an jumping it also expect wallet

core it's our business. in to again, us So ETF

offering. part expect it important be core Prime also WisdomTree a and our We very to good and of

Jeremy Campbell

a you're years? what platform how Great. few past our Thanks your question Jeremy, WisdomTree's have shareholders. product is strategy from from are advantages? Jarrett. evolved question today final man we because The color, products-related popular another that the for And over development retail the Say is

Jeremy Schwartz

talking values standpoint. And can on It's of another with from that see proprietary compound product can product having asset focuses in a love definitely track industry And say, third-party inception innovations through most the been a which and various product our point our intellectual robust. record and but even value-add, engagement offering, team We exposures unique betas was talking lineup, clients our and with gives years, our building that team, we're get creates holistically the indexing on vantage what seeing work my find classes, to of of new distribution, all team it great stories. I'd it that interesting further the of of the product and on direct investment markets model about we and feedback thought over our come think very indexes licensed ideas make innovation a the -- feedback clients of our property. Many us or those for unique on of we're by gives for a more unique flow come solutions, finally, And innovative supported positive team. more equities, more and the across to fixed can that ideas. participants It's strong and core we've owning this and have insights solutions what strategy which great portfolio we perspective valuable. advantage this firms to I lot further on to might the type build of IP investment whether investment own routes really competing IP, based showcases And with have those say us leadership, best loop us model content income, clients. leading and from get tools marketing innovative about, recent seeing to building our this with carefully.

WisdomTree. both of a key innovation there's product new So in short, been shortage and structure of ideas, strength has no

Jeremy Campbell

please analyst to Operator, Great. to free community. our open the Jeremy. Q&A up Thanks, feel

Operator

first Brennan UBS. Our comes with Instructions] from [Operator Hawken question

Brennan Hawken

of So you're on verge the launching Prime.

you So hearing was your platform expectations years? how I define what in just for plan this next the success interested latest in few costs for and

Jonathan Steinberg

you Will, start? Will about -- there at Asset why costs. question maybe, Bryan, WisdomTree who a don't Will the Peck, call. on is runs maybe And was then Digital

off you just that. So maybe finish could after

William Peck

Jono, everyone. you, Thank and Yes. good morning,

kind in not previously since all many, Really, beta is U.S. rolling So been in we're this what we've in as operational we've out in states lot quarter, the we that said, and a overall. make, feedback of implementing interface as but might been different users, terms the getting just of testing we changes of just that like from doing beta app the exiting well. early doing

they're forward, of if that's as and out engagement stuff more more coming year how to well So happy right. QX. well. gone to more adding going and be track with using in, I'd they're on customers, quite for all say very We're kind Excited about seeing as features, it, rolling it with so using it. is be more people more this seeing in

kind that and this, that So day finished iterative keep a of out X. on we It's features. not more improving product to it's more a with put unlike an constantly ETF adding and you thing changing want

it's for this features. about in that. and KPIs when be more of well the success, more adding year then and, and course, So and more we firm our over for revenue profits initiative us, and And terms more customers' then engagement from learning really from as time, of disclosing

Bryan Edmiston

embedded side, in And discretionary on spend guidance. the cost our comp digital then the spending is and

we think seeing we it significant to a to platform. be we're spending. teens High success $XX in the If launched the year. on future, been I million disciplined were as $XX million in see last going number would is recollection, Prime. at this uptick we're from our We've because the year

Brennan Hawken

Okay.

think way material Is it, So a momentum fair? unless product. the that my team's number behind there's that right is amount about of the to

Bryan Edmiston

Yes, that's fair. Correct.

Jonathan Steinberg

really rollout to time this the there of will -- change that starting the just the year, rest And any rolling cost through guidance, takes it learn QX, be out drives add get in upside to that in the -- what what's the from. I but unlikely of would that

Brennan Hawken

you then And -- of sorry, Okay. what me? kind hear can

Jonathan Steinberg

I Yes. can you. hear

Brennan Hawken

channels from here model flows you that Great. Excellent. you that contribution And grow guys and are see in as quarter? on? What the contribution goes time continuing to did core in see

Jonathan Steinberg

you Jarrett, start why don't the answer? model with

Robert Lilien

that a partners continue flows. RIAs been major platform indicating, to IBDs. be terms XX% set in been the but to to been continue part we've Yes. Models We've is story the of adding they've But the contribute about of where to also for quarter. increase. They wirehouses, and of number

over minds to about -- past spoken we've XX,XXX of that have access there number of increasing. establishing One now on is once take. long a a there, are a win be you got you've sort year. But and partnership, we that on steps then said, can I the of for out to begins wirehouse XX,XXX platform, because the as work a then whole in And have advisers now way, but to is take instance, As calls, you hearts actual our need could that that real number and the lead a getting platform, of and to time process advisers. meaningful the really go get

advisers seen what steps, initial success to second in having and more QX having also last on but seen getting of more those individual far all more So adding models. is we've step, year, also that success then so exposure more what on in we're the is advisers but which we've using more we're partners,

is fantastic, about also momentum the So We it assets. all sticky there talk time.

growing significance. going in innings well, is early that and So extremely still

Brennan Hawken

maybe a momentum, even years? the given of follow-up for That's there, do of to reasonable just range expect XX% what couple sort that move to that next to think you great. continued is And over

Robert Lilien

forecasting that our should We forecast just never increasing. say as haven't kind with would that, we of flows. out I of But do any number be any really gone

to which the a contributing at a models now, number, looking we've that's add appropriate and of can be what is to additional looking been all right that as at But be We more metrics, we'll continue indicating significant to say are would should you grow. point. still business, some become I expect as part it it's and growing

Operator

Brown comes Michael next KBW. question from Our with

Aidan Hall

rationale -- had capabilities This just is in Prime be thinking Securrency WisdomTree bolt-on behind we about follow-up Brown. talk can you strategic the forward? Is announced filling I Michael this? And Aidan additional the Transfers. Hall about acquisition and for acquisitions should a of enhanced for on going

Jonathan Steinberg

Will, you why again? start don't

William Peck

there Transfers. Yes, were you of cut me, out I WisdomTree Securrency think now for about but a bit you purchase the Transfers, little asking

for of want of So just in-house, was function this we what do. of is was do. really kind it we of a the terms This operational licensing an frankly, Securrency's in more might really function from start core needed thought software. was core but enabler bringing them, that about to one that of to kind kind competency we an

going made of like terms acquisition just it both sense we've just financially parties we small added but bringing this was some for in-house. what got strengthens It So in function and immaterial, a on, explore there. now, as got on. future, other going capabilities the to really focused of new funds ways kind In well. right on we've just monetize the can that it's digital But we supporting that

Aidan Hall

Great. gross gears products switching margin And bit. meet really this that in you expectation how to is year? And some to Can just for the a highlight adjusting of the client market bring is you're Embedded guidance your to product demand? then just expecting launches. little

Jonathan Steinberg

don't competitive some describe know, take Jeremy, we'll I for it to maybe over why product advance. it. don't a flag turn but broad you shot? reasons, don't Jeremy, But So ways in there's launches we to

Jeremy Schwartz

Yes. have you'll good that's track keep we we in, still with filings Obviously, what do. conviction late we've of been that a so the to plan doing what -- of

You're seeing diversification.

fixed You're do income. in seeing us more

we with that building that's about, talked additional just great enhanced see strategy Voya a core yield, You block.

option last You do more us strategies saw with year.

range from You which with up that Volos fund, of index sort target about saw $XX protection. provide downside unique is a million our

We option have today. X funds

we think space. in a of lot interest that I have

few you the market value. can with those our of nicely very, U.S. year. to our is which see as a million of artificial been a like in doing hundred started we but growth and things that team bit. has leading the of started been us Europe more inflows, We We've to megatrend European brought this the thematics. areas some growing You in see That's us And very some take in family. And intelligence, doing off

growth and You've seen being of us some megatrend launch part family more interesting late the strategies that. of

generally, think diversifiers those we what to X And I are areas. like we're So add doing. to

So for traditional bonds, diversifiers, we'll continue well. interesting that do you and look as to and stocks

Operator

next Michael Cyprys [Operator Our Stanley. Instructions] from with question Morgan comes

Michelle Foley

This WisdomTree How Foley been the of have And Prime. trying the about distribution is like is you Michelle you to this My question on taking? here? Mike. to sell actions clients, approach what are for what's

Jonathan Steinberg

you Will, start? again, want to

William Peck

I'll kind to distribution start. start Yes, And for WisdomTree Prime customers. of retail I'll

we in the So as said past, we're focused on marketing. lean

yield, a being experience, killer that payments. user it's I now definitely marketing on marketing. And management of to lot the digital working we're kind really kind kind out a the channels, continuing feature, and that's mean find One the around before. We've on. gold. us, we to areas closer something a So around I finding digital actually has our is Two floating in where that's great where what's notes spoken we're right. going that advantage gold. product buy call, and cash of of interest success bunch now press is crypto journal about article googling it's then perfect of mean, mean in early it. rate finding right actually initial it yield more how I to spoken be a recently second this of lot having seeing for connect investors a about there's we've to an that's where about good initial for to we're a and able a fund

is But as investors going of retail as areas with go something those second So lean going self-directed a guess I as some I X to marketing, now. of else we're kind others of the getting of are some as Prime, if there's WisdomTree well. so that right part to lot to start opportunities question we're working, as we well. And well those messages find said, there outside

Testnet every other of not the just joined increasing or amongst out testing think We tokenization some seeing I cut that financial firms. with be an Avalanche big some is well but baked, ideas of names So different day topic in as might those there. kind services spruce we're terms clear

platform digital which lots WisdomTree as one the we're and to we've well. funds of distribution that pursuing looking there's for component and future assets the the more is of terms in created, So we've opportunities those that of of, tokenized forward in Prime built,

Michelle Foley

have Great. And to that be the follow-up, bit been taken a a just some as assets regulatory the getting SEC. tougher with of the digital seems by backdrop for actions

what might So views impact your strategy? and that that to are extent on just curious what the

William Peck

be for to one Tougher mean, specific the compared comfortable competencies necessarily to of start-ups And that's especially instances. a some the strategic our not or of have not and value-add kind who differentiator. are us in space some, the by and of but the a proved them regulators we, regulation, early seen. key crackdowns movers with I dealing for right now, surprised for been each the kind are we've us. of of start, some of that core from But

So first engage we're continuing products the to by looking in fazed we did to place. forward with and we're like effective all, to the at not get just this these regulators

front. So all good from our

Operator

Jonathan no to Steinberg, time. are it for remarks. I CEO, further There you. at Thank will WisdomTree's back now hand closing questions this

Jonathan Steinberg

speak next remarks. more you attention for your to We'll you, everybody, Thank today. No quarter.

Operator

parties disconnect. Have concludes conference. may day. Thank you. a This today's great All

WisdomTree (WT) 28 Apr 232023 Q1 Earnings call transcript