WT - Earnings call transcript Q1 2024

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

Operator

Greetings. Welcome to the WisdomTree First Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference today is being recorded.

At this time, I'll turn the conference over to Jessica Zaloom, Head of Corporate Communications. Jessica, you may begin.

Jessica Zaloom

morning. Good

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

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

Bryan Edmiston

and morning, Jessica, you, good everyone. Thank

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

ability ability as organically, over our X Sustainable proof positive of our a our serve and with this flows point quarter theme depth demonstrate quarter. to continuing momentum, to have the $X continue having billion years net during grow We away and been lineup on inflows of generated and in illustrate breadth product the points results the to our board USFR. put a from of

rate our capture fee and quarter. generally revenue products into second blended fees, setting for and has were diverse $X billion of remixed broad the inflows Our with higher the for which higher higher, table

expanding coupled capital the disciplined AUM accelerated of formula organic is driving margin This and coupled business scalability the us market with conditions positive Our revenue margins, management record EPS with ending growth, of the is with market continuing our resulted in further and billion. growth. demonstrating for model, positive expense expansion alongside inflows growth and movement $XXX.X quarter

quarter and prior XX% slide. million, in from the Revenues quarter X.X% year an driven average AUM. $XX.X of by fourth up Next were higher the increase

We of last basis royalty expanding operating observed for second points over first the accomplished buyout, quarter year year. have gold last XXX of adjusting we adjusted of which basis XXX the also in our impact when quarter margins or the points versus organically

income net a million the $XX.X or adjusted $X.XX quarter share. Our was for

Next slide.

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

Next slide.

comments on Now a few our guidance. forecasted expense

today, to compensation our quarter would expense forecasted incentive expansion trending our year flows, remains million. million in Our relation upper price into including in share our Where compensation revenue income $XXX from towards we drivers start, variability growth, and we This the given and the $XXX magnitude performance half with a unchanged, anticipate sit this guidance peers. operating considers margin of range. to of and ranging the the strong

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

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

higher of we expansion. We or conditions, market growth AUM are launches fund maintaining of during scales levels our current anticipated If gross anticipate from further and the XX%, AUM organic year. margin continued XX% course gross to guidance considering would the margin favorable

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

million guidance We are maintaining of our $XX for the million to year. $XX

interest We are of also $XX maintaining our annual guidance expense adjusted million.

November. from we exclusive our of repurchased shares Council interest-free the related are expense the financing any interest impute adjusted last our to interest to under of reminder, As required is costs World we a Gold guidance GAAP

quarter Our during $X.X interest the was income first million.

assets. our million $X of guidance based forecasted are upon the We interest-earning year increasing magnitude to our for the million $X income by interest

in Our quarter $XXX.X And during adjusted of diluted $XXX well. XX.X% tax weighted year was and of shares XX% quarter XX% our first to million million the the rate average our the million remains first unchanged and were guidance guidance for $XXX remains to unchanged. our as

That said, notes. associated not any take incremental our does this shares guidance convertible with consideration into

scheduled per Our XXX current approaching stock conversion price year-to-date and price is convertible XX% in is related up our XXXX. the of notes share roughly to $X mature to over

option the price illustration shares is incremental While conversion to assist would to require diluted with per quantifying to forward. shares our included paid be with in have. our going for cash, principal the notes conversion shares option associated $X.XX incremental stock within That's earnings associated exceeds in all our the increased any once the need An be I share. presentation

now will Jarrett. call I turn over to the

Robert Lilien

All right. and Thanks, Bryan, morning, everyone. good

every report continued leadership in strong to which expanding every excited quarter the with record our value are reflect in for all for of part our another finance, growth creation. solutions and innovative industry of delivering also excited reshaping market are future in and inflows, which We cycle. creating about and the products progress blockchain-enabled and operating assets our margins, AUM We're robust opportunities environment net tokenized and new

the $X of nearly in higher net As depth of product QX billion inflows, especially and our by Bryan breadth mentioned, started lineup, funds. fee with driven

commodity $XXX.X currency In AUM inflows which gross our points, attracted demand Combined market, with ended our hedge XX and was such with XX.X% funds, fee up of higher. fund the overall year-over-year X.X% QX and and sequentially. the strong and total, record did our helped drive billion, as earnings basis silver fees India supportive as blended rate Our copper. we strategies

and which continue these across also ability growth diversified growth suite. reflect product results, driver. Models are of our to be proud steady deliver our a We to consistent

current is our pipeline, year-end. on from As XX,XXX advisers end have a our and access we the while year. reminder, That's growing penetrating of advisers the at further expect grow market also that to by actively our up the who grow models. our number last XX,XXX number advisers approach about to of accessible WisdomTree models to market using of Based to

billion on XXXX, to traction cadence in has firm-wide AUM adviser of growth remain we're quarters model the Additionally, at years AUM. Overall, to new users adding of the models ongoing that model in $X.X ahead. the growth growth track after about in The assets driven the bullish adviser XXXX. our runway growth we outpacing model end X,XXX on very March long for in maintain new of and

to that strong we also We're our our AUM expansion earnings to margin operating ability report growth, scalable another quarter in our and delivered model leverage growth. and demonstrating pleased

XX%, smart and dealmaking and XXX basis buying points points from increased margin payment operating year-over-year organically of out total was XXX Our and by basis which efficiency. gold driven spring royalty growth operational opportunistically basis the was by XXX to points last

XXXX WisdomTree to new represent they and believe adjusted finance Our $X.XX, line. on We opportunity markets, to as open margins a new remain operating per and expanded and growth bottom increased beyond. attract customers focused line XX% share reflecting new top we and growth growth And by continue the to in earnings streams. revenue for driving assets create margin huge that earnings tokenized blockchain-enabled dropping and year-over-year expansion

our and models. shines on growth Back product by operational in blockchain-enabled margin We finance. model efficiency expansion, how momentum AUM those we diversified drive driven assets about scalable growth XXXX, our each potential operating delivered quarter, opportunity In talked talked Each we and would suite we talked about have our quarter opportunities. growth and about the tokenized and brighter. since of our

to about today. is of Our what to margins have industry that want say been WisdomTree many be position in doing some alone solidify like expanding, the know assets. these at We to our talking do now look further have but used is we and going we you in tomorrow, to We if tokenized what company. themes,

our we the we long products, have clients culture about extremely to team organic the XXXX strategy, create black tokenized and and confident continue industry's and are and value conclusion, bullish evolution beyond, the that and chain-enabled to In in shareholders we finance. growth, and margins lead assets right continue drive to term. our remain the right the and expand We right the right for

with it Jono. me now over turn And let that, to

Jonathan Steinberg

Record expansion, year. points you, good everyone. and per quarter great increase earnings in first the fees, Been Thank strong XXX Jarrett, margin XX% the year. AUM, to last of a start higher versus basis of driving share morning, a flows,

We Those drivers key growth. of on drivers ETFs, being the next $XXX executing that AUM and portfolios, are billion will WisdomTree tokenization propel model the Prime.

remember Importantly, into It's the fully I want of digital really important for marketing that begins XXXX. all as spend, to everyone May. in is remind to our marketing, including guidance early baked

a asset of the Now has Financial in Services. the businesses the the premier Department been milestone regulator the the of operation and trust York strategy. core of for company is the component DFS trust receipt this our important U.S. quarter digital a of State from in most was New in space charter WisdomTree's

our counterparty things customers, the trust us we think for business put, Simply for a does for it going think retail strong trust and X us. is that charter specifically, institutional of forward. and the open company number up will opportunities we More a

it to New First, allows to WisdomTree Prime. customers onboard us York

to protections. trust the the services ability associated Second, us under company products gives offer supervision legal with DFS and perform

digital company custody coin stable fiduciary the manage approved issue perform of coins Specifically, reserves. assets, and can DFS trust stable

to from New the population launch WisdomTree U.S. Now the access across an in XX have and of including XX% York, perspective availability upcoming states Prime.

asset ecosystem. the hit feature of platforms a key another and in and through debit Prime launch prime first the and The ties card also WisdomTree On with our digitally users. customers available Google the payments card product milestone front, and to quarter Apple we to physically both is Pay balance the

to quarters. in token and debit other that asset like will customers our to the auto Initially, crypto able but market from dollar gold expand fund, money be functionality we will coming classes the balances

With already accounts effort too the early this It's but mentioned, the increasing to forward. further as funded in card, the efforts share I beginning. we any of trust our that and launch is generate be activity. will the will takeaways, and is the May, downloads early marketing This charter going debit

the interest of We may have asset you in noted. as in seeing increasing are space, many management tokenization

our retail positions of of space. us as tokenized asset the regulatory combination across classes and licenses distribution, in assets our Our the and and early suite institutional funds leader broad

to coming are is the this press the looking We advantage beginning. months. only in This

to time exciting continue WisdomTree. it's calls, in a recent very mention I for As

We a have to margin meaningful best-in-class towards leverage shift tokenization. expansion the organic and secular opportunity growth,

WisdomTree's of Campbell, Jeremy to over Head call the Investor turn Relations. let's Now

Jeremy Campbell

and lines All right. morning, directly up Operator, the let's from and our everybody. good analysts. to some go questions Jono, you, open Thank

Operator

with Our coming Beatty of Instructions] the line first from [Operator is Adam question UBS.

Adam Beatty

some from to a from to and wanted more an Prime firms of institutional prominent trying out you're other been away I strategy. retail approach the ask, examples of you there have of years kind setup go in of to recent backing retail as initiatives, roll kind and then that some

obviously, on, succeed you've that thoughts So studied there? your WisdomTree's wanted seen I just and differentiated is you'll how how to get offering

Jonathan Steinberg

let then Adam, start you'll Will, me and maybe, in. jump

already a First, I'd beginning from that direct-to-consumer has within WisdomTree say brand been and investments. is very the

So But starting we're doing Prime, accounts into very known think we're able bites, the of know time. the we have early starting to with with reason had said it by a TV course past do the message, years a from us extremely business cost-effective though, that delve very infrastructure our XX people It for of that into low ads in on beginning. This integrated is what people built XX line, that's be is our the testing core ago fruit is been online marketing direct-to-retail and fully the and we the new incremental this, the of seen or costs interacting isn't in brokerage a sure. from sort will money, years which for low-hanging we've space over what and the of small find really basis interested keeping gotten the on with beginning. incrementally I build further to the investors, consumer it the over and as most business, we'll

what just waste be would we're what you incremental through the so May talking add -- it year. will the increased to to in about rest that? the continue of increase in and is an And Will, for in just marketing spend,

William Peck

in of well, add, just I'd about both. I the is that lot spoken lot it having No, think co-parts I we've but about announcements was doing more to same retail platform mutually being institutional. to kind institutional and the think of both prime, one for We've covered that portal And to tokenization in they're beneficial up going Jono. mean our coming a platform the be past. self-reinforcing. a that alluded of we're we're I applied

So them. it's both flywheel they're both [indiscernible] a and of from both and mutually effect good enforcing there's

Adam Beatty

retail. to And context Fair appreciate wanted Yes. around effect I on enough. synergies. to the on the the up of I kind direct follow flywheel

to a sort address of investors things the and is core being One sometimes we from little separate a WisdomTree. just tends point to bit, be mentality from hear we'll mentality a there tokenization tends and prime the but be of that the of there of business

synergies maybe spend So you about bit little some as legacy might well. help and if your marketing could how the of talk the business a

Jonathan Steinberg

Will, that should go take ahead? I and

William Peck

of be to New listed fix a start. the listed on York a competencies I'm tokenized it's core a I a I'll very it right, mean on or asset ways, of exchange-traded in looks WisdomTree, the of think like Stock being completely on to product. in could Instead happy an available that right? leveraging blockchain. start, kind fund Jono. lot Switzerland, of Exchange or tokenized similar I

core very have. it's So competencies we what to similar

right what it's set today. but distribution does different now, kind a maybe WisdomTree leveraging think of definitely I

Jonathan Steinberg

prowess, our business of has engineering prowess, which been prowess, tapping help solutions just of business to digital and into We're of builds had assets. even expanded and regulatory interface technology the the with been marketing core tapped product our other the elements the team, user building development

well synergy as relationship along as And management. all vendor so overlapping

some mind to that or So was terms digital of in opportunity. come the footprint have to of WisdomTree how the well those asset are trying elements or tackle the is

Operator

of is question the from Keith line with Northcoast next Research. Our Housum

Keith Housum

the product the X come you appreciate product past, quarters business, So forward? say, X summary new vision and on for I the or the the going is But commentary part back the over give creation creation Jono if of what a WisdomTree. little we about to can perhaps then ETF new

Jonathan Steinberg

you. very, Schwartz, going it, Well, very to I'll but I'll on -- to I'm touch quickly it Jeremy turn over

We we and things one that overweight our quality a done not is of that build of we of lot family the funds build foundational only then but internal expanded to factor a as specific by a a more One original quality, started as on. the and brands our funds we did we've factor family. quality

actually first that which We largest years performance and the taken internationally format. in growth, just our last quality year started extraordinary past of quality quarter with launched product has bit more dividend We've an we fund. or why launched it's than used of a maybe quality growth. recently second could recently. But Jeremy, we had recently, recent it have the [indiscernible] over equity been the you in we've strategies the And don't this more some quarter, version that quarter into growth, that, little talk the that launched about

Jeremy Schwartz

about out. set is Yes. you but market We've product something have and been that versions for continually in In I diversify with and all AI. thematics sector-specific different you cyber market environments family, exact trying thematics XX over tech seen what you've $X.X in playing quality and across just sector, billion of to we our more our say, the not in UCITS cloud where think growth And have investment the environments.

you billion growth the of have these family type in U.S., a billion thematic we $X.X in now real so so range, [indiscernible] almost compete areas. can in. in you have $X And And of sort led sector-specific that growth

another fixed out in of in The family almost Europe. And how investing launched and longer futures income. can quality dividend add the and seeing way that continuing lot billion the family efficient in and taking duration recently growth Europe U.S. bond we're go which for equities, maybe firm even and to We've billion bringing stocks been for the to portfolios, with indexes we for up broaden more that we're and $XX is both USFR in family a those that a combines people across core than or yield exposures U.S. beyond our duration across broader enhanced $XX inflows. is to do is

that we with innovative we try approach. try to funds the and be to to overall So business help continue in diversify launch that the

Keith Housum

measure easiest outside these the success Great. is guys funds up how of way you AUM If the evaluate of these of new just to funds. do success growth? there. follow I And I'm AUM sure But in some can

Robert Lilien

Jarrett jump just quick jumping Maybe in. in one. for a I is This can

think, strategy you I growth. the about and about is overall But can our measuring talk launches. new Jeremy,

suite the sort it is working a at enhancing very new And several that's of pace having this we're generally about years, where year, then us strategy year And product well. with growth well and last that's innovative looking as XX we're to so changing That's been been that looking for about that. launches. the diversified over funds a not we're launch and

as X consistent the terms And really of than well leading growth. that industry growth again, more it's of that's by a is organic working years us for organic strategy in evidenced

very we're and continuing a strategy, it's sound with So it.

Jonathan Steinberg

Jeremy, add any? want you to do

Jeremy Schwartz

is the The hear a single models the there way continue we big models. about there, continue The get between Portfolio the the but and is models flow. to to is only the and is how thing in of that's that launch also It's to for more which the and had business individual addition how us I new the well. products, the traditional our launch of synergies Certainly, with of beyond leverage best would funds. prime business continue we you'll sale launch say sort is token part innovative and prime Siegel Siegel business success models ticker very really. our overlap fund, Model branded as to interesting And lot we -- new platforms, offering talk at to we've we diversified going

think another for you'll that of can I So us. source growth see see -- as you

Operator

question Michael from Morgan Cyprys line of next Stanley. Our with the is

Michael Cyprys

was you're your with I hoping greater wanted if taking in adoption drive advisers the talk on steps using models. the some could dig to to you of to new could. I a maybe models, we bit

the is of you to right advisers market think accessible likely to now this year. expand mentioned understand XX,XXX that's that sort I

using Just -- models of that curious about terms the you the number XX,XXX that improve you're are and how penetrated that in the actually talk of penetration. of are some steps within that taking your to some

Jonathan Steinberg

Jarrett?

Robert Lilien

quarter it's to Yes. we of major -- there. that's about last focuses. that our the a market. one it want And Well, accessible expand talked there's formula We

those last access that the the of financial the want as number XX,XXX And end taken penetrate at market. that advisers. a was and then, -- of our advisers number you course, accessible models. end to are X,XXX can had to of year, of the So And of that year, we at

was So more exciting that's a and lot still the one that our X%, of under penetrate. is market we penetration things have to addressable

Now really firms this we've growth year, both. so on that the market. we've accessible seen platforms on with been the successful on today, to the accessible growing most focused far And on getting already trend. this best of We're are some the market,

the and to And is. product and Jeremy that's weapon sales, earlier. try Siegel the good done on more So a big Stanley's How start a platform, win lot models, we're to great LPL's then Morgan platform, through as accessible we and walk platform. of have of on our effort. got the game go mentioned very is your platforms and convincing grow we And Merrill's door minds. you it with in that's do and Jeremy individual a hearts open, get research, And we is on. market. good great advisers But and with We've of how our not-so-secret the a part of lot now

number we pace last per we the of same doubled X,XXX X,XXX. on advisers We advisers We're our XXX our that from new to year. roughly the quarter. models, And this took using were adding year, number

business you this great visibility is another into pipeline. thing the have So real about

our have in just then we visibility the expect we that, by in the be by as is can already pipeline we see more So that great of year XX,XXX there, we possibly out accessible said and it know prepared what end to growing that remarks, we're we the also market, the and penetration.

the of on is adding portion know models, more portfolio get our one it And out. first thing models of comfortable, one they're of starts seasoning. know start using start and clients. then their they when We their testing day for they the a as be bigger of sort with And it we client's just another for might that and clients, someone more

And lot early advisers us have we're started seasoning the that very early because a at are of the stages the process. in so with

also we've a you lot our there, we're So market. advisers seize and We're giving that to in beginning the addressable but growing those penetration, onboarded. we're growing

Michael Cyprys

just the question and hoping a to success could steps WisdomTree taking about going was years you're what like directly a does awareness offering Maybe And accounts. today your your on to be of of you the us look to bring you over ETFs just bring in about to earlier been the And held understand a couple look to that you've as WisdomTree. Talk remind self-directed follow-up maybe and I strategy. of business are of customers out the on go-to-market sort Prime. talk bit. to you for comment what you portion that next some brokerage DTDC could

Jonathan Steinberg

start? want do you Will, to

William Peck

I'm Yes, Jono. to happy anything can else then you that, start. And you have if

was just the past. talking digital it it's in first. focusing -- been like on organic marketing, and Lean I about think you've that

app gold. clear So There some who appealing them. A be settlement digital at gold that want that would We ads, of product user got. people there [indiscernible] to a that's are that continue out is of monetize appealing, for large to universe people could of are with gold and that search be target digital example a things we've user. looking that very themes to who very like the store, instant that targeting

also as that going to in the targeting states adding on type that going being big the got adding of And that a that's press available we've in people additional to piece the U.S. features we're strategy So of has and and and organic addition well. people been be to

that. big Being big the [indiscernible] will coming a So be a York New open York part the New customers to of Trustco was weeks part in announcement of that.

we're that So going marketing type be that's of into. to strategy the leaning

Jonathan Steinberg

it's Yes, it the and would with a U.S. billion $XX just more say something of being have billion but AUM, a core the it's don't number. exact, to business Europe. retail I number to total the $X I $X on sort from billion of out penetration And retail-oriented

Michael Cyprys

in that brokerage self-directed? $X billion And

Jonathan Steinberg

Yes.

Operator

question comes next the Our from line George Craig-Hallum. of Sutton from

Adam Beatty

is curious, on third-party NYDFS the of of help does the receivable I to WisdomTree this Prime with George. conversations labeling? With for push to approval. white and respect any Adam This respect the was forward

Jonathan Steinberg

Will, do want to you start?

William Peck

Yes. Yes, it would.

I counterparty like us, to has be charter think the Now a the it's -- for Jono in regulated trust up opens York the to call, people really said New customers strong but earlier also dealing business with.

of trust So other in opportunities. style of and BXB strategies a that. who have great do on actually lots you BXBXC to have around trust The way the charter who of kind lots businesses white today is labeling that. And that see charter market

that but BXBXC labeling, much a more white and along of is BXB kind very step good that broadly? So just

Adam Beatty

I users. then from to initial but share respect existing there's could response I the And Great. debit you any early card with the was know days offering, it's about if insights curious

William Peck

been The has initial Yes. great. response

in marketing jumped very spend on We've messaging. actually to been an seeing opened terms cars debit the We're people uptick there. our just seen it. So in beginning strategy. of card It's helpful with

debit marketing so card key far. out of it, always borne in So that's the it's been has a been being and component the --

Adam Beatty

European business. headwind through a Great. And the respect just far little in Obviously, of to QX. bit so a with then flow there's

Just curious what's any you on color if driving that? additional had

Jonathan Steinberg

Jarrett, to or want do you? start one you Jeremy of from

Robert Lilien

jump you some Jarrett, money Sure. in seen We've is I start in. and give motion. a can

in commodities. some repositioning, seen You've especially

see some to it's big back in It big you to in And market. move then So the tend one that a Europe, chunky tends into and at comes blocks moves. time seen you've business.

I to European we've important yesterday, in UCITS. our UCITS again, part development the see area inflows We the growing in product So in since and an positive launch and is strategies believe, which $X of in strategy over launched every business, seen continue And still is [indiscernible] UCITS terms very you still the XXXX. customers to billion, can is really where customer of into feel Europe. year growth of one distribution, now number it the is that though, UCIT

asking, the in it's So chunky what's nature though, still about and around feeling very pretty U.S. This one. allocations. Also great a know people USFR there is and last no. change and people great the a before, talk core going point when seen we've lot some business the -- to always on is good lot moves number but are for a were because okay, our money I Europe, worried year year your holding, of about about the you of was flows

not we're not rates expecting direction, So when even change -- interest we're large outflows.

money in as the position the quarter quality in some, might it moving and that And the out money where something [indiscernible] more in significant substitute, into first you a higher models first but in revenue in the really a of in to conversation spades, us You where was the see overall fee products, growth. into helping but core drive some the many and USFR, holding moving you for saw the cash like puts things really be but flows of importantly, of that saw real goes. into basically quarter India, into the currency hedge driving strategies

with flows, both the and of Europe on going U.S. the great a So things in lot

Operator

Thank floor the the back we've session. management this to reached remarks. of end At you. time, I'll our turn for question-and-answer closing

Jonathan Steinberg

This We Have attention a speak Jono we'll your you is thank to remarks. Thanks, everybody. great support, all we me, and and any and I to Steinberg. next don't you time want think day. quarter. have for closing

Operator

conclude This conference. will today's

day. this your at may You and disconnect wonderful have a time, lines

WisdomTree (WT) 26 Apr 242024 Q1 Earnings call transcript