WisdomTree Announces Fourth Quarter 2024 Results

NEW YORK--(BUSINESS WIRE)--WisdomTree, Inc. (NYSE: WT), a global financial innovator, today reported financial results for the fourth quarter of 2024. $27.3 million of net income ($25.3(1) million of net income, as adjusted). See “Non-GAAP Financial Measurements” for additional information. $109.8 billion of ending AUM, a decrease of 2.5% from the prior quarter arising from market depreciation and net outflows. ($0.3) billion of net outflows, primarily driven by outflows from our emerging markets, commodity and fixed income products, partly offset by inflows into our U.S. equity and cryptocurrency products. 0.36% average advisory fee, a 1 basis point decrease from the prior quarter. 0.39% adjusted revenue yield(2), unchanged from the prior quarter. $110.7 million of operating revenues, a decrease of 2.2% from the prior quarter due to lower other revenues. The prior quarter included $3.7 million of other revenues related to legal and other expenses expected to be covered by insurance that were incurred in connection with a settlement with the U.S. Securities and Exchange Commission (the “SEC”) regarding certain statements about the ESG screening process for three ETFs advised by WisdomTree Asset Management, Inc. (the “SEC ESG Settlement”). 79.3% gross margin(1), a 1.5 point decrease from the prior quarter due to higher non-recurring costs associated with the migration of custody, fund accounting, fund administration, ETF services and securities lending to Bank of New York Mellon (“BNY”) during the quarter (the “BNY Custody Migration”). 31.7% operating income margin, a 4.3 point decrease (5.6 point decrease, as adjusted(1)) compared to our operating margin of 36.0% (37.3%, as adjusted(1)) in the prior quarter primarily due to higher expenses, including those associated with the BNY Custody Migration and seasonally higher discretionary spending. We also recognized approximately $1.0 million of costs remaining under one of our WisdomTree Prime-related contracts as we transition away from this service provider while continuing to expand our internal capabilities to further enhance the platform. $0.03 quarterly dividend declared, payable on February 26, 2025 to stockholders of record as of the close of business on February 12, 2025. Update from Jonathan Steinberg, WisdomTree CEO “In 2024, we focused on disciplined execution, delivering a 73% increase in adjusted EPS fueled by higher AUM, an expansion in our revenue yield, margin expansion, and stock repurchases. Looking ahead to 2025, I am confident WisdomTree will continue leveraging increased client engagement and the growing traction of our models business to drive top-line growth. At the same time, we will remain disciplined in executing margin expansion, proactive in accretive capital deployment, and focused on driving strategic innovation to position the company for accelerated growth.” Update from Jarrett Lilien, WisdomTree COO and President “The formula for sustainable long-term growth includes expanding WisdomTree’s client base and deepening engagement. We executed well on both initiatives, growing both the number of clients using WisdomTree products by 5% while also increasing the number of WisdomTree products held by each client by 4%. We will continue that momentum into 2025, leveraging our broad product lineup, our robust solutions offerings and our expertise to further expand our client relationships and grow AUM.” OPERATING AND FINANCIAL HIGHLIGHTS Three Months Ended Dec. 31, 2024 Sept. 30, 2024 June 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Consolidated Operating Highlights ($ in billions): AUM—end of period $ 109.8 $ 112.6 $ 109.7 $ 107.2 $ 100.1 Net (outflows)/inflows $ (0.3 ) $ (2.4 ) $ 0.3 $ 2.0 $ (0.3 ) Average AUM $ 112.3 $ 110.4 $ 108.5 $ 102.5 $ 96.6 Average advisory fee 0.36% 0.37% 0.37% 0.36% 0.36% Adjusted revenue yield(2) 0.39% 0.39% 0.40% 0.38% 0.37% Consolidated Financial Highlights ($ in millions, except per share amounts): Operating revenues $ 110.7 $ 113.2 $ 107.0 $ 96.8 $ 90.8 Net income/(loss) $ 27.3 $ (4.5 ) $ 21.8 $ 22.1 $ 19.1 Diluted earnings/(loss) per share $ 0.18 $ (0.13 ) $ 0.13 $ 0.13 $ 0.16 Operating income margin 31.7% 36.0% 31.3% 28.9% 28.7% As Adjusted (Non-GAAP(1)): Operating revenues, as adjusted $ 110.5 $ 109.5 $ 107.0 $ 96.4 $ 90.8 Gross margin 79.3% 80.8% 81.2% 79.3% 79.7% Net income, as adjusted $ 25.3 $ 28.8 $ 27.1 $ 20.3 $ 18.6 Diluted earnings per share, as adjusted $ 0.17 $ 0.18 $ 0.16 $ 0.12 $ 0.11 Operating income margin, as adjusted 31.7% 37.3% 35.3% 29.7% 28.7% RECENT BUSINESS DEVELOPMENTS Company News In January 2025, Smita Conjeevaram was appointed as Chair of the Board of Directors of WisdomTree, Inc., succeeding Win Neuger, who will continue to serve on the Board. In December 2024, WisdomTree was named a 2024 “Best Places to Work in Money Management” by Pensions & Investments for the fifth consecutive year and the eighth year since the award was created. WisdomTree was ranked second within the large employer category for managers with 100-499 employees, the third consecutive year earning a ranking among the top five employers. In Europe, we concluded 2024 as the leading provider of Crypto ETP flows, recording $520 million in net new flows. The WisdomTree Crypto ETP range exceeded $1.5 billion in assets under management (AUM), driven primarily by WisdomTree Physical Bitcoin (BTCW). BTCW surpassed $1 billion in AUM, led the European market for bitcoin ETP flows with $232 million in net new flows, and marked its 5-year anniversary in December 2024. Product News In November 2024, we launched the WisdomTree Global Efficient Core UCITS ETF (NTSG) on Deutsche Börse Xetra, the London Stock Exchange and Borsa Italiana, and the WisdomTree Physical XRP ETP (XRPW) on the Deutsche Börse Xetra, the Swiss Stock Exchange SIX and Euronext exchanges in Paris and Amsterdam. In January 2025, we launched the WisdomTree Strategic Metals UCITS ETF (WENU) on Deutsche Börse Xetra, the London Stock Exchange and Borsa Italiana alongside Euro-currency hedged and GBP-currency hedged share classes. In addition, in January 2025, the Siegel-WisdomTree Moderate, Longevity and Global Equity Model Portfolios became available on the UBS Financial Services Inc. separately managed account platform, providing over 85,000 advisors access to WisdomTree’s custom models. WISDOMTREE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited) Three Months Ended Years Ended Dec. 31, 2024 Sept. 30, 2024 June 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Dec. 31, 2024 Dec. 31, 2023 Operating Revenues: Advisory fees $ 102,264 $ 101,659 $ 98,938 $ 92,501 $ 86,988 $ 395,362 $ 333,227 Other revenues 8,433 11,509 8,096 4,337 3,856 32,375 15,808 Total revenues 110,697 113,168 107,034 96,838 90,844 427,737 349,035 Operating Expenses: Compensation and benefits 30,032 29,405 30,790 31,054 27,860 121,281 109,532 Fund management and administration 22,858 21,004 20,139 19,962 18,445 83,963 71,348 Marketing and advertising 6,117 4,897 5,110 4,408 4,951 20,532 17,256 Sales and business development 4,101 3,465 3,640 3,611 3,881 14,817 13,584 Contractual gold payments — — — — — — 6,069 Professional fees 4,559 6,315 6,594 3,630 3,201 21,098 18,969 Occupancy, communications and equipment 1,423 1,397 1,314 1,210 1,208 5,344 4,684 Depreciation and amortization 504 447 418 383 335 1,752 872 Third-party distribution fees 3,161 2,983 2,687 2,307 2,549 11,138 9,377 Other 2,902 2,463 2,831 2,323 2,379 10,519 9,852 Total operating expenses 75,657 72,376 73,523 68,888 64,809 290,444 261,543 Operating income 35,040 40,792 33,511 27,950 26,035 137,293 87,492 Other Income/(Expenses): Interest expense (5,616 ) (5,027 ) (4,140 ) (4,128 ) (3,758) (18,911 ) (15,242 ) Gain on revaluation/termination of deferred consideration—gold payments — — — — — — 61,953 Interest income 2,147 1,795 1,438 1,398 1,225 6,778 4,099 Impairments — — — — (339) — (7,942 ) Loss on extinguishment of convertible notes — (30,632 ) — — — (30,632 ) (9,721 ) Other gains and losses, net 2,627 (3,062 ) (1,283 ) 2,592 1,602 874 (1,631 ) Income before income taxes 34,198 3,866 29,526 27,812 24,765 95,402 119,008 Income tax expense 6,890 8,351 7,767 5,701 5,688 28,709 16,462 Net income/(loss) $ 27,308 $ (4,485 ) $ 21,759 $ 22,111 $ 19,077 $ 66,693 $ 102,546 Earnings/(loss) per share—basic $ 0.19 $ (0.13)(3 ) $ 0.13(3 ) $ 0.14(3 ) $ 0.16(3) $ 0.34(3 ) $ 0.66(3 ) Earnings/(loss) per share—diluted $ 0.18 $ (0.13)(3 ) $ 0.13 $ 0.13 $ 0.16(3) $ 0.33(3 ) $ 0.64(3 ) Weighted average common shares—basic 141,275 143,929 146,896 146,464 145,310 144,630 144,707 Weighted average common shares—diluted 147,612 143,929 166,359 165,268 171,703 158,844 170,413 As Adjusted (Non-GAAP(1)) Total revenues $ 110,505 $ 109,507 $ 107,034 $ 96,385 $ 90,844 Total operating expenses $ 75,465 $ 68,715 $ 69,252 $ 67,740 $ 64,809 Operating income $ 35,040 $ 40,792 $ 37,782 $ 28,645 $ 26,035 Income before income taxes $ 33,033 $ 37,187 $ 36,083 $ 26,987 $ 23,908 Income tax expense $ 7,753 $ 9,049 $ 9,008 $ 6,731 $ 5,342 Net income $ 25,280 $ 28,768 $ 27,075 $ 20,256 $ 18,566 Earnings per share—diluted $ 0.17 $ 0.18 $ 0.16 $ 0.12 $ 0.11 Weighted average common shares—diluted 147,612 156,745 166,359 165,268 171,703 QUARTERLY HIGHLIGHTS Operating Revenues Operating revenues decreased 2.2% from the third quarter of 2024 due to lower other revenues as the prior quarter included $3.7 million of other revenues related to legal and other expenses incurred in connection with the SEC ESG Settlement that are expected to be covered by insurance. Operating revenues increased 21.9% from the fourth quarter of 2023 due to higher average AUM and higher other revenues attributable to our European listed exchange-traded products (“ETPs”). Our average advisory fee was 0.36%, 0.37% and 0.36% during the fourth quarter of 2024, the third quarter of 2024 and the fourth quarter of 2023, respectively. Operating Expenses Operating expenses increased 4.5% from the third quarter of 2024 primarily due to seasonally higher discretionary spending, including marketing and sales-related expenses. In addition, higher fund management expenses arose from non-recurring costs related to the BNY Custody Migration and we recognized approximately $1.0 million of costs remaining under one of our WisdomTree Prime-related contracts as we transition away from this service provider while continuing to expand our internal capabilities to further enhance the platform. These increases were partly offset by lower professional fees incurred in the fourth quarter related to the SEC ESG Settlement. Operating expenses increased 16.7% from the fourth quarter of 2023 primarily due to higher fund management and administration costs, compensation, professional fees and marketing expenses. Other Income/(Expenses) Interest expense increased 11.7% and 49.4% from the third quarter of 2024 and fourth quarter of 2023, respectively, due to a higher level of debt outstanding, partly offset by a lower average interest rate. The increase from the fourth quarter of 2023 also is due to the recognition of a full quarter of imputed interest on our obligation payable to Gold Bullion Holdings (Jersey) Limited (“GBH”), a subsidiary of the World Gold Council, in connection with our repurchase in November 2023 of our Series C Non-Voting Convertible Preferred Stock. Interest income increased 19.6% and 75.3% from the third quarter of 2024 and the fourth quarter of 2023, respectively, due to a higher level of interest-earning assets. Other gains and losses, net was a gain of $2.6 million for the fourth quarter of 2024. This included net gains of $2.3 million on our financial instruments owned and net losses of $0.5 million on our investments. Gains and losses also generally arise from the sale of gold and crypto earned from management fees paid by our physically-backed gold and crypto ETPs, foreign exchange fluctuations and other miscellaneous items. Income Taxes Our effective income tax rate for the fourth quarter of 2024 was 20.1%, resulting in income tax expense of $6.8 million. The effective tax rate differs from the federal statutory rate of 21.0% primarily due to a favorable tax adjustment to the non-deductible loss on extinguishment of convertible notes and a lower tax rate on foreign earnings. Our adjusted effective income tax rate for the fourth quarter of 2024 was 23.5%(1). ANNUAL HIGHLIGHTS Operating revenues increased 22.5% as compared to 2023 due to higher average AUM and higher other revenues attributable to our European listed ETPs. In addition, operating revenues include $4.3 million of other revenues related to legal and other related expenses incurred in connection with the SEC ESG Settlement that are expected to be covered by insurance. Operating expenses increased 11.1% as compared to 2023 primarily due to higher incentive and stock-based compensation expense and increased headcount, fund management and administration costs, marketing expenses, sales and business development expenses, third-party distribution fees, as well as higher depreciation and amortization. Operating expenses during the year ended December 31, 2024 also include $4.3 million of legal and other related expenses expected to be covered by insurance that were incurred in connection with the SEC ESG Settlement. These increases were partly offset by lower contractual gold payments. Significant items reported in other income/(expense) in 2024 include: a loss on extinguishment of convertible notes of $30.6 million arising from the repurchase of $104.2 million aggregate principal amount of our 5.75% convertible senior notes due 2028; a civil money penalty of $4.0 million in connection with the SEC ESG Settlement; an increase in interest expense of 24.1% due to imputed interest on our obligation payable to GBH and higher level of debt outstanding, partly offset by a lower average interest rate; an increase in interest income of 65.4% due to an increase in our interest-earning assets; net gains on our financial instruments owned of $4.9 million; and losses on our investments of $1.1 million. Gains and losses also generally arise from the sale of gold earned on management fees paid by our physically-backed gold ETPs, foreign exchange fluctuations and other miscellaneous items. Our effective income tax rate for 2024 was 30.1%, resulting in an income tax expense of $28.7 million. Our tax rate differs from the federal statutory rate of 21.0% primarily due to a non-deductible loss on extinguishment of convertible notes, a non-deductible civil money penalty of $4.0 million in connection with the SEC ESG Settlement and non-deductible executive compensation. These items were partly offset by a lower tax rate on foreign earnings. CONFERENCE CALL DIAL-IN AND WEBCAST DETAILS WisdomTree will discuss its results and operational highlights during a live webcast on Friday, January 31, 2025 at 11:00 a.m. ET, which can be accessed using the following link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=VyP1taaA. Participants also can dial in using the following numbers: (877) 407-9210 or (201) 689-8049. Click here to access the participant international toll-free access numbers. To avoid delays, we encourage participants to log in or dial into the conference call 10 minutes ahead of the scheduled start time. All earnings materials and the webcast can be accessed through WisdomTree’s investor relations website at https://ir.wisdomtree.com. A replay of the webcast will also be available shortly after the call. About WisdomTree WisdomTree is a global financial innovator, offering a well-diversified suite of exchange-traded products (ETPs), models, solutions and products leveraging blockchain technology. We empower investors and consumers to shape their future and support financial professionals to better serve their clients and grow their businesses. WisdomTree is leveraging the latest financial infrastructure to create products that provide access, transparency and an enhanced user experience. Building on our heritage of innovation, we are also developing and have launched next-generation digital products, services and structures, including digital or blockchain-enabled mutual funds and tokenized assets, as well as our blockchain-native digital wallet, WisdomTree Prime® and institutional platform, WisdomTree Connect™.* * The WisdomTree Prime digital wallet and digital asset services and WisdomTree Connect institutional platform are made available through WisdomTree Digital Movement, Inc., a federally registered money services business, state-licensed money transmitter and financial technology company (NMLS ID: 2372500) or WisdomTree Digital Trust Company, LLC, in select U.S. jurisdictions and may be limited where prohibited by law. WisdomTree Digital Trust Company, LLC is chartered as a limited purpose trust company by the New York State Department of Financial Services to engage in virtual currency business. Visit https://www.wisdomtreeprime.com, the WisdomTree Prime mobile app or https://wisdomtreeconnect.com for more information. WisdomTree currently has approximately $113.5 billion in assets under management globally. For more information about WisdomTree, WisdomTree Connect and WisdomTree Prime, visit: https://www.wisdomtree.com. Please visit us on X at @WisdomTreeNews. WisdomTree® is the marketing name for WisdomTree, Inc. and its subsidiaries worldwide. PRODUCTS AND SERVICES AVAILABLE VIA WISDOMTREE PRIME: NOT FDIC INSURED | NO BANK GUARANTEE | NOT A BANK DEPOSIT | MAY LOSE VALUE | NOT SIPC PROTECTED | NOT INSURED BY ANY GOVERNMENT AGENCY The products and services available through the WisdomTree Prime app and WisdomTree Connect are not endorsed, indemnified or guaranteed by any regulatory agency. ______________ (1) See “Non-GAAP Financial Measurements.” (2) Adjusted revenue yield is computed by dividing our annualized adjusted operating revenues as reported in the GAAP to Non-GAAP Reconciliation herein by our average AUM during the period. (3) Earnings per share (“EPS”) is calculated pursuant to the two-class method as it results in a lower EPS amount as compared to the treasury stock method. In addition, the three months ended September 30, 2024 and year ended December 31, 2024 include a loss of $11,375 recognized upon the repurchase of our Series A Non-Voting Convertible Preferred Stock convertible into approximately 14.75 million shares of common stock from ETFS Capital Limited and $1,868 of stock repurchase excise taxes. The three months ended December 31, 2023 includes a gain of $7,966 recognized upon the repurchase of our Series C Non-Voting Convertible Preferred Stock convertible into approximately 13.1 million shares of common stock from GBH. These items are excluded from net income, but are required to be added to net income to arrive at income available to common stockholders in the calculation of EPS. These items are excluded from our EPS when computed on a non-GAAP basis. WISDOMTREE, INC. AND SUBSIDIARIES KEY OPERATING STATISTICS (Unaudited) Three Months Ended Dec. 31, 2024 Sept. 30, 2024 June 30, 2024 Mar. 31, 2024 Dec. 31, 2023 GLOBAL ETPs ($ in millions) Beginning of period assets $ 112,577 $ 109,686 $ 107,230 $ 100,124 $ 93,735 (Outflows)/inflows (281 ) (2,395 ) 340 1,988 (255 ) Market (depreciation)/appreciation (2,517 ) 5,286 2,116 5,118 6,644 End of period assets $ 109,779 $ 112,577 $ 109,686 $ 107,230 $ 100,124 Average assets during the period $ 112,349 $ 110,369 $ 108,479 $ 102,461 $ 96,641 Average advisory fee during the period 0.36 % 0.37 % 0.37 % 0.36 % 0.36 % Revenue days 92 92 91 91 92 Number of ETPs—end of the period 353 352 350 338 337 U.S. LISTED ETFs ($ in millions) Beginning of period assets $ 81,267 $ 79,722 $ 78,087 $ 72,486 $ 68,018 (Outflows)/inflows (40 ) (1,650 ) 1,106 1,983 (67 ) Market (depreciation)/appreciation (2,132 ) 3,195 529 3,618 4,535 End of period assets $ 79,095 $ 81,267 $ 79,722 $ 78,087 $ 72,486 Average assets during the period $ 80,661 $ 80,335 $ 78,523 $ 74,831 $ 69,801 Number of ETFs—end of the period 78 78 78 77 76 EUROPEAN LISTED ETPs ($ in millions) Beginning of period assets $ 31,310 $ 29,964 $ 29,143 $ 27,638 $ 25,717 (Outflows)/inflows (241 ) (745 ) (766 ) 5 (188 ) Market (depreciation)/appreciation (385 ) 2,091 1,587 1,500 2,109 End of period assets $ 30,684 $ 31,310 $ 29,964 $ 29,143 $ 27,638 Average assets during the period $ 31,688 $ 30,034 $ 29,956 $ 27,630 $ 26,840 Number of ETPs—end of the period 275 274 272 261 261 PRODUCT CATEGORIES ($ in millions) U.S. Equity Beginning of period assets $ 34,643 $ 31,834 $ 31,670 $ 29,156 $ 25,643 Inflows 1,099 328 221 536 487 Market (depreciation)/appreciation (328 ) 2,481 (57 ) 1,978 3,026 End of period assets $ 35,414 $ 34,643 $ 31,834 $ 31,670 $ 29,156 Average assets during the period $ 35,714 $ 33,175 $ 31,339 $ 30,154 $ 26,928 Commodity & Currency Beginning of period assets $ 23,034 $ 21,987 $ 21,944 $ 21,336 $ 20,466 Outflows (440 ) (741 ) (1,499 ) (460 ) (449 ) Market (depreciation)/appreciation (688 ) 1,788 1,542 1,068 1,319 End of period assets $ 21,906 $ 23,034 $ 21,987 $ 21,944 $ 21,336 Average assets during the period $ 22,989 $ 22,016 $ 22,437 $ 20,837 $ 21,254 Fixed Income Beginning of period assets $ 20,767 $ 21,430 $ 21,218 $ 21,197 $ 21,797 (Outflows)/inflows (387 ) (897 ) 236 (14 ) (715 ) Market (depreciation)/appreciation (337 ) 234 (24 ) 35 115 End of period assets $ 20,043 $ 20,767 $ 21,430 $ 21,218 $ 21,197 Average assets during the period $ 20,398 $ 21,135 $ 21,277 $ 21,082 $ 21,889 Three Months Ended Dec. 31, 2024 Sept. 30, 2024 June 30, 2024 Mar. 31, 2024 Dec. 31, 2023 International Developed Market Equity Beginning of period assets $ 18,075 $ 19,385 $ 18,103 $ 15,103 $ 13,902 Inflows/(outflows) 63 (1,391 ) 1,253 1,597 9 Market (depreciation)/appreciation (536 ) 81 29 1,403 1,192 End of period assets $ 17,602 $ 18,075 $ 19,385 $ 18,103 $ 15,103 Average assets during the period $ 17,716 $ 18,636 $ 18,809 $ 16,691 $ 14,267 Emerging Market Equity Beginning of period assets $ 12,452 $ 11,875 $ 11,189 $ 10,726 $ 9,569 (Outflows)/inflows (908 ) (20 ) 57 217 412 Market (depreciation)/appreciation (1,076 ) 597 629 246 745 End of period assets $ 10,468 $ 12,452 $ 11,875 $ 11,189 $ 10,726 Average assets during the period $ 11,407 $ 12,083 $ 11,448 $ 10,900 $ 9,833 Leveraged & Inverse Beginning of period assets $ 2,082 $ 1,922 $ 1,828 $ 1,815 $ 1,781 (Outflows)/inflows (69 ) 71 (18 ) (50 ) (59 ) Market (depreciation)/appreciation (89 ) 89 112 63 93 End of period assets $ 1,924 $ 2,082 $ 1,922 $ 1,828 $ 1,815 Average assets during the period $ 2,032 $ 1,962 $ 1,905 $ 1,792 $ 1,803 Cryptocurrency Beginning of period assets $ 1,054 $ 838 $ 874 $ 414 $ 243 Inflows 315 201 75 158 28 Market appreciation /(depreciation) 543 15 (111 ) 302 143 End of period assets $ 1,912 $ 1,054 $ 838 $ 874 $ 414 Average assets during the period $ 1,599 $ 917 $ 856 $ 614 $ 325 Alternatives Beginning of period assets $ 470 $ 415 $ 404 $ 377 $ 334 Inflows 46 54 15 4 32 Market (depreciation)/appreciation (6 ) 1 (4 ) 23 11 End of period assets $ 510 $ 470 $ 415 $ 404 $ 377 Average assets during the period $ 494 $ 445 $ 408 $ 391 $ 342 Headcount 313 314 304 300 303 Note: Previously issued statistics may be restated due to fund closures and trade adjustments. Source: WisdomTree WISDOMTREE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) Dec. 31, 2024 Dec. 31, 2023 (Unaudited) ASSETS Current assets: Cash, cash equivalents and restricted cash $ 181,191 $ 129,305 Financial instruments owned, at fair value 85,439 58,722 Accounts receivable 44,866 35,473 Prepaid expenses 5,340 5,258 Other current assets 1,542 1,036 Total current assets 318,378 229,794 Fixed assets, net 336 427 Securities held-to-maturity 206 230 Deferred tax assets, net 11,656 11,057 Investments 8,922 9,684 Right of use assets—operating leases 880 563 Goodwill 86,841 86,841 Intangible assets, net 605,896 605,082 Other noncurrent assets 425 459 Total assets $ 1,033,540 $ 944,137 LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Current liabilities: Fund management and administration payable $ 31,135 $ 30,085 Compensation and benefits payable 39,701 38,111 Payable to Gold Bullion Holdings (Jersey) Limited (“GBH”) 14,804 14,804 Income taxes payable 724 3,866 Operating lease liabilities 709 578 Accounts payable and other liabilities 22,124 15,772 Total current liabilities 109,197 103,216 Convertible notes—long term 512,033 274,888 Payable to GBH 12,159 24,328 Operating lease liabilities—long term 171 — Total liabilities 633,560 402,432 Preferred stock: Series A Non-Voting Convertible, par value $0.01; Zero and 14.750 shares authorized, issued and outstanding at December 31, 2024 and December 31, 2023, respectively — 132,569 STOCKHOLDERS’ EQUITY Common stock, par value $0.01; 400,000 shares authorized: Issued and outstanding: 146,102 and 150,330 at December 31, 2024 and December 31, 2023, respectively 1,461 1,503 Additional paid-in capital 270,303 312,440 Accumulated other comprehensive loss (1,607 ) (548 ) Retained earnings 129,823 95,741 Total stockholders’ equity 399,980 409,136 Total liabilities and stockholders’ equity $ 1,033,540 $ 944,137 WISDOMTREE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Years Ended December 31, 2024 2023 Cash flows from operating activities: Net income $ 66,693 $ 102,546 Adjustments to reconcile net income to net cash provided by operating activities: Advisory and license fees paid in gold, other precious metals and cryptocurrency (53,452 ) (49,400 ) Loss on extinguishment of convertible notes 30,632 9,721 Stock-based compensation 20,691 16,190 (Gains)/losses on financial instruments owned, at fair value (4,851 ) 517 Imputed interest on payable to GBH 2,635 297 Amortization of issuance costs—convertible notes 1,893 1,817 Depreciation and amortization 1,752 872 Amortization of right of use asset 1,304 1,285 Losses on investments 1,135 242 Deferred income taxes (398 ) (481 ) Gain on revaluation/termination of deferred consideration—gold payments — (61,953 ) Impairments — 7,942 Contractual gold payments — 6,069 Other — — Changes in operating assets and liabilities: Accounts receivable (9,036 ) (6,212 ) Prepaid expenses (107 ) (518 ) Gold and other precious metals 52,640 42,150 Other assets (247 ) 281 Fund management and administration payable 1,290 5,837 Compensation and benefits payable 1,937 1,209 Income taxes payable (3,126 ) 2,260 Operating lease liabilities (1,320 ) (1,284 ) Accounts payable and other liabilities 3,396 6,213 Net cash provided by operating activities 113,461 85,600 Cash flows from investing activities: Purchase of financial instruments owned, at fair value (69,439 ) (57,364 ) Cash paid—software development (2,336 ) (2,149 ) Purchase of investments (674 ) (11,228 ) Purchase of fixed assets (141 ) (113 ) Cash paid—acquisition of Securrency Transfers, Inc. (net of cash acquired) — (985 ) Proceeds from the sale of financial instruments owned, at fair value 48,126 123,564 Proceeds from the exit of investments 565 28,818 Proceeds from held-to-maturity securities maturing or called prior to maturity 24 29 Receipt of contingent consideration—Sale of Canadian ETF business — 1,477 Net cash (used in)/provided by investing activities (23,875 ) 82,049 Cash flows from financing activities: Repurchase of Series A Non-Voting Convertible Preferred Stock (143,812 ) — Repurchase and maturity of convertible notes (132,713 ) (184,272 ) Common stock repurchased (62,870 ) (3,570 ) Dividends paid (19,002 ) (20,144 ) Cash paid to GBH (14,804 ) — Issuance costs—convertible notes (7,667 ) (3,548 ) Repurchase costs—Series A Non-Voting Convertible Preferred Stock (132 ) — Proceeds from the issuance of convertible notes 345,000 130,000 Repurchase of Series C Non-Voting Convertible Preferred Stock — (40,000 ) Termination of deferred consideration—gold payments — (50,005 ) Issuance costs—Series C Non-Voting Convertible Preferred Stock — (97 ) Net cash used in financing activities (36,000 ) (171,636 ) Decrease/(increase) in cash flow due to changes in foreign exchange rate (1,700 ) 1,191 Net increase/(decrease) in cash, cash equivalents and restricted cash 51,886 (2,796 ) Cash, cash equivalents and restricted cash—beginning of year 129,305 132,101 Cash, cash equivalents and restricted cash—end of period $ 181,191 $ 129,305 Supplemental disclosure of cash flow information: Cash paid for income taxes $ 32,218 $ 16,156 Cash paid for interest $ 12,350 $ 10,709 NON-GAAP FINANCIAL MEASUREMENTS In an effort to provide additional information regarding our results as determined by GAAP, we also disclose certain non-GAAP information which we believe provides useful and meaningful information. Our management reviews these non-GAAP financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-GAAP measurements so as to share this perspective of management. Non-GAAP measurements do not have any standardized meaning, do not replace nor are they superior to GAAP financial measurements and are unlikely to be comparable to similar measures presented by other companies. These non-GAAP financial measurements should be considered in the context with our GAAP results. The non-GAAP financial measurements contained in this press release include: Adjusted Revenues, Operating Income, Operating Expenses, Income Before Income Taxes, Income Tax Expense, Net Income and Diluted Earnings per Share We disclose adjusted revenues, operating income, operating expenses, income before income taxes, income tax expense, net income and diluted earnings per share as non-GAAP financial measurements in order to report our results exclusive of items that are non-recurring or not core to our operating business. We believe presenting these non-GAAP financial measurements provides investors with a consistent way to analyze our performance. These non-GAAP financial measurements exclude the following: Legal and other related expenses expected to be covered by insurance: We have incurred $4.3 million of legal and other related expenses in connection with the SEC ESG Settlement that are expected to be covered by insurance. GAAP requires that such covered expenses be reported gross in the income statement such that revenues are recorded to offset expenses incurred. We offset the revenues and related expenses when calculating our non-GAAP financial measurements as the gross presentation serves to overstate our revenues and expenses recognized in the ordinary course of business. Gains or losses on financial instruments owned: We account for our financial instruments owned as trading securities, which requires these instruments to be measured at fair value with gains and losses reported in net income. We exclude these items when calculating our non-GAAP financial measurements as the gains and losses introduce volatility in earnings and are not core to our operating business. Tax windfalls and shortfalls upon vesting of stock-based compensation awards: GAAP requires the recognition of tax windfalls and shortfalls within income tax expense. These items arise upon the vesting of stock-based compensation awards and the magnitude is directly correlated to the number of awards vesting/exercised as well as the difference between the price of our stock on the date the award was granted and the date the award vested or was exercised. We exclude these items when calculating our non-GAAP financial measurements as they introduce volatility in earnings and are not core to our operating business. Imputed interest on our payable to the Gold Bullion Holdings (Jersey) Limited (“GBH”): During the fourth quarter of 2023, we repurchased our Series C Non-Voting Convertible Preferred Stock, which was convertible into approximately 13.1 million shares of WisdomTree common stock, from GBH, a subsidiary of the World Gold Council, for aggregate cash consideration of approximately $84.4 million. Under the terms of the transaction, we paid GBH $40.0 million on the closing date, with the remainder of the purchase price payable in equal annual installments on the first, second and third anniversaries of the closing date, with no requirement to pay interest. Under US GAAP, the obligation is recorded at its present value utilizing a market rate of interest on the closing date of 7.0% and the corresponding discount is amortized as interest expense pursuant to the effective interest method of accounting over the life of the obligation. We exclude this item when calculating our non-GAAP financial measurements as recognition of interest expense is non-cash and contrary to the stated terms of our obligation. Other items: Losses on extinguishment of convertible notes, a civil money penalty in connection with the SEC ESG Settlement, gains and losses recognized on our investments, changes in deferred tax asset valuation allowance, expenses incurred in response to an activist campaign and impairments are excluded when calculating our non-GAAP financial measurements. Adjusted Effective Income Tax Rate We disclose our adjusted effective income tax rate as a non-GAAP financial measurement in order to report our effective income tax rate exclusive of items that are non-recurring or not core to our operating business. We believe reporting our adjusted effective income tax rate provides investors with a consistent way to analyze our income taxes. Our adjusted effective income tax rate is calculated by dividing adjusted income tax expense by adjusted income before income taxes. See above for information regarding the items that are excluded. Gross Margin and Gross Margin Percentage We disclose our gross margin and gross margin percentage as non-GAAP financial measurements because we believe they provide investors with a consistent way to analyze the amount we retain after paying third-party service providers to operate our ETPs. These measures also assist us in analyzing the profitability of our products. We define gross margin as total adjusted operating revenues less fund management and administration expenses. Gross margin percentage is calculated as gross margin divided by total adjusted operating revenues. GAAP to NON-GAAP RECONCILIATION (CONSOLIDATED) (in thousands) (Unaudited) Three Months Ended Adjusted Net Income and Diluted Earnings per Share: Dec. 31, 2024 Sept. 30, 2024 June 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Net income/(loss), as reported $ 27,308 $ (4,485 ) $ 21,759 $ 22,111 $ 19,077 (Deduct)/add back: (Gains)/losses on financial instruments owned, net of income taxes (1,722 ) (607 ) 220 (1,562 ) (370 ) Add back: Loss on extinguishment of convertible notes, net of income taxes (718 ) 30,128 — — — Add back: Imputed interest on payable to GBH, net of income taxes 451 528 513 504 224 (Deduct)/add back: (Decrease)/increase in deferred tax asset valuation allowance on financial instruments owned and investments (428 ) (335 ) 391 (531 ) (280 ) Add back/(deduct): Losses/(gains) recognized on investments, net of income taxes 389 (436 ) 998 (93 ) (336 ) Add back: Civil money penalty in connection with SEC ESG Settlement — 4,000 — — — (Deduct)/add back: Tax (windfalls)/shortfalls upon vesting of stock-based compensation awards — (25 ) (40 ) (699 ) (6 ) Add back: Expenses incurred in response to an activist campaign, net of income taxes — — 3,234 526 — Add back: Impairments, net of income taxes — — — — 257 Adjusted net income $ 25,280 $ 28,768 $ 27,075 $ 20,256 $ 18,566 Weighted average common shares—diluted 147,612 156,745 166,359 165,268 171,703 Adjusted earnings per share—diluted $ 0.17 $ 0.18 $ 0.16 $ 0.12 $ 0.11 Three Months Ended Gross Margin and Gross Margin Percentage: Dec. 31, 2024 Sept. 30, 2024 June 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Operating revenues $ 110,697 $ 113,168 $ 107,034 $ 96,838 $ 90,844 Less: Legal and other related expenses expected to be covered by insurance (192 ) (3,661 ) — (453 ) — Operating revenues, as adjusted $ 110,505 $ 109,507 $ 107,034 $ 96,385 $ 90,844 Less: Fund management and administration (22,858 ) (21,004 ) (20,139 ) (19,962 ) (18,445 ) Gross margin $ 87,647 $ 88,503 $ 86,895 $ 76,423 $ 72,399 Gross margin percentage 79.3 % 80.8 % 81.2 % 79.3 % 79.7 % Three Months Ended Adjusted Operating Revenues, Operating Income and Adjusted Operating Income Margin: Dec. 31, 2024 Sept. 30, 2024 June 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Operating revenues $ 110,697 $ 113,168 $ 107,034 $ 96,838 $ 90,844 Deduct: Legal and other related expenses expected to be covered by insurance (192 ) (3,661 ) — (453 ) — Operating revenues, as adjusted $ 110,505 $ 109,507 $ 107,034 $ 96,385 $ 90,844 Operating income $ 35,040 $ 40,792 $ 33,511 $ 27,950 $ 26,035 Add back: Expenses incurred in response to an activist campaign — — 4,271 695 — Adjusted operating income $ 35,040 $ 40,792 $ 37,782 $ 28,645 $ 26,035 Adjusted operating income margin 31.7 % 37.3 % 35.3 % 29.7 % 28.7 % Three Months Ended Adjusted Total Operating Expenses: Dec. 31, 2024 Sept. 30, 2024 June 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Total operating expenses $ 75,657 $ 72,376 $ 73,523 $ 68,888 $ 64,809 Deduct: Legal and other related expenses expected to be covered by insurance (192 ) (3,661 ) — (453 ) — Deduct: Expenses incurred in response to an activist campaign — — (4,271 ) (695 ) — Adjusted total operating expenses $ 75,465 $ 68,715 $ 69,252 $ 67,740 $ 64,809 Three Months Ended Adjusted Income Before Income Taxes: Dec. 31, 2024 Sept. 30, 2024 June 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Income before income taxes $ 34,198 $ 3,866 $ 29,526 $ 27,812 $ 24,765 (Deduct)/add back: (Gains)/losses on financial instruments owned (2,275 ) (802 ) 291 (2,063 ) (489 ) Add back: Imputed interest on payable to GBH 596 697 677 666 296 Add back/(deduct): Losses/(gains) recognized on investments 514 (576 ) 1,318 (123 ) (1,003 ) Add back: Loss on extinguishment of convertible notes — 30,632 — — — Add back: Civil money penalty in connection with SEC ESG Settlement — 4,000 — — — Add back: Expenses incurred in response to an activist campaign — — 4,271 695 — Add back: Impairments — — — — 339 Adjusted income before income taxes $ 33,033 $ 37,817 $ 36,083 $ 26,987 $ 23,908 Three Months Ended Adjusted Income Tax Expense and Adjusted Effective Income Tax Rate: Dec. 31, 2024 Sept. 30, 2024 June 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Adjusted income before income taxes (above) $ 33,033 $ 37,817 $ 36,083 $ 26,987 $ 23,908 Income tax expense $ 6,890 $ 8,351 $ 7,767 $ 5,701 $ 5,688 Add back: Tax benefit arising from extinguishment of convertible notes 718 504 — — — (Deduct)/add back: Tax (expense)/benefit arising from (gains)losses on financial instruments owned (553 ) (195 ) 71 (501 ) (119 ) Add back/(deduct): Decrease/(increase) in deferred tax asset valuation allowance on financial instruments owned and investments 428 335 (391 ) 531 280 Add back: Tax benefit on imputed interest 145 169 164 162 72 Add back/(deduct): Tax benefit/(expense) on losses/(gains) on investments 125 (140 ) 320 (30 ) (667 ) Add back/(deduct): Tax windfalls/(shortfalls) upon vesting of stock-based compensation awards — 25 40 699 6 Add back: Tax benefit arising from expenses incurred in response to an activist campaign — — 1,037 169 — Add back: Tax benefit arising from impairments — — — — 82 Adjusted income tax expense $ 7,753 $ 9,049 $ 9,008 $ 6,731 $ 5,342 Adjusted effective income tax rate 23.5 % 23.9 % 25.0 % 24.9 % 22.3 % CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This press release contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, the risks described below. If one or more of these or other risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this press release completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements. In particular, forward-looking statements in this press release may include statements about: anticipated trends, conditions and investor sentiment in the global markets and ETPs; anticipated levels of inflows into and outflows out of our ETPs; our ability to deliver favorable rates of return to investors; competition in our business; whether we will experience future growth; our ability to develop new products and services and their potential for success; our ability to maintain current vendors or find new vendors to provide services to us at favorable costs; our ability to successfully implement our strategy relating to digital assets and blockchain-enabled financial services, including WisdomTree Prime® and WisdomTree Connect™, and achieve its objectives; our ability to successfully operate and expand our business in non-U.S. markets; the effect of laws and regulations that apply to our business; and actions of activist stockholders. Our business is subject to many risks and uncertainties, including without limitation: declining prices of securities, gold and other precious metals and other commodities and changes in interest rates and general market conditions can adversely affect our business by reducing the market value of the assets we manage or causing WisdomTree ETP investors to sell their fund shares and trigger redemptions; fluctuations in the amount and mix of our AUM, whether caused by disruptions in the financial markets or otherwise, including but not limited to events such as a pandemic or war, geopolitical conflicts, political events, acts of terrorism and other matters beyond our control, may negatively impact revenues and operating margins, and may impede our ability to refinance our debt upon maturity or increase the cost of borrowing upon a refinancing; competitive pressures could reduce revenues and profit margins; we derive a substantial portion of our revenues from a limited number of products, and, as a result, our operating results are particularly exposed to investor sentiment toward investing in the products’ strategies and our ability to maintain the AUM of these products, as well as the performance of these products and market-specific and political and economic risk; a significant portion of our AUM is held in products with exposure to U.S. and international developed markets, and we therefore have exposure to domestic and foreign market conditions and are subject to currency exchange rate risks; withdrawals or broad changes in investments in our ETPs by investors with significant positions may negatively impact revenues and operating margins; we face increased operational, regulatory, financial and other risks as a result of conducting our business internationally, and as we expand our digital assets product offerings and services beyond our existing ETP business; many of our ETPs have a limited track record, and poor investment performance could cause our revenues to decline; we depend on third parties to provide many critical services to operate our business and our ETPs. The failure of key vendors to adequately provide such services could materially affect our operating business and harm WisdomTree ETP investors; and actions of activist stockholders against us, which have been costly and may be disruptive and cause uncertainty about the strategic direction of our business. Other factors, such as general economic conditions, including currency exchange rate fluctuations, also may have an effect on the results of our operations. For a more complete description of the risks noted above and other risks that could cause our actual results to differ from our current expectations, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, and in subsequent reports filed with or furnished to the SEC. The forward-looking statements in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. Therefore, these forward-looking statements do not represent our views as of any date other than the date of this press release. Category: Business Update

WisdomTree Announces Fourth Quarter 2024 Results

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