WisdomTree Announces Third Quarter 2014 Results
WisdomTree Investments, Inc. 3 hours ago GlobeNewswire
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$0.08 diluted net income EPS
Pre-tax income increases 35% and revenues increase 19% from year ago quarter
Declares $0.08 quarterly dividend and $100 million share buyback program
Lowers baseline U.S. tax rate to approximately 38%
NEW YORK, Oct. 31, 2014 (GLOBE NEWSWIRE) -- WisdomTree Investments, Inc. ( WETF), an exchange-traded fund ("ETF") and exchange-traded product ("ETP") sponsor and asset manager, today reported net income of $10.6 million or $0.08 per diluted EPS in the third quarter. Pre-tax income was $20.3 million in the third quarter, an increase of 35.4% from the third quarter of 2013 and 0.6% from the second quarter of 2014. Pre-tax income is comparable to previous periods since prior to 2014, the Company did not record tax expense because of its net operating losses.
Included in the quarter was a loss of $1.5 million, or $0.01 per diluted EPS, associated with the Company's European listed ETP business, which was acquired in April 2014. The Company also lowered its U.S. income tax rate to approximately 38% from 45% (see "Income Taxes" for further discussion).
WisdomTree CEO and President Jonathan Steinberg said, "WisdomTree reported another quarter of record revenues and strong financial results. Despite the challenging market, net inflow levels increased from the second quarter to $748 million."
Mr. Steinberg continued, "The growing scale and positive momentum of our business is driving powerful cash generation. In addition, we are lowering our tax rate which will increase our earnings going forward, further propelling WisdomTree to a position of financial strength. As a result, we believe the time is right to institute a new component of our capital management program."
Capital Return Program - Quarterly Dividend and Share Buyback
The Company's Board of Directors declared a quarterly cash dividend of $0.08 per share of the Company's common stock. The dividend will be paid on November 26, 2014, to stockholders of record as of the close of business on November 12, 2014.
The Board also authorized the Company to purchase up to $100 million of its common stock over three years, including purchases to offset future equity grants made under the Company's equity plans. Purchases under this program will be made in open market or privately negotiated transactions. This authority may be exercised from time to time and in such amounts as market conditions warrant, and subject to regulatory considerations. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. The repurchase program may be suspended or terminated at any time without prior notice.
"We have structured a capital management plan which reflects WisdomTree's strength, strategy and commitment to our shareholders. With $164 million in cash and investments, we are confident we can continue to profitably grow the business and reinvest aggressively for future growth while continuing to generate surplus cash," added Mr. Steinberg.
Summary Operating and Financial Highlights
Three Months Ended Change From
Sep. 30, Jun. 30, Sep. 30,
Jun. 30, Sep. 30,
Operating Highlights 2014 2014 2013 2014 2013
U.S. listed ETFs($, in billions):
AUM $35.8 $35.5 $31.4 0.9% 14.3%
Net inflows/(outflows) $0.7 $0.3 $1.2 124.0% (35.5%)
Average AUM $35.6 $34.1 $30.5 4.1% 16.7%
Average advisory fee 0.52% 0.51% 0.51% 0.01 0.01
Market share of industry inflows 1.5% 0.6% 2.2% 0.9 (0.7)
European listed ETPs($, in millions):
AUM $123.2 $113.2 -- 8.8% --
Net inflows/(outflows) $19.2 $17.7 -- 8.7% --
Average advisory fee 0.79% 0.82% -- (0.03) --
Financial Highlights($, in millions, except per share amounts):
Consolidated Results:
Total revenues $47.1 $44.1 $39.6 6.8% 18.9%
Pre-tax income $20.3 $20.1 $15.0 0.6% 35.4%
Net income $10.6 $10.6 $15.0 0.2% (29.0%)
Diluted earnings per share $0.08 $0.08 $0.11 -- ($0.03)
Pre-tax margin 43.0% 45.6% 37.8% (2.6) 5.2
U.S. listed ETFs:
Total revenues $46.9 $43.9 $39.6 6.7% 18.3%
Pre-tax income $21.8 $21.7 $15.0 0.6% 45.9%
Gross margin1 (non-GAAP) 82.2% 82.4% 76.9% (0.2) 5.3
Pre-tax margin 46.6% 49.4% 37.8% (2.8) 8.8
1 Gross margin is defined as total revenues less fund management and administration expenses and third-party sharing arrangements.
Recent Business Developments
• On September 18, 2014, WisdomTree announced six of its ETFs are available on Schwab ETF OneSource
• On August 12, 2014, WisdomTree announced a strategic alliance with leading Australian ETP provider BetaShares
• On October 24, 2014, WisdomTree Europe announced the launch of 4 UCITS ETFs on the London Stock Exchange (LSE)
Assets Under Management and Net Inflows
U.S. listed ETF assets under management ("AUM") were $35.8 billion at September 30, 2014, up 14.3% from September 30, 2013 primarily due to inflow levels. U.S. listed AUM was up 0.9% from June 30, 2014 primarily due to $0.7 billion of net inflows partly offset by $0.4 billion of negative market movement.
European listed AUM was $123.2 million, up 8.8% from $113.2 million at June 30, 2014 primarily due to $19.2 million of net inflows partly offset by $9.2 million of negative market movement.
Performance
In evaluating the performance of our U.S. listed equity, fixed income and alternative ETFs against actively managed and index based mutual funds and ETFs, 86% of the $35.3 billion invested in our ETFs and 56% (29 of 52) of our ETFs outperformed their comparable Morningstar average since inception as of September 30, 2014.
For more information about WisdomTree ETFs including standardized performance, pleaseclick here or visit www.wisdomtree.com.
Third Quarter Financial Discussion
Revenues
Total revenues increased 18.9% from the third quarter of 2013 and 6.8% compared to the second quarter of 2014 to $47.1 million primarily due to higher average AUM and average fee capture. Included in the third quarter was $0.2 million in revenues from our European listed ETPs, which were acquired in April 2014. Our average advisory fee for our U.S. listed ETFs was 0.52% as compared to 0.51% for the third quarter of 2013 and 0.51% in the second quarter of 2014.
Margins
Gross margin for our U.S. listed ETFs, which is our total revenues less fund management and administration expenses and third party sharing arrangements, was 82.2% in the third quarter of 2014 as compared to 76.9% in the third quarter of 2013 and 82.4% in the second quarter of 2014. The increase was primarily due to beneficial pricing changes for our fund accounting, administration and custody services, which took effect April 2014.
Pre-tax margin was 43.0% in the third quarter of 2014 as compared to 37.8% in the third quarter of 2013 and 45.6% in the second quarter of 2014. Pre-tax margin for our U.S. listed ETFs was 46.6% in the quarter.
Expenses
Total expenses increased 8.9% from the third quarter of 2013 and 11.9% compared to the second quarter of 2014 to $26.9 million. Included in the quarter was $1.8 million of expenses associated with our European listed ETPs.
• Compensation and benefits expense increased 3.5% from the third quarter of 2013 to $10.0 million as lower accrued incentive compensation due to our inflow levels were offset by higher headcount related expenses to support our growth. In addition, we incurred higher compensation costs due to our acquisition of Boost in April 2014. This expense increased 32.3% as compared to the second quarter of 2014 primarily due to higher accrued incentive compensation and headcount related expenses. Our global headcount was 114 at the end of the third quarter of 2014.
• Fund management and administration expense decreased 3.7% from the third quarter of 2013 to $8.5 million. This decrease was primarily due to the transfer of our fund accounting, administration and custody services to State Street, despite the higher average AUM. Partly offsetting this decrease was $0.3 million of expenses for our European listed ETPs. This expense increased 8.3% from the second quarter of 2014 primarily due to variable costs related to higher average AUM. We had 69 U.S. listed ETFs and 42 European listed ETPs at the end of the third quarter of 2014.
• Marketing and advertising expense increased 64.5% from the third quarter of 2013 and 22.6% from the second quarter of 2014 to $3.3 million primarily due to higher levels of advertising related activities to support our growth.
• Sales and business development expense decreased 2.0% from the third quarter of 2013 and 25.9% from the second quarter of 2014 to $1.3 million primarily due to lower spending for sales and product development related initiatives.
• Professional and consulting fees increased $0.8 million from the third quarter of 2013 to $1.4 million primarily due to higher strategic corporate consulting costs. This expense decreased 24.8% compared to the second quarter of 2014. The second quarter of 2014 included advisory and other costs associated with our transaction to acquire Boost, which we completed in April 2014.
• Occupancy, communication and equipment expense increased 22.0% from the third quarter of 2013 to $0.9 million primarily due to costs for new office space which we began to occupy in January 2014. This expense was relatively unchanged compared to the second quarter of 2014.
• Depreciation and amortization expense increased $0.1 million to $0.2 million from the third quarter of 2013 primarily due to amortization of leasehold improvements for our new office space. This expense was essentially unchanged compared to the second quarter of 2014.
• Third-party sharing arrangements expense decreased 50.0% to $0.2 million in the third quarter of 2014 as compared to the third quarter of 2013 primarily due to lower fees to our third party marketing agent in Latin America. This expense was relatively unchanged as compared to the second quarter of 2014.
• Other expenses remained relatively unchanged as compared to the third quarter of 2013 and second quarter of 2014 at $1.1 million.
Income Taxes
The Company completed state tax planning which resulted in a reduction of its current baseline operating tax rate in the U.S. from 45% to approximately 38%. As a result, the Company recorded a charge to tax expense to reduce the value of its deferred tax asset, which had previously been recorded at a 45% rate. In addition, the Company accounted for non-deductible expenses associated with its acquisition of Boost in April 2014. As a result of these items, the Company recorded a charge of $1.3 million to tax expense. Management will discuss income taxes further on its conference call.
Balance Sheet
As of September 30, 2014, the Company had total assets of $202.2 million which consisted primarily of cash and cash equivalents of $151.3 million and investments of $12.2 million. There were approximately 131.9 million shares of common stock outstanding as of September 30, 2014. Fully diluted weighted average shares outstanding were 138.3 million for the third quarter.
Conference Call
WisdomTree will discuss its results and operational highlights during a conference call on Friday, October 31, 2014 at 9:00 a.m. ET. The call-in number will be (877) 303-7209. Anyone outside the U.S. or Canada should call (970) 315-0420. The slides used during the presentation will be available at http://ir.wisdomtree.com. For those unable to join the conference call at the scheduled time, an audio replay will be available on http://ir.wisdomtree.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based on our management's beliefs and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, the risks described below. If one or more of these or other risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this press release completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.
In particular, forward-looking statements in this press release may include statements about:
• 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;
• our ability to develop new products and services;
• our ability to maintain current vendors or find new vendors to provide services to U.S. at favorable costs;
• our ability to successfully expand our business into non-U.S. markets;
• timing of payment of our cash income taxes;
• competition in our business; and
• the effect of laws and regulations that apply to our business.
Our business is subject to many risks and uncertainties, including without limitation:
• We have only a limited operating history and, as a result, recent historical growth may not provide an accurate representation of the growth we may experience in the future, which may make it difficult to evaluate our future prospects.
• Challenging market conditions associated with declining prices of securities can adversely affect our business by reducing the market value of the assets we manage or causing customers to sell their fund shares and trigger redemptions.
• Fluctuations in the amount and mix of our AUM may negatively impact revenue and operating margin.
• Most of our assets under management are held in our U.S. listed ETFs that invest in foreign securities and we therefore have substantial exposure to foreign market conditions and are subject to currency exchange rate risks.
• We derive a substantial portion of our revenue from products invested in emerging markets and are exposed to the market-specific political and economic risks as well as general investor sentiment regarding future growth of those markets.
• We derive a substantial amount of our revenue from products invested in securities of Japanese companies and are exposed to the market-specific political and economic risks as well as general investor sentiment regarding future growth of those markets and currency fluctuations between the Japanese Yen and the U.S. Dollar.
• We derive a majority of our revenue from a limited number of products -- in particular one fund, WisdomTree Japan Hedged Equity Fund, that accounted for approximately 30% of our ETF AUM -- and, as a result, our operating results are particularly exposed to the performance of those funds, investor sentiment toward the strategies pursued by those funds and our ability to maintain the assets under management of those funds.
• Our ETPs and ETFs have a limited track record, and poor investment performance could cause our revenue to decline.
• We depend on other third parties to provide many critical services to operate our business and our ETPs and ETFs. The failure of key vendors to adequately provide such services could materially affect our operating business and harm our customers.
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, please see the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013.
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.
About WisdomTree
WisdomTree Investments, Inc., through its subsidiaries in the U.S. and Europe (collectively, "WisdomTree"), is an exchange-traded fund ("ETF") and exchange-traded product ("ETP") sponsor and asset manager headquartered in New York. WisdomTree offers products covering equities, fixed income, currencies, commodities and alternative strategies. WisdomTree currently has approximately $35.9 billion in assets under management globally.
WisdomTree(R) is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended % Change From Nine Months Ended
Sep. 30,
2014 Jun. 30,
2014 Sep. 30,
2013 Jun. 30,
2014 Sep. 30,
2013 Sep. 30,
2014 Sep. 30,
2013 %
Change
Revenues
Advisory fees $ 46,942 $ 43,938 $ 39,437 6.8% 19.0% $ 133,489 $ 105,691 26.3%
Other income 172 190 193 -9.5% -10.9% 673 611 10.1%
Total revenues 47,114 44,128 39,630 6.8% 18.9% 134,162 106,302 26.2%
Expenses
Compensation and benefits 9,990 7,551 9,648 32.3% 3.5% 26,896 26,577 1.2%
Fund management and administration 8,465 7,818 8,794 8.3% -3.7% 25,451 26,123 -2.6%
Marketing and advertising 3,341 2,726 2,031 22.6% 64.5% 8,645 6,164 40.2%
Sales and business development 1,279 1,727 1,305 -25.9% -2.0% 4,307 4,626 -6.9%
Professional and consulting fees 1,383 1,840 542 -24.8% 155.2% 5,018 1,812 176.9%
Occupancy, communication and equipment 882 853 723 3.4% 22.0% 2,635 1,691 55.8%
Depreciation and amortization 207 201 84 3.0% 146.4% 600 249 141.0%
Third party sharing arrangements 187 115 374 62.6% -50.0% 312 913 -65.8%
Other 1,123 1,164 1,164 -3.5% -3.5% 3,429 3,086 11.1%
Total expenses 26,857 23,995 24,665 11.9% 8.9% 77,293 71,241 8.5%
Income before taxes 20,257 20,133 14,965 0.6% 35.4% 56,869 35,061 62.2%
Income tax expense 9,634 9,531 -- -- -- 5,440 -- --
Net income $ 10,623 $ 10,602 $ 14,965 0.2% -29.0% $ 51,429 $ 35,061 46.7%
Income before taxes per share - basic $ 0.15 $ 0.15 $ 0.12
$ 0.43 $ 0.28
Income before taxes per share - diluted $ 0.15 $ 0.15 $ 0.11
$ 0.41 $ 0.25
Net income per share - basic $ 0.08 $ 0.08 $ 0.12
$ 0.39 $ 0.28
Net income per share - diluted $ 0.08 $ 0.08 $ 0.11
$ 0.37 $ 0.25
Weighted average common shares - basic 131,778 131,533 126,509
131,418 125,909
Weighted average common shares - diluted 138,346 138,258 140,097
138,476 139,805
WISDOMTREE INVESTMENTS, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
U.S. Listed Business
U.S.
Listed
Business European
Listed
Business
Total
% Change From
Q3/14 Q3/14 Q3/14 Q3/14 Q2/14 Q3/13 Q2/14 Q3/13
Revenues
Advisory fees $ 46,659 $ 283 $ 46,942 $ 46,659 $ 43,753 $ 39,437 6.6% 18.3%
Other income 224 (52) 172 224 182 193 23.1% 16.1%
Total revenues 46,883 231 47,114 46,883 43,935 39,630 6.7% 18.3%
Expenses
Compensation and benefits 9,250 740 9,990 9,250 7,026 9,648 31.7% -4.1%
Fund management and administration 8,139 326 8,465 8,139 7,625 8,794 6.7% -7.4%
Marketing and advertising 3,244 97 3,341 3,244 2,675 2,031 21.3% 59.7%
Sales and business development 1,185 94 1,279 1,185 1,653 1,305 -28.3% -9.2%
Professional and consulting fees 945 438 1,383 945 1,026 542 -7.9% 74.4%
Occupancy, communication and equipment 809 73 882 809 807 723 0.2% 11.9%
Depreciation and amortization 206 1 207 206 199 84 3.5% 145.2%
Third party sharing arrangements 187 -- 187 187 115 374 62.6% -50.0%
Other 1,088 35 1,123 1,088 1,105 1,164 -1.5% -6.5%
Total expenses 25,053 1,804 26,857 25,053 22,231 24,665 12.7% 1.6%
Income/(loss) before taxes 21,830 (1,573) 20,257 21,830 21,704 14,965 0.6% 45.9%
Income tax expense/(benefit) 9,662 (28) 9,634 9,662 9,873 -- -2.1% n/a
Net income/(loss) $ 12,168 $ (1,545) $ 10,623 $ 12,168 $ 11,831 $ 14,965 2.8% -18.7%
Pretax margin 46.6%
43.0%
Gross margin 82.2%
81.6%
WISDOMTREE INVESTMENTS, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
U.S. Listed Business
U.S.
Listed
Business European
Listed
Business
Total
%
9M/14 9M/14 9M/14 9M/14 9M/13 Change
Revenues
Advisory fees $ 133,021 $ 468 $ 133,489 $ 133,021 $ 105,691 26%
Other income 717 (44) 673 717 611 17%
Total revenues 133,738 424 134,162 133,738 106,302 26%
Expenses
Compensation and benefits 25,631 1,265 26,896 25,631 26,577 -4%
Fund management and administration 24,932 519 25,451 24,932 26,123 -5%
Marketing and advertising 8,497 148 8,645 8,497 6,164 38%
Sales and business development 4,139 168 4,307 4,139 4,626 -11%
Professional and consulting fees 3,766 1,252 5,018 3,766 1,812 108%
Occupancy, communication and equipment 2,516 119 2,635 2,516 1,691 49%
Depreciation and amortization 597 3 600 597 249 140%
Third party sharing arrangements 312 -- 312 312 913 -66%
Other 3,335 94 3,429 3,335 3,086 8%
Total expenses 73,725 3,568 77,293 73,725 71,241 3%
Income/(loss) before taxes 60,013 (3,144) 56,869 60,013 35,061 71%
Income tax expense/(benefit) 5,810 (370) 5,440 5,810 -- n/a
Net income/(loss) $ 54,203 $ (2,774) $ 51,429 $ 54,203 $ 35,061 55%
Pretax margin 44.9%
42.4%
Gross margin 81.1%
80.8%
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except per share amounts)
September 30,
2014 December 31,
2013
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 151,287 $ 104,316
Accounts receivable 16,268 18,100
Other current assets 2,208 1,320
Total current assets 169,763 123,736
Fixed assets, net 10,263 6,252
Investments 12,224 11,748
Deferred tax asset, net 8,253 --
Goodwill 1,676 --
Other noncurrent assets 56 55
Total assets $ 202,235 $ 141,791
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Fund management and administration payable $ 8,833 $ 10,394
Compensation and benefits payable 7,062 14,278
Accounts payable and other liabilities 4,956 4,384
Total current liabilities 20,851 29,056
Other noncurrent liabilities:
Acquisition payable 1,757 --
Deferred rent payable 5,326 3,706
Total liabilities 27,934 32,762
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; 250,000 shares authorized: issued: 133,516 and 132,247 outstanding: 131,947 and 130,350 1,335 1,322
Additional paid-in capital 198,040 184,201
Accumulated other comprehensive loss (9) --
Accumulated deficit (25,065) (76,494)
Total stockholders' equity 174,301 109,029
Total liabilities and stockholders' equity $ 202,235 $ 141,791
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Nine Months Ended
September 30,
2014 September 30,
2013
Cash flows from operating activities
Net income $ 51,429 $ 35,061
Non-cash items included in net income:
Income tax expense 5,396 --
Depreciation and amortization 600 249
Stock-based compensation 6,122 5,186
Deferred rent 1,620 111
Accretion to interest income and other (76) 108
Changes in operating assets and liabilities:
Accounts receivable 2,049 (3,683)
Other assets (811) (720)
Fund management and administration payable (1,579) 3,697
Compensation and benefits payable (7,510) 7,235
Accounts payable and other liabilities (590) 471
Net cash provided by operating activities 56,650 47,715
Cash flows from investing activities
Purchase of fixed assets (4,580) (1,118)
Purchase of investments (1,384) (3,358)
Cash acquired on acquisition 1,349 --
Proceeds from the redemption of investments 868 2,693
Net cash used in investing activities (3,747) (1,783)
Cash flows from financing activities
Shares repurchased (6,259) (1,413)
Proceeds from exercise of stock options 341 1,349
Net cash used in financing activities (5,918) (64)
Decrease in cash flows due to changes in foreign exchange rate (14) --
Net increase in cash and cash equivalents 46,971 45,868
Cash and cash equivalents - beginning of period 104,316 41,246
Cash and cash equivalents - end of period $ 151,287 $ 87,114
Supplemental disclosure of cash flow information
Cash paid for taxes $ 66 $ 33
WisdomTree Investments, Inc.
Key Operating Statistics (Unaudited)
Three Months Ended Nine Months Ended
September 30,
2014 June 30,
2014 September 30,
2013 September 30,
2014 September 30,
2013
U.S. LISTED ETFs
Total ETFs (in millions)
Beginning of period assets 35,500 33,884 28,975 34,884 18,286
Inflows/(outflows) 748 334 1,160 580 12,015
Market appreciation/(depreciation) (425) 1,282 1,217 359 1,051
End of period assets 35,823 35,500 31,352 35,823 31,352
Average assets during the period 35,554 34,141 30,473 34,518 26,932
Revenue Days 92 91 92 273 273
ETF Industry and Market Share (in billions)
ETF industry net inflows 48.5 57.7 53.7 120.7 121.3
WisdomTree market share of industry inflows 1.5% 0.6% 2.2% 0.5% 9.9%
International Hedged Equity ETFs (in millions)
Beginning of period assets 12,557 12,612 10,270 13,348 1,258
Inflows/(outflows) 799 (502) 752 285 9,199
Market appreciation/(depreciation) 615 447 459 338 1,024
End of period assets 13,971 12,557 11,481 13,971 11,481
Average assets during the period 12,654 12,189 11,175 12,631 7,744
US Equity ETFs (in millions)
Beginning of period assets 8,052 7,505 5,777 7,181 4,371
Inflows/(outflows) 84 221 273 494 1,111
Market appreciation/(depreciation) (197) 326 221 264 789
End of period assets 7,939 8,052 6,271 7,939 6,271
Average assets during the period 8,067 7,721 6,214 7,655 5,502
Emerging Markets Equity ETFs (in millions)
Beginning of period assets 7,606 6,753 7,172 7,448 7,332
Inflows/(outflows) 270 388 286 26 1,111
Market appreciation/(depreciation) (381) 465 245 21 (740)
End of period assets 7,495 7,606 7,703 7,495 7,703
Average assets during the period 7,878 7,088 7,289 7,247 7,719
International Developed Equity ETFs (in millions)
Beginning of period assets 5,340 4,830 2,633 3,864 2,474
Inflows/(outflows) (452) 518 205 878 401
Market appreciation/(depreciation) (394) (8) 312 (248) 275
End of period assets 4,494 5,340 3,150 4,494 3,150
Average assets during the period 5,016 5,135 2,888 4,833 2,782
Fixed Income ETFs (in millions)
Beginning of period assets 1,376 1,610 2,437 1,906 2,118
Inflows/(outflows) 69 (278) (320) (515) 266
Market appreciation/(depreciation) (66) 44 (22) (12) (289)
End of period assets 1,379 1,376 2,095 1,379 2,095
Average assets during the period 1,385 1,435 2,246 1,522 2,466
Currency ETFs (in millions)
Beginning of period assets 406 422 547 979 611
Inflows/(outflows) (35) (21) (48) (605) (98)
Market appreciation/(depreciation) (9) 5 3 (12) (11)
End of period assets 362 406 502 362 502
Average assets during the period 380 413 515 468 586
Alternative Strategy ETFs (in millions)
Beginning of period assets 163 152 139 158 122
Inflows/(outflows) 13 8 12 17 25
Market appreciation/(depreciation) 7 3 (1) 8 3
End of period assets 183 163 150 183 150
Average assets during the period 174 160 146 162 133
Average ETF assets during the period
International hedged equity ETFs 36% 36% 37% 37% 29%
US equity ETFs 23% 23% 20% 22% 20%
Emerging markets equity ETFs 22% 21% 24% 21% 29%
International developed equity ETFs 14% 15% 9% 14% 10%
Fixed income ETFs 4% 4% 7% 4% 9%
Currency ETFs 1% 1% 2% 1% 2%
Alternative strategy ETFs 0% 0% 1% 1% 1%
Total 100% 100% 100% 100% 100%
Average ETF advisory fee during the period
Alternative strategy ETFs 0.94% 0.94% 0.94% 0.94% 0.94%
Emerging markets equity ETFs 0.68% 0.67% 0.66% 0.67% 0.66%
International developed equity ETFs 0.56% 0.57% 0.56% 0.56% 0.56%
Fixed income ETFs 0.55% 0.55% 0.55% 0.55% 0.55%
International hedged equity ETFs 0.50% 0.50% 0.49% 0.50% 0.49%
Currency ETFs 0.49% 0.49% 0.50% 0.49% 0.50%
US equity ETFs 0.35% 0.35% 0.35% 0.35% 0.35%
Blended total 0.52% 0.51% 0.51% 0.52% 0.52%
Number of ETFs - end of the period
International developed equity ETFs 17 17 16 17 16
US equity ETFs 13 13 13 13 13
Fixed income ETFs 12 12 6 12 6
International hedged equity ETFs 12 12 4 12 4
Emerging markets equity ETFs 7 7 7 7 7
Currency ETFs 6 6 5 6 5
Alternative strategy ETFs 2 2 2 2 2
Total 69 69 53 69 53
EUROPEAN LISTED ETPs
Total ETPs (in thousands)
Beginning of period assets*** 113,244 96,817
96,817
Inflows/(outflows) 19,192 17,658
36,850
Market appreciation/(depreciation) (9,226) (1,231)
(10,457)
End of period assets 123,210 113,244
123,210
Average ETP advisory fee during the period 0.79% 0.82%
0.80%
Number of ETPs - end of the period 42 38
42
Global headcount 114 103 84 114 84
Note: Previously issued statistics may be restated due to trade adjustments
Source: Investment Company Institute, Bloomberg, WisdomTree
***Q1 and 9 month stats began April 16, 2014
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. The non-GAAP financial measurements included in this release include gross margin, gross margin percentage and our operating results for our U.S. listed ETF business. Our management reviews these non-GAAP financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-GAAP measurements so as to share this perspective of management. Non-GAAP measurements do not have any standardized meaning, do not replace nor are superior to GAAP financial measurements and are unlikely to be comparable to similar measures presented by other companies. These non-GAAP financial measurements should be considered in the context with our GAAP results. We disclose gross margin as a non-GAAP financial measurement to allow investors to analyze our revenues less the direct costs paid to third parties attributable to those revenues. We disclose the results of our U.S. listed ETF business to allow investors to better compare our results to the prior year as in April 2014, we acquired Boost ETP, a UK based ETP sponsor.
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
GAAP to NON-GAAP RECONCILIATION
(in thousands)
(Unaudited)
Three Months Ended For the Nine Months Ended
Sep. 30,
2014 Jun. 30,
2014 Sep. 30,
2013 Sep. 30,
2014 Sep. 30,
2013
GAAP total revenue $ 47,114 $ 44,128 $ 39,630 $ 134,162 $ 106,302
Fund management and administration (8,465) (7,818) (8,794) (25,451) (26,123)
Third party sharing arrangements (187) (115) (374) (312) (913)
Gross margin $ 38,462 $ 36,195 $ 30,462 $ 108,399 $ 79,266
Gross margin percentage 81.6% 82.0% 76.9% 80.8% 74.6%
U.S. listed ETFs:
GAAP total revenue $ 46,883 $ 43,935
Fund management and administration (8,139) (7,625)
Third party sharing arrangements (187) (115)
Gross margin $ 38,557 $ 36,195
Gross margin percentage 82.2% 82.4%
FinanceInvestment & Company Information
Contact:
WisdomTree Investments, Inc.
Stuart Bell / Jessica Zaloom
+1.917.267.3702 / +1.917.267.3735
sbell@wisdomtree.com / jzaloom@wisdomtree.com
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WisdomTree Moves Indexing in a New Direction - The trend that has seen assets move from actively-managed portfolios to index-based strategies has been gaining momentum over the last 15 years. At WisdomTree, we believe this shift will continue but with a twist: we expect a further transition from market cap-weighted indexes toward fundamentally weighted indexes.
A Unique Way to Index - WisdomTree Investments has created the first family of fundamentally weighted dividend indexes that cover all major market capitalizations both domestically and internationally. WisdomTree's back tested research shows the WisdomTree Indexes generally would have outperformed comparable cap-weighted indexes, with less risk, during the long-term period tested. While back testing has inherent limitations, and past performance does not guarantee future results, we believe we have found a better way to index.
http://www.wisdomtreeinvestments.com/about/
RAiDAR alerts: from Knobias - http://www.knobias.com/individual/public/quote.htm?aff=IHUB&ticker=WSDT
Domestic Dividend Equity Funds
WisdomTree Dividend Top 100 Fund (DTN)
WisdomTree High-Yielding Equity Fund (DHS)
WisdomTree LargeCap Dividend Fund (DLN)
WisdomTree MidCap Dividend Fund (DON)
WisdomTree SmallCap Dividend Fund (DES)
WisdomTree Total Dividend Fund (DTD)
International Dividend Equity Funds
WisdomTree DEFA Fund (DWM)
WisdomTree DEFA High-Yielding Equity Fund (DTH)
WisdomTree Europe High-Yielding Equity Fund (DEW)
WisdomTree Europe SmallCap Dividend Fund (DFE)
WisdomTree Europe Total Dividend Fund (DEB)
WisdomTree International Dividend Top 100 Fund (DOO)
WisdomTree International LargeCap Dividend Fund (DOL)
WisdomTree International MidCap Dividend Fund (DIM)
WisdomTree International SmallCap Dividend Fund (DLS)
WisdomTree Japan High-Yielding Equity Fund (DNL)
WisdomTree Japan SmallCap Dividend Fund (DFJ)
WisdomTree Japan Total Dividend Fund (DXJ)
WisdomTree Pacific ex-Japan High-Yielding Equity Fund (DNH)
WisdomTree Pacific ex-Japan Total Dividend Fund (DND)
International Sector Dividend Equity Funds
WisdomTree International Basic Materials Sector Fund (DBN)
WisdomTree International Communications Sector Fund (DGG)
WisdomTree International Consumer Cyclical Sector Fund (DPC)
WisdomTree International Consumer Non-Cyclical Sector Fund (DPN)
WisdomTree International Energy Sector Fund (DKA)
WisdomTree International Financial Sector Fund (DRF)
WisdomTree International Health Care Sector Fund (DBR)
WisdomTree International Industrial Sector Fund (DDI)
WisdomTree International Technology Sector Fund (DBT)
WisdomTree International Utilities Sector Fund (DBU)
http://www.wisdomtree.com/library/fact-sheets.asp
