Attached files
| file | filename |
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| 8-K - FORM 8-K - WisdomTree Investments, Inc. | v376911_8k.htm |
Exhibit 99.1
WisdomTree Announces First Quarter 2014 Results
Pre-tax income of $16.5 million; doubles from year ago quarter
$0.12 diluted pretax EPS
Revenues increase 46% from year ago quarter
New York, NY – (GlobeNewswire) – May 2, 2014 – WisdomTree Investments, Inc. (NASDAQ: WETF), an exchange-traded product (“ETP”) sponsor and asset manager, today reported pre-tax income of $16.5 million or $0.12 per share on a fully diluted basis. This compares to $7.9 million in the first quarter of 2013 and $16.5 million in the fourth quarter of 2013. Included in the quarter were $1.3 million, or $0.01 per diluted EPS, of costs associated with our acquisition of U.K.-based ETP provider Boost and non-recurring costs for transitioning our fund accounting and administration services. The Company also recorded a non-recurring tax benefit of $13.7 million resulting in net income of $30.2 million for the first quarter of 2014.1
WisdomTree CEO and President Jonathan Steinberg said, “WisdomTree’s powerful operating model produced strong financial results in the first quarter on a base of $33.9 billion in average ETF assets. Even against the backdrop of a challenging market environment for some of our largest exposures, we increased revenues and earnings year over year, demonstrating the scale and strength of our business.”
Mr. Steinberg continued, “We completed important initiatives, including a seamless transition in back office fund accounting, administration and custody services. We also completed our investment to establish WisdomTree Europe and look forward to building out a platform of Boost and WisdomTree products for the world’s second largest ETF market. We continue to invest strategically to make WisdomTree even more competitive for the future.”
Summary Operating and Financial Highlights
| Three Months Ended | Change From | |||||||||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | Dec. 31, | Mar. 31, | ||||||||||||||||
| Operating Highlights ($, in billions): | 2014 | 2013 | 2013 | 2013 | 2013 | |||||||||||||||
| ETF AUM | $ | 33.9 | $ | 34.9 | $ | 25.1 | (2.9 | %) | 35.0 | % | ||||||||||
| ETF net inflows/(outflows) | ($0.5 | ) | $ | 2.3 | $ | 5.9 | ($2.8 | ) | ($6.4 | ) | ||||||||||
| Average ETF AUM | $ | 33.9 | $ | 33.1 | $ | 21.9 | 2.3 | % | 54.4 | % | ||||||||||
| Average ETF advisory fee | 0.51 | % | 0.51 | % | 0.54 | % | -- | (0.03 | ) | |||||||||||
| Market share of industry inflows | -- | 3.9 | % | 11.3 | % | (3.9 | ) | (11.3 | ) | |||||||||||
| Revenue days | 90 | 92 | 90 | (2.0 | ) | -- | ||||||||||||||
| Financial Highlights ($, in millions, except per share amounts): | ||||||||||||||||||||
| Total revenues | $ | 42.9 | $ | 43.2 | $ | 29.3 | (0.6 | %) | 46.3 | % | ||||||||||
| Pre-tax income | $ | 16.5 | $ | 16.5 | $ | 7.9 | 0.0 | % | 109.8 | % | ||||||||||
| Net income | $ | 30.2 | $ | 16.5 | $ | 7.9 | 83.3 | % | 284.6 | % | ||||||||||
| Diluted earnings per share | $ | 0.22 | $ | 0.12 | $ | 0.06 | $ | 0.10 | $ | 0.16 | ||||||||||
| Gross margin2 (non-GAAP) | 78.6 | % | 78.2 | % | 71.6 | % | +0.4 | +7.0 | ||||||||||||
| Pre-tax margin | 38.4 | % | 38.2 | % | 26.8 | % | +0.2 | +11.6 | ||||||||||||
1 Please see section titled “Taxes.”
2 Gross margin is defined as total revenues less fund management and administration expenses and third-party sharing arrangements.
| 1 |
Recent Business Developments
| · | On May 1, 2014, WisdomTree announced the WisdomTree MidCap Dividend Fund (DON) surpassed $1 billion in assets |
| · | On April 29, 2014, WisdomTree announced 10 additional ETFs became available for sale in Japan |
| · | On April 21, 2014, WisdomTree announced the Mexican pension funds investment regulator approved 6 WisdomTree ETFs for sale to Mexican pension funds |
| · | On April 17, 2014, WisdomTree announced it completed an investment to create WisdomTree Europe |
| · | On April 8, 2014, WisdomTree announced the launch of a suite of currency hedged Japan Sector ETFs |
| · | On April 7, 2014, WisdomTree announced the WisdomTree Europe Hedged Equity Fund (HEDJ) surpassed $1 billion in assets |
| · | On March 20, 2014, WisdomTree announced it received three awards from ETF.com: “Most innovative ETF issuer of the year”, “ETF of the year” (WisdomTree Japan Hedged Equity Fund (DXJ)) and “Best new currency ETF of 2013”(WisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU)) |
| · | On February 26, 2014, WisdomTree announced the Peruvian pension funds investment regulator approved 12 WisdomTree ETFs for sale to Peruvian pension funds |
| · | On February 17, 2014, WisdomTree announced the WisdomTree Europe SmallCap Dividend Fund (DFE) surpassed $1 billion in assets |
| · | On February 2, 2014, WisdomTree announced the launch of the WisdomTree Bloomberg Floating Rate Treasury Fund (USFR) |
Assets Under Management and Net Inflows
ETF assets under management (“AUM”) were $33.9 billion at March 31, 2014, up 35.0% from $25.1 billion at March 31, 2013, and down 2.9% from $34.9 billion at December 31, 2013. AUM decreased from December 31, 2013 due to net outflows of $0.5 billion primarily in our emerging markets equity, currency and fixed income focused ETFs as well as in our Japan Hedged Equity ETF (DXJ). We also had negative market movement of $0.5 billion, primarily in those same funds.
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Performance
In evaluating the performance of our Equity, Fixed Income and Alternatives ETFs against actively managed and index based mutual funds and ETFs, 85% of the $33.4 billion invested in our ETFs and 58% (29 of 50) of our ETFs outperformed their comparable Morningstar average since inception as of March 31, 2014.
For more information about WisdomTree ETFs including standardized performance, please click here or visit www.wisdomtree.com.
First Quarter Financial Discussion
Revenues
Total revenues increased 46.3% to $42.9 million as compared to the first quarter of 2013 primarily due to higher average AUM. Revenues decreased 0.6% compared to the fourth quarter of 2013 due to two less revenue days in the first quarter. Our average advisory fee was 0.51% as compared to 0.54% for the first quarter of 2013 and 0.51% in the fourth quarter of 2013 due to a change in mix of our ETFs.
Margins
Our gross margin, which is our total revenues less fund management and administration expenses and third party sharing arrangements, was 78.6% in the first quarter of 2014 as compared to 71.6% in the first quarter of 2013 and 78.2% in the fourth quarter of 2013.
Our pre-tax margin was 38.4% in the first quarter of 2014 as compared to 26.8% in the first quarter of 2013 and 38.2% in the fourth quarter of 2013.
Expenses
Total expenses increased 23.1% to $26.4 million from $21.5 million in the first quarter of 2013. Total expenses decreased 0.9% from $26.7 million in the fourth quarter of 2013. Included in the quarter was $0.8 million of costs associated with our acquisition of Boost and $0.5 million in non-recurring costs for transitioning our fund accounting and administration services.
| § | Compensation and benefits expense increased 25.0% to $9.4 million compared to the first quarter of 2013. This increase was primarily due to higher headcount related expenses to support our growth as well as higher payroll taxes associated with 2013 bonus payments. |
| 3 |
Compensation and benefits expense decreased 2.9% as compared to the fourth quarter of 2013 primarily due to lower accrued incentive compensation partly offset by higher payroll taxes and stock based compensation associated with 2013 bonus awards.
Our headcount at the end of the first quarter of 2014 was 90 compared to 72 at the end of the first quarter of 2013 and 87 at the end of 2013.
| § | Fund management and administration expenses increased 11.5% to $9.2 million compared to the first quarter of 2013. Higher average AUM resulted in a $0.6 million increase in variable fees charged by our third party service providers associated with AUM. In addition, we incurred a non-recurring charge of $0.5 million for transitioning our fund accounting and administration services. |
Fund management and administration expenses increased 2.4% compared to the fourth quarter of 2013 primarily due to the transition cost referred to above. Partly offsetting this increase was a decrease in regulatory fees associated with net inflow levels and certain variable fees associated with a decrease in our emerging markets AUM.
We had 62 ETFs at the end of the first quarter of 2014 compared to 47 at the end of the first quarter of 2013 and 61 at the end of 2013.
| § | Marketing and advertising expenses increased to $2.6 million representing an increase of 33.1% from the first quarter and 20.2% from the fourth quarter of last year primarily due to higher levels of advertising related activities to support our growth. |
| § | Sales and business development expenses decreased to $1.3 million representing a decrease of 27.8% from the first quarter and 29.6% from the fourth quarter of last year primarily due to lower levels of spending for sales related initiatives. |
| § | Professional and consulting fees increased to $1.8 million representing an increase of 192.8% from the first quarter and 91.8% from the fourth quarter of last year primarily due to advisory and other costs associated with our transaction to acquire Boost. In addition, corporate legal fees increased as well as technology consulting expenses associated with our office relocation. |
| § | Occupancy, communication and equipment expense increased to $0.9 million in the first quarter of 2014 representing a 138.7% increase from the first quarter of last year primarily due to costs for new office space which we began to occupy in January 2014. This expense decreased 17.7% compared to the fourth quarter of 2013 primarily due to the expiration in January 2014 of the lease for our previous office space. From September 2013 to January 2014, we recognized rent expense for the new office space we were preparing to occupy while continuing to recognize rent expense for the old space we were occupying at the time. |
| § | Depreciation and amortization expense increased to $0.2 million in the first quarter of 2014 representing a 134.1% increase from the first quarter of last year primarily due to amortization of leasehold improvements for our new office space. This expense was essentially unchanged compared to the fourth quarter of 2013. |
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| § | Third-party sharing arrangements expense decreased to $0.01 million representing a decrease of 91.0% from the first quarter and 97.8% from the fourth quarter of last year primarily due to lower levels of inflows from our third party marketing agent in Latin America. |
| § | Other expenses increased 32.6% to $1.1 million compared to the first quarter of 2013 primarily due to higher independent director fees as well as higher general and administrative expenses. This expense decreased 20.5% compared to the fourth quarter of 2013 primarily due to lower overhead related expenses. |
Taxes
The Company recorded a non-recurring tax benefit of $13.7 million in the first quarter to recognize the Company’s deferred tax asset, which previously had been reserved with a 100% valuation allowance. The Company expects to record GAAP taxes beginning in the second quarter at a rate of 45%; however, for some time it will not be paying cash taxes due to the size of its net operating losses. The Company will discuss this topic on its conference call.
Balance Sheet
As of March 31, 2014, the Company had total assets of $159.7 million which consisted primarily of cash and cash equivalents of $104.8 million and investments of $11.8 million. There were approximately 131.5 million shares of common stock outstanding as of March 31, 2014. Fully diluted weighted average shares outstanding were approximately 138.7 million for the first quarter.
Conference Call
WisdomTree will discuss its results and operational highlights during a conference call on Friday, May 2, 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.
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In particular, forward-looking statements in this press release may include statements about:
| • | anticipated trends, conditions and investor sentiment in the global markets; | |
| • | anticipated levels of inflows into and outflows out of our exchange traded funds; | |
| • | 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 us at favorable costs; |
| • | 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 WisdomTree ETF shareholders 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 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. |
| 6 |
| • | 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 one third 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. |
| • | The WisdomTree 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 the WisdomTree ETFs. The failure of key vendors to adequately provide such services could materially affect our operating business and harm WisdomTree ETF shareholders. |
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 the U.K. (collectively, “WisdomTree”), is an exchange-traded product (“ETP”) sponsor and asset manager headquartered in New York. WisdomTree offers ETPs covering equity, fixed income, currency, alternatives and commodity asset classes. WisdomTree currently has approximately $33.3 billion in assets under management globally.
WisdomTree® is the marketing name for WisdomTree Investments, Inc. and its wholly owned subsidiary, WisdomTree Asset Management, Inc., a registered investment adviser and investment adviser to the WisdomTree Trust and each of its series. The WisdomTree Trust is a registered open-end management investment company.
| Contact Information: |
| 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 INVESTMENTS, INC. | |||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
| (in thousands, except per share amounts) | |||||||||
| (Unaudited) |
| Three Months Ended | % Change From | |||||||||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | Dec. 31, | Mar. 31, | ||||||||||||||||
| 2014 | 2013 | 2013 | 2013 | 2013 | ||||||||||||||||
| Revenues | ||||||||||||||||||||
| ETF advisory fees | $ | 42,609 | $ | 42,903 | $ | 29,153 | -0.7 | % | 46.2 | % | ||||||||||
| Other income | 311 | 263 | 188 | 18.3 | % | 65.4 | % | |||||||||||||
| Total revenues | 42,920 | 43,166 | 29,341 | -0.6 | % | 46.3 | % | |||||||||||||
| Expenses | ||||||||||||||||||||
| Compensation and benefits | 9,355 | 9,633 | 7,482 | -2.9 | % | 25.0 | % | |||||||||||||
| Fund management and administration | 9,168 | 8,953 | 8,223 | 2.4 | % | 11.5 | % | |||||||||||||
| Marketing and advertising | 2,578 | 2,145 | 1,937 | 20.2 | % | 33.1 | % | |||||||||||||
| Sales and business development | 1,301 | 1,848 | 1,801 | -29.6 | % | -27.8 | % | |||||||||||||
| Professional and consulting fees | 1,795 | 936 | 613 | 91.8 | % | 192.8 | % | |||||||||||||
| Occupancy, communication and equipment | 900 | 1,093 | 377 | -17.7 | % | 138.7 | % | |||||||||||||
| Depreciation and amortization | 192 | 190 | 82 | 1.1 | % | 134.1 | % | |||||||||||||
| Third party sharing arrangements | 10 | 455 | 111 | -97.8 | % | -91.0 | % | |||||||||||||
| Other | 1,142 | 1,437 | 861 | -20.5 | % | 32.6 | % | |||||||||||||
| Total expenses | 26,441 | 26,690 | 21,487 | -0.9 | % | 23.1 | % | |||||||||||||
| Income before taxes | 16,479 | 16,476 | 7,854 | 0.0 | % | 109.8 | % | |||||||||||||
| Income tax benefit | (13,725 | ) | - | - | - | - | ||||||||||||||
| Net income | $ | 30,204 | $ | 16,476 | $ | 7,854 | 83.3 | % | 284.6 | % | ||||||||||
| Income before taxes per share - basic | $ | 0.13 | $ | 0.13 | $ | 0.06 | ||||||||||||||
| Income before taxes per share - diluted | $ | 0.12 | $ | 0.12 | $ | 0.06 | ||||||||||||||
| Net income per share - basic | $ | 0.23 | $ | 0.13 | $ | 0.06 | ||||||||||||||
| Net income per share - diluted | $ | 0.22 | $ | 0.12 | $ | 0.06 | ||||||||||||||
| Weighted average common shares - basic | 130,934 | 128,851 | 125,436 | |||||||||||||||||
| Weighted average common shares - diluted | 138,667 | 140,065 | 139,650 | |||||||||||||||||
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| WISDOMTREE INVESTMENTS, INC. | |||
| CONSOLIDATED BALANCE SHEET | |||
| (in thousands, except per share amount) |
| March 31, | December 31, | |||||||
| 2014 | 2013 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 104,780 | $ | 104,316 | ||||
| Accounts receivable | 17,815 | 18,100 | ||||||
| Other current assets | 1,927 | 1,320 | ||||||
| Total current assets | 124,522 | 123,736 | ||||||
| Fixed assets, net | 9,587 | 6,252 | ||||||
| Investments | 11,835 | 11,748 | ||||||
| Deferred income taxes | 13,725 | - | ||||||
| Other noncurrent assets | 56 | 55 | ||||||
| Total assets | $ | 159,725 | $ | 141,791 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Fund management and administration payable | $ | 11,752 | $ | 10,394 | ||||
| Compensation and benefits payable | 2,805 | 14,278 | ||||||
| Accounts payable and other liabilities | 4,921 | 4,384 | ||||||
| Total current liabilities | 19,478 | 29,056 | ||||||
| Other noncurrent liabilities | 4,349 | 3,706 | ||||||
| Total liabilities | 23,827 | 32,762 | ||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Common stock, par value $0.01; 250,000 shares authorized: | ||||||||
| issued: 133,265 and 132,247 | 1,332 | 1,322 | ||||||
| outstanding: 131,525 and 130,350 | ||||||||
| Additional paid-in capital | 180,856 | 184,201 | ||||||
| Accumulated deficit | (46,290 | ) | (76,494 | ) | ||||
| Total stockholders' equity | 135,898 | 109,029 | ||||||
| Total liabilities and stockholders' equity | $ | 159,725 | $ | 141,791 | ||||
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| WISDOMTREE INVESTMENTS, INC. | |||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
| (in thousands) | |||
| (Unaudited) |
| Three Months Ended | ||||||||
| March 31, | March 31, | |||||||
| 2014 | 2013 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 30,204 | $ | 7,854 | ||||
| Non-cash items included in net income: | ||||||||
| Income tax benefit | (13,725 | ) | - | |||||
| Depreciation and amortization | 192 | 82 | ||||||
| Stock-based compensation | 2,015 | 1,714 | ||||||
| Deferred rent | 643 | (34 | ) | |||||
| Accretion to interest income and other | (111 | ) | 39 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 285 | (1,750 | ) | |||||
| Other assets | (491 | ) | (256 | ) | ||||
| Fund management and administration payable | 1,358 | 2,589 | ||||||
| Compensation and benefits payable | (11,473 | ) | 457 | |||||
| Accounts payable and other liabilities | 537 | (451 | ) | |||||
| Net cash provided by operating activities | 9,434 | 10,244 | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of fixed assets | (3,527 | ) | (10 | ) | ||||
| Purchase of investments | (154 | ) | (1,314 | ) | ||||
| Proceeds from the redemption of investments | 61 | 1,633 | ||||||
| Net cash (used in)/provided by investing activities | (3,620 | ) | 309 | |||||
| Cash flows from financing activities | ||||||||
| Shares repurchased | (5,426 | ) | (249 | ) | ||||
| Proceeds from exercise of stock options | 76 | 747 | ||||||
| Net cash (used in)/provided by financing activities | (5,350 | ) | 498 | |||||
| Net increase in cash and cash equivalents | 464 | 11,051 | ||||||
| Cash and cash equivalents - beginning of period | 104,316 | 41,246 | ||||||
| Cash and cash equivalents - end of period | $ | 104,780 | $ | 52,297 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for taxes | $ | 14 | $ | 34 | ||||
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| WisdomTree Investments, Inc. | ||||||
| Key Operating Statistics (Unaudited) | ||||||
| Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2014 | 2013 | 2013 | ||||||||||
| Total ETFs (in millions) | ||||||||||||
| Beginning of period assets | 34,884 | 31,352 | 18,286 | |||||||||
| Inflows/(outflows) | (498 | ) | 2,308 | 5,893 | ||||||||
| Market appreciation/(depreciation) | (502 | ) | 1,224 | 924 | ||||||||
| End of period assets | 33,884 | 34,884 | 25,103 | |||||||||
| Average assets during the period | 33,859 | 33,091 | 21,934 | |||||||||
| Revenue Days | 90 | 92 | 90 | |||||||||
| ETF Industry and Market Share (in billions) | ||||||||||||
| ETF industry net inflows | 14.6 | 58.6 | 52.2 | |||||||||
| WisdomTree market share of industry inflows | - | 3.9 | % | 11.3 | % | |||||||
| International Hedged Equity ETFs (in millions) | ||||||||||||
| Beginning of period assets | 13,348 | 11,481 | 1,258 | |||||||||
| Inflows/(outflows) | (12 | ) | 1,243 | 4,071 | ||||||||
| Market appreciation/(depreciation) | (724 | ) | 624 | 468 | ||||||||
| End of period assets | 12,612 | 13,348 | 5,797 | |||||||||
| Average assets during the period | 13,052 | 11,848 | 3,432 | |||||||||
| US Equity ETFs (in millions) | ||||||||||||
| Beginning of period assets | 7,181 | 6,271 | 4,371 | |||||||||
| Inflows/(outflows) | 189 | 367 | 291 | |||||||||
| Market appreciation/(depreciation) | 135 | 543 | 499 | |||||||||
| End of period assets | 7,505 | 7,181 | 5,161 | |||||||||
| Average assets during the period | 7,176 | 6,771 | 4,749 | |||||||||
| Emerging Markets Equity ETFs (in millions) | ||||||||||||
| Beginning of period assets | 7,448 | 7,703 | 7,332 | |||||||||
| Inflows/(outflows) | (632 | ) | (246 | ) | 876 | |||||||
| Market appreciation/(depreciation) | (63 | ) | (9 | ) | (137 | ) | ||||||
| End of period assets | 6,753 | 7,448 | 8,071 | |||||||||
| Average assets during the period | 6,775 | 7,891 | 7,905 | |||||||||
| International Developed Equity ETFs (in millions) | ||||||||||||
| Beginning of period assets | 3,864 | 3,150 | 2,474 | |||||||||
| Inflows/(outflows) | 812 | 565 | 139 | |||||||||
| Market appreciation/(depreciation) | 154 | 149 | 115 | |||||||||
| End of period assets | 4,830 | 3,864 | 2,728 | |||||||||
| Average assets during the period | 4,347 | 3,490 | 2,640 | |||||||||
| Fixed Income ETFs (in millions) | ||||||||||||
| Beginning of period assets | 1,906 | 2,095 | 2,118 | |||||||||
| Inflows/(outflows) | (302 | ) | (144 | ) | 508 | |||||||
| Market appreciation/(depreciation) | 6 | (45 | ) | (26 | ) | |||||||
| End of period assets | 1,610 | 1,906 | 2,600 | |||||||||
| Average assets during the period | 1,747 | 2,008 | 2,453 | |||||||||
| Currency ETFs (in millions) | ||||||||||||
| Beginning of period assets | 979 | 502 | 611 | |||||||||
| Inflows/(outflows) | (549 | ) | 515 | 12 | ||||||||
| Market appreciation/(depreciation) | (8 | ) | (38 | ) | 3 | |||||||
| End of period assets | 422 | 979 | 626 | |||||||||
| Average assets during the period | 611 | 933 | 637 | |||||||||
| Alternative Strategy ETFs (in millions) | ||||||||||||
| Beginning of period assets | 158 | 150 | 122 | |||||||||
| Inflows/(outflows) | (4 | ) | 8 | (4 | ) | |||||||
| Market appreciation/(depreciation) | (2 | ) | - | 2 | ||||||||
| End of period assets | 152 | 158 | 120 | |||||||||
| Average assets during the period | 151 | 150 | 118 | |||||||||
| Average ETF assets during the period | ||||||||||||
| International hedged equity ETFs | 39 | % | 36 | % | 15 | % | ||||||
| US equity ETFs | 21 | % | 20 | % | 22 | % | ||||||
| Emerging markets equity ETFs | 20 | % | 24 | % | 36 | % | ||||||
| International developed equity ETFs | 13 | % | 11 | % | 12 | % | ||||||
| Fixed income ETFs | 5 | % | 6 | % | 11 | % | ||||||
| Currency ETFs | 2 | % | 3 | % | 3 | % | ||||||
| Alternative strategy ETFs | 0 | % | 0 | % | 1 | % | ||||||
| Total | 100 | % | 100 | % | 100 | % | ||||||
| Average ETF advisory fee during the period | ||||||||||||
| Alternative strategy ETFs | 0.94 | % | 0.94 | % | 0.94 | % | ||||||
| Emerging markets equity ETFs | 0.66 | % | 0.66 | % | 0.67 | % | ||||||
| International developed equity ETFs | 0.56 | % | 0.56 | % | 0.56 | % | ||||||
| Fixed income ETFs | 0.55 | % | 0.55 | % | 0.55 | % | ||||||
| International hedged equity ETFs | 0.49 | % | 0.49 | % | 0.49 | % | ||||||
| Currency ETFs | 0.49 | % | 0.48 | % | 0.51 | % | ||||||
| US equity ETFs | 0.35 | % | 0.35 | % | 0.35 | % | ||||||
| Blended total | 0.51 | % | 0.51 | % | 0.54 | % | ||||||
| Number of ETFs - end of the period | ||||||||||||
| International developed equity ETFs | 16 | 16 | 16 | |||||||||
| US equity ETFs | 13 | 13 | 11 | |||||||||
| Fixed income ETFs | 12 | 11 | 6 | |||||||||
| Emerging markets equity ETFs | 7 | 7 | 5 | |||||||||
| International hedged equity ETFs | 6 | 6 | 2 | |||||||||
| Currency ETFs | 6 | 6 | 5 | |||||||||
| Alternative strategy ETFs | 2 | 2 | 2 | |||||||||
| Total | 62 | 61 | 47 | |||||||||
| Headcount | 90 | 87 | 72 | |||||||||
Note: Previously issued statistics may be restated due to trade adjustments
Source: Investment Company Institute, Bloomberg, WisdomTree
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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 and gross margin percentage. 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.
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| WISDOMTREE INVESTMENTS, INC. | ||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
| GAAP to NON-GAAP RECONCILIATION | ||||||
| (in thousands) | ||||||
| (Unaudited) |
| Three Months Ended | ||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | ||||||||||
| 2014 | 2013 | 2013 | ||||||||||
| GAAP total revenue | $ | 42,920 | $ | 43,166 | $ | 29,341 | ||||||
| Fund management and administration | (9,168 | ) | (8,953 | ) | (8,223 | ) | ||||||
| Third party sharing arrangements | (10 | ) | (455 | ) | (111 | ) | ||||||
| Gross margin | $ | 33,742 | $ | 33,758 | $ | 21,007 | ||||||
| Gross margin percentage | 78.6 | % | 78.2 | % | 71.6 | % | ||||||
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