WisdomTree, Inc. (WT) Q3 2026 Earnings Call Transcript

Welcome to the Wisdom Tree Q3 2026 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jessica Zaloum, Head of Corporate Communications. Thank you. You may begin.

Good morning. Before we begin, I would like to reference our legal disclaimer available in today's presentation. This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. A number of factors could cause actual results to differ materially from the results discussed in forward-looking statements, including, but not limited to, the risks set forth in this presentation in the risk factors section of Wisdom Tree's annual report, Thank you, Jessica, and good morning, everyone.

I'll begin with the review of our third quarter Followed by updates to our forward-looking guidance, before turning the call over to Jarrett, Will, and Jono for additional business updates. Our assets under management reached a record $171 billion at quarter end, marking our seventh consecutive quarter of record end. Assets increased 5% from June 30th, driven by strong net inflows and favorable market conditions. All-time highs were achieved across our U.S., European, and on-chain businesses, reflecting continued growth across our global platform. During the quarter, we generated $4.6 billion of net inflows, with positive contributions across the firm, including $2.4 billion in the U.S., $1.7 billion in Europe, and $500 million from on-chain. Year-to-date net inflows totaled $13.6 billion, representing an annualized organic growth rate of approximately 13%. Flows remain broad-based across strategies and geographies, with meaningful contributions from international equities, fixed income, commodities, and U.S. equities. The operating leverage inherent in our business model continues to translate into margin expansion, both sequentially and year-over-year, as record AUM and continued strong organic growth demonstrate the increasing earnings power of our business. We also remained active on capital management, retiring the remaining $18 million principal amount of our 2029 convertible notes using cash, while repurchasing approximately $11 million of common stock during the quarter, representing roughly 500,000 shares. These actions further simplify our capital structure while also returning capital to shareholders. Overall, our strong organic growth in record AUM continue to drive greater scale and higher earnings, strengthening our ability to create long-term value for shareholders. Next slide. Revenues were $179.4 million during the quarter, an increase of 1% from the second quarter, driven by higher AUM, partly offset by lower transaction fees from our European ETPs and lower performance fees. Revenues increased 43% from the prior year quarter and 49% year-to-date, driven by higher AUM, elevated trading activity relative to the prior periods, and contributions from the Cirrus and Atlantic House acquisitions. Thank you. We're $0.32 per share. Next slide. Now a few comments on our forward-looking guidance. Discretionary spending totaled $62.2 million year-to-date. We are updating our full-year guidance to range from $83 to $87 million, reflecting a modest $2 million reduction to the high end of our We are also narrowing our third-party distribution guidance to $21 million to $23 million, having recognized $16.5 million year-to-date. Our interest income guidance is increased by $1 million to $9 million, reflecting our current expectations for interest-earning assets. Finally, we expect fourth quarter diluted shares to range from 154 to 160 million shares, including incremental shares associated with our convertible notes, assuming an average stock price of $21 to $24 per share. Actual diluted shares may fall outside this range, depending on our average share price during the quarter. As a reminder, our earnings presentation includes an illustration to help quantify the potential dilution associated with our convertible notes going forward. All other elements of our forward-looking guidance remain unchanged from last quarter. This concludes my remarks. I will now turn the call over to Jarrett.

All right. Thanks, Brian, and good morning, everyone. As Brian highlighted, this was another strong quarter for WisdomTree, with $4.6 billion of net inflows and continued broad-based strength across our global product suite. And what continues to stand out isn't just the magnitude of those flows, but the breadth and depth of where they're coming from and how consistently we're generating growth, even as the funds driving it change with the market environment. Over the last several years, an average of nine of our top 15 flow-generating funds each quarter weren't in the top 15 the quarter before. That's the broad-based growth Brian describes in action, where a wide range of products are contributing at different times, giving us multiple ways to win Our portfolio solutions business also continues to grow well, with model AUA now approaching $10 billion. We're adding new advisors while deepening relationships with existing users, driving stickier assets and more sustainable organic flows. We're also beginning to see the benefits of our Atlantic House acquisition. We've launched our first two products in Europe, leveraging the team's capabilities, with plans to launch 15 to 20 products over the next 18 to 24 months. We see real opportunity to drive strong organic growth in liquid alternatives across both Europe and the U.S., combining differentiated investment expertise with our global distribution platform. At Cirrus, we launched Fund 2 in mid-June and already have a strong pipeline with more than $100 million of potential demand from over 100 investors in the mid-to-late stages. We remain very bullish on the combination of Cirrus' differentiated farmland strategy and WisdomTree's distribution capabilities to drive attractive returns and strong organic growth. And John will talk more about how Atlantic House and Cirrus fit into our broader evolution across public markets, private markets, and digital assets. Turning to efficiency, we're continuing to focus on scaling the business while finding ways to make our existing team even more productive. AI is an important part of that effort. We've been embedding AI into workflows across the firm for several years now, not as a headcount reduction initiative, but as a way to free up our employees to focus on higher impact activities. And we're seeing tangible results. In 2026, we've tracked more than 1,500 hours saved per month through AI, the equivalent of at least 10 full-time employees. And that's only from the initiatives we've been able to fully measure. So the actual impact is likely meaningfully higher. John, I will also touch on how we're using AI in the investment process itself. That focus on growth and efficiency is what's driving the margin expansion Brian walked through with 750 basis points of improvement year-to-date, and importantly, we're achieving that while continuing to invest in growth, maintaining expense discipline, and leveraging incremental margins north of 50%. So you've all heard me say this before, but we have an effective playbook that's been working for several years now, which is drive high-quality organic growth, find ways to become more efficient as we scale, and translate that into even greater earnings power, and we're continuing to execute on all three fronts. That playbook is also extending into new areas of growth, and tokenization is a prime example. On-Chain contributed $500 million of net inflows this quarter, and with so much going on in the space, we've invited Will Peck, our head of Wisdom Tree On-Chain, to join the call. He'll share more about the progress we're making from growing demand for our tokenized product to the partnerships expanding our distribution. And with that, Will, over to you.

Thanks, Jarrett, and good morning, everyone. I'm excited to spend a few minutes talking about where we stand with our on-chain business and where we're focused going forward. Let me start with something we announced recently, bringing our digital asset initiatives together under one name, WisdomTree On-Chain. Historically, with WisdomTree Prime, WisdomTree Connect, and the different pieces of our infrastructure, it hasn't always been easy to understand how everything fits together. But these have always been part of building one integrated platform, and WisdomTree on-chain better reflects what that business has become. That includes our retail app, WisdomTree Prime, our institutional and third-party distribution API and portal through WisdomTree Connect, and on-chain markets, which we're developing to expand secondary market trading. And importantly, we've built the underlying infrastructure ourselves. We've invested in our tokenization platform, on-chain transfer agent, broker-dealer, and regulated trust company. So we're not just an asset manager putting funds on a blockchain. We've built an integrated financial services platform that we can use for our own products and potentially offers to others as a service. And we're already seeing the benefits of that investment. A great example is WTGXX, our tokenized money market fund. While we've had some recent seasonal inflows and outflows, the trend line remains consistent. We are seeing continued growth across use cases. We've introduced the ability to trade the fund around the clock seven days a week, along with continuous interest accrual. This functionality is leading to greater demand. Stablecoin reserves, cash management, and increasingly, collateral mobility remain the major use cases we see for WTGXX and tokenized treasury funds. I like to think about stablecoins as money in motion and tokenized money market funds as money at rest. Stablecoins are incredibly useful for moving value around the blockchain ecosystem. But when that money isn't being used, investors should be able to earn a yield without having to move back into the traditional financial system or take risks in DeFi. And obviously, the benefits of this only increase when AI agents start handling a greater number of financial transactions and can always ensure idle cash is generating return for investors and businesses. That's exactly the kind of problem we're solving with WTGXX. We're also looking to extend these capabilities beyond money market funds. We have a novel tokenized ETF proposal in front of the SEC today, which could be another important step in bringing the benefits of on-chain trading to a broader range of investment products. So we've built the infrastructure, we have products demonstrating real demand, and now a major focus is distribution. How do we get these products and services in front of more customers? Increasingly, the answer is through partnerships. We've recently announced Thank you. The pipeline of conversations we're having, both around distributing our products and potentially providing tokenization services to other firms, is extremely robust. I can't predict when individual partnerships will come together, but I'm very encouraged by what we're seeing. On the legislative and regulatory front, the environment remains constructive. Genius Act's passage last year was a milestone event, and while the Clarity Act stalled in the Senate, adoption of stablecoins and tokenized securities has continued. Regulatory progress has also continued, including the SEC's proposed changes to Reg NMS, its innovation exemption for trading of tokenized securities, and the OCC's final rule implementing the Genius Act. So stepping back, our investments in this platform have us extremely well positioned for the secular bull market. We have the infrastructure, differentiated products, an expanding distribution network, and an increasingly supportive regulatory environment. There's still a lot of work ahead, but I think we're very well positioned as more financial services moves on chain. Thanks, everyone. I'll turn it back to Jono.

Thank you, Will, and good morning, everyone. As you've heard from Brian, Jared, and Will, WisdomTree continues to execute exceptionally well. It is becoming more apparent to more investors that WisdomTree is not simply an ETF company. We're becoming a truly modern global asset manager, a next generation global asset manager. After 20 plus years of continued strategic reinvestment, we are intentionally positioned at the intersection of three powerful transformations in financial services. The democratization of investing globally, the convergence of public and private markets, and the tokenization of financial markets on chain. The most exciting opportunity, the real transformation, comes from not merely participating in these three markets independently. It's in integrating them into a cohesive platform and investment ecosystem, which is exactly what WisdomTree is doing. WisdomTree has always taken a differentiated approach to our operating model. We only insource where it's strategic, and we have a genuine edge where our expertise can make a real difference. We retain the intellectual property, specialized investment capabilities, and global distribution network that distinguishes us. And we've brought our technology development in-house while outsourcing more commoditized activities. The result is an extraordinarily efficient and scalable business. Today, we manage approximately $170 billion in assets with just 440 employees. As we continue to grow, that operating leverage translates into expanding margins and faster earnings per share growth. But the operating model is only part of our story, starting with public markets, which remain the foundation of our business. Twenty years ago, we launched our first 20 ETFs, and we introduced the concept of modern alpha, challenging traditional indexing. As Jared highlighted, the breadth of our product lineup and years of consistent organic growth demonstrate just how successful this approach has been. Today, we're making modern alpha further than we could have imagined back then. We're using AI to uncover new sources of alpha. In fact, one of our AI-driven long-short strategies, which uses leverage, it's a true hedge fund in the ETF wrapper. It has outperformed the market by more than 900 basis points so far this year. And with Atlantic House, we've significantly expanded our capabilities in sophisticated liquid alternatives and defined outcome solutions. These are differentiated, higher revenue-yielding investment capabilities that we can now bring to a much broader global audience. Turning to privates, our acquisition of Cirrus gave WisdomTree a leading position in U.S. farmland, a differentiated asset class with attractive economics. But we're looking beyond farmland. Companies are staying private longer, and increasingly, significant value creation is happening before they ever reach the public markets. We believe ETF investors should have access to some of that opportunity. To me, that's another expression of modern alpha. In 2027, we expect to bring private market allocations into the ETF wrapper, providing investors with greater diversification and potentially new sources of outperformance. I don't want to get ahead of ourselves here, but we're working on some very innovative approaches, and you'll hear more about that in coming quarters. Finally, turning to tokenization and on-chain finance. As Will just outlined, we've spent years building a fully vertically integrated tokenization platform. We have the regulated infrastructure, the technology, and the investment products to compete at the cutting edge of this market. And while we're still in the early stages, I believe very few firms have assembled the capabilities that we have. And importantly, this platform is about more than just our own funds. We've built the infrastructure and services that other financial institutions can leverage as they embrace tokenization. I believe tokenization will fundamentally change how financial assets are issued, distributed, and traded. We've invested early, we've built the foundation, and we are exceptionally well-positioned to capitalize as adoption accelerates. Stepping back, public markets, private markets, and tokenization, three distinct but increasingly interconnected capabilities that I believe will define the future of asset management. Combine that breadth of capabilities with our extraordinarily efficient business model, and that's what we're building at WisdomTree, a truly modern global asset manager. Thank you. Let's open the call to questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. The first question is from Wilma Burtis from Raymond James. Please go ahead.

Hey, good morning. You just mentioned the ability to bring privately held companies to an ETF format. I realize this is still early stages, but we'd love to hear more if there's anything you can share. Seems like that would be a huge market. Thanks.

Thanks, Wilma. So, first, you know, our public – the target, you know, we're not sharing right now the specific fund mechanics or the launch dates beyond that we expect this to be a 2027 event. But, you know, what we're really trying to do is build strategies that are predominantly liquid that do incorporate limited allocations to private assets, really always towards the benefit of the investor, so delivering after fee returns that are enhanced by the addition of additional assets. And so, we really, you know, we believe, you know, obviously, we made the acquisition of farmland. That would be an obvious area of allocation within the appropriate selected funds. But we also think we could expand that to incorporate shares of private companies as well. But I don't think I can say more about that at this time. But we are excited about the opportunity.

It sounds like an interesting one.

Sorry, please continue, Wilma.

Oh, no, I was just saying it sounds like an interesting one. I don't know if there was anything else you wanted to add there. But expense growth seemed to moderate this quarter as well. Maybe you could talk a little bit about that. Thanks.

Yeah, Wilma, thanks for the question. Yeah, I got this one. Expenses were down and moderated a bit. But some of that seasonality over the summer months, some of that's just continuing to control our spend, and some of that is just realizing further leverage in our comp ratio as well.

Okay, thank you. And then could you talk a little bit about the profitability of the tokenization business and how that's going to progress in the near future? Thanks.

Will, do you want to start?

Yeah, happy to. Thanks for the question. So this business is very much in investment mode today. So we don't disclose kind of separate financials associated with it. You know, Brian can maybe provide some more color there. We just, you know, you can see in the AUM growth, you can see in kind of the pipeline that we have, remain extremely optimistic and bullish in trying to build this in a very, you know, disciplined way to take advantage of, you know, the infrastructure that we have here at WisdomTree, the benefits that we have with some of these global vendor relationships that we have that allow us to do this in a very cost-effective way than if you were just building, sort of trying to build the on-chain leader and registered funds from scratch. So we feel, you know, very good about how we positioned it from the investment side and expense side. And, you know, we'll continue to keep you posted as we have more details there that we can share.

Okay, Will, would you mind just also maybe talking a little bit about the use cases and maybe the addressable market? I mean, it does tie into future profitability.

Yeah, absolutely. So, you know, we've talked about, I spoke a bit about this in the prepared remarks. You know, we see a really large addressable market here for on-chain registered funds, you know, specifically with the money market fund, let's say, you know, the use cases that we're seeing today being cash management, stablecoin reserves, collateral mobility. These are huge addressable markets in and of themselves, right? So one of the ways that I like to think about, I mean, you're really talking about M2 at a certain level, right? So that's $23 trillion today. I don't mean to, like, overstate that, but M2 is a big number. People really want the risk-free rate today, right, especially when I think SOFR is at, like, 3.94% today. So there's really a real cost of capital in terms of not getting or not trying to get to the risk-free rate with your cash. And so we see that being a trend across financial services. It's only going to take hold even more, particularly as people incorporate agentic finance into their workflows. And that's going to really put a lot of pressure on friction-based businesses or this idea that you're comfortable not getting the risk-free rate on your cash. So while we do think it's going to be a huge address of market, you know, there's currently about $8 trillion in money market funds, $16 trillion in ETFs. I like to think about, like, how big could these numbers get, especially if we see accelerated GDP growth from here? Like, how big could those numbers get? You know, the world really wants access to U.S. dollar, U.S. capital markets. It wants that access within the U.S. regulatory perimeter. And that's something that we think on-chain formatting of these types of structures, these types of exposures can really help solve. So we are talking about a very, very big addressable market here over time.

You know, the only other thing, again, about the cost, Wilma, what I would just say is, you know, the Brian has given guidance that we're spending sort of the mid-20s from an operating loss standpoint. But I do believe that the value, you know, for those of the analysts or the investors that value us on a multiple of the P.E., you're really putting a negative value on the investments that we have made in this on-chain ecosystem. There are peers, a public peer, with more than a billion dollar of value. The delta here between what's in our stock today and what should be realized, I think, is quite immense. And obviously, we as management will be very diligent in trying to, you know, bring that value more closely to investors' attention to make it more obvious to more investors. So we're excited about it.

Okay. Thank you.

Thank you.

The next question is from George Sutton from Craig Callum. Please go ahead.

Thank you. Jono, just a little bit more to that point of the misvaluation of your digital asset build-out. You had started to discuss in the prepared comments that you insource where you have an edge. I'm just curious if you could give us a sense of some of those edges that you've built from an in-source perspective.

Will, do you – I could, but maybe it's better if it's Will Starts, the efficiency that comes from this fully integrated platform, Will.

Yeah, absolutely. I mean, I think WisdomTree, you know, historically has been very smart about where it in-sources and where it outsources. You know, I think that allows this business to have, you know, $170 billion thereabouts in AUM with about, you know, just north of 400 employees, right? So I think that's something that we're proud of in terms of how efficient we can be. And so we've got a very high bar in terms of where we insource versus where we outsource and try to focus on real value-added areas of insourcing. So in the on-chain business, right, there's really a lot of blank space when we started on this, right? You know, it might not be so common for an asset manager in 2026 to own its own transfer agent, but that was a real area of innovation that we saw where there was real doing things better really added value for your customers. Another example could be the willingness to have a money services business and regulated trust company. That's something that WisdomTree saw as being important in this, the ability to deal in stable coins. And so bringing that or having that in-house has really allowed us to win certain business that we think we otherwise would not have been able to win. And then the last piece that I kind of highlight is that we've, over the past few years, built out a broker-dealer. You know, FINRA member, broker-dealer, WisdomTree Securities, which supports various things in WisdomTree's business. One of which is the tokenization on-chain efforts. And that broker-dealer, you know, we've previewed on-chain markets a bit, the importance of having secondary market liquidity, our tokenized ETF model. That broker-dealer is going to prove to be very important, we think, going forward. So these are just examples where I think by being willing to think about how this technology actually adds value and what WisdomTree can do in order to achieve that, we've been willing to make those investments and have these entities, these regulated entities and related infrastructure that allows us to really maximize the opportunity. So we feel really good about those decisions to date where we are today.

And George, let me just add, so the question really was about, like, insourcing the technology development. It does allow us to be an incredibly responsive partner. So all the partnerships that Will has recently, that we mentioned or that we've announced or that are coming in the future, our ability to move quickly, be responsive, as opposed to somebody who's outsourcing a lot of this, I think shows up In these partnerships and in just a smoother user experience from beginning to end for the end customer. Thanks, George.

Perfect. And post the Clarity Act not moving forward, I actually saw you as an enormous beneficiary of that in that stablecoins cannot offer interest. And when I look at your tokenized money market fund, it seems like a very unusually attractive option for folks. And I'm just curious if you can address sort of the impact since the Clarity Act. And you've also mentioned the agentic moves so that, you know, obviously agents will try to find the best options independently. And then we were very pleased to see you offered now as part of the BitGo platform. So just can you give us a sense of how big can this tokenized money market fund alone be?

Oh, I mean, I think you, yeah, happy to. I think you spelled out a lot of the reasons there. I mean, yeah, we saw no impact really, like no negative impact on the Clarity Act failing to pass. It was really, for us, we saw like a pre-Genius Act world and a post-Genius Act world. And what the Genius Act kind of gave the, you know, kind of, for lack of a better term, blessing to U.S.-regulated institutions to start doing more business with stable coins and wallets. And so you've seen whether it's the consortium that we're a part of, some of the work that OpenStandard's doing or other, you know, Circle, others, really a real build-out in terms of stablecoins and, more importantly for us, wallet infrastructure, things that like MoonPay and BitGo provide, right? And so as this wallet infrastructure, you know, permeates the industry more broadly, that just opens up the real addressable market for our products and use cases. Like I said earlier, you know, people want the risk-free rate, especially when it's nearing 4%, right? And when you're on chain and payment stable coins, it is not so easy to get that. You're reliant on some of these, you know, tenuous rewards programs or taking risk in DeFi where you don't actually, you think you're getting the risk-free rate, but you don't know which kind of risk you're taking, right? So that does open up a huge opportunity in money market funds. And we think we've got, you know, certainly by doing this as a registered fund in the 40 Act, a 207 government money market fund, we've done a lot of the hard work to make this as available to the most amount of people as possible, with minimums as low as a dollar, right? Then we added this secondary market functionality with the exempted relief we got, and we think it's a very compelling value prop. And you're starting to see that with some of these integrations that we're doing in partnerships where putting this fund into the workflows of individuals and businesses is just going to make it, It's easier for them to access. So they don't need to separately come to WisdomTree, although we can continue to make that process extremely smooth for people. So it could be a huge fund, right? Like we're talking about a very, very large addressable market. Money market funds in general, especially, you know, as the Gentic Finance kind of continues to take hold, could get to be very, very big in the coming years. So we're very bullish on it.

And finally, if I could, Will, how are you working with a know-your-agent technology? Would that be an in-source or outsource solution for you, and has that been deployed?

That's a good question. No, we don't have any specific kind of updates there. I think there have been a couple of interesting white papers that have been put out about, like, how you do KYC, KYB, CIP in a, you know, when people are doing more business with agents. I mean, the one thing that I'd like to think about or point to today is that, you know, we try to create a very good surface area by which people can code to our, you know, our products, right, that they can do, they can access them programmatically in the way that works best for them. So I've seen some very cool examples of, you know, firms in our sandbox building agentic workflows using the sandbox. And I think that's just representative of how this could come. So, you know, we can kind of, in the future, maybe have more updates on specific, you know, know your agent style workflows, and I think more to come there. But in terms of creating a surface area by which people can access these products, access or approximate the risk-free rate, we think we're building a very good platform for that.

Awesome. Thanks, guys.

The next question is from Michael Cypress from Morgan Stanley. Please go ahead.

Hey, good morning. Thanks for taking the question. So I wanted to ask about digital. You guys have made substantial progress building out the on-chain platform and are expanding distribution. So as you look at over the next couple of years, how are you thinking about the opportunity to translate all of that growth there into meaningful revenue and earnings? Where do you see the greatest monetization opportunity and what might be the one or two or even three things that might be the notable catalysts around that? Will, start, please.

Right. So we do think that there's going to be a real opportunity for the broker-dealer to have kind of non-expense ratio revenue for the business. You know, we'll have more to kind of talk about that in 2027 and beyond. But if I really have to point to two, it would be one as the expense ratio as an asset manager, and the second would be services that the broker-dealer could provide.

And I'll just add, Mike, with our partnership involvement in the bank's stablecoin efforts, net interest income from greater stablecoin usage as our products are moving around the world more fulsomely. So I think there are three easy ones.

And then just on the partnerships with BitGo, MoonPay, and others, can you just elaborate on the opportunity set that you see to expand distribution and what needs to happen for those partnerships to begin contributing more meaningfully to AUM inflows?

Yeah, absolutely. I mean, we just announced them, so very, very recent. But let's take the BitGo example, right? You know, BitGo has a lot of customers, a lot of assets under custody. Some of their customers have not been able to kind of, again, access the risk-free rate kind of natively in a way that's like easy for them within the BitGo environment. And so instead of needing to have held away assets or not being willing to move over more money into BitGo because they want to have access to their money market fund separately, now within BitGo Mint, they can just access the money market fund WTGXX directly there. So that's just an example. We're very excited about that. I believe BitGo is very excited about it, where you can just make it easier for people to access these products directly in the place that they're doing business today. So success on these partnerships will be all these relationships continue to grow and people are seeing it. Oh, instead of just needing to do my, you know, certain crypto trading here or something, I can actually keep more assets in this platform and access WisdomTree directly there. And it's good for the partner, it's good for the client, and it's good for WisdomTree. So we think it's a really nice way to deliver this product to people.

Great. Sorry, one last one, if I could, just on the Binance hack, just curious your viewpoints there, and just given this significance of that security incident there at Binance, just curious how these sort of events potentially impact or affect institutional confidence and the pace of adoption of tokenized assets.

Yeah, I mean, it's a great question, and very recent, so I think we're going to hear more and more news coming out of it. It sounds like the initial reports I read suggested it was some entity affiliate with North Korea doing the hack. So look, for true bearer crypto assets, it might be concerning. One thing that I found to be very interesting in the response to this hack is that the major stablecoin issuers actually froze their stablecoins that were implicated in the hack, and the hacker does not have access to those or is not going to be able to easily. Which just shows how when you have actual issuer controls on the assets that you're issuing on chain, that the desire for hacking those, like the reward for hacking them, is just much, much, much less. So it wouldn't really even be possible to do with our money market fund, for example, in the way that happened there, given how we do the transfer restrictions. So long term, I think this could be, you know, people might have questions about, like, crypto assets on some of these centralized exchanges, but I don't know that it's going to impact stable coins or tokenized real world assets that are regulated. I think we'll see how that kind of continues to develop, but I wouldn't necessarily say it's a negative for those.

Great. Thanks so much. Thank you.

The next question is from Chris Kotowski from Oppenheimer. Please go ahead.

Hey, good morning. This is John Coffey on for Chris. I have two questions, one on the digital asset platform and one on your sort of combined public-private ETFs in the future. On the digital asset platform, have you entertained or maybe if you look out several years in the future, do you think that there could be any sort of significant revenues that could come from like maybe tokenizations of service, not just from your asset management fees, but maybe for other people who have certain assets, public or private, who want to wrap up? I mean, it would seem like you would have the technology to do that. Is that something you've contemplated or you have some kind of partnerships that could, you know, lead to that eventually?

Will?

Yeah, it's definitely something we've contemplated, you know, mentioned that briefly in the prepared remarks and the presentation. There are active conversations regarding it today. I mean, before we get into like what the revenue impact of that might be, which we spelled out earlier, some of the major areas of revenue we're seeing, We do think it's very constructive for all those ways that we can earn money to have like a really viable, like thriving ecosystem of on-chain funds, on-chain ETFs. If we can help bring that about and play a role in that, we would view that to be very constructive. Also, other transfer agents are going to try to do that as well. That can continue to be constructive, but we think there's like a right way to do this and would be very customer friendly. And we do view it being there's going to be a multi-issue or future in this way. And we think our tokenization as a service offering could play a really important role in that.

All right. I also just wanted to add, you know, that is one way that we might be able to demonstrate the inherent value in the investments that we've made in the platform, and some of those announcements could be constructive in really closing the gap between how the stock is valued today and what we think the embedded value that we have in on-chain investments. So we're looking forward to pursuing that.

Thank you. And I just have one other question. And I know, again, it's very early days on these products that would be sort of a joint public and private fund. But I was thinking, if we were to look forward to that, do you think the model would be something like what you maybe would have with Sarah, that the private assets would come from a company you own 100% of? Or would it be something more like you would buy private, maybe pre-IPO shares or some kind of private equity holding just from other parties, and those would eventually be, you know, like put into different funds? I'm just wondering, like, with essentially how you think about the sourcing of the private equity funds would be or the private equity assets would be. Okay.

So, I think it'll be a combination of things that we own completely, like CIRITs, and I think that there will be more of a partnership type of relationship in sort of the venture side of bringing privates to sort of equities. So, we'll leave it at that. But I think it'll be a combination of both.

Perfect. Thank you very much.

Thank you.

The next question is from Mike Rondell from Northland Securities. Please go ahead.

Hey, thanks, guys. We've seen some news about wealth platforms looking to charge ETF platform fees. Just wondering what you think this dynamic looks like potentially for Wisdom Tree.

Brian or Jarrett? Brian, you want to go first, I think?

Sure. I can give you just some outlook as it relates to any potential financial impact, and then maybe, Jarrett, you can fill in with a lot more color. But without getting into any specifics regarding any particular relationships, these third-party distribution fees, they're roughly 3% of our total revenue based on recent experience. We'll formalize our 2027 guidance next quarter, but there shouldn't be a material deviation from this ratio going into next year.

Yeah, and I just double underline that. Distribution economics have been part of what we do for years. And so this is part of the business. And what we do is we make sure that every dollar spent on a platform fee results in value add to us so that as we grow assets on the platform, as the platforms grow, We get a return on that money spent. Yes, you have seen recent agreements. Those may affect others more than they do us, but we're, you know, as Brian said, and I've already said, it's part of what we do, and it works well for us right now.

And I would just add, you know, the efficiency of our model, the margins that we're demonstrating is very constructive that, you know, it's a part of the business today. Brian just said that it doesn't, the outlook may not change as a percentage of revenue. What are we paying for distribution or access? And so, again, having such an efficient model, we can afford this and it's a part of the Got it.

And then secondly, the portfolio solutions or models business, you know, seems to be really accelerating, you know, $10 billion now. What is really driving that? And do you see that continuing?

Thank you. Jared and maybe Jeremy.

Yeah, I can maybe start on that one. And you're right. Flows are strong there. The growth in the models and solutions business actually outpaces or leads the growth engine for the firm. Also, I think everyone should recognize the flows are higher quality. There's lower turnover, stickier assets. The areas of continued growth right now that are driving the growth within that growth, custom models in the U.S. have been really gaining a lot of traction and driving the recent growth that we're seeing. But then something like Atlantic House is just an incredible addition. And I'd say on Atlantic House, a couple of things, that integration couldn't have gone smoother. We couldn't be happier with that acquisition. But Atlantic House has also added reach to our models and solutions business, and they've added more tools to the toolkit. So, they will also be contributing great growth to the global effort, and will also be bringing some of those capabilities to the U.S. to help further accelerate the U.S. effort. So, it's a major focus area. Flows are strong, and they continue to really be a growth driver for the firm as a whole.

Thank you.

As a reminder, to ask a question, Please press star 1. The next question is from Alex Blostein from Goldman Sachs. Please go ahead.

Hey, everyone. This is actually Aditya filling in for Alex this morning. Thank you so much for taking our question. So I had a question on the SEC innovation exemption and probably just looking for some clarity around that. So, your U.S. tokenized funds today are digital funds rather than ETFs. Does the innovation exemption change how you think about bringing the U.S. ETF lineup itself on chain, or does the digital fund wrap or, you know, remain the preferable?

Great question. Will?

Yeah, it is a great question. So, if you look at, you know, our filing we made on the tokenized ETF, you look at how our Our digital funds actually work, as you noted them. It's actually the funds that are issuing the shares directly on chain. It's an issue response or tokenization model where they're really direct registration, right? So if you have the share of the money market fund in your wallet, you know, you are on the shareholder register of a fund. It's different than a lot of the various wrapper models that exist out there. You know, certainly offshore, you've seen a number of whether they're notes or kind of other SPVs that are kind of wrapping existing securities and providing exposure, to that wrapper, but not necessarily the underlying. With the innovation exemption, you've seen more examples and people trying to bring forward models of which a security entitlement is in there. I think we'll see how that kind of continues to evolve. We're very confident in our model of having to fund issue shares directly on chain, what the benefits might come from doing that and creating a really good investor experience by doing that. You know, it's going to be important, like the total cost of execution, right, for these exposures, making sure that people can access them in a way that's very convenient for them, and also trade them at, you know, a low execution cost, right? So that's something that we're focused on, very confident in our model for doing that, and that model is fully supported within the innovation exemption as well.

And, Will, again, tying tokenized ETFs into your TAMP and into your broker-dealer, the other revenue streams, I mean, does it all hold together?

Yes, absolutely. I mean, this is the direction of travel that we saw, you know, probably two years ago now, and it's encouraging to really see it play out in that the way that we've built the platform is, we think, setting up very well for what we think is going to be to continue.

Thank you, Will.

Thank you.

Thank you.

There are no further questions at this time. I would like to turn the floor back over to Jonathan Steinberg for closing comments.

Well, thank you everyone for your interest and attention today, and please continue to watch the Wisdom Tree story very carefully. Hopefully, there will be a lot of news coming in the future. So thank you all. Have a great day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.