8-K
WisdomTree, Inc. (WT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 27, 2021
WisdomTree Investments, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-10932 | 13-3487784 |
|---|---|---|
| (State or other jurisdiction<br> <br>of incorporation) | Commission<br> <br>File Number: | (IRS Employer<br> <br>Identification No.) |
245 Park Avenue
35^th^ Floor
New York, NY 10167
(Address of principal executive offices, including zip code)
(212) 801-2080
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common Stock, $0.01 par value | WETF | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition |
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On July 30, 2021, WisdomTree Investments, Inc. (the “Company”) issued a press release announcing its financial results for the three and six months ended June 30, 2021. A copy of the press release containing this information is being furnished as Exhibit 99.1 to this Report on Form 8-K and is incorporated herein by reference.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section and shall not be deemed incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended.
| Item 8.01. | Other Events |
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On July 27, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.03 per share of common stock, payable on August 25, 2021 to stockholders of record as of the close of business on August 11, 2021. A copy of the press release issued in connection with the dividend is attached as Exhibit 99.1 to this Report on Form 8-K and is incorporated herein by reference.
| Item 9.01. | Financial Statements and Exhibits |
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(d) Exhibits:
| Exhibit 99.1 | Press Release, dated July 30, 2021 |
|---|---|
| Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WisdomTree Investments, Inc. | ||
|---|---|---|
| Date: July 30, 2021 | By: | /s/ Bryan Edmiston |
| Bryan Edmiston | ||
| Chief Financial Officer |
EX-99.1
Exhibit 99.1
WisdomTree Announces Second Quarter 2021 Results – Diluted Earnings Per Share of $0.11 ($0.10, as adjusted)
New York, NY – (GlobeNewswire) – July 30, 2021 – WisdomTree Investments, Inc. (NASDAQ: WETF) **** today reported financial results for the second quarter of 2021.
$17.6 million net income($16.8 ^1^ million net income, as adjusted), **** see “Non-GAAP Financial Measurements” for additional information.
$73.9 billion of ending AUM, an increase of 6.3% arising from market appreciation and net inflows.
$0.9 billion of net inflows, driven by inflows into our emerging markets equity, international developed market equity, U.S. equity and fixed income products.
0.41% average global advisory fee, a decrease of 1 basis point due to AUM mix shift.
$77.6 million of operating revenues, an increase of 6.6% due to higher average AUM, partly offset by a lower average global advisory fee.
79.1% gross margin ^1^, a 0.4 point increase from the previous quarter.
30.5% operating income margin, a 5.0 point increase primarily due to higher revenues.
$150.0 million issuance of convertible senior notes due 2026, bearing interest at a rate of 3.25% and issued with a conversion price of $11.04 per share. We used a portion of the proceeds to repurchase our common stock and intend to use the remainder of the net proceeds for working capital and other general corporate purposes, which may include debt retirement, organic and inorganic growth initiatives and common stock repurchases.
$31.9 million repurchase of 4.6 million shares of ourcommon stock, principally in connection with the issuance of the convertible notes.
$0.03 quarterly dividend declared, payable on August 25, 2021 to stockholders of record as of the close of business on August 11, 2021.
Update from Jonathan Steinberg,WisdomTree CEO
| “Many businesses across the financial services ecosystem are struggling to balance legacy business models and the conflicts that arise with fast moving<br>technological advancements - not WisdomTree. Our solid operating and financial results in the second quarter demonstrate continued growth and strong execution across our business today, along with exciting progress on our long-term strategic<br>initiatives, all while showing the efficiency and scalability of our business.<br> <br><br><br><br>“We continue to strengthen our position in areas of growing interest such as liquid alternatives, ESG and model portfolios. We are also quickly<br>establishing expertise around digital assets, delivering the insights from our pioneering work in regulated cryptocurrency exposures and our broader vision for the applications of blockchain technology in the form of investor-facing research and<br>events.<br> <br><br> <br>“The focus and flexibility of our remote first business model have<br>enabled WisdomTree to attract and retain world-class talent, drive strong operating results, and engage with our clients across different modalities with an ever-expanding set of resources.” |
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1
Update from Jarrett Lilien, WisdomTree COO and President
| “This was a strong quarter for WisdomTree, extending a string of strong quarters**,** and we are continuing to build momentum as we execute on our key<br>growth initiatives.<br> <br><br> <br>“We are producing balance and quality in the mix of our<br>global flows. In the U.S., we are seeing strength in our Large Blend, Emerging Markets and China funds. In Europe, our UCITs ETFs and Thematic funds are standouts, and we are also experiencing growth in industrial metals, copper, silver and<br>even gold, while there continues to be volatility in the gold market.<br> <br><br> <br>“We are<br>investing in our future growth with 11 new fund launches and a number of well-received product enhancements completed in the first half of the year. We also launched ESG model portfolios and +Crypto models this past quarter and continue to be<br>optimistic about the impact of models on our flows.<br> <br><br><br><br>“We are executing well on all fronts, building momentum and are excited to enter the second half of the year<br>building on these strong results.” |
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OPERATING AND FINANCIAL HIGHLIGHTS
| Mar. 31,<br>2021 | Dec. 31,<br>2020 | Sept. 30,<br>2020 | June 30,<br>2020 | |||||||||||
| Consolidated Operating Highlights (<br>in billions): | ||||||||||||||
| AUM | 73.9 | $ | 69.5 | $ | 67.4 | $ | 60.7 | $ | 57.7 | |||||
| Net inflows/(outflows) | 0.9 | $ | 1.3 | $ | 0.9 | $ | (0.5 | ) | $ | 0.1 | ||||
| Average AUM | 73.7 | $ | 69.6 | $ | 64.1 | $ | 61.2 | $ | 55.7 | |||||
| Average advisory fee | 0.41 | % | 0.42 | % | 0.41 | % | 0.42 | % | 0.41 | % | ||||
| Consolidated Financial Highlights (<br>in millions, except per share amounts): | ||||||||||||||
| Operating revenues | 77.6 | $ | 72.8 | $ | 67.1 | $ | 64.6 | $ | 58.1 | |||||
| Net income/(loss) | 17.6 | $ | 15.1 | $ | (13.5 | ) | $ | (0.3 | ) | $ | (13.3 | ) | ||
| Diluted earnings/(loss) per share | 0.11 | $ | 0.09 | $ | (0.10 | ) | $ | (0.01 | ) | $ | (0.09 | ) | ||
| Operating income margin | 30.5 | % | 25.5 | % | 19.2 | % | 22.8 | % | 20.3 | % | ||||
| As Adjusted (Non-GAAP1): | ||||||||||||||
| Gross margin | 79.1 | % | 78.7 | % | 75.6 | % | 76.5 | % | 75.1 | % | ||||
| Net income, as adjusted | 16.8 | $ | 12.5 | $ | 9.2 | $ | 11.0 | $ | 8.5 | |||||
| Diluted<br>earnings per share, as adjusted | 0.10 | $ | 0.08 | $ | 0.06 | $ | 0.07 | $ | 0.05 |
All values are in US Dollars.
2
RECENT BUSINESS DEVELOPMENTS
| Company News<br> <br><br><br><br>• In May 2021, Bryan Edmiston was appointed as Chief Financial Officer, effective<br>June 1, 2021.<br> <br><br><br><br>• In June 2021, we completed a private offering of $150.0 million in aggregate principal<br>amount of 3.25% Convertible Senior Notes due 2026.<br> <br><br><br><br>• In June 2021, we appointed Stockholm-based Björn Sandberg as Director of Nordic Sales<br>for WisdomTree Europe.<br> <br><br> <br>Product News<br><br><br><br> <br>• In May 2021, we<br>launched the WisdomTree Alternative Income Fund (HYIN) on the CBOE; we launched the WisdomTree Efficient Core family of ETFs on the NYSE, which includes the International Efficient Core Fund (NTSI), the Emerging Markets Efficient Core Fund (NTSE)<br>and the renamed U.S. Efficient Core Fund (NTSX); we launched +Crypto Model Portfolios for advisors in collaboration with OnRamp Invest which features Gemini integration; and the WisdomTree S&P 500 VIX Short-Term Futures 2.25x Daily Leveraged<br>(VIXL) underwent a change of index as part of volatility proofing measures across the European product range.<br> <br><br><br><br>• In June 2021, we launched the WisdomTree BioRevolution Fund (WDNA) on the CBOE, leveraging<br>data and thematic insights from Dr. Jamie Metzl, one of the world’s leading technology futurists; we launched the WisdomTree U.S. Growth & Momentum Fund (WGRO) on the Nasdaq stock exchange; and we listed the WisdomTree Bitcoin ETP<br>(BTCW) and WisdomTree Ethereum ETP (ETHW) on Euronext exchanges in Paris and Amsterdam.<br> <br><br><br><br>• In July 2021, we listed the WisdomTree Enhanced Commodity<br>ex-Agriculture UCITS ETF – EUR Hedged (EXAG) on Börse Xetra. |
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3
WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30,<br>2021 | Mar. 31,<br>2021 | Dec. 31,<br>2020 | Sept. 30,<br>2020 | June 30,<br>2020 | June 30,<br>2021 | June 30,<br>2020 | |||||||||||||||
| Operating Revenues: | |||||||||||||||||||||
| Advisory fees | $ | 75,997 | $ | 71,616 | $ | 66,105 | $ | 63,919 | $ | 57,208 | $ | 147,613 | $ | 120,158 | |||||||
| Other income | 1,606 | 1,214 | 954 | 721 | 918 | 2,820 | 1,842 | ||||||||||||||
| Total revenues | 77,603 | 72,830 | 67,059 | 64,640 | 58,126 | 150,433 | 122,000 | ||||||||||||||
| Operating Expenses: | |||||||||||||||||||||
| Compensation and benefits | 20,331 | 22,627 | 20,827 | 19,098 | 17,455 | 42,958 | 34,750 | ||||||||||||||
| Fund management and administration | 16,195 | 15,521 | 16,350 | 15,219 | 14,461 | 31,716 | 28,946 | ||||||||||||||
| Marketing and advertising | 3,594 | 3,006 | 3,715 | 2,996 | 1,949 | 6,600 | 4,417 | ||||||||||||||
| Sales and business development | 2,159 | 2,145 | 2,595 | 2,386 | 2,181 | 4,304 | 5,598 | ||||||||||||||
| Contractual gold payments | 4,314 | 4,270 | 4,449 | 4,539 | 4,063 | 8,584 | 7,823 | ||||||||||||||
| Professional fees | 1,921 | 2,013 | 1,322 | 950 | 1,357 | 3,934 | 2,630 | ||||||||||||||
| Occupancy, communications and equipment | 1,266 | 1,475 | 1,622 | 1,611 | 1,643 | 2,741 | 3,194 | ||||||||||||||
| Depreciation and amortization | 256 | 252 | 261 | 253 | 251 | 508 | 507 | ||||||||||||||
| Third-party distribution fees | 2,130 | 1,343 | 1,291 | 1,233 | 1,340 | 3,473 | 2,695 | ||||||||||||||
| Acquisition and disposition- related costs | — | — | — | — | 33 | — | 416 | ||||||||||||||
| Other | 1,752 | 1,571 | 1,720 | 1,611 | 1,596 | 3,323 | 3,593 | ||||||||||||||
| Total operating expenses | 53,918 | 54,223 | 54,152 | 49,896 | 46,329 | 108,141 | 94,569 | ||||||||||||||
| Operating income | 23,685 | 18,607 | 12,907 | 14,744 | 11,797 | 42,292 | 27,431 | ||||||||||||||
| Other Income/(Expenses): | |||||||||||||||||||||
| Interest expense | (2,567 | ) | (2,296 | ) | (2,694 | ) | (2,511 | ) | (2,044 | ) | (4,863 | ) | (4,463 | ) | |||||||
| Gain/(loss) on revaluation of deferred consideration – gold payments | 497 | 2,832 | (22,385 | ) | (8,870 | ) | (23,358 | ) | 3,329 | (25,566 | ) | ||||||||||
| Interest income | 225 | 231 | 351 | 111 | 119 | 456 | 282 | ||||||||||||||
| Impairments | — | (303 | ) | — | (3,080 | ) | — | (303 | ) | (19,672 | ) | ||||||||||
| Loss on extinguishment of debt | — | — | — | — | (2,387 | ) | — | (2,387 | ) | ||||||||||||
| Other gains and losses, net | 49 | (5,893 | ) | 524 | 744 | 1,819 | (5,844 | ) | (688 | ) | |||||||||||
| Income/(loss) before income taxes | 21,889 | 13,178 | (11,297 | ) | 1,138 | (14,054 | ) | 35,067 | (25,063 | ) | |||||||||||
| Income tax expense/(benefit) | 4,259 | (1,969 | ) | 2,200 | 1,408 | (804 | ) | 2,290 | (3,175 | ) | |||||||||||
| Net income/(loss) | $ | 17,630 | $ | 15,147 | $ | (13,497 | ) | $ | (270 | ) | $ | (13,250 | ) | $ | 32,777 | $ | (21,888 | ) | |||
| Earnings/(loss) per share – basic | $ | 0.11 | ^2^ | $ | 0.09 | ^2^ | ($0.10 | )^2^ | ($0.01 | )^2^ | ($0.09 | ) | $ | 0.20 | ^2^ | ($0.15 | )^2^ | ||||
| Earnings/(loss) per share – diluted | $ | 0.11 | $ | 0.09 | ($0.10 | )^2^ | ($0.01 | )^2^ | ($0.09 | ) | $ | 0.20 | ($0.15 | )^2^ | |||||||
| Weighted average common shares – basic | 145,542 | 145,649 | 145,096 | 145,564 | 151,623 | 145,652 | 152,071 | ||||||||||||||
| Weighted average common shares – diluted | 164,855 | 161,831 | 145,096 | 145,564 | 151,623 | 163,062 | 152,071 | ||||||||||||||
| As Adjusted (Non-GAAP^1^) | |||||||||||||||||||||
| Income<br>before income taxes | $ | 21,253 | $ | 15,583 | $ | 11,504 | $ | 13,242 | $ | 10,911 | |||||||||||
| Income tax expense | $ | 4,458 | $ | 3,079 | $ | 2,281 | $ | 2,205 | $ | 2,417 | |||||||||||
| Net income | $ | 16,795 | $ | 12,504 | $ | 9,223 | $ | 11,037 | $ | 8,494 | |||||||||||
| Earnings<br>per share – diluted | $ | 0.10 | $ | 0.08 | $ | 0.06 | $ | 0.07 | $ | 0.05 |
4
QUARTERLY HIGHLIGHTS
Operating Revenues
| • | Operating revenues increased 6.6% and 33.5% from the first quarter of 2021 and second quarter of 2020,<br>respectively, due to higher average global AUM arising from market appreciation and net inflows. |
|---|---|
| • | Our average global advisory fee was 0.41%, 0.42% and 0.41% during the second quarter of 2021, the first quarter<br>of 2021 and the second quarter of 2020, respectively. |
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Operating Expenses
| • | Operating expenses decreased 0.6% from the first quarter of 2021 primarily due to lower compensation arising from<br>reduced stock-based compensation and prior quarter seasonal payroll taxes, partly offset by higher third-party distribution fees, marketing expenses and fund management and administration costs. |
|---|---|
| • | Operating expenses increased 16.4% from the second quarter of 2020 primarily due to higher incentive compensation<br>and headcount, fund management and administration costs, marketing expenses, third-party distribution fees and professional fees. |
| --- | --- |
Other Income/(Expenses)
| • | Interest expense increased 11.8% from the first quarter of 2021 primarily due to the issuance of<br>$150.0 million convertible senior notes due 2026. Interest expense increased 25.6% from the second quarter of 2020 primarily due to a higher level of debt outstanding and a higher effective interest rate. |
|---|---|
| • | We recognized a non-cash gain on revaluation of deferred consideration of<br>$0.5 million during the second quarter of 2021. The gain was due to a flattening of the forward-looking gold curve. The magnitude of any gain or loss recognized is highly correlated to the magnitude of the change in the forward-looking price of<br>gold. |
| --- | --- |
Income Taxes
| • | Our effective income tax rate for the second quarter of 19.5% resulted in income tax expense of<br>$4.3 million. Our tax rate differs from the federal statutory rate of 21% primarily due to a lower tax rate on foreign earnings. |
|---|---|
| • | Our adjusted effective income tax rate was 21.0%^1^.<br> |
| --- | --- |
SIX MONTH HIGHLIGHTS
| • | Operating revenues increased 23.3% as compared to 2020 due to higher average AUM. |
|---|---|
| • | Operating expenses increased 14.4% as compared to 2020 largely due to higher incentive compensation accruals and<br>headcount, fund management and administration costs, marketing expenses, professional fees, third party distribution fees and contractual gold payments. These increases were partly offset by lower sales and business development expenses and<br>occupancy expenses. |
| --- | --- |
| • | Significant items reported in other income/(expenses) in 2021 include a<br>non-cash gain on revaluation of deferred consideration of $3.3 million; a non-cash charge of $5.2 million arising from the release of tax-related indemnification assets upon the expiration of the statute of limitations (an equal and offsetting benefit was recognized in income tax expense); and a gain of $0.4 million recognized on our<br>investment in Securrency, Inc. due to its recent capital raise. |
| --- | --- |
| • | Our effective income tax rate for 2021 of 6.5% resulted in income tax expense of $2.3 million. Our tax rate<br>differs from the federal statutory rate of 21% primarily due to a tax benefit of $5.2 million recognized in connection with the release of the tax-related indemnification asset described above, a lower<br>tax rate on foreign earnings and a non-taxable gain on revaluation of deferred consideration. These items were partly offset by tax shortfalls associated with the vesting and exercise of stock-based<br>compensation awards and state and local taxes. |
| --- | --- |
CONFERENCE CALL
WisdomTree will discuss its results and operational highlights during a conference call on Friday, July 30, 2021 at 9:00 a.m. ET. The call-in number is (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.
5
ABOUT WISDOMTREE
WisdomTree Investments, Inc., through its subsidiaries in the U.S. and Europe (collectively, “WisdomTree”), is an ETF and ETP sponsor and asset manager headquartered in New York. WisdomTree offers products covering equity, commodity, fixed income, leveraged and inverse, currency, cryptocurrency and alternative strategies. WisdomTree currently has approximately $74.3 billion in assets under management globally.
WisdomTree^®^ is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.
| ^1^ | See “Non-GAAP Financial Measurements.” |
|---|---|
| ^2^ | Earnings/(loss) per share (“EPS”) is calculated pursuant to the<br>two-class method as it results in a lower EPS amount as compared to the treasury stock method. |
| --- | --- |
Contact Information:
Corporate Communications
Jessica Zaloom
+1.917.267.3735
jzaloom@wisdomtree.com
6
WisdomTree Investments, Inc.
Key Operating Statistics (Unaudited)
| Mar. 31,<br>2021 | Dec. 31,<br>2020 | Sept. 30,<br>2020 | June 30,<br>2020 | |||||||||||
| GLOBAL ETPs ( in millions) | ||||||||||||||
| Beginning of period assets | 69,537 | $ | 67,392 | $ | 60,710 | $ | 57,666 | $ | 50,347 | |||||
| Inflows/(outflows) | 931 | 1,279 | 881 | (477 | ) | 126 | ||||||||
| Market appreciation/(depreciation) | 3,484 | 866 | 5,801 | 3,567 | 7,489 | |||||||||
| Fund closures | (4 | ) | — | — | (46 | ) | (296 | ) | ||||||
| End of period assets | 73,948 | $ | 69,537 | $ | 67,392 | $ | 60,710 | $ | 57,666 | |||||
| Average assets during the period | 73,658 | $ | 69,589 | $ | 64,106 | $ | 61,200 | $ | 55,746 | |||||
| Average advisory fee during the period | 0.41 | % | 0.42 | % | 0.41 | % | 0.42 | % | 0.41 | % | ||||
| Revenue days | 91 | 90 | 92 | 92 | 91 | |||||||||
| Number of ETFs – end of the period | 318 | 313 | 309 | 305 | 311 | |||||||||
| U.S. LISTED ETFs ( in millions) | ||||||||||||||
| Beginning of period assets | 42,163 | $ | 38,517 | $ | 33,310 | $ | 31,362 | $ | 28,920 | |||||
| Inflows/(outflows) | 1,130 | 1,343 | 919 | 575 | (1,474 | ) | ||||||||
| Market appreciation/(depreciation) | 1,836 | 2,303 | 4,288 | 1,373 | 4,030 | |||||||||
| Fund closures | — | — | — | — | (114 | ) | ||||||||
| End of period assets | 45,129 | $ | 42,163 | $ | 38,517 | $ | 33,310 | $ | 31,362 | |||||
| Average assets during the period | 44,183 | $ | 40,706 | $ | 35,926 | $ | 33,002 | $ | 30,651 | |||||
| Average advisory fee during the period | 0.40 | % | 0.40 | % | 0.40 | % | 0.41 | % | 0.41 | % | ||||
| Number of ETFs – end of the period | 73 | 68 | 67 | 67 | 67 | |||||||||
| OPEAN LISTED ETPs ( in millions) | ||||||||||||||
| Beginning of period assets | 27,374 | $ | 28,875 | $ | 27,400 | $ | 26,304 | $ | 21,427 | |||||
| Inflows/(outflows) | (199 | ) | (64 | ) | (38 | ) | (1,052 | ) | 1,600 | |||||
| Market appreciation/(depreciation) | 1,648 | (1,437 | ) | 1,513 | 2,194 | 3,459 | ||||||||
| Fund closures | (4 | ) | — | — | (46 | ) | (182 | ) | ||||||
| End of period assets | 28,819 | $ | 27,374 | $ | 28,875 | $ | 27,400 | $ | 26,304 | |||||
| Average assets during the period | 29,475 | $ | 28,883 | $ | 28,135 | $ | 28,198 | $ | 25,095 | |||||
| Average advisory fee during the period | 0.43 | % | 0.44 | % | 0.42 | % | 0.42 | % | 0.41 | % | ||||
| Number of ETPs – end of the period | 245 | 245 | 242 | 238 | 244 | |||||||||
| PRODUCT CATEGORIES ( in millions) | ||||||||||||||
| Commodity & Currency | ||||||||||||||
| Beginning of period assets | 23,657 | $ | 25,879 | $ | 25,176 | $ | 24,246 | $ | 19,818 | |||||
| Inflows/(outflows) | (318 | ) | (660 | ) | (296 | ) | (1,112 | ) | 1,308 | |||||
| Market appreciation/(depreciation) | 1,433 | (1,562 | ) | 999 | 2,042 | 3,120 | ||||||||
| End of period assets | 24,772 | $ | 23,657 | $ | 25,879 | $ | 25,176 | $ | 24,246 | |||||
| Average assets during the period | 25,577 | $ | 25,296 | $ | 25,598 | $ | 25,949 | $ | 23,048 | |||||
| U.S. Equity | ||||||||||||||
| Beginning of period assets | 20,019 | $ | 18,367 | $ | 15,612 | $ | 13,997 | $ | 12,151 | |||||
| Inflows/(outflows) | 199 | 218 | 395 | 897 | (241 | ) | ||||||||
| Market appreciation/(depreciation) | 1,076 | 1,434 | 2,360 | 718 | 2,087 | |||||||||
| End of period assets | 21,294 | $ | 20,019 | $ | 18,367 | $ | 15,612 | $ | 13,997 | |||||
| Average assets during the period | 20,989 | $ | 19,320 | $ | 17,070 | $ | 15,159 | $ | 13,324 | |||||
| Emerging Market Equity | ||||||||||||||
| Beginning of period assets | 10,477 | $ | 8,539 | $ | 5,979 | $ | 5,413 | $ | 4,600 | |||||
| Inflows/(outflows) | 529 | 1,662 | 1,399 | 257 | (25 | ) | ||||||||
| Market appreciation/(depreciation) | 511 | 276 | 1,161 | 309 | 838 | |||||||||
| End of period assets | 11,517 | $ | 10,477 | $ | 8,539 | $ | 5,979 | $ | 5,413 | |||||
| Average assets during the period | 11,010 | $ | 9,875 | $ | 7,250 | $ | 5,917 | $ | 5,131 |
All values are in US Dollars.
7
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30,<br>2021 | Mar. 31,<br>2021 | Dec. 31,<br>2020 | Sept. 30,<br>2020 | June 30,<br>2020 | |||||||||||
| International Developed Market Equity | |||||||||||||||
| Beginning of period assets | $ | 9,991 | $ | 9,414 | $ | 8,621 | $ | 8,839 | $ | 8,659 | |||||
| Inflows/(outflows) | 397 | 17 | (191 | ) | (587 | ) | (965 | ) | |||||||
| Market appreciation/(depreciation) | 405 | 560 | 984 | 369 | 1,145 | ||||||||||
| End of period assets | $ | 10,793 | $ | 9,991 | $ | 9,414 | $ | 8,621 | $ | 8,839 | |||||
| Average assets during the period | $ | 10,529 | $ | 9,796 | $ | 8,931 | $ | 8,835 | $ | 8,780 | |||||
| Fixed Income | |||||||||||||||
| Beginning of period assets | $ | 3,261 | $ | 3,324 | $ | 3,630 | $ | 3,530 | $ | 3,527 | |||||
| Inflows/(outflows) | 168 | 10 | (330 | ) | 76 | (53 | ) | ||||||||
| Market appreciation/(depreciation) | 28 | (73 | ) | 24 | 24 | 56 | |||||||||
| End of period assets | $ | 3,457 | $ | 3,261 | $ | 3,324 | $ | 3,630 | $ | 3,530 | |||||
| Average assets during the period | $ | 3,354 | $ | 3,253 | $ | 3,472 | $ | 3,605 | $ | 3,523 | |||||
| Leveraged & Inverse | |||||||||||||||
| Beginning of period assets | $ | 1,521 | $ | 1,478 | $ | 1,425 | $ | 1,345 | $ | 896 | |||||
| Inflows/(outflows) | (2 | ) | (5 | ) | (125 | ) | (9 | ) | 311 | ||||||
| Market appreciation/(depreciation) | 173 | 48 | 178 | 89 | 138 | ||||||||||
| End of period assets | $ | 1,692 | $ | 1,521 | $ | 1,478 | $ | 1,425 | $ | 1,345 | |||||
| Average assets during the period | $ | 1,666 | $ | 1,555 | $ | 1,430 | $ | 1,476 | $ | 1,164 | |||||
| Cryptocurrency | |||||||||||||||
| Beginning of period assets | $ | 377 | $ | 168 | $ | 33 | $ | 15 | $ | 5 | |||||
| Inflows/(outflows) | 8 | 36 | 48 | 15 | 8 | ||||||||||
| Market appreciation/(depreciation) | (156 | ) | 173 | 87 | 3 | 2 | |||||||||
| End of period assets | $ | 229 | $ | 377 | $ | 168 | $ | 33 | $ | 15 | |||||
| Average assets during the period | $ | 300 | $ | 264 | $ | 79 | $ | 27 | $ | 11 | |||||
| Alternatives | |||||||||||||||
| Beginning of period assets | $ | 227 | $ | 214 | $ | 229 | $ | 225 | $ | 244 | |||||
| Inflows/(outflows) | (44 | ) | — | (26 | ) | (4 | ) | (29 | ) | ||||||
| Market appreciation/(depreciation) | 11 | 13 | 11 | 8 | 10 | ||||||||||
| End of period assets | $ | 194 | $ | 227 | $ | 214 | $ | 229 | $ | 225 | |||||
| Average assets during the period | $ | 228 | $ | 223 | $ | 224 | $ | 226 | $ | 226 | |||||
| Closed ETPs | |||||||||||||||
| Beginning of period assets | $ | 7 | $ | 9 | $ | 5 | $ | 56 | $ | 447 | |||||
| Inflows/(outflows) | (6 | ) | 1 | 7 | (10 | ) | (188 | ) | |||||||
| Market appreciation/(depreciation) | 3 | (3 | ) | (3 | ) | 5 | 93 | ||||||||
| Fund closures | (4 | ) | — | — | (46 | ) | (296 | ) | |||||||
| End of period assets | $ | — | $ | 7 | $ | 9 | $ | 5 | $ | 56 | |||||
| Average assets during the period | $ | 5 | $ | 7 | $ | 7 | $ | 6 | $ | 538 | |||||
| Headcount | 227 | 227 | 217 | 211 | 214 |
Note: Previously issued statistics may be restated due to fund closures and trade adjustments
Source: WisdomTree
8
WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
| Dec. 31,<br>2020 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 167,635 | $ | 73,425 | ||
| Securities owned, at fair value | 58,806 | 34,895 | |||
| Accounts receivable | 34,800 | 29,455 | |||
| Income taxes receivable | 948 | — | |||
| Prepaid expenses | 6,327 | 3,827 | |||
| Other current assets | 288 | 259 | |||
| Total current assets | 268,804 | 141,861 | |||
| Fixed assets, net | 7,247 | 7,579 | |||
| Securities<br>held-to-maturity | 370 | 451 | |||
| Deferred tax assets, net | 5,628 | 8,063 | |||
| Investments | 14,238 | 8,112 | |||
| Right of use assets – operating leases | 16,213 | 16,327 | |||
| Goodwill | 85,856 | 85,856 | |||
| Intangible assets | 601,247 | 601,247 | |||
| Other noncurrent assets | 348 | 180 | |||
| Total assets | 999,951 | $ | 869,676 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
| LIABILITIES | |||||
| Current liabilities: | |||||
| Fund management and administration payable | 18,592 | $ | 19,564 | ||
| Compensation and benefits payable | 15,447 | 22,803 | |||
| Deferred consideration – gold payments | 16,101 | 17,374 | |||
| Operating lease liabilities | 3,326 | 3,135 | |||
| Income taxes payable | — | 916 | |||
| Accounts payable and other liabilities | 11,318 | 10,207 | |||
| Total current liabilities | 64,784 | 73,999 | |||
| Convertible notes | 317,336 | 166,646 | |||
| Deferred consideration – gold payments | 210,605 | 212,763 | |||
| Operating lease liabilities | 16,920 | 17,434 | |||
| Total liabilities | 609,645 | 470,842 | |||
| Preferred stock – Series A Non-Voting Convertible,<br>par value 0.01; 14.750 shares authorized, issued and outstanding | 132,569 | 132,569 | |||
| STOCKHOLDERS’ EQUITY | |||||
| Common stock, par value 0.01; 250,000 shares authorized: | |||||
| Issued and outstanding: 145,114 and 148,716 at June 30, 2021 and December 31, 2020,<br>respectively | 1,451 | 1,487 | |||
| Additional paid-in capital | 285,002 | 317,075 | |||
| Accumulated other comprehensive income | 1,155 | 1,102 | |||
| Accumulated deficit | (29,871 | ) | (53,399 | ) | |
| Total stockholders’ equity | 257,737 | 266,265 | |||
| Total liabilities and stockholders’ equity | 999,951 | $ | 869,676 |
All values are in US Dollars.
9
WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| Six Months Ended | ||||||
|---|---|---|---|---|---|---|
| June 30,<br>2021 | June 30,<br>2020 | |||||
| Cash flows from operating activities: | ||||||
| Net income/(loss) | $ | 32,777 | $ | (21,888 | ) | |
| Adjustments to reconcile net income/(loss) to net cash (used in)/provided by operating<br>activities: | ||||||
| Advisory fees received in gold, other precious metals and cryptocurrencies | (39,341 | ) | (29,135 | ) | ||
| Contractual gold payments | 8,584 | 7,823 | ||||
| Stock-based compensation | 5,264 | 6,159 | ||||
| Deferred income taxes | 3,367 | 832 | ||||
| (Gain)/loss on revaluation of deferred consideration – gold payments | (3,329 | ) | 25,566 | |||
| Amortization of right of use asset | 1,340 | 1,588 | ||||
| Amortization of issuance costs - convertible notes | 899 | 115 | ||||
| Depreciation and amortization | 508 | 507 | ||||
| Impairments | 303 | 19,672 | ||||
| Gain on sale – Canadian ETF business | — | (2,877 | ) | |||
| Loss on extinguishment of debt | — | 2,387 | ||||
| Amortization of issuance costs - former credit facility | — | 1,328 | ||||
| Other | (372 | ) | (83 | ) | ||
| Changes in operating assets and liabilities: | ||||||
| Securities owned, at fair value | (23,911 | ) | 4,209 | |||
| Accounts receivable | (2,622 | ) | 4,461 | |||
| Prepaid expenses | (2,497 | ) | (2,016 | ) | ||
| Gold, other precious metals and cryptocurrencies | 27,959 | 20,882 | ||||
| Other assets | (202 | ) | (702 | ) | ||
| Fund management and administration payable | (896 | ) | 1,677 | |||
| Compensation and benefits payable | (7,396 | ) | (18,431 | ) | ||
| Income taxes receivable/payable | (1,852 | ) | (1,046 | ) | ||
| Securities sold, but not yet purchased, at fair value | — | (582 | ) | |||
| Operating lease liabilities | (1,658 | ) | (1,845 | ) | ||
| Accounts payable and other liabilities | 858 | 781 | ||||
| Net cash (used in)/provided by operating activities | (2,217 | ) | 19,382 | |||
| Cash flows from investing activities: | ||||||
| Purchase of investments | (5,750 | ) | — | |||
| Purchase of fixed assets | (173 | ) | (224 | ) | ||
| Proceeds from<br>held-to-maturity securities maturing or called prior to maturity | 77 | 16,365 | ||||
| Proceeds from the sale of the Company’s financial interests in AdvisorEngine Inc. | — | 8,155 | ||||
| Proceeds from sale of Canadian ETF business, net | — | 2,774 | ||||
| Net cash (used in)/provided by investing activities | (5,846 | ) | 27,070 | |||
| Cash flows from financing activities: | ||||||
| Shares repurchased | (34,506 | ) | (26,444 | ) | ||
| Dividends paid | (9,865 | ) | (10,270 | ) | ||
| Convertible notes issuance costs | (4,297 | ) | (4,611 | ) | ||
| Repayment of debt | — | (179,000 | ) | |||
| Proceeds from the issuance of convertible notes | 150,000 | 150,000 | ||||
| Proceeds from exercise of stock options | 815 | 240 | ||||
| Net cash provided by/(used in) financing activities | 102,147 | (70,085 | ) | |||
| Increase/(decrease) in cash flows due to changes in foreign exchange rate | 126 | (1,084 | ) | |||
| Increase/(decrease) in cash and cash equivalents | 94,210 | (24,717 | ) | |||
| Cash and cash equivalents – beginning of year | 73,425 | 74,972 | ||||
| Cash and cash equivalents – end of period | $ | 167,635 | $ | 50,255 | ||
| Supplemental disclosure of cash flow information: | ||||||
| Cash paid for taxes | $ | 5,846 | $ | 2,200 | ||
| Cash paid for interest | $ | 3,719 | $ | 3,390 |
10
Non-GAAP Financial Measurements
In an effort to provide additional information regarding our results as determined by GAAP, we also disclose certain non-GAAP information which we believe provides useful and meaningful information. Our management reviews these non-GAAP financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-GAAP measurements so as to share this perspective of management. Non-GAAP measurements do not have any standardized meaning, do not replace nor are superior to GAAP financial measurements and are unlikely to be comparable to similar measures presented by other companies. These non-GAAP financial measurements should be considered in the context with our GAAP results. The non-GAAP financial measurements contained in this press release include:
| • | Adjusted income before income taxes, income tax expense, *net income and diluted earnings per share.*We disclose adjusted income before income taxes, income tax expense, net income and diluted earnings per share as non-GAAP financial measurements in order to report our results exclusive of items that are non-recurring or not core to our operating business. We believe presenting these non-GAAP financial measures provides investors with a consistent way to analyze our<br>performance. These non-GAAP financial measures exclude the following: |
|---|---|
| • | Unrealized gains or losses on the revaluation of deferred consideration: Deferred consideration is an<br>obligation we assumed in connection with the ETFS acquisition that is carried at fair value. This item represents the present value of an obligation to pay fixed ounces of gold into perpetuity and is measured using forward-looking gold prices.<br>Changes in the forward-looking price of gold and changes in the discount rate used to compute the present value of the annual payment obligations may have a material impact on the carrying value of the deferred consideration and our reported<br>financial results. We exclude this item when calculating our non-GAAP financial measurements as it is not core to our operating business. The item is not adjusted for income taxes as the obligation was assumed<br>by a wholly-owned subsidiary of ours that is based in Jersey, a jurisdiction where we are subject to a zero percent tax rate. |
| --- | --- |
| • | Tax shortfalls and windfalls upon vesting and exercise of stock-based compensation awards: GAAP requires<br>the recognition of tax windfalls and shortfalls within income tax expense. These items arise upon the vesting and exercise of stock-based compensation awards and the magnitude is directly correlated to the number of awards vesting/exercised as well<br>as the difference between the price of our stock on the date the award was granted and the date the award vested or was exercised. We exclude these items when calculating our non-GAAP financial measurements as<br>they introduce volatility in earnings and are not core to our operating business. |
| --- | --- |
| • | Other items: Unrealized gains recognized on our investment in Securrency, impairment charges, interest<br>expense from the amortization of discount arising from the bifurcation of the conversion option embedded in the convertible notes (prior to January 1, 2021, the effective date of Accounting Standards Update<br>2020-06, Debt – Debt with Conversion and Other Options, Cash Conversion), a loss on extinguishment of debt, the release of a deferred tax asset valuation allowance recognized on interest<br>carryforwards arising from our debt previously outstanding in the United Kingdom, a gain arising from an adjustment to the estimated fair value of consideration received from the exit of our investment in AdvisorEngine and disposition-related costs<br>are excluded when calculating our non-GAAP financial measurements. |
| --- | --- |
| • | Adjusted effective income tax rate. We disclose our adjusted effective income tax rate as a non-GAAP financial measurement in order to report our effective income tax rate exclusive of items that are non-recurring or not core to our operating business. We believe<br>reporting our adjusted effective income tax rate provides investors with a consistent way to analyze our income taxes. Our adjusted effective income tax rate is calculated by dividing adjusted income tax expense by adjusted income before income<br>taxes. See above for information regarding the items that are excluded. |
| --- | --- |
| • | Gross margin and gross margin percentage. We disclose our gross margin and gross margin percentage as non-GAAP financial measurements because we believe they provide investors with a consistent way to analyze the amount we retain after paying third-party service providers to operate our ETPs. These measures also<br>assist us in analyzing the profitability of our products. We define gross margin as total operating revenues less fund management and administration expenses. Gross margin percentage is calculated as gross margin divided by total operating revenues.<br> |
| --- | --- |
11
WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES
GAAP to NON-GAAP RECONCILIATION (CONSOLIDATED)
(in thousands)
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30,<br>2021 | Mar. 31,<br>2021 | Dec. 31,<br>2020 | Sept. 30,<br>2020 | June 30,<br>2020 | |||||||||||
| Adjusted Net Income and Diluted Earnings per Share: | |||||||||||||||
| Net income/(loss), as reported | $ | 17,630 | $ | 15,147 | $ | (13,497 | ) | $ | (270 | ) | $ | (13,250 | ) | ||
| Deduct/Add back: (Gain)/loss on revaluation of deferred consideration | (497 | ) | (2,832 | ) | 22,385 | 8,870 | 23,358 | ||||||||
| Deduct: Unrealized gain recognized on our investment in Securrency, net of income taxes | (105 | ) | (179 | ) | — | — | — | ||||||||
| Deduct/Add back: Tax (windfalls)/shortfalls upon vesting and exercise of stock-based compensation<br>awards | (233 | ) | 123 | 21 | 50 | 119 | |||||||||
| Add back: Impairments, net of income taxes (where applicable) | — | 245 | — | 2,326 | — | ||||||||||
| Add back: Interest expense from the amortization of discount arising from the bifurcation of the<br>conversion option embedded in the convertible notes, net of income taxes | — | — | 314 | 286 | 42 | ||||||||||
| Deduct: Gain arising from an adjustment to the estimated fair value of consideration received from<br>the exit of our investment in AdvisorEngine | — | — | — | (225 | ) | (868 | ) | ||||||||
| Add back: Loss on extinguishment of debt, net of income taxes | — | — | — | — | 1,910 | ||||||||||
| Deduct: Release of a deferred tax asset valuation allowance recognized on interest carryforwards<br>arising from debt previously outstanding in the United Kingdom | — | — | — | — | (2,842 | ) | |||||||||
| Add back: Acquisition and disposition-related costs, net of income taxes | — | — | — | — | 25 | ||||||||||
| Adjusted net income | $ | 16,795 | $ | 12,504 | $ | 9,223 | $ | 11,037 | $ | 8,494 | |||||
| Weighted average common shares - diluted | 164,855 | 161,831 | 161,138 | 160,876 | 166,634 | ||||||||||
| Adjusted earnings per share - diluted | $ | 0.10 | $ | 0.08 | $ | 0.06 | $ | 0.07 | $ | 0.05 | |||||
| Three Months Ended | |||||||||||||||
| June 30,<br>2021 | Mar. 31,<br>2021 | Dec. 31,<br>2020 | Sept. 30,<br>2020 | June 30,<br>2020 | |||||||||||
| Gross Margin and Gross Margin Percentage: | |||||||||||||||
| Operating revenues | $ | 77,603 | $ | 72,830 | $ | 67,059 | $ | 64,640 | $ | 58,126 | |||||
| Less: Fund management and administration | (16,195 | ) | (15,521 | ) | (16,350 | ) | (15,219 | ) | (14,461 | ) | |||||
| Gross margin | $ | 61,408 | $ | 57,309 | $ | 50,709 | $ | 49,421 | $ | 43,665 | |||||
| Gross margin percentage | 79.1 | % | 78.7 | % | 75.6 | % | 76.5 | % | 75.1 | % |
12
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30,<br>2021 | Mar. 31,<br>2021 | Dec. 31,<br>2020 | Sept. 30,<br>2020 | June 30,<br>2020 | |||||||||||
| Adjusted Income Before Income Taxes: | |||||||||||||||
| Income/(loss) before income taxes | $ | 21,889 | $ | 13,178 | $ | (11,297 | ) | $ | 1,138 | $ | (14,054 | ) | |||
| Deduct/Add back: (Gain)/loss on revaluation of deferred consideration | (497 | ) | (2,832 | ) | 22,385 | 8,870 | 23,358 | ||||||||
| Deduct: Unrealized gain recognized on our investment in Securrency, before income taxes | (139 | ) | (237 | ) | — | — | — | ||||||||
| Add back: Loss recognized upon reduction of a tax-related<br>indemnification asset | — | 5,171 | — | — | — | ||||||||||
| Add back: Impairments, before income taxes | — | 303 | — | 3,080 | — | ||||||||||
| Add back: Interest expense from the amortization of discount arising from the bifurcation of the<br>conversion option embedded in the convertible notes, before income taxes | — | — | 416 | 379 | 55 | ||||||||||
| Deduct: Gain arising from an adjustment to the estimated fair value of consideration received from<br>the exit of our investment in AdvisorEngine | — | — | — | (225 | ) | (868 | ) | ||||||||
| Add back: Loss on extinguishment of debt, before income taxes | — | — | — | — | 2,387 | ||||||||||
| Add back: Acquisition and disposition-related costs, before income taxes | — | — | — | — | 33 | ||||||||||
| Adjusted income before income taxes | $ | 21,253 | $ | 15,583 | $ | 11,504 | $ | 13,242 | $ | 10,911 | |||||
| Three Months Ended | |||||||||||||||
| June 30,<br>2021 | Mar. 31,<br>2021 | Dec. 31,<br>2020 | Sept. 30,<br>2020 | June 30,<br>2020 | |||||||||||
| Adjusted Income Tax Expense and Adjusted Effective Income Tax Rate: | |||||||||||||||
| Adjusted income before income taxes (above) | $ | 21,253 | $ | 15,583 | $ | 11,504 | $ | 13,242 | $ | 10,911 | |||||
| Income tax expense/(benefit) | $ | 4,259 | $ | (1,969 | ) | $ | 2,200 | $ | 1,408 | $ | (804 | ) | |||
| Add back/(deduct): Tax windfalls/(shortfalls) upon vesting and exercise of stock-based<br>compensation awards | 233 | (123 | ) | (21 | ) | (50 | ) | (119 | ) | ||||||
| Deduct: Tax expense on unrealized gain recognized on our investment in Securrency | (34 | ) | (58 | ) | — | — | — | ||||||||
| Add back: Tax benefit arising from reduction of a<br>tax-related indemnification asset | — | 5,171 | — | — | — | ||||||||||
| Add back: Tax benefit arising from impairments | — | 58 | — | 754 | — | ||||||||||
| Add back: Tax benefit arising from the amortization of discount associated with the bifurcation of<br>the conversion option embedded in the convertible notes | — | — | 102 | 93 | 13 | ||||||||||
| Add back: Tax benefit arising from loss on extinguishment of debt | — | — | — | — | 477 | ||||||||||
| Add back: Release of a deferred tax asset valuation allowance recognized on interest carryforwards<br>arising from debt previously outstanding in the United Kingdom | — | — | — | — | 2,842 | ||||||||||
| Add back: Tax benefit arising from acquisition and disposition-related costs | — | — | — | — | 8 | ||||||||||
| Adjusted income tax expense | $ | 4,458 | $ | 3,079 | $ | 2,281 | $ | 2,205 | $ | 2,417 | |||||
| Adjusted effective income tax rate | 21.0 | % | 19.8 | % | 19.8 | % | 16.7 | % | 22.2 | % |
13
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
| • | the ultimate duration of the COVID-19 pandemic and its short-term and<br>long-term impact on our business and the global economy; |
|---|---|
| • | anticipated trends, conditions and investor sentiment in the global markets and ETPs; |
| --- | --- |
| • | anticipated levels of inflows into and outflows out of our ETPs; |
| --- | --- |
| • | our ability to deliver favorable rates of return to investors; |
| --- | --- |
| • | competition in our business; |
| --- | --- |
| • | 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;<br> |
| --- | --- |
| • | our ability to successfully operate and expand our business in non-U.S.<br>markets; and |
| --- | --- |
| • | the effect of laws and regulations that apply to our business. |
| --- | --- |
Our business is subject to many risks and uncertainties, including without limitation:
| • | adverse market developments arising from the COVID-19 pandemic could<br>negatively impact our assets under management, resulting in a decline in our revenues and other potential operational challenges; |
|---|---|
| • | declining prices of securities, gold and other precious metals and other commodities can adversely affect our<br>business by reducing the market value of the assets we manage or causing WisdomTree ETP investors to sell their fund shares and trigger redemptions; |
| --- | --- |
| • | fluctuations in the amount and mix of our AUM, whether caused by disruptions in the financial markets or<br>otherwise, including but not limited to a pandemic event such as COVID-19, may negatively impact revenues and operating margins, and may impede our ability to refinance our debt upon maturity or, increase the<br>cost of borrowing upon a refinancing; |
| --- | --- |
| • | competitive pressures could reduce revenues and profit margins; |
| --- | --- |
| • | we derive a substantial portion of our revenues from a limited number of products, and as a result, our operating<br>results are particularly exposed to investor sentiment toward investing in the products’ strategies and our ability to maintain the AUM of these products, as well as the performance of these products and market-specific and political and<br>economic risk; |
| --- | --- |
| • | a significant portion of our AUM is held in products with exposure to U.S. and international developed markets<br>and we therefore have exposure to domestic and foreign market conditions and are subject to currency exchange rate risks; |
| --- | --- |
| • | withdrawals or broad changes in investments in our ETPs by investors with significant positions may negatively<br>impact revenues and operating margins; |
| --- | --- |
| • | over the last few years, we have expanded our business internationally. This expansion subjects us to increased<br>operational, regulatory, financial and other risks; |
| --- | --- |
| • | many of our ETPs have a limited track record, and poor investment performance could cause our revenues to<br>decline; and |
| --- | --- |
| • | we depend on third parties to provide many critical services to operate our business and our ETPs. The failure of<br>key vendors to adequately provide such services could materially affect our operating business and harm WisdomTree ETP investors. |
| --- | --- |
Other factors, such as general economic conditions, including currency exchange rate fluctuations, also may have an effect on the results of our operations. For a more complete description of the risks noted above and other risks that could cause our actual results to differ from our current expectations, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.
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.
14