8-K
NASDAQ false 0000880631 0000880631 2021-01-25 2021-01-25

 

 

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): January 25, 2021

 

 

WisdomTree Investments, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-10932   13-3487784

(State or other jurisdiction

of incorporation)

 

Commission

File Number:

 

(IRS Employer

Identification No.)

 

245 Park Avenue
35th 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))

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

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

On January 29, 2021, WisdomTree Investments, Inc. (the “Company”) issued a press release announcing its financial results for the three months and year ended December 31, 2020. 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 5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Appointment of Smita Conjeevaram as a Director

On January 25, 2021, the Board of Directors of the Company appointed Smita Conjeevaram to serve as a Class I member of the Board of Directors, effective immediately, with an initial term expiring at the Company’s 2021 annual meeting of stockholders.

Ms. Conjeevaram will receive cash and equity compensation as provided in the Company’s Non-Employee Director Compensation Program. Pursuant to this program, upon appointment to the Board, Ms. Conjeevaram received 7,296 shares of restricted stock under the Company’s 2016 Equity Plan, which shares vest on the first anniversary of the grant date. The Company has entered into its standard director indemnification agreement with Ms. Conjeevaram.

Ms. Conjeevaram, 60, retired in 2013 after a 19-year career in the global investment and hedge fund firm industry. Her most recent position was as the Chief Financial Officer – Credit Hedge Funds and Deputy Chief Financial Officer – Credit Funds for Fortress Investment Group LLC, a global investment firm, where she served from 2010 to 2013. Prior to that, Ms. Conjeevaram served as the Chief Financial Officer of Everquest Financial LLC, a specialty finance company, from 2006 to 2009, and Strategic Value Partners LLC, a leading global investment firm, from 2004 to 2005. Ms. Conjeevaram began her career as a tax specialist at two Big-4 public accounting firms and is a Certified Public Accountant. In January 2021, Ms. Conjeevaram joined the board of directors of McGrath RentCorp (NASDAQ: MGRC), a diversified business-to-business rental company, and SkyWest, Inc. (NASDAQ: SKYW), an aircraft leasing company. She also has served as a director of SS&C Technologies Holdings, Inc. (NASDAQ: SSNC), an investment and financial management software and service provider for the global financial services industry, since November 2015, and is a member of the audit committee. Ms. Conjeevaram received her B.S. in Accounting and Business Administration from Butler University and a B.A. in Economics from Ethiraj College, Madras, India.

A copy of the press release containing information about Ms. Conjeevaram’s appointment is being furnished as Exhibit 99.2 to this Report on Form 8-K and is incorporated herein by reference.

 

Item 8.01.

Other Events

On January 26, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.03 per share of common stock, payable on February 24, 2021 to stockholders of record as of the close of business on February 10, 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

(d) Exhibits:

 

Exhibit 99.1    Press Release, dated January 29, 2021
Exhibit 99.2    Press Release, dated January 27, 2021
Exhibit 104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

2


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: January 29, 2021     By:  

/s/ Amit Muni

      Amit Muni
      Chief Financial Officer

 

3

EX-99.1

Exhibit 99.1

 

LOGO

WisdomTree Announces Fourth Quarter 2020 Results – Diluted Loss Per Share of ($0.10), or Earnings Per Share of $0.06, as adjusted

New York, NY – (GlobeNewswire) – January 29, 2021 – WisdomTree Investments, Inc. (NASDAQ: WETF) today reported financial results for the fourth quarter of 2020.

($13.5) million net loss ($9.21 million net income, as adjusted), see “Non-GAAP Financial Measurements” for additional information.

$22.4 million of non-cash charges, associated with the revaluation of deferred consideration – gold payments.

$67.4 billion of ending AUM, an increase of 11.0% arising from market appreciation and net inflows.

$881 million of net inflows, driven by inflows into our emerging markets equity and U.S. equity products, partly offset by outflows from our fixed income, commodity, international developed market equity and leveraged & inverse products.

0.41% average global advisory fee, a decrease of 1 basis point due to AUM mix shift.

$67.1 million of operating revenues, an increase of 3.7% primarily due to higher average AUM, partly offset by a lower average global advisory fee.

75.6% gross margin1, a 0.9 point decrease primarily due to Brexit and fund rebalancing costs.

19.2% operating income margin, a 3.6 point decrease primarily due to higher operating expenses, partly offset by higher revenues.

$0.03 quarterly dividend declared, payable on February 24, 2021 to stockholders of record as of the close of business on February 10, 2021.

Update from Jonathan Steinberg, WisdomTree CEO

 

 

“Our business has more than navigated the global pandemic, we have emerged stronger. Not only have we adapted to the remote working environment without missing a beat, but we also gleaned new operating efficiencies and competitive strengths that represent real value for shareholders. These strengths include: Our leading European-listed Bitcoin ETP approaching an inflection point; the building of a profitable, fast-growing and complementary UCITS platform; and the achievement of true diversification, powered by a leadership position in gold.

 

“We ended the year with momentum which we are carrying into the new year. Our digital assets initiatives reinforce and expand upon our core business strengths, as WisdomTree is aggressively pursuing and is well-positioned for success in this growing space. In 2020, we set our strategy for these initiatives, and we have been designing workflows and engaging productively with regulators with a goal of launching products later this year.”

 

 

1


Update from Jarrett Lilien, WisdomTree President and COO

 

 

“I am very excited about our business. We ended 2020 with strong growth and momentum. That momentum is continuing in 2021, and we are well positioned and have a strong 2021 growth plan. To date, we have seen global organic growth of $630 million and now have global assets under management at a new record, just shy of $70 billion.

 

“For 2021, with our dividend strategies, our leadership position in gold and commodities, our best-in-market crypto ETP offering, our cloud computing, AI and battery products, recent global cybersecurity launch, as well as our leading ESG offerings, we could not be better positioned.

 

“Lastly, remote working has worked for us. We have transformed our operating model and we are working as a global team better than ever before. With a fresh perspective we have found new efficiencies adding scalability to our model and giving us scope to make further investments in future growth. Our vision is to continue with a remote-first approach post pandemic, ensuring that these efficiencies are permanent and carried into future years.”

OPERATING AND FINANCIAL HIGHLIGHTS

 

     Three Months Ended  
     Dec. 31,
2020
    Sept. 30,
2020
    June 30,
2020
    Mar. 31,
2020
    Dec. 31,
2019
 

Consolidated Operating Highlights ($ in billions):

          

AUM

   $ 67.4     $ 60.7     $ 57.7     $ 50.3     $ 63.6  

Net inflows/(outflows)

   $ 0.9     $ (0.5   $ 0.1     $ (0.5   $ 0.4  

Average AUM

   $ 64.1     $ 61.2     $ 55.7     $ 60.2     $ 61.9  

Average advisory fee

     0.41     0.42     0.41     0.42     0.44

Consolidated Financial Highlights ($ in millions, except per share amounts):

          

Operating revenues

   $ 67.1     $ 64.6     $ 58.1     $ 63.9     $ 68.9  

Net loss

   $ (13.5   $ (0.3   $ (13.3   $ (8.6   $ (25.9

Diluted loss per share

   $ (0.10   $ (0.01   $ (0.09   $ (0.06   $ (0.17

Operating income margin

     19.2     22.8     20.3     24.5     21.5

As Adjusted (Non-GAAP1):

          

Gross margin

     75.6     76.5     75.1     77.3     77.3

Net income, as adjusted

   $ 9.2     $ 11.0     $ 8.5     $ 11.2     $ 10.1  

Diluted earnings per share, as adjusted

   $ 0.06     $ 0.07     $ 0.05     $ 0.07     $ 0.06  

Operating income margin, as adjusted

     19.2     22.8     20.4     25.1     22.0

 

2


RECENT BUSINESS DEVELOPMENTS

 

 

Company News

 

•  In November 2020, we were named as “European Smart Beta Provider of the Year” for the second consecutive year and “European Fund Launch of the Year” for the WisdomTree Cloud Computing UCITS ETF (WCLD), at the Funds Europe Awards 2020.

 

•  In December 2020, we were named as Pensions & Investments’ “Best Places to Work” in Money Management 2020 in the category for managers with 100-499 employees.

 

•  In January 2021, we announced the appointment of Smita Conjeevaram to our Board of Directors.

 

Product News

 

•  In November 2020, the splits and consolidations of certain classes of WisdomTree Multi Asset Issuer ETP securities were made effective. Consolidations: WisdomTree Brent Crude Oil 3x Daily Short (3BRS), WisdomTree NASDAQ 100 3x Daily Short (QQQS), WisdomTree Natural Gas 3x Daily Leveraged (3NGL), WisdomTree S&P 500 VIX Short-Term Futures 2.25x Daily Leveraged (VIXL). Splits: WisdomTree NASDAQ 100 3x Daily Leveraged (QQQ3); and we relaunched the short and leveraged oil products; WisdomTree WTI Crude Oil 3x Daily Leveraged (3OIL), WisdomTree WTI Crude Oil 3x Daily Short (3OIS) and WisdomTree Brent Crude Oil 3x Daily Leveraged (3BRL).

 

•  In December 2020, we declared final year-end U.S. capital gains distributions; we announced the reorganization of the WisdomTree Enhanced Commodity Strategy Fund (GCC) – previously the WisdomTree Continuous Commodity Index Fund – with an updated approach to broad-based commodity investing; we applied an ESG screen and introduced the WisdomTree Composite Risk Score to WisdomTree US Quality Dividend Growth UCITS ETF (DGRW), and WisdomTree US Equity Income UCITS ETF (DHS); we implemented a number of volatility proofing measures for four energy ETPs: WisdomTree WTI Crude Oil Pre-roll (WTID), WisdomTree Brent Crude Oil Pre-roll (BRND), WisdomTree Natural Gas 3x Daily Short (3NGS) and WisdomTree Brent Crude Oil 3x Daily Short (3BRS); and we listed the WisdomTree Core Physical Gold ETP (WGLD) on the London Stock Exchange.

 

•  In January 2021, we introduced eNav (estimated NAV) in collaboration with Virtu Financial to financial professionals available on WisdomTree’s website; we announced the global launch of the WisdomTree Cyber Security Fund (WCBR) on the NASDAQ, and the UCITS ETF on the London Stock Exchange, Borsa Italiana and Börse Xetra; and we applied an ESG screen to WisdomTree ex-State-Owned Enterprises Fund (XSOE), WisdomTree China ex-State-Owned Enterprises Fund (CXSE) and India ex-State-Owned Enterprises Fund (IXSE).

 

 

3


WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended     Years Ended  
     Dec. 31,
2020
    Sept. 30,
2020
    June 30,
2020
    Mar. 31,
2020
    Dec. 31,
2019
    Dec. 31,
2020
    Dec. 31,
2019
 

Operating Revenues:

              

Advisory fees

   $ 66,105     $ 63,919     $ 57,208     $ 62,950     $ 68,179     $ 250,182     $ 265,652  

Other income

     954       721       918       924       728       3,517       2,751  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     67,059       64,640       58,126       63,874       68,907       253,699       268,403  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating Expenses:

              

Compensation and benefits

     20,827       19,098       17,455       17,295       19,280       74,675       80,761  

Fund management and administration

     16,350       15,219       14,461       14,485       15,650       60,515       61,502  

Marketing and advertising

     3,715       2,996       1,949       2,468       3,551       11,128       12,163  

Sales and business development

     2,595       2,386       2,181       3,417       5,329       10,579       18,276  

Contractual gold payments

     4,449       4,539       4,063       3,760       3,516       16,811       13,226  

Professional and consulting fees

     1,322       950       1,357       1,273       1,604       4,902       5,641  

Occupancy, communications and equipment

     1,622       1,611       1,643       1,551       1,587       6,427       6,302  

Depreciation and amortization

     261       253       251       256       253       1,021       1,045  

Third-party distribution fees

     1,291       1,233       1,340       1,355       1,146       5,219       6,968  

Acquisition and disposition-related costs

     —         —         33       383       366       416       902  

Other

     1,720       1,611       1,596       1,997       1,816       6,924       8,083  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     54,152       49,896       46,329       48,240       54,098       198,617       214,869  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     12,907       14,744       11,797       15,634       14,809       55,082       53,534  

Other Income/(Expenses):

              

Interest expense

     (2,694     (2,511     (2,044     (2,419     (2,606     (9,668     (11,240

Loss on revaluation of deferred consideration – gold payments

     (22,385     (8,870     (23,358     (2,208     (5,354     (56,821     (11,293

Interest income

     351       111       119       163       936       744       3,332  

Impairments

     —         (3,080     —         (19,672     (30,138     (22,752     (30,710

Loss on extinguishment of debt

     —         —         (2,387     —         —         (2,387     —    

Other gains and losses, net

     524       744       1,819       (2,507     (2     580       (3,502
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss)/income before income taxes

     (11,297     1,138       (14,054     (11,009     (22,355     (35,222     121  

Income tax expense/(benefit)

     2,200       1,408       (804     (2,371     3,525       433       10,546  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (13,497   $ (270   $ (13,250   $ (8,638   $ (25,880   $ (35,655   $ (10,425
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss per share – basic

     ($0.10 )2      ($0.01 )2      ($0.09     ($0.06     ($0.17     ($0.25 )2      ($0.08 )2 

Loss per share – diluted

     ($0.10 )2      ($0.01 )2      ($0.09     ($0.06     ($0.17     ($0.25 )2      ($0.08 )2 

Weighted average common shares – basic

     145,096       145,564       151,623       152,519       151,948       148,682       151,823  

Weighted average common shares – diluted

     145,096       145,564       151,623       152,519       151,948       148,682       151,823  

As Adjusted (Non-GAAP1)

              

Total operating expenses

   $ 54,152     $ 49,896     $ 46,296     $ 47,857     $ 53,732      

Operating income

   $ 12,907     $ 14,744     $ 11,830     $ 16,017     $ 15,175      

Income before income taxes

   $ 11,504     $ 13,242     $ 10,911     $ 14,358     $ 13,503      

Income tax expense

   $ 2,281     $ 2,205     $ 2,417     $ 3,134     $ 3,396      

Net income

   $ 9,223     $ 11,037     $ 8,494     $ 11,224     $ 10,107      

Earnings per share – diluted

   $ 0.06     $ 0.07     $ 0.05     $ 0.07     $ 0.06      

 

4


QUARTERLY HIGHLIGHTS

Operating Revenues

 

   

Operating revenues increased 3.7% from the third quarter of 2020 due to higher average global AUM arising from market appreciation and net inflows, partly offset by a 1 basis point decrease in our average global advisory fee due to AUM mix shift.

 

   

Operating revenues decreased 2.7% from the fourth quarter of 2019 due to a 3 basis point decline in our average global advisory fee arising from AUM mix shift, notwithstanding the increase in our average AUM.

 

   

Our average global advisory fee was 0.41%, 0.42% and 0.44% during the fourth quarter of 2020, the third quarter of 2020 and the fourth quarter of 2019, respectively.

Operating Expenses

 

   

Operating expenses increased 8.5% from the third quarter of 2020 due to higher incentive compensation, higher fund management and administration costs arising from Brexit and fund rebalances, as well as higher marketing expenses and professional fees.

 

   

Operating expenses were essentially unchanged from the fourth quarter of 2019.

Other Income/(Expenses)

 

   

We recognized a non-cash loss on revaluation of deferred consideration of ($22.4) million, ($8.9) million and ($5.4) million during the fourth quarter of 2020, third quarter of 2020 and fourth quarter of 2019, respectively. The loss in the fourth quarter of 2020 arose primarily from a reduction in the discount rate used to compute the present value of the annual payment obligations. The prior quarter losses arose due to an increase in forward-looking gold prices. The magnitude of any gain or loss recognized is highly correlated to the magnitude of the change in the forward-looking price of gold.

 

   

Interest expense increased 7.3% from the third quarter of 2020 to $2.7 million primarily due to higher levels of debt outstanding. This expense increased 3.4% from the fourth quarter of 2019 due to a higher effective interest rate, partly offset by lower levels of debt outstanding.

 

   

Other gains and losses, net, were $0.5 million, $0.7 million and $0.0 million for the fourth quarter of 2020, third quarter of 2020 and fourth quarter of 2019, respectively. The third quarter of 2020 includes a gain of $0.2 million from the exit of our investment in AdvisorEngine Inc. Gains and losses also generally arise from the sale of gold earned from management fees paid by our physically-backed gold ETPs, foreign exchange fluctuations, securities owned and other miscellaneous items.

Income Taxes

 

   

Our effective income tax rate for the fourth quarter of 2020 of negative 19.5% resulted in income tax expense of $2.2 million. Our tax rate differs from the federal statutory tax rate of 21% primarily due to a non-deductible loss on revaluation of deferred consideration, partly offset by a lower tax rate on foreign earnings.

 

   

Our adjusted effective income tax rate was 19.8%1.

ANNUAL HIGHLIGHTS

 

   

Operating revenues decreased 5.5% as compared to 2019 due to a 4 basis point decline in our average global advisory fee arising from AUM mix shift, notwithstanding the increase in our average AUM.

 

   

Operating expenses decreased 7.6% as compared to 2019 due to lower incentive compensation accruals as well as $3.5 million of severance expense included in the prior year, lower sales and business development costs, third party distribution costs, marketing expenses and other expenses, as well as lower fund management and administration costs primarily due to the sale of our Canadian ETF business. These declines were partly offset by higher contractual gold payments due to higher average gold prices.

 

   

Significant changes in items reported in other income/(expenses) include a decrease in interest expense of 14.0% due to a lower level of debt outstanding; non-cash losses on revaluation of deferred consideration of ($56.8) million and ($11.3) million in 2020 and 2019, respectively; a decrease in interest income of 77.7% as the prior year included accrued paid-in-kind interest income on our former AdvisorEngine investment; non-cash impairment charges of $22.8 million and $30.7 million recorded in 2020 and 2019, respectively; a loss on extinguishment of debt of $2.4 million in 2020; non-cash charges of $6.0 million and $4.3 million in 2020 and 2019, respectively, 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 $1.1 million in 2020 arising from an adjustment to the estimated fair value of consideration received from the exit of our investment in AdvisorEngine.

 

5


   

Our effective income tax rate for 2020 of negative 1.2% resulted in income tax expense of $0.4 million. Our tax rate differs from the federal statutory rate of 21% primarily due to a non-deductible loss on revaluation of deferred consideration, a valuation allowance on capital losses and tax shortfalls associated with the vesting and exercise of stock-based compensation awards. These items were partly offset by a tax benefit of $6.0 million recognized in connection with the release of the tax-related indemnification asset described above, a $2.9 million non-taxable gain recognized upon sale of our Canadian ETF business in the first quarter, a tax benefit of $2.6 million recognized in connection with the release of a deferred tax asset valuation allowance on interest carryforwards arising from our debt previously held in the United Kingdom and a lower tax rate on foreign earnings.

CONFERENCE CALL

WisdomTree will discuss its results and operational highlights during a conference call on Friday, January 29, 2021 at 9:00 a.m. ET. The call-in number will be (877) 303-7209. Anyone outside the U.S. or Canada should call (970) 315-0420. The slides used during the presentation will be available at http://ir.wisdomtree.com. For those unable to join the conference call at the scheduled time, an audio replay will be available on http://ir.wisdomtree.com.

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 and alternative strategies. WisdomTree currently has approximately $69.2 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 two-class method as it results in a lower EPS amount as compared to the treasury stock method.

Contact Information:

 

Media Relations     
Jessica Zaloom   
+1.917.267.3735   
jzaloom@wisdomtree.com   

 

6


WisdomTree Investments, Inc.

Key Operating Statistics (Unaudited)

     Three Months Ended  
     Dec. 31,
2020
    Sept. 30,
2020
    June 30,
2020
    Mar. 31,
2020
    Dec. 31,
2019
 

GLOBAL ETPs ($ in millions)

          

Beginning of period assets

   $ 60,710     $ 57,666     $ 50,347     $ 63,615     $ 59,981  

Assets sold

     —         —         —         (778     —    

Inflows/(outflows)

     881       (477     126       (536     390  

Market appreciation/(depreciation)

     5,898       3,567       7,489       (11,934     3,247  

Fund closures

     (97     (46     (296     (20     (3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

   $ 67,392     $ 60,710     $ 57,666     $ 50,347     $ 63,615  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

   $ 64,125     $ 61,216     $ 55,708     $ 60,189     $ 61,858  

Average advisory fee during the period

     0.41     0.42     0.41     0.42     0.44

Revenue days

     92       92       91       91       92  

Number of ETFs – end of the period

     309       305       311       331       349  

U.S. LISTED ETFs ($ in millions)

          

Beginning of period assets

   $ 33,310     $ 31,362     $ 28,920     $ 40,600     $ 37,592  

Inflows/(outflows)

     919       575       (1,474     (1,273     563  

Market appreciation/(depreciation)

     4,385       1,373       4,030       (10,397     2,448  

Fund closures

     (97     —         (114     (10     (3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

   $ 38,517     $ 33,310     $ 31,362     $ 28,920     $ 40,600  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

   $ 36,002     $ 32,984     $ 30,626     $ 36,940     $ 39,094  

Average advisory fee during the period

     0.40     0.41     0.41     0.43     0.44

Number of ETFs – end of the period

     67       67       67       77       80  

INTERNATIONAL LISTED ETPs ($ in millions)

          

Beginning of period assets

   $ 27,400     $ 26,304     $ 21,427     $ 23,015     $ 22,389  

Assets sold

     —         —         —         (778     —    

Inflows/(outflows)

     (38     (1,052     1,600       737       (173

Market appreciation/(depreciation)

     1,513       2,194       3,459       (1,537     799  

Fund closures

     —         (46     (182     (10     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

   $ 28,875     $ 27,400     $ 26,304     $ 21,427     $ 23,015  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

   $ 28,123     $ 28,232     $ 25,082     $ 23,249     $ 22,764  

Average advisory fee during the period

     0.42     0.42     0.41     0.40     0.44

Number of ETPs – end of the period

     242       238       244       254       269  

PRODUCT CATEGORIES ($ in millions)

          

Commodity & Currency

          

Beginning of period assets

   $ 25,122     $ 24,191     $ 19,748     $ 19,947     $ 19,599  

Inflows/(outflows)

     (254     (1,106     1,325       622       (250

Market appreciation/(depreciation)

     1,179       2,037       3,118       (821     598  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

   $ 26,047     $ 25,122     $ 24,191     $ 19,748     $ 19,947  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

   $ 25,676     $ 25,878     $ 22,964     $ 20,302     $ 19,770  

U.S. Equity

          

Beginning of period assets

   $ 15,612     $ 13,997     $ 12,151     $ 17,732     $ 16,281  

Inflows/(outflows)

     395       897       (241     (285     460  

Market appreciation/(depreciation)

     2,360       718       2,087       (5,296     991  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

   $ 18,367     $ 15,612     $ 13,997     $ 12,151     $ 17,732  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

   $ 17,050     $ 15,141     $ 13,302     $ 16,011     $ 16,969  

International Developed Market Equity

          

Beginning of period assets

   $ 8,621     $ 8,839     $ 8,659     $ 13,011     $ 12,169  

Inflows/(outflows)

     (191     (587     (965     (1,097     (135

Market appreciation/(depreciation)

     984       369       1,145       (3,255     977  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

   $ 9,414     $ 8,621     $ 8,839     $ 8,659     $ 13,011  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

   $ 8,930     $ 8,835     $ 8,779     $ 11,453     $ 12,607  

 

7


     Three Months Ended  
     Dec. 31,
2020
    Sept. 30,
2020
    June 30,
2020
    Mar. 30,
2020
    Dec. 31,
2019
 

Emerging Market Equity

          

Beginning of period assets

   $ 5,979     $ 5,413     $ 4,600     $ 6,400     $ 5,699  

Inflows/(outflows)

     1,399       257       (25     69       195  

Market appreciation/(depreciation)

     1,161       309       838       (1,869     506  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

   $ 8,539     $ 5,979     $ 5,413     $ 4,600     $ 6,400  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

   $ 7,249     $ 5,917     $ 5,129     $ 5,919     $ 5,991  

Fixed Income

          

Beginning of period assets

   $ 3,630     $ 3,530     $ 3,527     $ 3,585     $ 3,337  

Inflows/(outflows)

     (330     76       (53     21       218  

Market appreciation/(depreciation)

     24       24       56       (79     30  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

   $ 3,324     $ 3,630     $ 3,530     $ 3,527     $ 3,585  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

   $ 3,472     $ 3,605     $ 3,523     $ 3,653     $ 3,540  

Leveraged & Inverse

          

Beginning of period assets

   $ 1,430     $ 1,350     $ 896     $ 1,138     $ 1,121  

Inflows/(outflows)

     (118     (9     312       12       (22

Market appreciation/(depreciation)

     175       89       142       (254     39  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

   $ 1,487     $ 1,430     $ 1,350     $ 896     $ 1,138  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

   $ 1,436     $ 1,482     $ 1,169     $ 1,147     $ 1,178  

Alternatives

          

Beginning of period assets

   $ 229     $ 225     $ 244     $ 358     $ 418  

Inflows/(outflows)

     (26     (4     (29     (66     (61

Market appreciation/(depreciation)

     11       8       10       (48     1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

   $ 214     $ 229     $ 225     $ 244     $ 358  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

   $ 224     $ 226     $ 226     $ 328     $ 398  

Closed ETPs

          

Beginning of period assets

   $ 87     $ 121     $ 522     $ 1,444     $ 1,357  

Assets sold

     —         —         —         (778     —    

Inflows/(outflows)

     6       (1     (198     188       (15

Market appreciation/(depreciation)

     4       13       93       (312     105  

Fund closures

     (97     (46     (296     (20     (3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

   $ —       $ 87     $ 121     $ 522     $ 1,444  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

   $ 88     $ 132     $ 616     $ 1,376     $ 1,405  

Headcount

     217       211       214       210       208  

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,
2020
    Dec. 31,
2019
 
     (Unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 73,425     $ 74,972  

Securities owned, at fair value

     34,895       17,319  

Accounts receivable

     29,455       26,838  

Prepaid expenses

     3,827       3,724  

Other current assets

     259       207  
  

 

 

   

 

 

 

Total current assets

     141,861       123,060  

Fixed assets, net

     7,579       8,127  

Notes receivable

     —         28,172  

Securities held-to-maturity

     451       16,863  

Deferred tax assets, net

     8,063       7,398  

Investments

     8,112       11,192  

Right of use assets – operating leases

     16,327       18,161  

Goodwill

     85,856       85,856  

Intangible assets

     601,247       603,294  

Other noncurrent assets

     180       983  
  

 

 

   

 

 

 

Total assets

   $ 869,676     $ 903,106  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

LIABILITIES

    

Current liabilities:

    

Fund management and administration payable

   $ 19,564     $ 22,021  

Compensation and benefits payable

     22,803       26,501  

Deferred consideration – gold payments

     17,374       13,953  

Securities sold, but not yet purchased, at fair value

     —         582  

Operating lease liabilities

     3,135       3,682  

Income taxes payable

     916       3,372  

Accounts payable and other liabilities

     10,207       8,930  
  

 

 

   

 

 

 

Total current liabilities

     73,999       79,041  

Convertible notes

     166,646       —    

Debt

     —         175,956  

Deferred consideration – gold payments

     212,763       159,071  

Operating lease liabilities

     17,434       19,057  
  

 

 

   

 

 

 

Total liabilities

     470,842       433,125  

Preferred stock – Series A Non-Voting Convertible, 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: 148,716 and 155,264 at December 31, 2020 and December 31, 2019, respectively

     1,487       1,553  

Additional paid-in capital

     317,075       352,658  

Accumulated other comprehensive income

     1,102       945  

Accumulated deficit

     (53,399     (17,744
  

 

 

   

 

 

 

Total stockholders’ equity

     266,265       337,412  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 869,676     $ 903,106  
  

 

 

   

 

 

 

 

9


WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

     Years Ended  
     Dec. 31,
2020
    Dec. 31,
2019
 

Cash flows from operating activities:

    

Net loss

   $ (35,655   $ (10,425

Adjustments to reconcile net loss to net cash provided by operating activities:

    

Advisory fees received in gold and other precious metals

     (62,416     (49,887

Loss on revaluation of deferred consideration – gold payments

     56,821       11,293  

Impairments

     22,752       30,710  

Contractual gold payments

     16,811       13,226  

Stock-based compensation

     11,706       11,590  

Amortization of right of use asset

     3,182       3,174  

Gain on sale –Canadian ETF business

     (2,877     —    

Loss on extinguishment of debt

     2,387       —    

Deferred income taxes

     (2,192     (349

Amortization of issuance costs - convertible notes

     1,710       —    

Amortization of issuance costs - former credit facility

     1,328       2,888  

Depreciation and amortization

     1,021       1,045  

Paid-in-kind interest income

     —         (2,498

Other

     (1,169     (173

Changes in operating assets and liabilities:

    

Securities owned, at fair value

     (17,576     (8,446

Accounts receivable

     (193     (19

Prepaid expenses

     (159     738  

Gold and other precious metals

     45,087       35,886  

Other assets

     107       172  

Fund management and administration payable

     (2,264     (476

Compensation and benefits payable

     (3,804     7,885  

Income taxes payable

     (2,441     4,524  

Securities sold, but not yet purchased, at fair value

     (582     (1,116

Operating lease liabilities

     (3,517     (3,587

Accounts payable and other liabilities

     1,328       677  
  

 

 

   

 

 

 

Net cash provided by operating activities

     29,395       46,832  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchase of fixed assets

     (472     (47

Proceeds from held-to-maturity securities maturing or called prior to maturity

     16,488       3,244  

Proceeds from the sale of our financial interests in AdvisorEngine

     9,592       —    

Proceeds from sale of Canadian ETF business, net

     2,774       —    

Purchase of investments

     —         (8,112

Funding of notes receivable

     —         (2,090
  

 

 

   

 

 

 

Net cash provided by/(used in) investing activities

     28,382       (7,005
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Repayment of debt

     (179,000     (21,000

Shares repurchased

     (31,197     (2,341

Dividends paid

     (20,113     (20,385

Convertible notes issuance costs

     (5,411     —    

Proceeds from the issuance of convertible notes

     175,250       —    

Proceeds from exercise of stock options

     292       160  
  

 

 

   

 

 

 

Net cash used in financing activities

     (60,179     (43,566
  

 

 

   

 

 

 

Increase in cash flows due to changes in foreign exchange rate

     855       927  
  

 

 

   

 

 

 

Decrease in cash and cash equivalents

     (1,547     (2,812

Cash and cash equivalents – beginning of year

     74,972       77,784  
  

 

 

   

 

 

 

Cash and cash equivalents – end of year

   $ 73,425     $ 74,972  
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information:

    

Cash paid for taxes

   $ 10,131     $ 10,060  
  

 

 

   

 

 

 

Cash paid for interest

   $ 7,088     $ 8,037  
  

 

 

   

 

 

 

 

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 operating income, operating expenses, income before income taxes, income tax expense, net income and diluted earnings per share. We disclose adjusted operating income, operating expenses, income before income taxes, income tax expense, net income and diluted earnings per share as non-GAAP financial measurements in order to report our results exclusive of items that are non-recurring or not core to our operating business. We believe presenting these non-GAAP financial measures provides investors with a consistent way to analyze our performance. These non-GAAP financial measures exclude the following:

 

   

Unrealized gains or losses on the revaluation of deferred consideration: Deferred consideration is an 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. 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 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 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 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 as the difference between the price of our stock on the date the award was granted and the date the award vested or was exercised. We exclude these items when calculating our non-GAAP financial measurements as they introduce volatility in earnings and are not core to our operating business.

 

   

Interest expense from the amortization of discount arising from the bifurcation of the conversion option embedded in the convertible notes: GAAP requires convertible instruments to be separated into their liability and equity components by allocating the issuance proceeds to each of these components. The liability component for convertible instruments that qualify for a derivative scope exception (applicable to our convertible notes) is allocated proceeds equal to the estimated fair value of similar debt without the conversion option. The difference between the gross proceeds received from the issuance of the convertible instrument and the proceeds allocated to the liability component represents the residual amount that is classified in equity. The discount arising from the recognition of the residual amount classified in equity is amortized as interest expense over the life of the instrument. We exclude this item when calculating our non-GAAP financial measurements as it is non-cash and distorts our actual cost of borrowing. In addition, in August 2020, the FASB issued Accounting Standards Update 2020-06, Debt – Debt with Conversion and Other Options, Cash Conversion which includes the elimination of the requirement to bifurcate conversion options qualifying for a derivative scope exception. Once effective, this interest expense will no longer be recognized.

 

   

Other items: Loss on extinguishment of debt, the release of a deferred tax asset valuation allowance recognized on interest 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, impairment charges, a gain recognized upon sale of our Canadian ETF business and acquisition and disposition-related costs are excluded when calculating our non-GAAP financial measurements.

 

 

Adjusted effective income tax rate. We disclose our adjusted effective income tax rate as a non-GAAP financial measurement in order to report our effective income tax rate exclusive of items that are non-recurring or not core to our operating business. We believe reporting our adjusted effective income tax rate provides investors with a consistent way to analyze our income taxes. Our adjusted effective income tax rate is calculated by dividing adjusted income tax expense by adjusted income before income taxes. See above for information regarding the items that are excluded.

 

 

Gross margin and gross margin percentage. We disclose our gross margin and gross margin percentage as non-GAAP financial measurements because we believe they provide investors with a consistent way to analyze the amount we retain after paying third-party service providers to operate our ETPs. These measures also assist us in analyzing the profitability of our products. We define gross margin as total operating revenues less fund management and administration expenses. Gross margin percentage is calculated as gross margin divided by total operating revenues.

 

 

Adjusted operating income margin. We disclose adjusted operating income margin as a non-GAAP financial measurement in order to report our operating income margin exclusive of items that are non-recurring or not core to our operating business.

 

11


WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES

GAAP to NON-GAAP RECONCILIATION (CONSOLIDATED)

(in thousands)

(Unaudited)

 

     Three Months Ended  
     Dec. 31,
2020
    Sept. 30,
2020
    June 30,
2020
    Mar. 31,
2020
    Dec. 31,
2019
 

Adjusted Net Income and Diluted Earnings per Share:

          

Net loss, as reported

   $ (13,497   $ (270   $ (13,250   $ (8,638   $ (25,880

Add back: Loss on revaluation of deferred consideration

     22,385       8,870       23,358       2,208       5,354  

Add back: Interest expense from the amortization of discount arising from the bifurcation of the conversion option embedded in the convertible notes, net of income taxes

     314       286       42       —         —    

Add back: Tax shortfalls upon vesting and exercise of stock-based compensation awards

     21       50       119       501       142  

Add back: Impairments, net of income taxes

     —         2,326       —         19,672       30,138  

Deduct: Gain arising from an adjustment to the estimated fair value of consideration received from the exit of 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 arising from debt previously outstanding in the United Kingdom

     —         —         (2,842     —         —    

Deduct: Gain recognized upon sale of Canadian ETF business

     —         —         —         (2,877     —    

Add back: Acquisition and disposition-related costs, net of income taxes

     —         —         25       358       353  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 9,223     $ 11,037     $ 8,494     $ 11,224     $ 10,107  

Weighted average common shares - diluted

     161,138       160,876       166,634       167,561       167,203  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings per share - diluted

   $ 0.06     $ 0.07     $ 0.05     $ 0.07     $ 0.06  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended  
     Dec. 31,
2020
    Sept. 30,
2020
    June 30,
2020
    Mar. 31,
2020
    Dec. 31,
2019
 

Gross Margin and Gross Margin Percentage:

          

Operating revenues

   $ 67,059     $ 64,640     $ 58,126     $ 63,874     $ 68,907  

Less: Fund management and administration

     (16,350     (15,219     (14,461     (14,485     (15,650
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

   $ 50,709     $ 49,421     $ 43,665     $ 49,389     $ 53,257  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin percentage

     75.6     76.5     75.1     77.3     77.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended  
     Dec. 31,
2020
    Sept. 30,
2020
    June 30,
2020
    Mar. 31,
2020
    Dec. 31,
2019
 

Adjusted Operating Income and Adjusted Operating Income Margin:

          

Operating revenues

   $ 67,059     $ 64,640     $ 58,126     $ 63,874     $ 68,907  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 12,907     $ 14,744     $ 11,797     $ 15,634     $ 14,809  

Add back: Acquisition and disposition-related costs, before income taxes

     —         —         33       383       366  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted operating income

   $ 12,907     $ 14,744     $ 11,830     $ 16,017     $ 15,175  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted operating income margin

     19.2     22.8     20.4     25.1     22.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

12


     Three Months Ended  
     Dec. 31,
2020
    Sept. 30,
2020
    June 30,
2020
    Mar. 31,
2020
    Dec. 31,
2019
 

Adjusted Total Operating Expenses:

          

Total operating expenses

   $ 54,152     $ 49,896     $ 46,329     $ 48,240     $ 54,098  

Deduct: Acquisition and disposition-related costs, before income taxes

     —         —         (33     (383     (366
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted total operating expenses

   $ 54,152     $ 49,896     $ 46,296     $ 47,857     $ 53,732  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended  
     Dec. 31,
2020
    Sept. 30,
2020
    June 30,
2020
    Mar. 31,
2020
    Dec. 31,
2019
 

Adjusted Income Before Income Taxes:

          

(Loss)/income before income taxes

   $ (11,297   $ 1,138     $ (14,054   $ (11,009   $ (22,355

Add back: Loss on revaluation of deferred consideration

     22,385       8,870       23,358       2,208       5,354  

Add back: Interest expense from the amortization of discount arising from the bifurcation of the conversion option embedded in the convertible notes, before income taxes

     416       379       55       —         —    

Add back: Impairments, before income taxes

     —         3,080       —         19,672       30,138  

Deduct: Gain arising from an adjustment to the estimated fair value of consideration received from the exit of investment in AdvisorEngine

     —         (225     (868     —         —    

Add back: Loss on extinguishment of debt

     —         —         2,387       —         —    

Add back: Loss recognized upon reduction of a tax-related indemnification asset

     —         —         —         5,981       —    

Deduct: Gain recognized upon sale of Canadian ETF business

     —         —         —         (2,877     —    

Add back: Acquisition and disposition-related costs, before income taxes

     —         —         33       383       366  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income before income taxes

   $ 11,504     $ 13,242     $ 10,911     $ 14,358     $ 13,503  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended  
     Dec. 31,
2020
    Sept. 30,
2020
    June 30,
2020
    Mar. 31,
2020
    Dec. 31,
2019
 

Adjusted Income Tax Expense and Adjusted Effective Income Tax Rate:

          

Adjusted income before income taxes (above)

   $ 11,504     $ 13,242     $ 10,911     $ 14,358     $ 13,503  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income tax expense/(benefit)

   $ 2,200     $ 1,408     $ (804   $ (2,371   $ 3,525  

Add back: Tax benefit arising from the amortization of discount associated with the bifurcation of the conversion option embedded in the convertible notes

     102       93       13       —         —    

Deduct: Tax shortfalls upon vesting and exercise of stock-based compensation awards

     (21     (50     (119     (501     (142

Add back: Tax benefit arising from impairments

     —         754       —         —         —    

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 arising from debt previously outstanding in the United Kingdom

     —         —         2,842       —         —    

Add back: Tax benefit arising from reduction of a tax-related indemnification asset

     —         —         —         5,981       —    

Add back: Tax benefit arising from acquisition and disposition-related costs

     —         —         8       25       13  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income tax expense

   $ 2,281     $ 2,205     $ 2,417     $ 3,134     $ 3,396  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted effective income tax rate

     19.8     16.7     22.2     21.8     25.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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 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;

 

   

our ability to successfully operate and expand our business in non-U.S. 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:

 

   

declining prices of securities, gold and other precious metals and other commodities can adversely affect our business by reducing the market value of the assets we manage or causing WisdomTree ETP investors to sell their fund shares and trigger redemptions;

 

   

fluctuations in the amount and mix of our AUM, whether caused by disruptions in the financial markets or otherwise, including but not limited to 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, increase the cost of borrowing or result in our debt being called prior to maturity;

 

   

competitive pressures could reduce revenues and profit margins;

 

   

we derive a substantial portion of our revenues from a limited number of products, and as a result, our operating results are particularly exposed to investor sentiment toward investing in the products’ strategies and our ability to maintain the AUM of these products, as well as the performance of these products and market-specific and political and economic risk;

 

   

a significant portion of our AUM is held in products with exposure to U.S. and international developed markets and we therefore have exposure to domestic and foreign market conditions and are subject to currency exchange rate risks;

 

   

withdrawals or broad changes in investments in our ETPs by investors with significant positions may negatively impact revenues and operating margins;

 

   

over the last few years, we have expanded our business globally. This expansion subjects us to increased operational, regulatory, financial and other risks;

 

   

many of our ETPs have a limited track record, and poor investment performance could cause our revenues to decline; and

 

   

we depend on third parties to provide many critical services to operate our business and our ETPs. The failure of key vendors to adequately provide such services could materially affect our operating business and harm WisdomTree ETP investors.

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, 2019 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 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

EX-99.2

Exhibit 99.2

 

LOGO

WisdomTree Appoints Smita Conjeevaram to Board of Directors

New York, NY - (GlobeNewswire) – January 27, 2021 – WisdomTree Investments, Inc. (NASDAQ: WETF), an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset manager, today announced that Smita Conjeevaram has been appointed to WisdomTree’s Board of Directors.

Jonathan Steinberg, WisdomTree CEO, said, “It is my pleasure to welcome Smita to WisdomTree’s Board. Having held several leadership positions within the financial services industry for many years, Smita’s financial, accounting and compliance background, global experience and track record of success in guiding companies through significant growth will be a tremendous asset to WisdomTree and our stockholders. Furthermore, Smita’s experience on the board and audit committee of SS&C Technologies Holdings, Inc. (NASDAQ: SSNC), a fintech company, will translate into valuable governance and oversight as WisdomTree continues to prioritize the importance of disruptive technologies and innovation within the current financial ecosystem.”

Ms. Conjeevaram previously served for close to 15 years as a chief financial officer at some of the most sophisticated financial services companies. Her most recent position was as the Chief Financial Officer – Credit Hedge Funds and Deputy Chief Financial Officer – Credit Funds for Fortress Investment Group LLC, where she served from 2010 to 2013. Prior to that, she served as the Chief Financial Officer of Everquest Financial LLC, from 2006 to 2009, and Strategic Value Partners LLC, from 2004 to 2005. Ms. Conjeevaram began her career as a tax specialist at two Big-4 public accounting firms and is a Certified Public Accountant.

In addition to her experience on the board and audit committee of SS&C Technologies, Ms. Conjeevaram serves on the board of directors of McGrath RentCorp (NASDAQ: MGRC), a diversified business-to-business rental company, and SkyWest, Inc. (NASDAQ: SKYW), an aircraft leasing company. Ms. Conjeevaram received her B.S. in Accounting and Business Administration from Butler University and a B.A. in Economics from Ethiraj College, Madras, India.

More information on WisdomTree’s Board of Directors can be found here.

About WisdomTree

WisdomTree Investments, Inc., through its subsidiaries in the U.S. and Europe (collectively, “WisdomTree”), is an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset manager headquartered in New York. WisdomTree offers products covering equities, commodities, fixed income, leveraged and inverse, currencies, and alternative strategies. WisdomTree currently has approximately $68.7 billion in assets under management globally.

WisdomTree® is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.

Contact Information:

Media Relations

WisdomTree Investments, Inc.

Jessica Zaloom

+1.917.267.3735

jzaloom@wisdomtree.com / wisdomtree@fullyvested.com