October 30, 2015

WisdomTree Announces Third Quarter 2015 Results

Net Income Up 119.2% Year-Over-Year to $23.3 Million or Diluted EPS $0.17

Revenues Up 71.4% Year-Over-Year to $80.8 Million

U.S. Pre-Tax Margin of 52%; Consolidated Pre-Tax Margin of 49%

Declares $0.08 Quarterly Dividend and $0.25 Special Dividend

NEW YORK, Oct. 30, 2015 (GLOBE NEWSWIRE) -- WisdomTree Investments, Inc. (NASDAQ:WETF), an exchange-traded fund ("ETF") and exchange-traded product ("ETP") sponsor and asset manager today reported net income of $23.3 million for the third quarter of 2015 or $0.17 per share on a fully diluted basis.  This compares to $10.6 million in the third quarter of 2014 and $24.2 million for the second quarter of 2015. 

WisdomTree CEO and President Jonathan Steinberg said, "WisdomTree generated strong financial results and achieved a solid third quarter despite a challenging market environment.  These results reflect our overall financial strength and demonstrate the profitable, scalable and highly efficient nature of our operating model."

Mr. Steinberg continued, "WisdomTree is ideally positioned for the future of asset management, as we continue to enhance our global ETF platform through investments in headcount, product and client-facing services.  The structural shift to passive investing and ETFs is continuing, the appetite for investment innovations like Smart Beta and Currency Hedging is growing and a decisive move toward greater transparency in financial products and advice is more pronounced than ever.  These are all trends that will continue to be advantageous to WisdomTree going forward."

Mr. Steinberg concluded, "In reflection of our growing financial resources, we are pleased to further enhance our capital management program through the addition of a $0.25 special dividend.  We first instituted a $0.08 regular quarterly dividend and a $100 million share buyback program in the third quarter of 2014.  Since that time we have achieved robust growth in assets, revenues and earnings while continuing to make investments for future growth.  We are demonstrating an ability to profitably grow the business, reinvest for future growth and return surplus capital to our shareholders."   

Summary Operating and Financial Highlights

 Three Months EndedChange From
 Sept. 30,Jun. 30,Sept. 30,Jun. 30,Sept. 30,
Operating Highlights 2015  2015  2014  2015  2014 
U.S. listed ETFs ($, in billions):     
AUM$53.0 $61.3 $35.8  (13.5%) 48.1%
Net inflows/(outflows)($0.7)$6.6 $0.7  n/a  n/a 
Average AUM$59.6 $61.2 $35.6  (2.6%) 67.6%
Average advisory fee 0.53% 0.53% 0.52% -  +0.01 
Market share of U.S. industry inflows n/a  15.9% 1.5% n/a  n/a 
      
European listed ETPs ($, in millions):     
AUM$695.7 $612.7 $123.2  13.6% 464.7%
Net inflows$258.8 $194.6 $19.2  33.0% 1,246.3%
Average advisory fee 0.69% 0.68 % 0.79% +0.01  -0.1 
      
Financial Highlights ($, in millions, except per share amounts):     
Consolidated Results:     
Total revenues$80.8 $81.6 $47.1  (1.0%) 71.4%
Pre-tax income$39.5 $40.9 $20.3  (3.4%) 95.2%
Net income$23.3 $24.2 $10.6  (3.7%) 119.2%
Diluted earnings per share$0.17 $0.18 $0.08 $-0.01 $+0.09 
Pre-tax margin 49.0% 50.2% 43.0% -1.2  +6.0 
      
U.S. listed ETFs:     
Gross margin1 (non-GAAP) 87.2% 86.4% 82.2% +0.8  +5.0 
Pre-tax margin 52.3% 53.2% 46.6% -0.9  +5.7 
      
 
1 Gross margin is defined as total revenues less fund management and administration expenses and third-party sharing arrangements.
 


 Nine Months Ended
 Sept. 30,Sept. 30,Change
Operating Highlights 2015  2014  
U.S. listed ETFs ($, in billions):   
AUM$53.0 $35.8  48.1%
Net inflows$19.5 $0.6  3,254.7%
Average AUM$55.7 $34.5  61.4%
Average advisory fee 0.53% 0.52% +0.01 
Market share of U.S. industry inflows 13.8% 0.5% +13.3 
    
European listed ETPs ($, in millions):   
AUM$695.7 $123.2  464.7%
Net inflows$627.6 $36.9  1,601.7%
Average advisory fee 0.70% 0.80 % -0.1 
    
Financial Highlights ($, in millions, except per share amounts):   
Consolidated Results:   
Total revenues$222.5 $134.2  65.8%
Pre-tax income$101.5 $56.9  78.5%
Net income$59.5 $51.4  15.7%
Diluted earnings per share$0.43 $0.37  +0.06 
Pre-tax margin 45.6% 42.4% +3.2 
    
U.S. listed ETFs:   
Gross margin2 (non-GAAP) 85.8% 81.1% +4.7 
Pre-tax margin 48.8% 44.9% +3.9 
    
 
2 Gross margin is defined as total revenues less fund management and administration expenses and third-party sharing arrangements.
 

Recent Business Developments

  • On October 30, 2015, the Company announced it will enter into the Commodity ETF space through the acquisition of The GreenHaven Commodity Funds: the GreenHaven Continuous Commodity Index Fund (GCC) and the GreenHaven Coal Fund (TONS)
  • On October 29, 2015, the Company announced the launch of the WisdomTree Europe Local Recovery Fund (EZR), the WisdomTree Strong Dollar Emerging Markets Equity Fund (EMSD) and the WisdomTree Global ex-U.S. Hedged Real Estate Fund (HDRW)
    • WisdomTree Europe:
      • Listed the WisdomTree UK Equity Income UCITS ETF (WUKD) in London on the London Stock Exchange on October 8, 2015; and listed the WisdomTree Emerging Asia Equity Income UCITS ETF (DEMA) in London on the London Stock Exchange on October 12, 2015, and in Italy on Borsa Italiana and in Germany on Börse Xetra on October 15, 2015.
      • Listed two Boost ETPs in Italy on Borsa Italiana on October 19, 2015.

Assets Under Management and Net Inflows

U.S. listed ETF assets under management ("AUM") was $53.0 billion at the end of the third quarter, up 35.0% for the year and up 48.1% from the third quarter of last year primarily due to record net inflows.  However, AUM declined 13.5% from the end of the second quarter of this year due to $7.6 billion of negative market movement as well as $0.7 billion of net outflows, primarily in our emerging market ETFs.

European listed AUM increased to $695.7 million at the end of the third quarter, up from the third quarter of last year and the second quarter of this year primarily due to net inflows, partially offset by negative market movement.

Performance

In evaluating the performance of our U.S. listed equity, fixed income and alternative ETFs against actively managed and index based mutual funds and ETFs, 91% of the $52.4 billion invested in our ETFs and 55% (33 of 60) of our ETFs outperformed their comparable Morningstar average since inception as of September 30, 2015.

For more information about WisdomTree ETFs including standardized performance, please click here or visit www.wisdomtree.com.

Third Quarter Financial Discussion

Revenues

Total revenues increased 71.4% from the third quarter of 2014 primarily due to higher average AUM from strong inflows. Total revenues declined 1.0% from the second quarter of 2015 primarily due to lower average AUM due to negative market movement in our U.S. listed ETFs. Revenues from our European listed ETPs increased to $1.3 million from $0.2 million in the third quarter of 2014 primarily due to higher inflows into our Boost branded ETPs.  The average advisory fee for our U.S. listed ETFs increased to 0.53% as compared to 0.52% for the third quarter of 2014 and was flat compared to the second quarter of 2015.

Margins

Gross margin for our U.S. listed ETFs, which is our total revenues less fund management and administration expenses and third party sharing arrangements, was 87.2% in the third quarter of 2015 as compared to 82.2% in the third quarter of 2014 primarily due to higher average AUM.  Gross margins increased from the second quarter of 2015 due to lower regulatory fees as a result of net outflows in the quarter.

Consolidated pre-tax margin was 49.0% in the third quarter of 2015.  Pre-tax margin for our U.S. listed ETFs was 52.3% on average U.S. listed AUM of $59.6 billion.

Expenses

Total expenses increased 53.5% from the third quarter of 2014 and 1.5% compared to the second quarter of 2015 to $41.2 million.  Included in the quarter was $3.3 million of expenses associated with our European listed ETPs. 

  • Compensation and benefits expense increased 94.3% from the third quarter of 2014 to $19.4 million due to higher accrued incentive compensation as a result of record setting inflow levels, increased headcount related expenses to support our growth and higher stock based compensation due to equity granted as part of incentive compensation.  Included in the quarter was $1.5 million in compensation costs for employees associated with our European listed ETPs.

    This expense increased 4.0% compared to the second quarter of 2015 primarily due to higher headcount related costs as part of our strategic growth initiatives.  Payroll related taxes were higher in the third quarter due to bonus payments and employees exercising stock options.  
  • Fund management and administration expense increased 24.3% from the third quarter of 2014 to $10.5 million.  This increase was primarily due to higher average AUM, inflow levels and number of U.S. ETFs.  We also incurred additional costs for our European listed ETPs as a result of launching our WisdomTree UCITS ETFs in the fourth quarter of 2014.  We had 79 U.S. listed ETFs and 74 European listed ETPs at the end of the quarter.

    This expense decreased 6.1% compared to the second quarter of 2015 primarily due to lower regulatory fees as a result of net outflows in the quarter.
  • Marketing and advertising expense increased 6.9% from the third quarter of 2014 primarily due to higher levels of advertising related activities to support our growth.  This expense was relatively unchanged compared to the second quarter of 2015.
     
  • Sales and business development expense increased 90.6% from the third quarter of 2014 and 17.4% from the second quarter of 2015 to $2.4 million primarily due to higher spending for sales related activities.
     
  • Professional and consulting fees increased 13.5% from the third quarter of 2014 to $1.6 million primarily due to advisory fees associated with our acquisition of Greenhaven ETFs as well as higher technology related initiatives.  This expense was relatively unchanged compared to the second quarter of 2015.
     
  • Occupancy, communications and equipment expense increased 34.1% compared to the third quarter of 2014 and 25.5% compared to the second quarter of 2015 primarily due to technology equipment spending initiatives and higher rent expense due to higher property taxes.    
     
  • Depreciation and amortization expense was also relatively unchanged at $0.2 million as compared to the third quarter of 2014 and second quarter of 2015.
     
  • Third-party sharing arrangements expense increased 159.4% compared to the third quarter of 2014 primarily due to fees for listing our ETFs on a third party platform.  This expense was relatively unchanged compared to the second quarter of 2015.
     
  • Acquisition contingent payment expense was $0.2 million in the third quarter of 2015.  This represents the current expense accrual for expected payments due to the former Boost shareholders related to our acquisition in April 2014 and is primarily driven by increased AUM derived from our European business. 
     
  • Other expenses increased 44.3% from the third quarter of 2014 and 7.4% from the second quarter of 2015 to $1.6 million primarily due to higher general and administrative spending.
     
  • Income tax expense was $16.2 million for the third quarter of 2015.  The effective tax rate on our U.S. listed ETF business was 39.1% in the third quarter.  The Company's overall effective tax rate was 41.1% due to the non-deductibility of losses in our European ETP business.  These losses may be recognized in the future after the European business is profitable.

Balance Sheet

As of September 30, 2015, the Company had total assets of $292.4 million which consisted primarily of cash and cash equivalents and investments of $235.6 million.  There were approximately 136.7 million shares of common stock outstanding as of September 30, 2015. Fully diluted weighted average shares outstanding were 138.2 million for the third quarter.

Dividend and Share Buyback

The Company's Board of Directors declared a quarterly cash dividend of $0.08 per share of the Company's common stock.  The dividend will be paid on November 25, 2015 to stockholders of record as of the close of business on November 11, 2015. 

The Company's Board of Directors also declared a special cash dividend of $0.25 per share of the Company's common stock.  The dividend will be paid on November 25, 2015 to stockholders of record as of the close of business on November 11, 2015.

The Company purchased 329,635 shares for $8.4 million in the third quarter of 2015.

Conference Call 

WisdomTree will discuss its results and operational highlights during a conference call on Friday, October 30, 2015 at 9:00 a.m. ET. The call-in number will be (877) 303-7209.  Anyone outside the U.S. or Canada should call (970) 315-0420.  The slides used during the presentation will be available at http://ir.wisdomtree.com.  For those unable to join the conference call at the scheduled time, an audio replay will be available on http://ir.wisdomtree.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements that are based on our management's beliefs and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, the risks described below.  If one or more of these or other risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this press release completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.

In particular, forward-looking statements in this press release may include statements about:

  • anticipated trends, conditions and investor sentiment in the global markets and ETPs;
  • anticipated levels of inflows into and outflows out of our ETPs;
  • our ability to deliver favorable rates of return to investors;
  • our ability to develop new products and services;
  • our ability to maintain current vendors or find new vendors to provide services to us at favorable costs;
  • our ability to successfully expand our business into non-U.S. markets;
  • timing of payment of our cash income taxes;
  • competition in our business; and
  • the effect of laws and regulations that apply to our business.

Our business is subject to many risks and uncertainties, including without limitation:

  • Recent historical growth may not provide an accurate representation of the growth we may experience in the future, which may make it difficult to evaluate our future prospects.
  • Challenging global market conditions associated with declining prices of securities can adversely affect our business by reducing the market value of the assets we manage or causing customers to sell their fund shares and trigger redemptions.
  • Fluctuations in the amount and mix of our AUM may negatively impact revenue and operating margin.
  • We derive a substantial portion of our revenue from a limited number of products — in particular two funds, the WisdomTree Europe Hedged Equity Fund and the WisdomTree Japan Hedged Equity Fund — and, as a result, our operating results are particularly exposed to the performance of those funds, investor sentiment toward the strategies pursued by those funds and our ability to maintain the AUM of those funds.
  • Most of our AUM are held in our U.S. listed ETFs that invest in foreign securities and we therefore have substantial exposure to foreign market conditions and are subject to currency exchange rate risks.
  • We derive a substantial portion of our revenue from international hedged equity ETFs and are exposed to the market-specific political and economic risks, as well as general investor sentiment regarding monetary policy of those markets.
  • We derive a substantial portion of our revenue from products invested in securities of Japanese and European companies and are exposed to the market-specific political and economic risks, as well as general investor sentiment regarding future growth of those markets and currency fluctuations.
  • We derive a significant portion of our revenue from products invested in emerging markets and are exposed to the market-specific political and economic risks as well as general investor sentiment regarding future growth of those markets.
  • Many of our ETPs and ETFs have a limited track record, and poor investment performance could cause our revenue to decline.
  • We depend on third parties to provide many critical services to operate our business and our ETPs and ETFs. The failure of key vendors to adequately provide such services could materially affect our operating business and harm our customers.           

Other factors, such as general economic conditions, including currency exchange rate fluctuations, also may have an effect on the results of our operations. For a more complete description of the risks noted above and other risks that could cause our actual results to differ from our current expectations, please see the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

The forward-looking statements in this press release represent our views as of the date of this press release.  We anticipate that subsequent events and developments may cause our views to change.  However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law.  Therefore, these forward-looking statements do not represent our views as of any date other than the date of this press release. 

About WisdomTree

WisdomTree Investments, Inc., through its subsidiaries in the U.S. and Europe (collectively, "WisdomTree"), is an exchange-traded fund ("ETF") and exchange-traded product ("ETP") sponsor and asset manager headquartered in New York.  WisdomTree offers products covering equities, fixed income, currencies, commodities and alternative strategies.  WisdomTree currently has approximately $58.1 billion in assets under management globally. 

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

  
WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per share amounts) 
(Unaudited) 
                 
 Three Months Ended % Change From Nine Months Ended 
 Sep. 30, Jun. 30, Sep. 30, Jun. 30, Sep. 30, Sep. 30, Sep. 30, % 
  2015   2015   2014   2015   2014   2015   2014  Change 
                 
Revenues:                
Advisory fees$  80,520  $  81,320  $  46,942   -1.0%  71.5% $  221,709  $  133,489   66.1% 
Other income   233     239     172   -2.5%  35.5%    744     673   10.5% 
                 
Total revenues   80,753     81,559     47,114   -1.0%  71.4%    222,453     134,162   65.8% 
                 
Expenses:                
Compensation and benefits   19,407     18,669     9,990   4.0%  94.3%    57,677     26,896   114.4% 
Fund management and administration   10,519     11,208     8,465   -6.1%  24.3%    31,895     25,451   25.3% 
Marketing and advertising   3,573     3,628     3,341   -1.5%  6.9%    10,277     8,645   18.9% 
Sales and business development   2,438     2,076     1,279   17.4%  90.6%    6,414     4,307   48.9% 
Professional and consulting fees   1,570     1,604     1,383   -2.1%  13.5%    4,637     5,018   -7.6% 
Occupancy, communications and equipment   1,183     943     882   25.5%  34.1%    3,044     2,635   15.5% 
Depreciation and amortization   253     223     207   13.5%  22.2%    696     600   16.0% 
Third party sharing arrangements   485     497     187   -2.4%  159.4%    1,265     312   305.4% 
Acquisition contingent payment   172     264     -    -34.8% n/a    693     -   n/a 
Other   1,620     1,509     1,123   7.4%  44.3%    4,364     3,429   27.3% 
Total expenses   41,220     40,621     26,857   1.5%  53.5%    120,962     77,293   56.5% 
                                 
Income before taxes   39,533     40,938     20,257   -3.4%  95.2%    101,491     56,869   78.5% 
                 
Income tax expense   16,245     16,766     9,634     -      -      41,969     5,440     -   
                 
Net income$  23,288  $  24,172  $  10,623   -3.7%  119.2% $  59,522  $  51,429   15.7% 
                 
                 
                 
Income before taxes per share - basic$  0.29  $  0.30  $  0.15      $  0.75  $  0.43    
                 
Income before taxes per share - diluted$  0.29  $  0.30  $  0.15      $  0.74  $  0.41    
                 
                 
Net income per share - basic   0.17  $  0.18  $  0.08      $  0.44  $  0.39    
                 
Net income per share - diluted   0.17  $  0.18  $  0.08      $  0.43  $  0.37    
                 
Weighted average common shares - basic   136,582     135,895     131,778         135,527     131,418    
                 
Weighted average common shares - diluted   138,181     137,951     138,346         137,833     138,476    
                 

 

 
WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES
NON-GAAP SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)
             
  U.S.European         
  ListedListed  U.S. Listed Business
  BusinessBusinessTotal     % Change From
  Q3/15Q3/15Q3/15 Q3/15Q2/15Q3/14 Q2/15 Q3/14
Revenues            
Advisory fees $  79,242 $  1,278 $  80,520  $  79,242 $  80,409 $  46,659   -1.5%  69.8%
Other income    230    3    233     230    238    224   -3.4%  2.7%
             
Total revenues    79,472    1,281    80,753     79,472    80,647    46,883   -1.5%  69.5%
             
Expenses            
Compensation and benefits    17,915    1,492    19,407     17,915    17,437    9,250   2.7%  93.7%
Fund management and administration    9,666    853    10,519     9,666    10,462    8,139   -7.6%  18.8%
Marketing and advertising    3,156    417    3,573     3,156    3,256    3,244   -3.1%  -2.7%
Sales and business development    2,419    19    2,438     2,419    2,048    1,185   18.1%  104.1%
Professional and consulting fees    1,414    156    1,570     1,414    1,541    945   -8.2%  49.6%
Occupancy, communications and equipment    1,079    104    1,183     1,079    889    809   21.4%  33.4%
Depreciation and amortization    249    4    253     249    221    206   12.7%  20.9%
Third party sharing arrangements    485    -    485     485    497    187   -2.4%  159.4%
Acquisition contingent payment    -    172    172     -    -    -  n/a n/a
Other    1,517    103    1,620     1,517    1,413    1,088   7.4%  39.4%
Total expenses    37,900    3,320    41,220     37,900    37,764    25,053   0.4%  51.3%
             
Income/(loss) before taxes    41,572    (2,039)   39,533     41,572    42,883    21,830   -3.1%  90.4%
             
Income tax expense/(benefit)    16,263    (18)   16,245     16,263    16,785    9,662   -3.1%  n/a 
               
Net income/(loss) $  25,309 $  (2,021)$  23,288  $  25,309 $  26,098 $  12,168   -3.0%  108.0%
             
Pretax margin  52.3%  49.0%        
             
Gross margin  87.2%  86.4%        
             

 

  
WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS 
(in thousands, except per share amounts) 
  
 September 30, December 31, 
  2015   2014  
 (Unaudited)   
     
ASSETS    
Current assets:    
Cash and cash equivalents$  211,992  $  165,284  
Accounts receivable 25,514   18,176  
Deferred tax asset, net 10,297     3,872  
Other current assets   2,958     1,708  
     
Total current assets   250,761     189,040  
     
Fixed assets, net   11,279     10,356  
Investments   23,651     13,990  
Deferred tax asset, net   4,326     5,618  
Goodwill   1,676     1,676  
Other noncurrent assets   723     71  
     
Total assets$  292,416  $  220,751  
       
       
LIABILITIES AND STOCKHOLDERS' EQUITY   
LIABILITIES   
Current liabilities:    
Fund management and administration payable$  11,245  $  9,983  
Compensation and benefits payable   21,875     14,333  
Accounts payable and other liabilities   6,420     5,115  
     
Total current liabilities   39,540     29,431  
     
Other noncurrent liabilities:    
Acquisition payable   2,449     1,757  
Deferred rent payable   5,213     5,278  
     
Total liabilities   47,202     36,466  
     
     
     
STOCKHOLDERS' EQUITY    
Common stock, par value $0.01; 250,000 shares authorized:    
issued: 138,398 and 134,959;   1,384     1,350  
outstanding: 136,727 and 133,445;    
Additional paid-in capital   243,410     209,216  
Accumulated other comprehensive loss   (7)    (53) 
Retained earnings/(accumulated deficit)   427     (26,228) 
     
Total stockholders' equity   245,214     184,285  
     
     
Total liabilities and stockholders' equity$  292,416  $  220,751  
     

 

  
WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(in thousands) 
(Unaudited) 
     
     
 Nine Months Ended 
  September 30,   September 30,  
  2015   2014  
Cash flows from operating activities:    
Net income$  59,522  $  51,429  
Non-cash items included in net income:    
Income tax expense   40,573     5,396  
Depreciation and amortization   696     600  
Stock-based compensation   7,878     6,122  
Deferred rent   (26)    1,620  
Accretion to interest income and other   9     (76) 
Changes in operating assets and liabilities:    
Accounts receivable   (7,253)    2,049  
Other assets   (1,892)    (811) 
Deferred acquisition contingent payment   693     -   
Fund management and administration payable   1,216     (1,579) 
Compensation and benefits payable   7,402     (7,510) 
Accounts payable and other liabilities   1,330     (590) 
     
Net cash provided by operating activities   110,148     56,650  
     
Cash flows from investing activities:    
Purchase of fixed assets   (1,606)    (4,580) 
Purchase of investments   (11,353)    (1,384) 
Cash acquired on acquisition   -      1,349  
Proceeds from the redemption of investments   1,681     868  
     
Net cash used in investing activities   (11,278)    (3,747) 
     
Cash flows from financing activities:    
Dividends paid   (32,867)    -   
Shares repurchased   (23,689)    (6,259) 
Proceeds from exercise of stock options   4,471     341  
     
Net cash used in financing activities   (52,085)    (5,918) 
     
Decrease in cash flows due to changes in foreign exchange rate   (77)    (14) 
     
     
Net increase in cash and cash equivalents   46,708     46,971  
     
Cash and cash equivalents - beginning of period   165,284     104,316  
    
Cash and cash equivalents - end of period$  211,992  $  151,287  
     
Supplemental disclosure of cash flow information:    
     
Cash paid for taxes$  551  $  66  
     

 

             
 WisdomTree Investments, Inc.          
 Key Operating Statistics (Unaudited)          
             
             
             
   Three Months Ended For the Nine Months Ended 
   September 30, June 30, September 30, September 30, September 30, 
    2015   2015   2014   2015   2014  
 U.S. LISTED ETFs          
 Total ETFs (in millions)          
  Beginning of period assets   61,299     55,758     35,500     39,281     34,884  
  Inflows/(outflows)   (661)    6,598     748     19,457     580  
  Market appreciation/(depreciation)   (7,591)    (1,057)    (425)    (5,691)    359  
  End of period assets   53,047     61,299     35,823     53,047     35,823  
             
  Average assets during the period   59,572     61,153     35,554     55,705     34,518  
  Revenue Days   92     91     92     273     273  
             
 ETF Industry and Market Share (in billions)          
  ETF industry net inflows   44.3     41.4     48.8     141.2     121.0  
  WisdomTree market share of industry inflows n/a   15.9%  1.5%  13.8%  0.5% 
             
 International Hedged Equity ETFs (in millions)          
  Beginning of period assets   39,222     33,925     12,557     17,760     13,348  
  Inflows   751     6,083     799     20,274     285  
  Market appreciation/(depreciation)   (5,365)    (786)    615     (3,426)    338  
  End of period assets   34,608     39,222     13,971     34,608     13,971  
             
  Average assets during the period   39,061     38,548     12,654     34,056     12,631  
             
 U.S. Equity ETFs (in millions)          
  Beginning of period assets   9,245     9,748     8,052     9,390     7,181  
  Inflows/(outflows)   (259)    (320)    84     (285)    494  
  Market appreciation/(depreciation)   (739)    (183)    (197)    (858)    264  
  End of period assets   8,247     9,245     7,939     8,247     7,939  
             
  Average assets during the period   8,876     9,664     8,067     9,436     7,655  
             
 International Developed Equity ETFs (in millions)          
  Beginning of period assets   4,829     4,323     5,340     3,988     3,864  
  Inflows/(outflows)   21     497     (452)    706     878  
  Market appreciation/(depreciation)   (456)    9     (394)    (300)    (248) 
  End of period assets   4,394     4,829     4,494     4,394     4,494  
             
  Average assets during the period   4,714     4,790     5,016     4,538     4,833  
             
 Emerging Markets Equity ETFs (in millions)          
  Beginning of period assets   6,244     6,068     7,606     6,187     7,448  
  Inflows/(outflows)   (1,013)    250     270     (928)    26  
  Market appreciation/(depreciation)   (943)    (74)    (381)    (971)    21  
  End of period assets   4,288     6,244     7,495     4,288     7,495  
             
  Average assets during the period   5,253     6,336     7,878     5,912     7,247  
             
 Fixed Income ETFs (in millions)          
  Beginning of period assets   956     904     1,376     1,152     1,906  
  Inflows/(outflows)   (85)    67     69     (228)    (515) 
  Market depreciation   (77)    (15)    (66)    (130)    (12) 
  End of period assets   794     956     1,379     794     1,379  
             
  Average assets during the period   884     929     1,385     944     1,522  
             
 Currency ETFs (in millions)          
  Beginning of period assets   573     565     406     599     979  
  Inflows/(outflows)   (63)    7     (35)    (100)    (605) 
  Market appreciation/(depreciation)   (5)    1     (9)    6     (12) 
  End of period assets   505     573     362     505     362  
             
  Average assets during the period   562     651     380     595     468  
             
 Alternative Strategy ETFs (in millions)          
  Beginning of period assets   230     225     163     205     158  
  Inflows/(outflows)   (13)    14     13     18     17  
  Market appreciation/(depreciation)   (6)    (9)    7     (12)    8  
  End of period assets   211     230     183     211     183  
             
  Average assets during the period   222     235     174     224     162  
             
   Three Months Ended For the Nine Months Ended 
   September 30, June 30, September 30, September 30, September 30, 
    2015   2015   2014   2015   2014  
 Average ETF assets during the period          
  International hedged equity ETFs 66%  63%  36%  61%  37% 
  U.S. equity ETFs 15%  16%  23%  17%  22% 
  Emerging markets equity ETFs 9%  10%  22%  11%  21% 
  International developed equity ETFs 8%  8%  14%  8%  14% 
  Fixed income ETFs 1%  2%  4%  2%  4% 
  Currency ETFs 1%  1%  1%  1%  1% 
  Alternative strategy ETFs 0%  0%  0%  0%  1% 
  Total 100%  100%  100%  100%  100% 
             
 Average ETF advisory fee during the period          
  Alternative strategy ETFs 0.95%  0.95%  0.94%  0.95%  0.94% 
  Emerging markets equity ETFs 0.72%  0.71%  0.68%  0.71%  0.67% 
  International developed equity ETFs 0.56%  0.56%  0.56%  0.56%  0.56% 
  International hedged equity ETFs 0.54%  0.54%  0.50%  0.54%  0.50% 
  Fixed income ETFs 0.51%  0.52%  0.55%  0.52%  0.55% 
  Currency ETFs 0.50%  0.50%  0.49%  0.50%  0.49% 
  U.S. equity ETFs 0.35%  0.35%  0.35%  0.35%  0.35% 
  Blended total 0.53%  0.53%  0.52%  0.53%  0.52% 
             
 Number of ETFs - end of the period          
  International developed equity ETFs   18     18     17     18     17  
  International hedged equity ETFs   17     16     12     17     12  
  U.S. equity ETFs   15     13     13     15     13  
  Fixed income ETFs   13     12     12     13     12  
  Emerging markets equity ETFs   8     8     7     8     7  
  Currency ETFs   6     6     6     6     6  
  Alternative strategy ETFs   2     2     2     2     2  
  Total   79     75     69     79     69  
             
 EUROPEAN LISTED ETPs          
 Total ETPs (in thousands)          
  Beginning of period assets   384,089     288,801     113,244     165,018     96,817  
  Inflows   191,044     50,331     19,224     386,757     36,882  
  Market appreciation/(depreciation)   (143,874)    44,957     (9,258)    (120,516)    (10,489) 
  End of period assets   431,259     384,089     123,210     431,259     123,210  
             
 Average ETP advisory fee during the period 0.83%  0.82%  0.79%  0.83%  0.80% 
 Number of ETPs - end of the period   62     57     42     62     42  
             
 Total UCITS ETFs (in thousands)          
  Beginning of period assets****   228,588     45,846       16,179    
  Inflows   67,770     144,234       240,855    
  Market appreciation/(depreciation)   (31,906)    38,508       7,418    
  End of period assets   264,452     228,588       264,452    
             
 Average ETP advisory fee during the period 0.45%  0.44%    0.44%   
 Number of ETPs - end of the period   12     10       12    
             
 U.S. headcount   128     117     97     128   97  
 Non-U.S. headcount   34     29     20     34   20  
             
             
 Note: Previously issued statistics may be restated due to trade adjustments          
 Source: Investment Company Institute, Bloomberg, WisdomTree          
             
 ****UCITS first launched October 24, 2014          
             

 

 
Non-GAAP Financial Measurements
 
In an effort to provide additional information regarding our results as determined by GAAP, we also disclose certain non-GAAP information which we believe provides useful and meaningful information.  The non-GAAP financial measurements included in this release include gross margin, gross margin percentage and our operating results for our US and European listed ETF businesses. Our management reviews these non-GAAP financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-GAAP measurements so as to share this perspective of management.  Non-GAAP measurements do not have any standardized meaning, do not replace nor are superior to GAAP financial measurements and are unlikely to be comparable to similar measures presented by other companies. These non-GAAP financial measurements should be considered in the context with our GAAP results. We disclose gross margin as a non-GAAP financial measurement to allow investors to analyze our revenues less the direct costs paid to third parties attributable to those revenues.  We disclose the results of our US listed ETF business to allow investors to better compare our results to the prior year as in April 2014, we acquired Boost ETP, a UK based ETP sponsor.
 

 

  
WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF OPERATIONS 
GAAP to NON-GAAP RECONCILIATION 
(in thousands) 
(Unaudited) 
            
      
 Three Months Ended   For the Nine Months Ended  
 Sep. 30, Jun. 30, Sep. 30,  Sep. 30, Sep. 30, 
  2015   2015   2014    2015   2014  
GAAP total revenue$  80,753  $  81,559  $  47,114   $  222,453  $  134,162  
Fund management and administration   (10,519)    (11,208)    (8,465)     (31,895)    (25,451) 
Third party sharing arrangements   (485)    (497)    (187)     (1,265)    (312) 
            
Gross margin$  69,749  $  69,854  $  38,462   $  189,293  $  108,399  
            
Gross margin percentage 86.4%  85.6%  81.6%   85.1%  80.8% 
            
            
U.S. listed ETFs:           
            
GAAP total revenue$  79,472  $  80,647  $  46,883   $  219,699  $  133,738  
Fund management and administration   (9,666)    (10,462)    (8,139)     (29,861)    (24,932) 
Third party sharing arrangements   (485)    (497)    (187)     (1,265)    (312) 
            
Gross margin$  69,321  $  69,688  $  38,557   $  188,573  $  108,494  
            
Gross margin percentage 87.2%  86.4%  82.2%   85.8%  81.1% 
            
Contact Information:
WisdomTree Investments, Inc.
Stuart Bell / Jessica Zaloom
+1.917.267.3702 / +1.917.267.3735
sbell@wisdomtree.com / jzaloom@wisdomtree.com


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