Exhibit 99.1

WisdomTree Announces Fourth Quarter and Year End 2012 Results

$1.1 billion of net inflows during quarter and $4.7 billion for the year

Record revenues up 46% from year ago quarter and 30% for the year

Net income more than tripled from year ago quarter and full year

New York, NY – (GlobeNewswire) – February 1, 2013 – WisdomTree Investments, Inc. (NASDAQ: WETF), an exchange-traded fund (“ETF”) sponsor and asset manager, today reported net income of $5.3 million for the fourth quarter of 2012, up from $0.9 million in the fourth quarter of 2011 and $4.5 million in the third quarter of 2012. Excluding non-operating items related to patent litigation, ETF shareholder proxy and secondary offering, proforma operating income1 was $5.1 million for the fourth quarter of 2012, up from proforma operating income of $1.0 million in the fourth quarter of 2011 and $4.8 million in the third quarter of 2012.

For the full year, net income was $11.0 million in 2012, up from $3.1 million in 2011. Excluding non-operating items related to patent litigation, ETF shareholder proxy, secondary offering and initial exchange listing fees, proforma operating income1 was $14.8 million in 2012, up from proforma operating income of $4.0 million in 2011.

WisdomTree CEO and President Jonathan Steinberg commented, “WisdomTree captured $4.7 billion in net inflows for the full year as both our existing and new products powered our AUM and top line growth, resulting in record financial results. WisdomTree achieved substantial top line growth with record revenues and tripled its net income for the quarter and year.”

Mr. Steinberg continued, “2012 was a year of terrific execution and accomplishments for WisdomTree, with continued momentum into the new year. We have expanded our product set with additional equity and fixed income strategies, while hitting record asset milestones in several of our flagship funds. The ETF industry continues to demonstrate dynamic growth, posting a record $185 billion in net inflows for the year. We are continuing to invest in our business and position WisdomTree to take part in the fast-growing ETF market.”

Assets Under Management, Net Inflows and Market Share

ETF assets under management (“AUM”) were $18.3 billion at December 31, 2012, up from $12.2 billion at December 31, 2011 and $16.8 billion at September 30, 2012. Net inflows for the fourth quarter of 2012 were $1.1 billion compared to $0.8 billion in the fourth quarter of 2011 and $1.0 billion in the third quarter of 2012. WisdomTree’s market share of industry net inflows was 1.9% in the fourth quarter of 2012 as compared to 1.7% in the fourth quarter of 2011 and 2.0% in the third quarter of 2012.

 

 

1  Proforma operating income and other proforma amounts described below are non-GAAP financial measurements. Please see the section entitled “Non-GAAP Financial Measurements” for a reconciliation of these measurements to GAAP.

 

1


For the full year of 2012, net inflows were $4.7 billion as compared to $3.9 billion in 2011. WisdomTree’s market share of industry net inflows was 2.6% as compared to 3.3% in 2011.

Summary Operating and Financial Highlights

 

     Three Months Ended     Change From  

Operating Highlights (in billions):

   Dec. 31,
2012
    Sept. 30,
2012
    Dec. 31,
2011
    Sept. 30,
2012
    Dec. 31,
2011
 

ETF AUM

   $ 18.3      $ 16.8      $ 12.2        9.0     50.1

ETF net inflows

   $ 1.1      $ 1.0      $ 0.8        2.2     40.1

Average ETF AUM

   $ 17.1      $ 15.8      $ 11.8        8.2     44.2

Average ETF advisory fee

     0.54     0.54     0.54     —          —     

Market share of industry inflows

     1.9     2.0     1.7     (0.1     0.2   

Financial Highlights (in millions):

                              

Total revenues

   $ 23.6      $ 21.7      $ 16.2        8.8     45.7

Net income

   $ 5.3      $ 4.5      $ 0.9        15.9     nm   

Proforma operating income (non-GAAP)

   $ 5.1      $ 4.8      $ 1.0        6.9     nm   

Gross margin2

     68     68     62     —          +6   

Pre-tax margin

     22     21     6     +1        +16   

Proforma pre-tax margin

     22     22     6     —          +16   

 

       Year Ended Dec. 31,         

Operating Highlights (in billions):

     2012      2011      Change  

ETF AUM

     $ 18.3       $ 12.2         50.1

ETF net inflows

     $ 4.7       $ 3.9         21.4

Average ETF AUM

     $ 15.6       $ 11.7         32.5

Average ETF advisory fee

       0.54      0.55      (0.01

Market share of industry inflows

       2.6      3.3      (0.7

Financial Highlights (in millions):

                      

Total revenues

     $ 84.8       $ 65.2         30.1

Net income

     $ 11.0       $ 3.1         nm   

Proforma operating income (non-GAAP)

     $ 14.8       $ 4.0         nm   

Gross margin

       66      61      +5   

Pre-tax margin

       13      5      +8   

Proforma pre-tax margin

       18      6      +12   

 

 

2  Gross margin is defined as total revenues less fund management and administration expenses and third-party sharing arrangements.

 

2


Recent Business Developments

 

 

On November 6, 2012, WisdomTree announced a change from quarterly to monthly dividend distributions for the Company’s Domestic Dividend ETF family.

 

 

On November 8, 2012, WisdomTree announced Research Affiliates withdrew its patent infringement lawsuit against WisdomTree.

 

 

On November 12, 2012, WisdomTree announced the Company commenced a secondary offering for existing stockholders. On November 14, WisdomTree announced the pricing of the secondary offering. On December 19, WisdomTree announced underwriters exercised their option to purchase additional securities in connection with the previously announced offering.

 

 

On November 26, 2012, WisdomTree announced zero capital gains distributions for 2012 on all 35 Equity ETFs

 

 

On December 26, 2012, WisdomTree announced the WisdomTree Japan Hedged Equity Fund (DXJ) surpassed $1 Billion in AUM. On January 22, WisdomTree announced the WisdomTree Japan Hedged Equity Fund (DXJ) surpassed $2 billion in AUM.

 

 

On January 14, 2013, WisdomTree announced the WisdomTree Emerging Markets Equity Income Fund (DEM) surpassed $5 billion in AUM.

 

 

On January 23, 2013, WisdomTree announced the Company surpassed $20 billion in AUM.

 

 

On January 31, 2013, WisdomTree announced the launch of the WisdomTree Global Corporate Bond Fund (GLCB)

Performance

72% of the $15.4 billion invested in our 34 equity ETFs on December 31, 2012 were in funds that, since their respective inceptions, outperformed their capitalization-weighted or competitive benchmarks through that date. 68%, or 23 of our 34 equity ETFs, outperformed their capitalization-weighted or competitive benchmarks since their respective inception through December 31, 2012. For more information about WisdomTree ETFs including standardized performance, please click here or visit www.wisdomtree.com.

Fourth Quarter Financial Discussion

Revenues

Total revenues increased 45.7% to a record $23.6 million as compared to the fourth quarter of 2011 and 8.8% compared to the third quarter of 2012 primarily due to higher average AUM. Our average fee earned was 0.54% in the fourth quarter of 2012, unchanged compared to the fourth quarter of 2011 and third quarter of 2012.

Margins

Our gross margin, which is our total revenues less fund management and administration expenses and third party sharing arrangements, was 68% in the fourth quarter of 2012 as compared to 62% in the fourth quarter of 2011 and was unchanged from the third quarter of 2012. Changes in our gross margin are primarily driven by changes in AUM and mix of AUM.

 

3


Our pre-tax margin was 22% in the fourth quarter of 2012 as compared to 6% in the fourth quarter of 2011 and 21% in the third quarter of 2012. Excluding non-operating items, proforma pre-tax operating margin was 22% in the fourth quarter of 2012 as compared to 6% in the fourth quarter of 2011 and was unchanged from the third quarter of 2012.

Expenses

Total expenses increased 19.9% to $18.3 million from $15.3 million in the fourth quarter of 2011 and increased 7.0% from $17.1 million in the third quarter of 2012. Excluding non-operating items, expenses increased 22.2% compared to the fourth quarter of 2011 and increased 9.4% compared to the third quarter of 2012.

 

     Three Months Ended     Change from  
(in thousands)    Dec. 31,
2012
    Sept. 30,
2012
    Dec. 31,
2011
    Sept. 30,
2012
    Dec. 31,
2011
 

Total expenses

   $ 18,321      $ 17,128      $ 15,286        7.0     19.9

Less patent litigation expenses

     (393     (1,468     (150    

Add back insurance reimbursement

     217        1,249        —         

Add back litigation settlement

     700        —          —         

Less secondary offering fees

     (353     —          —         
  

 

 

   

 

 

   

 

 

     

Proforma operating expenses (non-GAAP)

   $ 18,492      $ 16,909      $ 15,136        9.4     22.2

 

 

Compensation and benefits expense increased 30.6% to $6.2 million compared to the fourth quarter of 2011. This increase was primarily due to higher accrued incentive compensation due to our strong results, higher stock based compensation expense due to equity awards granted to our employees as part of their 2011 year end incentive compensation, as well as costs associated with higher headcount. Our headcount at the end of the fourth quarter of 2012 was 70 compared to 65 at the end of the fourth quarter of 2011.

Compensation and benefits expense increased 7.5% compared to the third quarter of 2012 primarily due to higher accrued incentive compensation.

 

 

Fund management and administration expenses increased 29.7% to $6.3 million compared to the fourth quarter of 2011. Higher average AUM resulted in a $0.8 million increase in portfolio management, fund administration and accounting, index licensing and distribution fees. We also incurred $0.3 million in tax fees related to our India ETF. This expense also increased due to additional ETFs we launched during the period. We launched two ETFs since the fourth quarter of 2011 and closed three at the end of 2012.

Fund management and administration expenses increased 11.8% compared to the third quarter of 2012 primarily due to the reasons described above.

 

4


 

Marketing and advertising expenses increased 31.7% to $1.6 million compared to the fourth quarter of 2011 and increased 88.7% compared to the third quarter of 2012 primarily due to higher levels of advertising related activities to support our growth.

 

 

Sales and business development expenses increased 6.3% to $1.1 million compared to the fourth quarter of 2011 and increased 26.7% compared to the third quarter of 2012 primarily due to higher levels of sales related activities.

 

 

Professional and consulting fees decreased 29.3% to $0.8 million compared to the fourth quarter of 2011 and decreased 39.6% compared to the third quarter of 2012 primarily due to lower variable stock based compensation. We will no longer incur variable stock based compensation after the fourth quarter of 2012.

 

 

Occupancy, communication and equipment expense increased 31.3% to $0.4 million compared to the fourth quarter of 2011. Beginning in the second quarter, we began occupying office space we had previously sub-leased to a third party. This expense declined slightly compared to the third quarter of 2012.

 

 

Third-party sharing arrangements expense increased 6.8% to $1.3 million compared to the fourth quarter of 2011 and increased 8.9% compared to the third quarter of 2012 due to higher profit sharing from our joint venture with BNY Mellon. This joint venture ended at the end of 2012.

 

 

Other expenses increased 23.8% to $0.8 million compared to the fourth quarter of 2011 primarily due to higher general and administrative expenses. This expense decreased 10.9% compared to the third quarter of 2012 primarily due to lower public company related expenses.

 

 

Litigation – We incurred $0.4 million in expenses in the fourth quarter of 2012 related to our patent infringement lawsuit of which $0.2 million will be reimbursed by our insurance carrier. In addition, we received a settlement payment of $0.7 million from Research Affiliates in connection with the resolution of the litigation.

 

 

We incurred $0.4 million in expenses related to the public offering of shares held by two of our stockholders in November of 2012. The Company did not issue any new shares in the offering but was required to pay for these fees under the registration rights agreement with these stockholders.

Full Year Results

Total revenues increased 30.1% to $84.8 million in 2012 as compared to $65.2 in 2011. This increase was due to higher average AUM, which increased 32.5%, primarily due to $4.7 billion of ETF net inflows. Our average fee decreased to 0.54% from 0.55% due to a change in mix of our AUM.

 

5


Total expenses increased 18.9% to $73.8 million over the comparable period. Excluding non-operating items related to our patent litigation, ETF shareholder proxy, initial exchange listing, and secondary offering, expenses increased 14.4% to $70.0 million from $61.2 million. This increase was primarily due to higher compensation and benefits related expenses due to higher accrued incentive compensation, stock based compensation, and expenses associated with higher headcount; higher fund management and administration expenses due to higher average asset balances; and higher marketing related expenses to support our growth.

Balance Sheet

As of December 31, 2012, WisdomTree had total assets of $63.4 million which consisted primarily of cash and cash equivalents of $41.2 million and investments of $11.0 million. The Company has no debt. There were approximately 126.6 million shares of common stock issued as of December 31, 2012. Fully diluted weighted average shares outstanding were 138.0 million for 2012.

Conference Call

WisdomTree will discuss its results and operational highlights during a conference call on Friday, February 1, 2013 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.

 

 

6


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

 

   

anticipated trends, conditions and investor sentiment in the global markets;

 

   

anticipated levels of inflows into and outflows out of our exchange traded funds;

 

   

our ability to deliver favorable rates of return to investors;

 

   

our ability to develop new products and services;

 

   

our ability to maintain current vendors or find new vendors to provide services to us at favorable costs;

 

   

competition in our business; and

 

   

the effect of laws and regulations that apply to our business.

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

 

   

We have only a limited operating history and, as a result, recent historical growth may not provide an accurate representation of the growth we may experience in the future, which may make it difficult to evaluate our future prospects.

 

   

Challenging market conditions associated with declining prices of securities can adversely affect our business by reducing the market value of the assets we manage or causing WisdomTree ETF shareholders to sell their fund shares and trigger redemptions.

 

   

Fluctuations in the amount and mix of our AUM may negatively impact revenue and operating margin.

 

   

Most of our assets under management are held in ETFs that invest in foreign securities and we therefore have substantial exposure to foreign market conditions and are subject to currency exchange rate risks.

 

   

We derive a substantial portion of our revenue from products invested in emerging markets and are exposed to the market-specific political and economic risks as well as general investor sentiment regarding future growth of those markets.

 

   

We derive a substantial portion of our revenue from a limited number of products and, as a result, our operating results are particularly exposed to the performance of those funds, investor sentiment toward the strategies pursued by those funds and our ability to maintain the assets under management of those funds.

 

   

The WisdomTree ETFs have a limited track record, and poor investment performance could cause our revenue to decline.

 

   

We depend on other third parties to provide many critical services to operate our business and the WisdomTree ETFs. The failure of key vendors to adequately provide such services could materially affect our operating business and harm WisdomTree ETF shareholders.

 

7


   

We may from time to time in the future be, involved in legal proceedings that could require significant management time and attention, possibly resulting in significant expense or in an unfavorable outcome, which could have a material adverse effect on our business, financial conditions, results of operations and cash flows.

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, 2011.

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. is a New York-based exchange-traded fund (“ETF”) sponsor and asset manager. WisdomTree currently offers 47 ETFs across Equities, Currency Income, Fixed Income and Alternatives asset classes. WisdomTree also licenses its indexes to third parties for proprietary products and promotes the use of WisdomTree ETFs in 401(k) plans. WisdomTree currently has approximately $20.7 billion in ETF assets under management. For more information, please visit www.wisdomtree.com.

WisdomTree® is the marketing name for WisdomTree Investments, Inc. and its wholly owned subsidiaries WisdomTree Asset Management, Inc. and WisdomTree Retirement Services, Inc. WisdomTree Asset Management, Inc. is a registered investment advisor and is the investment advisor to the WisdomTree Trust and the WisdomTree ETFs. The WisdomTree Trust is a registered open-end investment company. Each WisdomTree ETF is a series of the WisdomTree Trust. WisdomTree Retirement Services, Inc. supports the use of the WisdomTree ETFs in retirement plans by financial professionals.

Contact Information:

WisdomTree Investments, Inc.

Stuart Bell / Jessica Zaloom

+1.917.267.3702 / +1.917.267.3735

sbell@wisdomtree.com / jzaloom@wisdomtree.com

 

8


WISDOMTREE INVESTMENTS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended      % Change From     Year Ended  
     Dec. 31,
2012
    Sept. 30,
2012
     Dec. 31,
2011
     Sept. 30,
2012
    Dec. 31,
2011
    Dec. 31,
2012
     Dec. 31,
2011
     %
Change
 
                                     (Audited)  

Revenues

                    

ETF advisory fees

   $ 23,379      $ 21,440       $ 16,025         9.0     45.9   $ 84,024       $ 64,366         30.5

Other income

     195        221         150         -11.8     30.0     774         794         -2.5
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total revenues

     23,574        21,661         16,175         8.8     45.7     84,798         65,160         30.1

Expenses

                    

Compensation and benefits

     6,165        5,734         4,722         7.5     30.6     23,233         19,634         18.3

Fund management and administration

     6,343        5,671         4,891         11.8     29.7     23,020         19,882         15.8

Marketing and advertising

     1,627        862         1,235         88.7     31.7     5,363         4,475         19.8

Sales and business development

     1,053        831         991         26.7     6.3     3,586         3,603         -0.5

Professional and consulting fees

     788        1,305         1,114         -39.6     -29.3     4,603         4,307         6.9

Occupancy, communication and equipment

     369        374         281         -1.3     31.3     1,419         1,127         25.9

Depreciation and amortization

     82        79         67         3.8     22.4     307         267         15.0

Third party sharing arrangements

     1,300        1,194         1,217         8.9     6.8     5,468         5,651         -3.2

Other

     765        859         618         -10.9     23.8     2,976         2,243         32.7

ETF shareholder proxy

     —          —           —           n/a        n/a        3,264         —           n/a   

Litigation, net

     (524     219         150         n/a        n/a        176         150         17.3

Exchange listing and offering

     353        —           —           n/a        n/a        353         729         -51.6
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total expenses

     18,321        17,128         15,286         7.0     19.9     73,768         62,068         18.9
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Income before provision for income taxes

     5,253        4,533         889         15.9     490.9     11,030         3,092         256.7

Provision for income taxes

     —          —           —               —           —        
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Net income

   $ 5,253      $ 4,533       $ 889         15.9     490.9   $ 11,030       $ 3,092         256.7
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Net income per share - basic

   $ 0.04      $ 0.04       $ 0.01           $ 0.09       $ 0.03      

Net income per share - diluted

   $ 0.04      $ 0.03       $ 0.01           $ 0.08       $ 0.02      

Weighted average common shares - basic

     124,202        123,214         114,863             122,138         114,132      

Weighted average common shares - diluted

     138,417        138,458         135,682             137,968         135,539      


WISDOMTREE INVESTMENTS, INC.

NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended      Year Ended  
     Dec. 31,
2012
    Sept. 30,
2012
     Dec. 31,
2011
     Dec. 31,
2012
     Dec. 31,
2011
 

Revenues

             

ETF advisory fees

   $ 23,379      $ 21,440       $ 16,025       $ 84,024       $ 64,366   

Other income

     195        221         150         774         794   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     23,574        21,661         16,175         84,798         65,160   

Operating expenses

             

Compensation and benefits

     6,165        5,734         4,722         23,233         19,634   

Fund management and administration

     6,343        5,671         4,891         23,020         19,882   

Marketing and advertising

     1,627        862         1,235         5,363         4,475   

Sales and business development

     1,053        831         991         3,586         3,603   

Professional and consulting fees

     788        1,305         1,114         4,603         4,307   

Occupancy, communication and equipment

     369        374         281         1,419         1,127   

Depreciation and amortization

     82        79         67         307         267   

Third party sharing arrangements

     1,300        1,194         1,217         5,468         5,651   

Other

     765        859         618         2,976         2,243   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total proforma operating expenses

     18,492        16,909         15,136         69,975         61,189   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Proforma operating income

     5,082        4,752         1,039         14,823         3,971   

ETF shareholder proxy

     —          —           —           3,264         —     

Litigation, net

     (524     219         150         176         150   

Exchange listing and offering

     353        —           —           353         729   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Income before provision for income taxes

     5,253        4,533         889         11,030         3,092   

Provision for income taxes

     —          —           —           —           —     
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 5,253      $ 4,533       $ 889       $ 11,030       $ 3,092   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 


WISDOMTREE INVESTMENTS, INC.

CONSOLIDATED BALANCE SHEET

(in thousands, except per share amount)

 

     December 31,
2012
    December 31,
2011
 
     (Unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 41,246      $ 25,630   

Accounts receivable

     9,348        5,625   

Other current assets

     1,273        1,601   
  

 

 

   

 

 

 

Total current assets

     51,867        32,856   

Fixed assets, net

     480        597   

Investments

     11,036        9,056   

Other noncurrent assets

     42        58   
  

 

 

   

 

 

 

Total assets

   $ 63,425      $ 42,567   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

LIABILITIES

    

Current liabilities:

    

Fund management and administration payable

   $ 6,924      $ 10,035   

Compensation and benefits payable

     2,156        4,168   

Accounts payable and other liabilities

     3,272        2,360   
  

 

 

   

 

 

 

Total current liabilities

     12,352        16,563   

Other noncurrent liabilities

     13        151   
  

 

 

   

 

 

 

Total liabilities

     12,365        16,714   
  

 

 

   

 

 

 

STOCKHOLDERS’ EQUITY

    

Common stock, par value $0.01; 250,000 shares authorized:

    

issued: 126,554 and 116,703

     1,265        1,167   

outstanding: 125,272 and 115,392

    

Additional paid-in capital

     177,826        163,747   

Accumulated deficit

     (128,031     (139,061
  

 

 

   

 

 

 

Total stockholders’ equity

     51,060        25,853   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 63,425      $ 42,567   
  

 

 

   

 

 

 


WISDOMTREE INVESTMENTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Twelve Months Ended  
     December 31,
2012
    December 31,
2011
 
     (Unaudited)        

Cash flows from operating activities

    

Net income

   $ 11,030      $ 3,092   

Non-cash items included in net income:

    

Depreciation and amortization

     307        267   

Stock-based compensation

     7,437        7,141   

Deferred rent

     (140     (154

Accretion to interest income and other

     194        135   

Changes in operating assets and liabilities:

    

Accounts receivable

     (3,723     (800

Other assets

     337        (950

Fund management and administration payable

     (3,111     4,321   

Compensation and benefits payable

     (2,012     530   

Accounts payable and other liabilities

     915        110   
  

 

 

   

 

 

 

Net cash provided by operating activities

     11,234        13,692   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchase of fixed assets

     (190     (108

Purchase of investments

     (10,004     (8,114

Proceeds from the redemption of investments

     7,836        7,542   
  

 

 

   

 

 

 

Net cash used in investing activities

     (2,358     (680
  

 

 

   

 

 

 

Cash flows from financing activities

    

Net proceeds from sale of common stock

     4,329        —     

Shares repurchased

     (2,261     (2,153

Proceeds from exercise of stock options

     4,672        538   
  

 

 

   

 

 

 

Net cash provided by/(used in) financing activities

     6,740        (1,615
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     15,616        11,397   

Cash and cash equivalents - beginning of period

     25,630        14,233   
  

 

 

   

 

 

 

Cash and cash equivalents - end of period

   $ 41,246      $ 25,630   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information

    

Cash paid for income taxes

   $ 33      $ 13   
  

 

 

   

 

 

 


WisdomTree Investments, Inc.

Key Operating Statistics (Unaudited)

 

     Three Months Ended     For the Year Ended  
     December 31,
2012
    September 30,
2012
    December 31,
2011
    December 31,
2012
    December 31,
2011
 

Total ETFs (in millions)

          

Beginning of period assets

     16,783        15,004        11,184        12,182        9,891   

Inflows/(outflows)

     1,059        1,036        756        4,732        3,899   

Market appreciation/(depreciation)

     444        743        242        1,372        (1,608
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     18,286        16,783        12,182        18,286        12,182   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     17,068        15,769        11,836        15,554        11,739   

ETF Industry and Market Share (in billions)

          

ETF industry net inflows

     55.4        51.8        43.9        185.4        117.6   

WisdomTree market share of industry inflows

     1.9     2.0     1.7     2.6     3.3

International Developed Equity ETFs (in millions)

          

Beginning of period assets

     2,896        2,846        2,501        2,407        2,311   

Inflows/(outflows)

     620        (58     (94     1,000        471   

Market appreciation/(depreciation)

     216        108        —          325        (375
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     3,732        2,896        2,407        3,732        2,407   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     3,022        2,859        2,496        2,854        2,634   

Emerging Markets Equity ETFs (in millions)

          

Beginning of period assets

     6,542        5,430        3,230        3,613        3,780   

Inflows/(outflows)

     515        736        418        3,111        924   

Market appreciation/(depreciation)

     275        376        (35     608        (1,091
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     7,332        6,542        3,613        7,332        3,613   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     6,767        5,915        3,456        5,715        3,664   

US Equity ETFs (in millions)

          

Beginning of period assets

     4,640        4,094        2,523        3,429        2,057   

Inflows/(outflows)

     (205     363        586        610        1,255   

Market appreciation/(depreciation)

     (64     183        320        332        117   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     4,371        4,640        3,429        4,371        3,429   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     4,522        4,393        2,973        4,252        2,507   

Currency ETFs (in millions)

          

Beginning of period assets

     654        769        1,194        950        1,179   

Inflows/(outflows)

     (37     (129     (157     (351     (69

Market appreciation/(depreciation)

     (6     14        (56     12        (129

Reclass to Int'l Fixed Income

         (31       (31
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     611        654        950        611        950   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     632        694        1,120        772        1,480   

International Fixed Income ETFs (in millions)

          

Beginning of period assets

     1,904        1,698        1,493        1,506        564   

Inflows/(outflows)

     190        148        (34     491        1,022   

Market appreciation/(depreciation)

     24        58        16        121        (111

Reclass from Currency

         31          31   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     2,118        1,904        1,506        2,118        1,506   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     1,990        1,749        1,536        1,770        1,297   

Alternative Strategy ETFs (in millions)

          

Beginning of period assets

     147        167        243        277        —     

Inflows/(outflows)

     (24     (24     37        (129     296   

Market appreciation/(depreciation)

     (1     4        (3     (26     (19
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     122        147        277        122        277   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     135        159        255        191        157   

Average ETF assets during the period

          

Emerging markets equity ETFs

     39     38     29     37     31

US equity ETFs

     26     28     25     27     21

International developed equity ETFs

     18     18     21     19     22

International fixed income ETFs

     12     11     13     11     12

Currency ETFs

     4     4     10     5     13

Alternative strategy ETFs

     1     1     2     1     1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     100     100     100     100     100
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average ETF advisory fee during the period

          

Alternative strategy ETFs

     0.94     0.94     0.95     0.95     0.95

Emerging markets equity ETFs

     0.67     0.67     0.68     0.67     0.70

International fixed income ETFs

     0.55     0.55     0.55     0.55     0.55

International developed equity ETFs

     0.54     0.54     0.54     0.54     0.54

Currency ETFs

     0.50     0.50     0.49     0.50     0.49

US equity ETFs

     0.35     0.35     0.35     0.35     0.34
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Blended total

     0.54     0.54     0.54     0.54     0.55
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Number of ETFs - end of the period

          

International developed equity ETFs

     18        18        18        18        18   

US equity ETFs

     11        12        12        11        12   

Currency ETFs

     5        7        7        5        7   

International fixed income ETFs

     5        5        4        5        4   

Emerging markets equity ETFs

     5        5        4        5        4   

Alternative strategy ETFs

     2        2        2        2        2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     46        49        47        46        47   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Headcount

     70        70        65        70        65   

Note: Previously issued statistics may be restated due to trade adjustments

Source: Investment Company Institute, Bloomberg, WisdomTree


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 proforma operating income, proforma expenses and proforma pre-tax operating margin. 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 have disclosed our results excluding certain non-operating items including (1) our patent litigation with Research Affiliates LLC; (2) expenses for the WisdomTree ETF shareholder proxy solicitation; (3) advisory costs related to the preparation of our Form 10 for the initial listing of our common stock on NASDAQ; and (4) advisory and other related fees associated with the secondary offering of our common stock in November 2012. Management excludes these items when measuring our financial performance as they are not directly related to our core business of being an ETF sponsor and asset manager.


WISDOMTREE INVESTMENTS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

GAAP to NON-GAAP RECONCILIATION

(in thousands)

(Unaudited)

 

     For the Three Months Ended     For the Year Ended  
     Dec. 31,
2012
    Sept. 30,
2012
    Dec. 31,
2011
    Dec. 31,
2012
    Dec. 31,
2011
 

GAAP total expenses

   $ 18,321      $ 17,128      $ 15,286      $ 73,768      $ 62,068   

Less ETF shareholder proxy

     —          —          —          (3,264     —     

Less patent litigation

     524        (219     (150     (176     (150

Less initial exchange listing and offering

     (353     —          —          (353     (729
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Proforma operating expenses

   $ 18,492      $ 16,909      $ 15,136      $ 69,975      $ 61,189   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP net income

   $ 5,253      $ 4,533      $ 889      $ 11,030      $ 3,092   

Add ETF shareholder proxy

     —          —          —          3,264        —     

Add patent litigation

     (524     219        150        176        150   

Add initial exchange listing and offering

     353        —          —          353        729   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Proforma operating income

   $ 5,082      $ 4,752      $ 1,039      $ 14,823      $ 3,971   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP net income

   $ 5,253      $ 4,533      $ 889      $ 11,030      $ 3,092   

Divide GAAP total revenue

     23,574        21,661        16,175        84,798        65,160   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP pre-tax margin

     22.3     20.9     5.5     13.0     4.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Proforma pre-tax net income

   $ 5,082      $ 4,752      $ 1,039      $ 14,823      $ 3,971   

Divide GAAP total revenue

     23,574        21,661        16,175        84,798        65,160   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Proforma pre-tax operating margin

     21.6     21.9     6.4     17.5     6.1