Exhibit 99.1

WisdomTree Announces Second Quarter 2013 Results

$5.0 billion net inflows in quarter

Net inflow market share 29% in second quarter, 15% first half

Record revenues, up 83% from year ago quarter

Record net income $12.2 million, up 56% from prior quarter

Diluted EPS $0.09

New York, NY – (GlobeNewswire) – July 26, 2013 – WisdomTree Investments, Inc. (NASDAQ: WETF), an exchange-traded fund (“ETF”) sponsor and asset manager, today reported net income of $12.2 million for the second quarter of 2013, or $0.09 per share on a fully diluted basis. This compares to $0.1 million in the second quarter of 2012 and $7.9 million in the first quarter of 2013.

WisdomTree CEO and President Jonathan Steinberg commented, “With $5.0 billion in net inflows for the quarter and nearly $11 billion in the first half of 2013, we continued our positive momentum from the first quarter to achieve a strong second quarter with record market share gains. WisdomTree was the third best asset gatherer across all U.S. mutual fund and ETF complexes in the second quarter according to Morningstar.”

Mr. Steinberg continued, “WisdomTree’s innovative ETF strategies are powering our top-line growth, with our currency hedged equity and domestic equity families leading our net inflows in the second quarter. While growing our existing funds, we are also seeking to bolster and expand upon the success of these strategies by launching new funds. In the second quarter, we listed two new currency hedged equity funds and our first dividend growth ETF.

Mr. Steinberg concluded, “Our robust asset growth is translating into excellent financial results with record revenues and net income in the second quarter. While we believe the ETF industry is still in its early innings of growth, WisdomTree is already proving the efficiency and scale of our business model: we achieved a 33% pre-tax margin on a base of $28.4 billion in average assets.”

Assets Under Management, Net Inflows and Market Share

ETF assets under management (“AUM”) were $29.0 billion at June 30, 2013, up 93.1% from $15.0 billion at June 30, 2012, and up 15.4% from $25.1 billion at March 31, 2013. Net inflows for the second quarter of 2013 were $5.0 billion as compared to $0.3 billion in the second quarter of 2012 and $5.9 billion in the first quarter of 2013. WisdomTree’s market share of industry net inflows was 29.4% in the second quarter of 2013 as compared to 1.4% in the second quarter of 2012 and 10.8% in the first quarter of 2013. For the first six months of 2013, WisdomTree’s market share was 15.2% as compared to 3.4% for the first six months of 2012.

 

1


Summary Operating and Financial Highlights

 

     Three Months Ended     Change From  
     Jun. 30,
2013
    Mar. 31,
2013
    Jun. 30,
2012
    Mar. 31,
2013
    Jun. 30,
2012
 

Operating Highlights (in billions):

          

ETF AUM

   $ 29.0      $ 25.1      $ 15.0        15.4     93.1

ETF net inflows

   $ 5.0      $ 5.9      $ 0.3        (15.8 %)      nm   

Average ETF AUM

   $ 28.4      $ 21.9      $ 15.1        29.4     87.8

Average ETF advisory fee

     0.52     0.54     0.54     (0.02     (0.02

Market share of industry inflows

     29.4     10.8     1.4     +18.6        +28.0   

Financial Highlights (in millions):

          

Total revenues

   $ 37.3      $ 29.3      $ 20.4        27.2     83.1

Net income

   $ 12.2      $ 7.9      $ 0.1        55.9     nm   

Proforma operating income (non-GAAP)

   $ 12.2      $ 7.9      $ 3.1        55.9     290.4

Gross margin1

     74     72     67     +2        +7   

Pre-tax margin

     33     27     1     +6        +32   

Proforma pre-tax margin (non-GAAP)

     33     27     15     +6        +18   

 

     Six Months Ended        
     Jun. 30,
2013
    Jun. 30,
2012
    Change  

Operating Highlights (in billions):

      

ETF AUM

   $ 29.0      $ 15.0        93.1

ETF net inflows

   $ 10.9      $ 2.6        311.6

Average ETF AUM

   $ 25.2      $ 14.7        71.3

Average ETF advisory fee

     0.53     0.54     (0.01

Market share of industry inflows

     15.2     3.4     +11.8   

Financial Highlights (in millions):

      

Total revenues

   $ 66.7      $ 39.6        68.5

Net income

   $ 20.1      $ 1.2        nm   

Proforma operating income (non-GAAP)

   $ 20.1      $ 5.0        302.8

Gross margin1

     73     65     +8   

Pre-tax margin

     30     3     +27   

Proforma pre-tax margin (non-GAAP)

     30     13     +17   

 

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

 

2


Recent Business Developments

 

   

On May 1, 2013, WisdomTree announced the appointment of Ryan Louvar as General Counsel for WisdomTree Funds

 

   

On May 22, 2013, WisdomTree announced the launch of the WisdomTree U.S. Dividend Growth Fund (DGRW)

 

   

On June 13, 2013, WisdomTree announced the listing of 12 additional ETFs on Bolsa Mexicana de Valores

 

   

On June 28, 2013, WisdomTree announced the launch of the WisdomTree Japan Hedged SmallCap Equity Fund (DXJS) and the WisdomTree United Kingdom Hedged Equity Fund (DXPS)

 

   

On July 9, 2013, WisdomTree announced 6 ETFs filed notifications with the Financial Services Agency of Japan

 

   

On July 16, 2013, WisdomTree announced the WisdomTree Emerging Markets Local Debt Fund (ELD) received an NAIC Designation

 

   

On July 24, 2013, WisdomTree announced Win Neuger joined the Board of Directors

 

   

On July 25, 2013, WisdomTree announced the launch of the WisdomTree U.S. SmallCap Dividend Growth Fund (DGRS)

Performance

40% of the $25.8 billion invested in our 35 equity ETFs on June 30, 2013 were in funds that, since their respective inceptions, outperformed their capitalization-weighted or competitive benchmarks through that date. 51%, or 18 of our 35 equity ETFs, outperformed their capitalization-weighted or competitive benchmarks since their respective inceptions through June 30, 2013. For more information about WisdomTree ETFs including standardized performance, please click here or visit www.wisdomtree.com.

Second Quarter Financial Discussion

Revenues

Total revenues increased 83.1% to a record $37.3 million as compared to the second quarter of 2012 and 27.2% compared to the first quarter of 2013 primarily due to higher average AUM as a result of $5.0 billion of net inflows into our ETFs. Our average advisory fee earned was 0.52% as compared to 0.54% for the second quarter of 2012 and first quarter of 2013 due to the majority of our inflows arising from our Japan Hedged Equity Fund (DXJ), which is priced at 0.48%.

Margins

Our gross margin, which is our total revenues less fund management and administration expenses and third party sharing arrangements, was 74% in the second quarter of 2013 as compared to 67% in the second quarter of 2012 and 72% in the first quarter of 2013. Higher AUM and the end of our joint venture with BNY Mellon were the primary drivers for the higher gross margin.

 

3


Our pre-tax margin was 33% in the second quarter of 2013 as compared to 1% (or 15% proforma) in the second quarter of 2012 and 27% in the first quarter of 2013 reflecting the operating scale in our business model.

Expenses

Total expenses increased 23.8% to $25.1 million from $20.3 million in the second quarter of 2012 and increased 16.8% from $21.5 million in the first quarter of 2013. Included in the prior periods were non-operating items related to patent litigation and ETF shareholder proxy.

 

     Three Months Ended     Change from  
(in thousands)    Jun. 30,
2013
     Mar. 31,
2013
     Jun. 30,
2012
    Mar. 31,
2013
    Jun. 30,
2012
 

Total expenses

   $ 25,089       $ 21,487       $ 20,264        16.8     23.8

Patent litigation, net

     —           —           191       

ETF shareholder proxy

     —           —           (3,198    
  

 

 

    

 

 

    

 

 

     

Proforma operating expenses (non-GAAP)

   $ 25,089       $ 21,487       $ 17,257        16.8     45.4

 

 

Compensation and benefits expense increased 72.5% to $9.4 million compared to the second quarter of 2012. This increase was primarily due to higher accrued incentive compensation due to our record level of net inflows. In addition, we incurred higher stock based compensation due to equity awards granted to our employees as part of year-end compensation. Lastly, we incurred higher headcount related expenses. Our headcount at the end of the second quarter of 2013 was 79 compared to 66 at the end of the second quarter of 2012.

Compensation and benefits expense increased 26.3% compared to the first quarter of 2013 primarily due to higher accrued incentive compensation due to our strong results.

 

 

Fund management and administration expenses increased 63.6% to $9.1 million compared to the second quarter of 2012. At the end of 2012, we ended our joint venture with BNY Mellon. As a result, we began to record certain operating costs related to our currency and fixed income ETFs, which were previously recognized by BNY Mellon as part of the joint venture. This resulted in approximately $0.6 million in higher costs, while eliminating the expense of the third-party sharing arrangement. Higher average AUM resulted in a $2.7 million increase in portfolio management, fund administration, accounting, index licensing, regulatory and distribution fees. We also incurred $0.3 million in higher printing related fees due to an increase in the number of holders of our ETFs.

Fund management and administration expenses increased 10.7% compared to the first quarter of 2013 primarily due to higher average AUM.

 

4


 

Marketing and advertising expenses increased 41.9% to $2.2 million compared to the second quarter of 2012 and increased 13.4% compared to the first quarter of 2013 primarily due to higher levels of advertising related activities to support our growth.

 

 

Sales and business development expenses increased 80.5% to $1.5 million compared to the second quarter of 2012 primarily due to new product development related activities as well as higher levels of spending for sales related initiatives.

Sales and business development expenses decreased 15.6% compared to the first quarter of 2013 primarily due to lower level of sales related spending.

 

 

Professional and consulting fees decreased 53.1% to $0.7 million compared to the second quarter of 2012 primarily due to lower variable stock based compensation, which ended as of the end of 2012, partly offset by higher corporate consulting related fees. Professional and consulting fees increased slightly compared to the first quarter of 2013.

 

 

Occupancy, communication and equipment expense increased 57.6% to $0.6 million compared to the second quarter of 2012 and increased 56.8% compared to the first quarter of 2013. This increase was primarily due to $0.2 million in commercial rent tax expense payable to NYC on our office space since 2008.

 

 

Third-party sharing arrangements expense declined 65.2% to $0.4 million compared to the second quarter of 2012 due to the end of our joint venture with BNY Mellon discussed above.

Third-party sharing arrangements expense increased $0.3 million compared to the first quarter of 2013 primarily due to higher inflows raised by our marketing agent in Latin America.

 

 

Other expenses increased 42.8% to $1.1 million compared to the second quarter of 2012 and increased 23.2% compared to the first quarter of 2013 primarily due to higher general and administrative expenses.

Balance Sheet

As of June 30, 2013, WisdomTree had total assets of $97.1 million which consisted primarily of cash and cash equivalents of $70.7 million and investments of $11.4 million. There were approximately 128.0 million shares of common stock issued as of June 30, 2013. Fully diluted weighted average shares outstanding was approximately 140 million.

Conference Call

WisdomTree will discuss its results and operational highlights during a conference call on Friday, July 26, 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.

 

5


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;

 

   

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.

 

6


   

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 amount of our revenue from products invested in securities of Japanese 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 between the Japanese Yen and the U.S. Dollar.

 

   

We derive a majority of our revenue from a limited number of products—in particular one fund, WisdomTree Japan Hedged Equity Fund, that accounted for 34.3% of our ETF AUM at June 30, 2013—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.

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, 2012.

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.

 

7


About WisdomTree

WisdomTree Investments, Inc. is a New York-based exchange-traded fund (“ETF”) sponsor and asset manager. WisdomTree currently offers 51 ETFs across Equities, Fixed Income, Currency 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 $31.6 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)

(Unaudited)

 

     Three Months Ended     % Change From     Six Months Ended  
     Jun. 30,
2013
     Mar. 31,
2013
     Jun. 30,
2012
    Mar. 31,
2013
    Jun. 30,
2012
    Jun. 30,
2013
     Jun. 30,
2012
     %
Change
 

Revenues

                    

ETF advisory fees

   $ 37,101       $ 29,153       $ 20,230        27.3     83.4   $ 66,254       $ 39,205         69.0

Other income

     230         188         163        22.3     41.1     418         358         16.8
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total revenues

     37,331         29,341         20,393        27.2     83.1     66,672         39,563         68.5

Expenses

                    

Compensation and benefits

     9,447         7,482         5,477        26.3     72.5     16,929         11,334         49.4

Fund management and administration

     9,106         8,223         5,567        10.7     63.6     17,329         11,006         57.5

Marketing and advertising

     2,196         1,937         1,548        13.4     41.9     4,133         2,874         43.8

Sales and business development

     1,520         1,801         842        -15.6     80.5     3,321         1,702         95.1

Professional and consulting fees

     657         613         1,401        7.2     -53.1     1,270         2,510         -49.4

Occupancy, communication and equipment

     591         377         375        56.8     57.6     968         676         43.2

Depreciation and amortization

     83         82         75        1.2     10.7     165         146         13.0

Third party sharing arrangements

     428         111         1,229        285.6     -65.2     539         2,974         -81.9

Other

     1,061         861         743        23.2     42.8     1,922         1,352         42.2

ETF shareholder proxy

     —           —           3,198        n/a        n/a        —           3,264         n/a   

Patent litigation, net

     —           —           (191     n/a        n/a        —           481         n/a   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total expenses

     25,089         21,487         20,264        16.8     23.8     46,576         38,319         21.5
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Income before provision for income taxes

     12,242         7,854         129        55.9     n/a        20,096         1,244         n/a   

Provision for income taxes

     —           —           —              —           —        
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Net income

   $ 12,242       $ 7,854       $ 129        55.9     n/a      $ 20,096       $ 1,244         n/a   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Net income per share - basic

   $ 0.10       $ 0.06       $ 0.00          $ 0.16       $ 0.01      

Net income per share - diluted

   $ 0.09       $ 0.06       $ 0.00          $ 0.14       $ 0.01      

Weighted average common shares - basic

     125,771         125,436         121,920            125,605         120,551      

Weighted average common shares - diluted

     140,081         139,650         138,477            139,716         137,748      


WISDOMTREE INVESTMENTS, INC.

NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(Unaudited)

 

     Three Months Ended     Six Months Ended  
     Jun. 30,      Mar. 31,      Jun. 30,     Jun. 30,      Jun. 30,  
     2013      2013      2012     2013      2012  

Revenues

             

ETF advisory fees

   $ 37,101       $ 29,153       $ 20,230      $ 66,254       $ 39,205   

Other income

     230         188         163        418         358   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total revenues

     37,331         29,341         20,393        66,672         39,563   

Operating expenses

             

Compensation and benefits

     9,447         7,482         5,477        16,929         11,334   

Fund management and administration

     9,106         8,223         5,567        17,329         11,006   

Marketing and advertising

     2,196         1,937         1,548        4,133         2,874   

Sales and business development

     1,520         1,801         842        3,321         1,702   

Professional and consulting fees

     657         613         1,401        1,270         2,510   

Occupancy, communication and equipment

     591         377         375        968         676   

Depreciation and amortization

     83         82         75        165         146   

Third party sharing arrangements

     428         111         1,229        539         2,974   

Other

     1,061         861         743        1,922         1,352   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total proforma operating expenses

     25,089         21,487         17,257        46,576         34,574   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Proforma operating income

     12,242         7,854         3,136        20,096         4,989   

ETF shareholder proxy

     —           —           3,198        —           3,264   

Patent litigation, net

     —           —           (191     —           481   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Income before provision for income taxes

     12,242         7,854         129        20,096         1,244   

Provision for income taxes

     —           —           —          —           —     
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net income

   $ 12,242       $ 7,854       $ 129      $ 20,096       $ 1,244   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 


WISDOMTREE INVESTMENTS, INC.

CONSOLIDATED BALANCE SHEET

(in thousands, except per share amount)

 

     June 30,     December 31,  
     2013     2012  
     (Unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 70,733      $ 41,246   

Accounts receivable

     12,460        9,348   

Other current assets

     2,015        1,273   
  

 

 

   

 

 

 

Total current assets

     85,208        51,867   

Fixed assets, net

     438        480   

Investments

     11,375        11,036   

Other noncurrent assets

     51        42   
  

 

 

   

 

 

 

Total assets

   $ 97,072      $ 63,425   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

LIABILITIES

    

Current liabilities:

    

Fund management and administration payable

   $ 10,671      $ 6,924   

Compensation and benefits payable

     7,232        2,156   

Accounts payable and other liabilities

     3,783        3,272   
  

 

 

   

 

 

 

Total current liabilities

     21,686        12,352   

Other noncurrent liabilities

     —          13   
  

 

 

   

 

 

 

Total liabilities

     21,686        12,365   
  

 

 

   

 

 

 

STOCKHOLDERS’ EQUITY

    

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

    

issued: 128,017 and 126,554

     1,280        1,265   

outstanding: 125,978 and 125,272

    

Additional paid-in capital

     182,041        177,826   

Accumulated deficit

     (107,935     (128,031
  

 

 

   

 

 

 

Total stockholders’ equity

     75,386        51,060   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 97,072      $ 63,425   
  

 

 

   

 

 

 


WISDOMTREE INVESTMENTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

     Six Months Ended  
     June 30,     June 30,  
     2013     2012  

Cash flows from operating activities

    

Net income

   $ 20,096      $ 1,244   

Non-cash items included in net income:

    

Depreciation and amortization

     165        146   

Stock-based compensation

     3,405        4,033   

Deferred rent

     (69     (71

Accretion to interest income and other

     94        80   

Changes in operating assets and liabilities:

    

Accounts receivable

     (3,112     (1,980

Other assets

     (761     (497

Fund management and administration payable

     3,747        2,499   

Compensation and benefits payable

     5,076        (1,362

Accounts payable and other liabilities

     568        4,438   
  

 

 

   

 

 

 

Net cash provided by operating activities

     29,209        8,530   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchase of fixed assets

     (123     (125

Purchase of investments

     (2,943     (5,241

Proceeds from the redemption of investments

     2,520        4,437   
  

 

 

   

 

 

 

Net cash used in investing activities

     (546     (929
  

 

 

   

 

 

 

Cash flows from financing activities

    

Net proceeds from sale of common stock

     —          4,329   

Shares repurchased

     (249     (1,033

Proceeds from exercise of stock options

     1,073        2,773   
  

 

 

   

 

 

 

Net cash provided by financing activities

     824        6,069   
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     29,487        13,670   

Cash and cash equivalents - beginning of period

     41,246        25,630   
  

 

 

   

 

 

 

Cash and cash equivalents - end of period

   $ 70,733      $ 39,300   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information

    

Cash paid for income taxes

   $ 34      $ 16   
  

 

 

   

 

 

 


WisdomTree Investments, Inc.

Key Operating Statistics (Unaudited)

 

     Three Months Ended     For the Six Months Ended  
     June 30,
2013
    March 31,
2013
    June 30,
2012
    June 30,
2013
    June 30,
2012
 

Total ETFs (in millions)

          

Beginning of period assets

     25,103        18,286        15,691        18,286        12,182   

Inflows/(outflows)

     4,962        5,893        338        10,855        2,637   

Market appreciation/(depreciation)

     (1,090     924        (1,025     (166     185   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     28,975        25,103        15,004        28,975        15,004   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     28,390        21,934        15,116        25,162        14,690   

ETF Industry and Market Share (in billions)

          

ETF industry net inflows

     16.9        54.4        25.0        71.3        78.2   

WisdomTree market share of industry inflows

     29.4     10.8     1.4     15.2     3.4

International Developed Equity ETFs (in millions)

          

Beginning of period assets

     8,525        3,732        2,964        3,732        2,407   

Inflows/(outflows)

     4,433        4,210        137        8,643        439   

Market appreciation/(depreciation)

     (55     583        (255     528        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     12,903        8,525        2,846        12,903        2,846   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     11,444        6,072        2,853        8,758        2,767   

Emerging Markets Equity ETFs (in millions)

          

Beginning of period assets

     8,071        7,332        5,594        7,332        3,613   

Inflows/(outflows)

     (51     876        462        825        1,860   

Market appreciation/(depreciation)

     (848     (137     (626     (985     (43
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     7,172        8,071        5,430        7,172        5,430   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     7,964        7,905        5,398        7,934        5,089   

US Equity ETFs (in millions)

          

Beginning of period assets

     5,161        4,371        4,275        4,371        3,429   

Inflows/(outflows)

     547        291        (113     838        452   

Market appreciation/(depreciation)

     69        499        (68     568        213   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     5,777        5,161        4,094        5,777        4,094   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     5,541        4,749        4,101        5,145        4,045   

Fixed Income ETFs (in millions)

          

Beginning of period assets

     2,600        2,118        1,735        2,118        1,506   

Inflows/(outflows)

     78        508        (8     586        153   

Market appreciation/(depreciation)

     (241     (26     (29     (267     39   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     2,437        2,600        1,698        2,437        1,698   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     2,700        2,453        1,716        2,577        1,671   

Currency ETFs (in millions)

          

Beginning of period assets

     626        611        881        611        950   

Inflows/(outflows)

     (62     12        (82     (50     (186

Market appreciation/(depreciation)

     (17     3        (30     (14     5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     547        626        769        547        769   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     607        637        828        622        881   

Alternative Strategy ETFs (in millions)

          

Beginning of period assets

     120        122        242        122        277   

Inflows/(outflows)

     17        (4     (58     13        (81

Market appreciation/(depreciation)

     2        2        (17     4        (29
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     139        120        167        139        167   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     134        118        220        126        237   

Average ETF assets during the period

          

International developed equity ETFs

     40     27     19     35     19

Emerging markets equity ETFs

     28     36     36     32     35

US equity ETFs

     20     22     27     20     27

Fixed income ETFs

     10     11     11     10     11

Currency ETFs

     2     3     6     2     6

Alternative strategy ETFs

     0     1     1     1     2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     100     100     100     100     100
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average ETF advisory fee during the period

          

Alternative strategy ETFs

     0.94     0.94     0.95     0.94     0.95

Emerging markets equity ETFs

     0.66     0.67     0.66     0.66     0.64

Fixed income ETFs

     0.55     0.55     0.55     0.55     0.55

Currency ETFs

     0.51     0.51     0.50     0.51     0.53

International developed equity ETFs

     0.50     0.52     0.54     0.51     0.54

US equity ETFs

     0.35     0.35     0.35     0.35     0.35
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Blended total

     0.52     0.54     0.54     0.53     0.54
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Number of ETFs - end of the period

          

International developed equity ETFs

     20        18        18        20        18   

US equity ETFs

     12        11        12        12        12   

Fixed income ETFs

     6        6        5        6        5   

Currency ETFs

     5        5        7        5        7   

Emerging markets equity ETFs

     5        5        4        5        4   

Alternative strategy ETFs

     2        2        2        2        2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     50        47        48        50        48   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Headcount

     79        72        66        79        66   

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; and (2) expenses for the WisdomTree ETF shareholder proxy solicitation; 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 Six Months Ended  
     Jun. 30,     Mar. 31,     Jun. 30,     Jun. 30,     Jun. 30,  
     2013     2013     2012     2013     2012  

GAAP total expenses

   $ 25,089      $ 21,487      $ 20,264      $ 46,576      $ 38,319   

ETF shareholder proxy

     —          —          (3,198     —          (3,264

Patent litigation, net

     —          —          191        —          (481
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Proforma operating expenses

   $ 25,089      $ 21,487      $ 17,257      $ 46,576      $ 34,574   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP net income

   $ 12,242      $ 7,854      $ 129      $ 20,096      $ 1,244   

ETF shareholder proxy

     —          —          3,198        —          3,264   

Patent litigation, net

     —          —          (191     —          481   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Proforma operating income

   $ 12,242      $ 7,854      $ 3,136      $ 20,096      $ 4,989   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP net income

   $ 12,242      $ 7,854      $ 129      $ 20,096      $ 1,244   

Divide GAAP total revenue

     37,331        29,341        20,393        66,672        39,563   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP pre-tax margin

     32.8     26.8     0.6     30.1     3.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Proforma pre-tax net income

   $ 12,242      $ 7,854      $ 3,136      $ 20,096      $ 4,989   

Divide GAAP total revenue

     37,331        29,341        20,393        66,672        39,563   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Proforma pre-tax operating margin

     32.8     26.8     15.4     30.1     12.6