EXHIBIT 99.1

WisdomTree Announces Fourth Quarter and Year End 2014 Results

$0.07 diluted net income EPS for the quarter and $0.44 for the year

$4.5 billion fourth quarter inflows and $5.1 billion for the year

Declares $0.08 quarterly dividend

New York, NY – (GlobeNewswire) – February 6, 2015 – WisdomTree Investments, Inc. (NASDAQ: WETF), an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset manager today reported net income of $9.6 million or $0.07 per diluted EPS in the fourth quarter. Pre-tax income was $16.7 million in the fourth quarter, an increase of 1.2% from the fourth quarter of 2013 and down 17.7% from the third quarter of 2014. Included in the quarter was a loss of $1.9 million, or $0.01 per diluted EPS, associated with the Company’s European listed ETP business, which was acquired in April 2014. Pre-tax income is comparable to previous periods since the Company did not record income tax expense prior to 2014.

For the year, net income was $61.1 million or $0.44 per diluted EPS. Pre-tax income was $73.5 million, an increase of 42.7% from the prior year. Excluding the results of our European listed ETP business, pre-tax income increased 52.6% from the prior year.

WisdomTree CEO and President Jonathan Steinberg said,

“Before discussing our strong fourth quarter and year of accomplishments, I’d first like to comment on WisdomTree’s larger opportunity. The success of the $2 trillion ETF market is undeniable. Through greater investor education and awareness we are confident its growth will continue. Don’t be distracted by old debates like passive versus active, or new terminology like smart beta and liquid alts. The simple truth is that the ETF structure is just that, a structure by which you can access numerous asset classes and strategies. But it is a structure with the characteristics central to a positive investing experience: transparency, liquidity and tax efficiency. It is a matter of fact, not opinion, that ETFs are more competitive than traditional investment products in these crucial respects. The industry’s record $239 billion in 2014 annual inflows proves these truths are becoming more widely recognized every day.”

“WisdomTree’s $4.5 billion of net inflows in the fourth quarter, followed by another $4.6 billion year-to-date, demonstrate our momentum. WisdomTree’s accomplishments throughout 2014 – including the seamless back-office transition to State Street, the efficient acquisition and rollout of local products in Europe, additions to our U.S. product set and staff, and the implementation of a dividend and stock buyback to our capital management program – demonstrate our execution and growing resources.”

“In the fourth quarter we reported record revenues of $49.6 million and a strong balance sheet with cash and investments of $179 million. Our growing scale, cash flow and overall resources will allow us to exploit the tremendous opportunities we see ahead.”


Summary Operating and Financial Highlights

 

     Three Months Ended     Change From  
     Dec. 31,     Sept. 30,     Dec. 31,     Sept. 30,     Dec. 31,  
Operating Highlights    2014     2014     2013     2014     2013  

US listed ETFs ($, in billions):

          

AUM

   $ 39.3      $ 35.8      $ 34.9        9.7     12.6

Net inflows

   $ 4.5      $ 0.7      $ 2.3        501.1     94.8

Average AUM

   $ 37.7      $ 35.6      $ 33.1        6.0     13.9

Average advisory fee

     0.52     0.52     0.51     —          +0.01   

Market share of industry inflows

     3.8     1.5     3.9     +2.3        -0.1   

European listed ETPs ($, in millions):

          

AUM

   $ 181.2      $ 123.2        —          47.1     —     

Net inflows

   $ 98.2      $ 19.2        —          410.9     —     

Average advisory fee

     0.73     0.79     —          -0.06        —     

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

          

Consolidated Results:

          

Total revenues

   $ 49.6      $ 47.1      $ 43.2        5.3     14.9

Pre-tax income

   $ 16.7      $ 20.3      $ 16.5        -17.7     1.2

Net income

   $ 9.6      $ 10.6      $ 16.5        -9.4     -41.6

Diluted earnings per share

   $ 0.07      $ 0.08      $ 0.12      ($ 0.01   ($ 0.05

Pre-tax margin

     33.6     43.0     38.2     -9.4        -4.6   

US listed ETFs:

          

Total revenues

   $ 49.2      $ 46.9      $ 43.2        5.0     14.0

Pre-tax income

   $ 18.6      $ 21.8      $ 16.5        -14.7     13.0

Gross margin1 (non-GAAP)

     82.5     82.2     78.2     +0.3        +4.3   

Pre-tax margin

     37.8     46.6     38.2     -8.8        -0.4   

 

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

 

2


     Year Ended Dec. 31,        
Operating Highlights    2014     2013     Change  

US listed ETFs ($, in billions):

      

AUM

   $ 39.3      $ 34.9        12.6

Net inflows

   $ 5.1      $ 14.3        (64.6 %) 

Average AUM

   $ 35.3      $ 28.5        24.0

Average advisory fee

     0.52     0.52     —     

Market share of industry inflows

     2.1     8.0     -5.9   

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

      

Consolidated Results:

      

Total revenues

   $ 183.8      $ 149.5        22.9

Pre-tax income

   $ 73.5      $ 51.5        42.7

Net income

   $ 61.1      $ 51.5        18.5

Diluted earnings per share

   $ 0.44      $ 0.37        +0.07   

Pre-tax margin

     40.0     34.5     +5.5   

US listed ETFs:

      

Total revenues

   $ 182.9      $ 149.5        22.4

Pre-tax income

   $ 78.6      $ 51.5        52.6

Gross margin2 (non-GAAP)

     81.5     75.6     +5.9   

Pre-tax margin

     43.0     34.5     +8.5   

 

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

 

3


Recent Business Developments

 

    On November 25, 2014, the WisdomTree Equity Income Fund (DHS) Surpassed $1 billion in assets

 

    On December 10, 2014, the Company launched the Emerging Markets ex-State-Owned-Enterprises Fund (XSOE)

 

    On December 18, 2014, the WisdomTree Europe Hedged Equity Fund (HEDJ) Surpassed $5 billion in assets

 

    On January 22, 2015, WisdomTree cross-listed 4 additional ETFs on the Bolsa Mexicana de Valores

 

    On January 26, 2015, WisdomTree added four additional ETFs to Schwab ETF OneSource™: WisdomTree Barclays U.S. Aggregate Bond Zero Duration Fund (AGZD), WisdomTree BofA Merrill Lynch High Yield Bond Zero Duration Fund (HYZD), WisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU), WisdomTree Global ex-U.S. Dividend Growth Fund (DNL)

 

    WisdomTree Europe:

 

    Launched two WisdomTree UCITS ETFs on the London Stock Exchange on November 19, 2014; and launched six WisdomTree UCITS ETFs on the Borsa Italiana on January 19, 2015

 

    Launched 12 Boost ETPs on Deutche Boerse’s Xetra on November 17, 2014; launched one fixed income ETP on the London Stock Exchange on November 26, 2014; and launched seven ETPs on the Borsa Italiana between December 10, 2014 and January 8, 2015

Assets Under Management and Net Inflows

US listed ETF assets under management (“AUM”) were $39.3 billion at December 31, 2014, up 12.6% from December 31, 2013 primarily due to inflow levels. US listed AUM was up 9.7% from September 30, 2014 primarily due to $4.5 billion of net inflows.

European listed AUM was $181.2 million, up 47.1% from $123.2 million at September 30, 2014 primarily due to $98.2 million of net inflows partly offset by $40.2 million of negative market movement.

Performance

In evaluating the performance of our US listed equity, fixed income and alternative ETFs against actively managed and index based mutual funds and ETFs, 87% of the $38.5 billion invested in our ETFs and 64% (33 of 52) of our ETFs outperformed their comparable Morningstar average since inception as of December 31, 2014.

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

 

4


Fourth Quarter Financial Discussion

Revenues

Total revenues increased 14.9% from the fourth quarter of 2013 and 5.3% compared to the third quarter of 2014 to $49.6 million primarily due to higher average AUM from strong inflows. Revenues from our European listed ETPs, which were acquired in April 2014, increased to $0.4 million from $0.2 million in the third quarter of 2014 primarily due to higher inflows for the Boost branded ETPs and the launch of WisdomTree branded ETFs in the quarter. Our average advisory fee for our US listed ETFs increased to 0.52% as compared to 0.51% for the fourth quarter of 2013 due to change in the mix of our AUM and remained the same at 0.52% as compared to the third quarter of 2014.

Margins

Gross margin for our US listed ETFs, which is our total revenues less fund management and administration expenses and third party sharing arrangements, was 82.5% in the fourth quarter of 2014 as compared to 78.2% in the fourth quarter of 2013 and 82.2% in the third quarter of 2014. The increase was primarily due to beneficial pricing changes for our fund accounting, administration and custody services, which took effect in April 2014.

Pre-tax margin was 33.6% in the fourth quarter of 2014 as compared to 38.2% in the fourth quarter of 2013 and 43.0% in the third quarter of 2014. Pre-tax margin for our US listed ETFs was 37.8% in the quarter.

Expenses

Total expenses increased 23.3% from the fourth quarter of 2013 and 22.6% compared to the third quarter of 2014 to $32.9 million. Included in the quarter was $2.3 million of expenses associated with our European listed ETPs.

 

  Compensation and benefits expense increased 46.4% from the fourth quarter of 2013 to $14.1 million due to higher accrued incentive compensation due to our inflow levels in the fourth quarter as well as higher headcount related expenses to support our growth. Included in the quarter was $1.0 million in compensation costs for employees associated with our European listed ETPs. Our headcount was 101 in the US and 124 globally at the end of 2014.

 

  Fund management and administration expense in the fourth quarter was relatively unchanged with the fourth quarter of 2013 at $8.9 million as costs associated with higher average AUM were offset by lower fees as a result of changing our fund accounting, administration and custody service provider. This expense increased 5.5% compared to the third quarter of 2014 due to US regulatory expenses associated with higher inflow levels and additional costs for the WisdomTree branded ETFs which were launched in Europe in the fourth quarter. We had 70 US listed ETFs and 56 European listed ETPs at the end of 2014.

 

5


  Marketing and advertising expense increased 33.8% from the fourth quarter of 2013 to $2.9 million primarily due to higher levels of advertising related activities to support our growth. This expense decreased 14.1% from the third quarter of 2014 due to lower levels of advertising related activities.

 

  Sales and business development expense increased 3.6% from the fourth quarter of 2013 and 49.6% from the third quarter of 2014 to $1.9 million primarily due to higher spending for sales and product development related initiatives.

 

  Professional and consulting fees increased to $2.6 million in the fourth quarter of 2014, an increase of $1.6 million from the fourth quarter of 2013 and $1.2 million from the third quarter of 2014 primarily due to strategic consulting services.

 

  Occupancy, communication and equipment expense decreased 13.7% from the fourth quarter of 2013 to $0.9 million. At the end of the third quarter of 2013, we began to pay for additional office space which began to occupy in January 2014. This expense was relatively unchanged compared to the third quarter of 2014.

 

  Depreciation and amortization expense was relatively unchanged at $0.2 million for the fourth quarter of 2014 and 2013 as well as the third quarter of 2014.

 

  Third-party sharing arrangements expense decreased 38.0% to $0.3 million in the fourth quarter of 2014 as compared to the fourth quarter of 2013 primarily due to lower fees to our third party marketing agent in Latin America. This expense increased 50.8% compared to the third quarter of 2014 due to fees for listing our ETFs on a third party platform.

 

  Other expenses decreased 23.4% compared to the fourth quarter of 2013 and 2.0% compared to the third quarter of 2014 due to lower general and administrative expenses.

 

  Income tax expense was $7.1 million for the fourth quarter of 2014. The effective tax rate on our US listed ETF business was 38.3% and our overall effective tax rate was 42.3% 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. We did not record income tax expense in the fourth quarter of 2013.

Balance Sheet

As of December 31, 2014, the Company had total assets of $220.8 million which consisted primarily of cash and cash equivalents of $165.3 million and investments of $14.0 million. There were approximately 133.4 million shares of common stock outstanding as of December 31, 2014. Fully diluted weighted average shares outstanding were 138.8 million for the fourth quarter.

 

6


Quarterly Dividend

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 March 4, 2015 to stockholders of record as of the close of business on February 18, 2015.

Conference Call

WisdomTree will discuss its results and operational highlights during a conference call on Friday, February 6, 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;

 

7


    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:

 

    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 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.

 

    Most of our assets under management 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 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 approximately 30% of our ETF AUM – 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.

 

8


    Our ETPs and 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 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, 2013.

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 $44.6 billion in assets under management globally.

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

 

Contact Information:

WisdomTree Investments, Inc.

Stuart Bell / Jessica Zaloom

+1.917.267.3702 / +1.917.267.3735

sbell@wisdomtree.com / jzaloom@wisdomtree.com

 

9


WISDOMTREE INVESTMENTS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended      % Change From     Year Ended  
     Dec. 31,      Sep. 30,      Dec. 31,      Sep. 30,     Dec. 31,     Dec. 31,      Dec. 31,      %  
     2014      2014      2013      2014     2013     2014      2013      Change  

Revenues

                     

Advisory fees

   $ 49,327       $ 46,942       $ 42,903         5.1     15.0   $ 182,816       $ 148,594         23.0

Other income

     273         172         263         58.7     3.8     946         874         8.2
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total revenues

     49,600         47,114         43,166         5.3     14.9     183,762         149,468         22.9

Expenses

                     

Compensation and benefits

     14,099         9,990         9,633         41.1     46.4     40,995         36,210         13.2

Fund management and administration

     8,932         8,465         8,953         5.5     -0.2     34,383         35,076         -2.0

Marketing and advertising

     2,869         3,341         2,145         -14.1     33.8     11,514         8,309         38.6

Sales and business development

     1,914         1,279         1,848         49.6     3.6     6,221         6,474         -3.9

Professional and consulting fees

     2,560         1,383         936         85.1     173.5     7,578         2,748         175.8

Occupancy, communication and equipment

     943         882         1,093         6.9     -13.7     3,578         2,784         28.5

Depreciation and amortization

     221         207         190         6.8     16.3     821         439         87.0

Third party sharing arrangements

     282         187         455         50.8     -38.0     594         1,368         -56.6

Other

     1,101         1,123         1,437         -2.0     -23.4     4,530         4,523         0.2
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total expenses

     32,921         26,857         26,690         22.6     23.3     110,214         97,931         12.5
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Income before taxes

     16,679         20,257         16,476         -17.7     1.2     73,548         51,537         42.7

Income tax expense

     7,057         9,634         —           —          —          12,497         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Net income

   $ 9,622       $ 10,623       $ 16,476         -9.4     -41.6   $ 61,051       $ 51,537         18.5
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Income before taxes per share - basic

   $ 0.13       $ 0.15       $ 0.13           $ 0.56       $ 0.41      

Income before taxes per share - diluted

   $ 0.12       $ 0.15       $ 0.12           $ 0.53       $ 0.37      

Net income per share - basic

   $ 0.07       $ 0.08       $ 0.13           $ 0.46       $ 0.41      

Net income per share - diluted

   $ 0.07       $ 0.08       $ 0.12           $ 0.44       $ 0.37      

Weighted average common shares - basic

     132,816         131,778         128,851             131,770         126,651      

Weighted average common shares - diluted

     138,787         138,346         140,065             138,551         139,797      


WISDOMTREE INVESTMENTS, INC.

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(Unaudited)

 

     US
Listed
Business
Q4/14
    European
Listed
Business
Q4/14
    Total
Q4/14
    US Listed Business  
                                % Change From  
           Q4/14      Q3/14      Q4/13      Q3/14     Q4/13  

Revenues

                   

Advisory fees

   $ 48,966      $ 361      $ 49,327      $ 48,966       $ 46,659       $ 42,903         4.9     14.1

Other income

     243        30        273        243         224         263         8.5     -7.6
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total revenues

     49,209        391        49,600        49,209         46,883         43,166         5.0     14.0

Expenses

                   

Compensation and benefits

     13,127        972        14,099        13,127         9,250         9,633         41.9     36.3

Fund management and administration

     8,334        598        8,932        8,334         8,139         8,953         2.4     -6.9

Marketing and advertising

     2,696        173        2,869        2,696         3,244         2,145         -16.9     25.7

Sales and business development

     1,620        294        1,914        1,620         1,185         1,848         36.7     -12.3

Professional and consulting fees

     2,456        104        2,560        2,456         945         936         159.9     162.4

Occupancy, communication and equipment

     850        93        943        850         809         1,093         5.1     -22.2

Depreciation and amortization

     219        2        221        219         206         190         6.3     15.3

Third party sharing arrangements

     282        —          282        282         187         455         50.8     -38.0

Other

     1,007        94        1,101        1,007         1,088         1,437         -7.4     -29.9
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total expenses

     30,591        2,330        32,921        30,591         25,053         26,690         22.1     14.6
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Income/(loss) before taxes

     18,618        (1,939     16,679        18,618         21,830         16,476         -14.7     13.0

Income tax expense/(benefit)

     7,131        (74     7,057        7,131         9,662         —           -26.2     n/a   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net income/(loss)

   $ 11,487      $ (1,865   $ 9,622      $ 11,487       $ 12,168       $ 16,476         -5.6     -30.3
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Pretax margin

     37.8       33.6             

Gross margin

     82.5       81.4             


WISDOMTREE INVESTMENTS, INC.

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(Unaudited)

 

     US
Listed
Business
12M/14
    European
Listed
Business
12M/14
         

 

US Listed Business

 
         Total
12M/14
    12M/14      12M/13      %
Change
 

Revenues

              

Advisory fees

   $ 181,987      $ 829      $ 182,816      $ 181,987       $ 148,594         22

Other income

     960        (14     946        960         874         10
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total revenues

  182,947      815      183,762      182,947      149,468      22

Expenses

Compensation and benefits

  38,758      2,237      40,995      38,758      36,210      7

Fund management and administration

  33,266      1,117      34,383      33,266      35,076      -5

Marketing and advertising

  11,193      321      11,514      11,193      8,309      35

Sales and business development

  5,759      462      6,221      5,759      6,474      -11

Professional and consulting fees

  6,222      1,356      7,578      6,222      2,748      126

Occupancy, communication and equipment

  3,366      212      3,578      3,366      2,784      21

Depreciation and amortization

  816      5      821      816      439      86

Third party sharing arrangements

  594      —        594      594      1,368      -57

Other

  4,342      188      4,530      4,342      4,523      -4
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total expenses

  104,316      5,898      110,214      104,316      97,931      7
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Income/(loss) before taxes

  78,631      (5,083   73,548      78,631      51,537      53

Income tax expense/(benefit)

  12,941      (444   12,497      12,941      —        n/a   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Net income/(loss)

$ 65,690    $ (4,639 $ 61,051    $ 65,690    $ 51,537      27
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Pretax margin

  43.0   40.0

Gross margin

  81.5   81.0


WISDOMTREE INVESTMENTS, INC.

CONSOLIDATED BALANCE SHEET

(in thousands, except per share amounts)

 

     December 31,
2014
    December 31,
2013
 
     (Unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 165,284      $ 104,316   

Accounts receivable

     18,176        17,591   

Deferred tax asset, net

     3,872        —     

Other current assets

     1,708        1,320   
  

 

 

   

 

 

 

Total current assets

     189,040        123,227   

Fixed assets, net

     10,356        6,252   

Investments

     13,990        11,748   

Deferred tax asset, net

     5,618        —     

Goodwill

     1,676        —     

Other noncurrent assets

     71        564   
  

 

 

   

 

 

 

Total assets

   $ 220,751      $ 141,791   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

LIABILITIES

    

Current liabilities:

    

Fund management and administration payable

   $ 9,983      $ 10,394   

Compensation and benefits payable

     14,333        14,278   

Accounts payable and other liabilities

     5,115        4,384   
  

 

 

   

 

 

 

Total current liabilities

     29,431        29,056   

Other noncurrent liabilities:

    

Acquisition payable

     1,757        —     

Deferred rent payable

     5,278        3,706   
  

 

 

   

 

 

 

Total liabilities

     36,466        32,762   
  

 

 

   

 

 

 

STOCKHOLDERS’ EQUITY

    

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

    

issued: 134,959 and 132,247

     1,350        1,322   

outstanding: 133,445 and 130,350

    

Additional paid-in capital

     209,216        184,201   

Accumulated other comprehensive loss

     (53     —     

Accumulated deficit

     (26,228     (76,494
  

 

 

   

 

 

 

Total stockholders’ equity

     184,285        109,029   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 220,751      $ 141,791   
  

 

 

   

 

 

 


WISDOMTREE INVESTMENTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Twelve Months Ended  
     December 31,     December 31,  
     2014     2013  
     (Unaudited)        

Cash flows from operating activities

    

Net income

   $ 61,051      $ 51,537   

Non-cash items included in net income:

    

Income tax expense

     12,403        —     

Depreciation and amortization

     821        439   

Stock-based compensation

     8,137        6,459   

Deferred rent

     1,572        706   

Accretion to interest income and other

     (72     116   

Changes in operating assets and liabilities:

    

Accounts receivable

     (369     (5,020

Other assets

     99        (579

Fund management and administration payable

     (445     3,470   

Compensation and benefits payable

     (186     12,122   

Accounts payable and other liabilities

     (381     874   
  

 

 

   

 

 

 

Net cash provided by operating activities

     82,630        70,124   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchase of fixed assets

     (4,894     (6,211

Purchase of investments

     (3,225     (3,597

Cash acquired on acquisition

     1,349        —     

Proceeds from the redemption of investments

     939        2,781   
  

 

 

   

 

 

 

Net cash used in investing activities

     (5,831     (7,027
  

 

 

   

 

 

 

Cash flows from financing activities

    

Shares repurchased

     (6,531     (1,613

Dividends paid

     (10,785     —     

Proceeds from exercise of stock options

     1,544        1,586   
  

 

 

   

 

 

 

Net cash used in financing activities

     (15,772     (27
  

 

 

   

 

 

 

Decrease in cash flows due to changes in foreign exchange rate

     (59     —     
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     60,968        63,070   

Cash and cash equivalents - beginning of period

     104,316        41,246   
  

 

 

   

 

 

 

Cash and cash equivalents - end of period

   $ 165,284      $ 104,316   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information

    

Cash paid for taxes

   $ 66      $ 38   
  

 

 

   

 

 

 

Non-cash investing and financing activities:

    

Cashless exercise of stock options

   $ —        $ 267   
  

 

 

   

 

 

 


WisdomTree Investments, Inc.

Key Operating Statistics (Unaudited)

 

     Three Months Ended     For the Year Ended  
     December 31,
2014
    September 30,
2014
    December 31,
2013
    December 31,
2014
    December 31,
2013
 

US LISTED ETFs

          

Total ETFs (in millions)

          

Beginning of period assets

     35,823        35,500        31,352        34,884        18,286   

Inflows/(outflows)

     4,496        748        2,308        5,075        14,323   

Market appreciation/(depreciation)

     (1,038     (425     1,224        (678     2,275   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     39,281        35,823        34,884        39,281        34,884   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     37,680        35,554        33,091        35,308        28,472   

Revenue Days

     365        92        92        365        365   

ETF Industry and Market Share (in billions)

          

ETF industry net inflows

     118.3        48.8        58.6        239.3        179.9   

WisdomTree market share of industry inflows

     3.8     1.5     3.9     2.1     8.0

International Hedged Equity ETFs (in millions)

          

Beginning of period assets

     13,971        12,557        11,481        13,348        1,258   

Inflows/(outflows)

     4,580        799        1,243        4,865        10,441   

Market appreciation/(depreciation)

     (791     615        624        (453     1,649   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     17,760        13,971        13,348        17,760        13,348   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     15,637        12,654        11,848        13,383        8,770   

US Equity ETFs (in millions)

          

Beginning of period assets

     7,939        8,052        6,271        7,181        4,371   

Inflows/(outflows)

     968        84        367        1,462        1,477   

Market appreciation/(depreciation)

     483        (197     543        747        1,333   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     9,390        7,939        7,181        9,390        7,181   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     8,833        8,067        6,771        7,949        5,819   

Emerging Markets Equity ETFs (in millions)

          

Beginning of period assets

     7,495        7,606        7,703        7,448        7,332   

Inflows/(outflows)

     (836     270        (246     (810     865   

Market appreciation/(depreciation)

     (472     (381     (9     (451     (749
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     6,187        7,495        7,448        6,187        7,448   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     7,092        7,878        7,891        7,208        7,762   

International Developed Equity ETFs (in millions)

          

Beginning of period assets

     4,494        5,340        3,150        3,864        2,474   

Inflows/(outflows)

     (305     (452     565        573        967   

Market appreciation/(depreciation)

     (201     (394     149        (449     423   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     3,988        4,494        3,864        3,988        3,864   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     4,170        5,016        3,490        4,667        2,959   

Fixed Income ETFs (in millions)

          

Beginning of period assets

     1,379        1,376        2,095        1,906        2,118   

Inflows/(outflows)

     (164     69        (144     (680     121   

Market appreciation/(depreciation)

     (63     (66     (45     (74     (333
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     1,152        1,379        1,906        1,152        1,906   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     1,294        1,385        2,008        1,465        2,352   

Currency ETFs (in millions)

          

Beginning of period assets

     362        406        502        979        611   

Inflows/(outflows)

     232        (35     515        (373     418   

Market appreciation/(depreciation)

     5        (9     (38     (7     (50
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     599        362        979        599        979   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     456        380        933        465        673   

Alternative Strategy ETFs (in millions)

          

Beginning of period assets

     183        163        150        158        122   

Inflows/(outflows)

     21        13        8        38        34   

Market appreciation/(depreciation)

     1        7        —          9        2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period assets

     205        183        158        205        158   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average assets during the period

     198        174        150        171        137   


     Three Months Ended     For the Year Ended  
     December 31,
2014
    September 30,
2014
    December 31,
2013
    December 31,
2014
    December 31,
2013
 

Average ETF assets during the period

          

International hedged equity ETFs

     42     36     36     38     31

US equity ETFs

     23     23     20     23     20

Emerging markets equity ETFs

     19     22     24     20     27

International developed equity ETFs

     11     14     11     13     11

Fixed income ETFs

     3     4     6     4     8

Currency ETFs

     1     1     3     1     2

Alternative strategy ETFs

     1     0     0     1     1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  100   100   100   100   100
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average ETF advisory fee during the period

Alternative strategy ETFs

  0.95   0.94   0.94   0.95   0.94

Emerging markets equity ETFs

  0.70   0.68   0.66   0.68   0.66

International developed equity ETFs

  0.56   0.56   0.56   0.56   0.56

Fixed income ETFs

  0.53   0.55   0.55   0.54   0.55

International hedged equity ETFs

  0.51   0.50   0.49   0.50   0.49

Currency ETFs

  0.49   0.49   0.48   0.49   0.49

US equity ETFs

  0.35   0.35   0.35   0.35   0.35
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Blended total

  0.52   0.52   0.51   0.52   0.52
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Number of ETFs - end of the period

International developed equity ETFs

  17      17      16      17      16   

US equity ETFs

  13      13      13      13      13   

Fixed income ETFs

  12      12      11      12      11   

International hedged equity ETFs

  12      12      6      12      6   

Emerging markets equity ETFs

  8      7      7      8      7   

Currency ETFs

  6      6      6      6      6   

Alternative strategy ETFs

  2      2      2      2      2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  70      69      61      70      61   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EUROPEAN LISTED ETPs

Total ETPs (in thousands)

Beginning of period assets***

  123,210      113,244      96,817   

Inflows/(outflows)

  82,175      19,224      119,057   

Market appreciation/(depreciation)

  (40,367   (9,258   (50,856
  

 

 

   

 

 

     

 

 

   

End of period assets

  165,018      123,210      165,018   
  

 

 

   

 

 

     

 

 

   

Average ETP advisory fee during the period

  0.78   0.79   0.79

Number of ETPs - end of the period

  50      42      50   

Total UCITS ETFs (in thousands)

Beginning of period assets****

  —     

Inflows/(outflows)

  16,036   

Market appreciation/(depreciation)

  143   
  

 

 

         

End of period assets

  16,179   
  

 

 

         

Average ETP advisory fee during the period

  0.38

Number of ETPs - end of the period

  6   

Global headcount

  124      117      87      124      87   

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

Source: Investment Company Institute, Bloomberg, WisdomTree

 

*** 12 month stats began April 16, 2014
**** 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.

CONSOLIDATED STATEMENTS OF OPERATIONS

GAAP to NON-GAAP RECONCILIATION

(in thousands)

(Unaudited)

 

     Three Months Ended     For the Year Ended  
     Dec. 31,
2014
    Sep. 30,
2014
    Dec. 31,
2013
    Dec. 31,
2014
    Dec. 31,
2013
 

GAAP total revenue

   $ 49,600      $ 47,114      $ 43,166      $ 183,762      $ 149,468   

Fund management and administration

     (8,932     (8,465     (8,953     (34,383     (35,076

Third party sharing arrangements

     (282     (187     (455     (594     (1,368
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

   $ 40,386      $ 38,462      $ 33,758      $ 148,785      $ 113,024   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin percentage

     81.4     81.6     78.2     81.0     75.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

US listed ETFs:

          

GAAP total revenue

   $ 49,209      $ 46,883      $ 43,166      $ 182,947      $ 149,468   

Fund management and administration

     (8,334     (8,139     (8,953     (33,266     (35,076

Third party sharing arrangements

     (282     (187     (455     (594     (1,368
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

   $ 40,593      $ 38,557      $ 33,758      $ 149,087      $ 113,024   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin percentage

     82.5     82.2     78.2     81.5     75.6