• Assets Under Management (AUM): Record AUM of $109.7 billion.
• Net Inflows: $1.9 billion net inflows during the quarter; $4.2 billion year-to-date.
• Revenue: $107 million for the quarter, up 10.5% from the previous quarter and 25% year-over-year.
• Other Revenue: $8.1 million, an 87% increase from the first quarter.
• Adjusted Operating Margin: 32.6% year-to-date, up over 840 basis points from the prior year.
• Adjusted Net Income: $27.1 million or $0.16 per share for the quarter.
• Gross Margin: 81.2% for the second quarter.
• Compensation-to-Revenue Ratio: Estimated at 28% to 29% for the year.
• Discretionary Spending: $30.5 million year-to-date; full-year guidance of $64 million to $68 million.
• Interest Income: $2.8 million year-to-date; guidance of $5 million for the year.
• Adjusted Tax Rate: 25% for the second quarter.
• Weighted Average Diluted Shares: 165.9 million year-to-date.
• Operating Margin: 35.3% for the second quarter, up 570 basis points from the previous quarter.
• Earnings Per Share: Up 78% year-over-year and 33% sequentially.

• Warning! GuruFocus has detected 2 Warning Sign with WT.

Release Date: July 26, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• WisdomTree Inc (NYSE:WT) achieved record assets under management (AUM) of $109.7 billion, driven by favorable market conditions.
• The company reported a 25% increase in revenue compared to the prior-year quarter, reaching $107 million.
• WisdomTree Inc (NYSE:WT) experienced strong net inflows of $1.9 billion in US-listed ETFs and offshore UCITS ETF suite during the quarter.
• The company achieved a significant margin expansion, with operating margins reaching 35.3% in Q2 2024.
• WisdomTree Inc (NYSE:WT) is expanding its accessible market for adviser models, expecting to reach over 85,000 advisers by year-end.

Negative Points

• WisdomTree Inc (NYSE:WT) faced outflows from its commodity products, which are tactical in nature, affecting overall flows.
• The company's European fund outflows have been a concern, with commodity and currency funds experiencing outflows for 15 of the past 17 quarters.
• The lengthy regulatory process for tokenization and blockchain-enabled finance has taken longer than initially anticipated.
• WisdomTree Inc (NYSE:WT) is still in the early stages of marketing its WisdomTree Prime offering, with full state coverage yet to be achieved.
• The company's compensation expense guidance is being updated to a percentage of revenue, indicating potential variability in future expenses.

Q & A Highlights

Q: What is WisdomTree's five-year plan? A: Jonathan Steinberg, Founder and CEO, explained that WisdomTree aims to continue expanding its global ETF lineup, grow AUM through strong performance, and leverage tokenization and blockchain-enabled finance. The focus is on strategic investments to ensure growth today and in the future, with a disciplined approach to expenses. The goal is to achieve higher AUM, margins, and earnings per share, leading to stock appreciation.

Q: What drove the increase in the accessibility of models to 85,000 advisers by year-end? A: Jarrett Lilien, President and CFO, noted that the increase was due to a couple of additional wins on major platforms. The focus is now shifting to penetrating these platforms by engaging individual advisers. The accessible market now includes 28% of US advisers, controlling $18 trillion of advised assets.

Q: Can you provide more color on the European fund outflows, particularly in commodities and currency funds? A: Jonathan Steinberg and Jarrett Lilien explained that the European footprint is heavily weighted towards commodities, which are tactical in nature. The focus has been on diversifying revenue away from commodities. Despite outflows, the overall revenue capture in Europe is healthy, and the region remains a high contributor to results.

Q: Are there opportunities for model growth in Europe similar to the US? A: Jarrett Lilien confirmed that Europe presents an opportunity, though the market is more fragmented. WisdomTree has announced a deal to provide models on a European platform, marking the first step in expanding internationally.

Q: What is WisdomTree's view on strategic or inorganic growth opportunities? A: Jonathan Steinberg stated that while the focus is on organic growth, the company remains opportunistic about M&A. Past acquisitions have been highly accretive, and WisdomTree looks to strategically position itself for future growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.