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WisdomTree Inc (WT) (Q1 2024) Earnings Call Transcript Highlights: Robust Growth and Strategic ...

GuruFocus Research
·4 min read

  • Revenue: $96.8 million, up 18% year-over-year.

  • Net Inflows: $2 billion during the quarter.

  • AUM: Record $107.2 billion, up 18.2% year-over-year.

  • Net Income: Adjusted $20.3 million.

  • Earnings Per Share (EPS): Adjusted $0.12 per share.

  • Gross Margin: 79.4% in Q1; guidance of 79% to 80%.

  • Operating Margin: Expanded by 820 basis points year-over-year to 30%.

  • Compensation Expense Guidance: Unchanged at $108 million to $118 million.

  • Discretionary Spending: $14.9 million in Q1; full-year guidance of $64 million to $68 million.

  • Third-party Distribution Expense: $2.3 million in Q1; annual guidance of $10 million to $11 million.

  • Interest Income: $1.4 million in Q1; increased annual guidance to $5 million.

  • Adjusted Tax Rate: 24.9% in Q1; guidance of 24% to 25%.

  • Diluted Shares: Weighted average of 165.3 million in Q1; annual guidance of 156 million to 168 million.

Release Date: April 26, 2024

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

Q & A Highlights

Q: As you roll out WisdomTree Prime and from the retail initiatives, there have been some examples of other firms trying to transition from an institutional setup to a more retail approach and then backing away from that strategy. How is WisdomTree's offering differentiated and how do you plan to succeed there? A: Jonathan Steinberg - Wisdomtree Inc - Chief Executive Officer, Director: WisdomTree has been a direct-to-consumer brand from the beginning, with a strong presence in online brokerage accounts. The integration of WisdomTree Prime into our core business is built on existing infrastructure, starting with investors familiar with our brand. We plan to keep costs low and increase marketing spend incrementally to find a cost-effective marketing message.

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Q: Can you discuss the synergies between Prime and tokenization and the core business of WisdomTree, and how the marketing spend might help your legacy business as well? A: William Peck - Wisdomtree Inc - Head of Digital Assets: The tokenization platform leverages the core competencies of WisdomTree, such as product development and regulatory prowess. Both retail and institutional applications of our tokenization platform are mutually beneficial and self-reinforcing, creating a strong synergy with our existing business.

Q: Could you provide a summary of the new product creation over the past four or five quarters and the vision for new product creation going forward? A: Jeremy Schwartz - Wisdomtree Inc - Global Chief Investment Officer: We have diversified our product set to include quality growth and thematic investments, such as cloud, cyber, and AI technologies. Our strategy includes launching about 20 new funds a year to drive growth and diversify our business, reflecting our commitment to innovation in fund offerings.

Q: What steps are you taking to drive greater adoption of your models with new advisors, and how do you improve penetration within the accessible market of advisors? A: R. Jarrett Lilien - Wisdomtree Inc - President, Chief Operating Officer: Our focus is on expanding the accessible market and penetrating it by getting our models onto major platforms like Merrill and Morgan Stanley. We aim to convince advisors of our product quality through effective sales strategies and comprehensive research, leveraging our visibility into the pipeline to drive growth.

Q: Could you discuss your go-to-market strategy for WisdomTree Prime and the steps you're taking to bring awareness and attract customers? A: William Peck - Wisdomtree Inc - Head of Digital Assets: Our strategy focuses on lean marketing, targeting digital and organic channels first, such as App Store search ads. We aim to attract users interested in themes like digital gold and continue to add features and expand availability, like the recent New York TrustCo announcement, to reach more customers.

Q: With the NYDFS approval for WisdomTree Prime, how does this impact conversations around third-party white labeling? A: William Peck - Wisdomtree Inc - Head of Digital Assets: The trust charter not only opens up new customer opportunities but also positions us as a strong regulated counterparty for B2B and B2C opportunities. This approval facilitates white labeling strategies, leveraging our regulatory status to attract business partnerships.

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

This article first appeared on GuruFocus.