WisdomTree(WT) - 2024 Q2 - Quarterly Report

Assets Under Management (AUM) and ETF/ETP Performance - The company's AUM (Assets Under Management) reached $109.7 billion as of June 30, 2024, up from$107.2 billion in the previous quarter[115][116] - The company's U.S. listed ETFs AUM increased from $78.1 billion in Q1 2024 to$79.7 billion in Q2 2024, driven by market appreciation and net inflows[121] - European listed ETPs AUM grew from $29.1 billion in Q1 2024 to$30.0 billion in Q2 2024, despite net outflows of $0.8 billion[121] - Global ETPs end of period assets increased to$109,686 million in June 2024, up from $93,666 million in June 2023[133] - U.S. Listed ETFs saw inflows of$1,106 million in June 2024, compared to $3,249 million in June 2023[133] - European Listed ETPs experienced outflows of$766 million in June 2024, compared to outflows of $922 million in June 2023[133] - U.S. Equity ETPs had inflows of$221 million in June 2024, down from 414 million in June 2023[133] - Commodity & Currency ETPs saw outflows of 1,499 million in June 2024, compared to outflows of $1,513 million in June 2023[133] - Fixed Income ETPs recorded inflows of$236 million in June 2024, a decrease from $1,471 million in June 2023[133] - International Developed Market Equity ETPs had inflows of$1,253 million in June 2024, down from $1,593 million in June 2023[133] - Emerging Market Equity assets increased from$10,726 million at the beginning of the period to $11,875 million at the end, driven by$629 million in market appreciation and 57 million in inflows[134] - Leveraged & Inverse assets grew from 1,828 million to $1,922 million, with$112 million in market appreciation offsetting $18 million in outflows[134] - Cryptocurrency assets decreased from$874 million to $838 million, with$111 million in market depreciation and $75 million in inflows[134] - Average AUM increased by 18.4$91,578 million in Q2 2023 to $108,392 million in Q2 2024[135] - Average AUM grew by 17.7$89,543 million in H1 2023 to $105,376 million in H1 2024[145] Financial Performance and Revenues - Total revenues increased by 24.9$107.0 million for the three months ended June 30, 2024[123] - Net income for Q2 2024 was $21.8 million, compared to$54.3 million in the same period last year[123] - Advisory fee revenues rose 20.7% from $82.0 million in Q2 2023 to$98.9 million in Q2 2024, with average advisory fees at 0.37%[136] - Other revenues surged 117.6% from $3.7 million in Q2 2023 to$8.1 million in Q2 2024, driven by European listed products[135] - Advisory fee revenues increased by 19.9% from $159.6 million in H1 2023 to$191.4 million in H1 2024, driven by higher average AUM[146] - Other revenues surged by 53.0% from $8.1 million in H1 2023 to$12.4 million in H1 2024, attributed to European listed products[146] - Adjusted net income for Q2 2024 was $27.1 million, compared to$14.9 million in Q2 2023[164] - Adjusted diluted earnings per share for Q2 2024 was $0.16, compared to$0.09 in Q2 2023[164] Expenses and Compensation - Compensation expense for 2024 is estimated to range from 28% to 29% of revenue, with planned hires and incentive compensation variability factored in[124] - Total operating expenses increased 8.9% from $67.5 million in Q2 2023 to$73.5 million in Q2 2024, with compensation and benefits up 17.0% to $30.8 million[137] - Headcount grew from 291 in June 2023 to 304 in June 2024, contributing to higher compensation costs[138] - Total operating expenses increased by 7.1$133.0 million in H1 2023 to $142.4 million in H1 2024[147] - Compensation and benefits expense rose by 15.1$53.7 million in H1 2023 to $61.8 million in H1 2024 due to higher incentive and stock-based compensation[149] - Fund management and administration expense increased by 15.0$34.9 million in H1 2023 to $40.1 million in H1 2024, driven by higher AUM and product launches[150] - Depreciation and amortization expense surged by 248.3$0.2 million in H1 2023 to $0.8 million in H1 2024 due to software development costs[152] Cash Flow and Liquidity - Cash, cash equivalents, and restricted cash increased by$3.2 million in the first half of 2024, reaching $132.5 million[164][166] - Operating cash flows for the first half of 2024 were$31.2 million, compared to $20.0 million in the same period of 2023[165] - Total available liquidity as of June 30, 2024, was$103.6 million, up from $73.1 million at the end of 2023[164] - The company's corporate cash investments totaled$83.0 million as of June 30, 2024, primarily in federal agency debt instruments, WisdomTree fixed income ETFs, U.S. treasuries, and corporate bonds[183] Debt and Financial Instruments - The company issued $130.0 million in 5.75$69.8 million as of June 30, 2024, from $58.7 million at the end of 2023[164] - The company repurchased$115.0 million of 2020 Convertible Notes, resulting in a $9.7 million loss on extinguishment in Q1 2023[167] - The company has$280.0 million in aggregate principal amount of Convertible Notes outstanding, with $150.0 million maturing on June 15, 2026, and$130.0 million maturing on August 15, 2028[172] - The 2023 Convertible Notes have an interest rate of 5.75%, while the 2021 Convertible Notes have an interest rate of 3.25%[168] - The company repurchased 1,096,278 shares of its common stock for an aggregate cost of $7.8 million during the six months ended June 30, 2024, with$88.6 million remaining under the repurchase program[171] - The company repurchased its Series C Preferred Stock from GBH for aggregate cash consideration of approximately $84.4 million on November 20, 2023[173] Guidance and Projections - The company updated its gross margin guidance for 2024 to 80$64.0 million and $68.0 million, with a skew towards Q4 due to seasonality[125] Blockchain and Digital Assets - The company's blockchain-native digital wallet, WisdomTree Prime, is available in 44 U.S. states, covering approximately 79$13.5 million, influenced by non-deductible executive compensation and state taxes[161] - The company's subsidiaries are required to maintain a minimum level of regulatory capital, which was approximately $37.0 million in the aggregate as of June 30, 2024[171] Miscellaneous - The company terminated a deferred consideration—gold payments obligation for$137.0 million in Q2 2023[162] - The company repurchased Series C Preferred Stock for $84.4 million in Q4 2023, with$40.0 million paid upfront[162] - The company's total future minimum lease payments with respect to operating lease liabilities were $0.9 million as of June 30, 2024[174] - The company recognized gains of$1.8 million on its financial instruments during the six months ended June 30, 2024[183] - The company's advisory fees are based on a percentage of the ETPs' average daily net assets, with revenue recognized over time as the performance obligation is satisfied[180] - The company's European listed ETPs predominantly earn advisory fees in U.S. dollars, with expenses for corporate overhead generally incurred in British pounds[186]