WisdomTree(US:WT)2023-07-29 02:11Financial Data and Key Metrics Changes - The company ended the quarter with $93.7 billion in Assets Under Management (AUM), a new record, up 3% from the prior quarter due to strong inflows and market appreciation [6] - Revenues were $85.7 million, an increase of 4.5% from the first quarter, driven by higher average AUM, partially offset by lower other income [8] - Adjusted net income was $14.9 million or $0.09 per share, excluding a non-cash after-tax gain of $41.4 million related to the termination of a contractual gold payment obligation [10] - The company reported a gross margin of about 79% year-to-date, updating its gross margin guidance to 79% from 78% [13][16] Business Line Data and Key Metrics Changes - The company generated $2.3 billion in net inflows during the second quarter, marking the 11th consecutive quarter of positive flows [19] - The managed model suite is now available to over 65,000 advisers, indicating strong traction in the market [20] - The extinguishment of the gold royalty obligation in May expanded annualized operating margins by over 500 basis points [21] Market Data and Key Metrics Changes - The company has seen inflows in all eight major product categories so far this year, indicating a healthy flow profile [20] - In Europe, the company has experienced robust leadership in commodities, with inflows to copper and oil offsetting outflows from legacy gold products [39] Company Strategy and Development Direction - The company is focused on expanding its WisdomTree Prime platform, which went live in late June, with plans to cover substantially all of the U.S. population by the end of the year [25] - The company aims to leverage its early mover advantage in asset tokenization and blockchain-enabled finance [29][31] - The management is optimistic about the long-term potential of the AI theme, with significant inflows observed in related products [44] Management's Comments on Operating Environment and Future Outlook - Management expressed strong confidence in the company's momentum, citing record AUM and best-in-class organic growth [23] - The company anticipates that the WisdomTree Prime platform will lead to faster organic growth and higher margins [58] - Management highlighted the importance of a better user experience in driving the success of the tokenization strategy [57] Other Important Information - The company settled its contractual gold payment obligation for about $137 million, which will reduce operating expenses by about $18 million per year [9] - The adjusted tax rate was updated to 24% due to the current distribution of profits among U.S. and European businesses [16] Q&A Session Summary Question: What are you most excited about related to WisdomTree Prime? - Management highlighted the importance of tokenization and the ambitious product roadmap for WisdomTree Prime, focusing on connecting spending and investing [34][36] Question: Are there unique trends in the European business compared to the U.S. market? - Management noted a robust leadership position in commodities in Europe, with significant inflows to copper and oil, while the U.S. market has a value bias [38][40] Question: What types of customers are using WisdomTree models? - The company serves various customer segments, including retail investors, advisers, and third-party platforms, with models contributing to 12% of flows [48][52] Question: What are the early metrics for the WisdomTree Prime platform? - Early metrics indicate positive conversion rates from downloads to funded users, although it is still early in the rollout [54][80] Question: What are the revenue opportunities from WisdomTree Prime? - The company expects to earn management fees, brokerage commissions, and trading spreads, but is not providing specific guidance on the revenue mix [68][70]