WisdomTree(WT) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - WisdomTree's AUM (Assets Under Management) decreased due to negative market movements, currently standing at $74.6 billion, a 5% increase from the end of September [8][9] - Revenues for the quarter were $72.4 million, a decrease of 6% from the prior quarter, attributed to negative market impacts on AUM [10] - Adjusted net income was $9.3 million or $0.06 per share, with non-GAAP results excluding a noncash after-tax gain of $78 million [10] - Adjusted operating expenses decreased by 3% for the quarter, primarily due to lower incentive compensation and marketing expenses [11] Business Line Data and Key Metrics Changes - Fixed income products were the primary contributors, generating over $2.8 billion in flows during the quarter and almost $9.7 billion year-to-date [7] - U.S. Equity product suite experienced 13% annualized organic growth, bringing in $1.2 billion during the quarter and $2.5 billion year-to-date [7] - The company reported best-in-class annualized organic growth of 14% across AUM, with eight consecutive positive flowing quarters [8] Market Data and Key Metrics Changes - The company experienced $1.7 billion of flows during the quarter and $8.7 billion year-to-date for October, despite challenging market conditions [6] - Fixed income inflows year-to-date exceeded $10 billion, marking a breakout year for WisdomTree's fixed income team [48] Company Strategy and Development Direction - WisdomTree is focusing on digital assets and blockchain-enabled finance as a key growth area, with plans to launch a full digital fund suite [23][26] - The company aims to bring mainstream exposures into the digital world through blockchain-enabled funds and tokenized assets [24] - WisdomTree is evolving from individual ticker sales to being a true solutions provider, enhancing its model lineup and partnerships with major financial institutions [31][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging market backdrop with rising interest rates and inflation concerns but expressed confidence in the company's performance and growth potential [6][28] - The company anticipates continued organic growth in digital assets, ETFs, and managed models, with a robust pipeline of opportunities [55][62] Other Important Information - WisdomTree received SEC approval for its digital treasury fund, marking a significant milestone in its digital asset strategy [42] - The company is changing its name to WisdomTree Inc. and its ticker symbol to WT, reflecting its broader mission beyond investments [36] Q&A Session Summary Question: How is WisdomTree thinking about the spot bitcoin approval process? - Management emphasized a productive relationship with regulators and the goal to be among the first to launch a spot bitcoin ETF, while also focusing on other digital asset initiatives [40][41] Question: How have fixed income products fared in the higher rate environment? - WisdomTree reported $10 billion in fixed income flows year-to-date, highlighting the success of its Floating Rate Treasury product [48] Question: Where do you see the opportunity to gather assets going forward? - Management identified digital assets, ETF lineup, and managed models as key areas for continued organic growth [55][62] Question: Can you provide more color on the beta version of WisdomTree Prime? - Management confirmed that everything is on track for a national rollout in Q1, with no specific metrics disclosed at this time [84] Question: How do you anticipate the competitive landscape to evolve in digital assets? - Management expects more competitors to enter the space but believes WisdomTree's early mover advantage and established infrastructure will position it well for future growth [106][111]