WisdomTree, Inc. Q3 FY2024 earnings call

• Ended the quarter with record AUM of $112.6 billion despite $2.4 billion outflows. Favorable market conditions drove AUM higher. - Active on capital management: repurchased preferred stock and common stock, raised convertible notes, resulting in accretive transactions. - Adjusted revenues grew due to higher average AUM. - Record AUM drives revenue growth and expanding margins. - Models business: accessible market for advisors set to grow from 70,000 to 85,000, number of advisors using models grew to over 2,500. - Tokenization initiatives: WisdomTree Prime on track to be available across US by year end, WisdomTree Connect live and onboarding institutional users, token issuance platform for expanding blockchain-enabled product suite.

Ended the quarter with record AUM of $112.6 billion. Adjusted revenues were $109.4 million during the quarter, an increase of 2.3% from the second quarter and up approximately 20.5% versus the prior year quarter, driven by higher average AUM. The outflows during the third quarter were largely from currency hedged Japan product DXJ, floating rate treasury product USFR, and tactical commodity trading. Record AUM of $113 billion was achieved, with adjusted operating margin expanding by 800 basis points compared to the same period last year.

• Narrowed full year discretionary spending guidance to range from $62 million to $65 million. - Updated annual adjusted interest expense guidance to approximately $16 million, run rate about $5 million per quarter. - Updated interest income guidance for the year to be about $6 million. - Anticipates weighted average diluted shares to be 147 million to 148 million in the fourth quarter. - Compensation, gross margin, third-party distribution and tax guidance unchanged from last quarter.

• Market dynamics such as outflows from certain products being a headwind. - Regulatory challenges for tokenization rollout. - Uncertainty around election impact on digital asset development.

Q: What are the implications of the election on your broad market outlook for the next year and WisdomTree product suite in particular?

A: U.S. markets look more expensive, debt and deficit concerns, inflation hedging needs. WisdomTree positioned well with 70% global stocks, 20% commodities, attractive equity value proposition, fixed income exposures considered.

Q: Can WisdomTree still expand operating margins from current levels?

A: Yes, due to confidence in growth with high incremental margins over 50%, broad product set, models business, tokenization leadership.

Q: What is the annual spend on WisdomTree Prime continued development?

A: Forecasted to be low to mid-20s this year, up from high teens.

Q: What is the midterm expectation for advisor penetration using models?

A: Baseline expectation of 1,000 new advisors a year, with growth potential as accessible market expands.

Q: How much is models AUM contributing to flows?

A: Generally between 10% and 12%, with potential for growth as advisors utilize models more.