WisdomTree Investments
WisdomTree Announces Fourth Quarter and Year-End 2009 Results
Monday 08 February 2010
Total Assets under management increase 22% from Q3 to record $6.7 billion; up 83% for 2009 $911 million net inflows for the quarter, $1.8 billion total net inflows for 2009 26 out of 42 equity funds outperformed benchmarks since inception through 2009
NEW YORK--WisdomTree (Pink Sheets:WSDT), an innovative exchange-traded fund (“ETF”) sponsor and asset manager, today reported a GAAP net loss of $5.0 million in the fourth quarter of 2009, flat with the third quarter. Proforma operating net loss, which excludes stock-based compensation, depreciation and amortization, and interest and investment income, was $1.5 million in the fourth quarter, a 37.7% improvement from a proforma operating net loss of $2.4 million in the third quarter. For the full year, net loss was $21.2 million compared to $27.0 million in 2008. Proforma operating net loss for the full year was $11.3 million, a 39.8% improvement from proforma operating net loss of $18.7 million in 2008. WisdomTree CEO Jonathan Steinberg commented, “WisdomTree achieved our best fourth quarter in Company history. We are encouraged to see the market responding to our innovations in the emerging markets – namely the industry’s first India, and emerging markets small cap ETFs, as well as the first “1940 Act” family of currency ETFs which collectively were responsible for the majority of the $911 million net inflows in the fourth quarter.” Mr. Steinberg continued, “Our agility proved to be an asset during a challenging year; we pared down operating costs without impeding our ability to grow existing funds and continued to develop innovative products. In fact, we are closer than ever to becoming cash flow positive at a time when the ETF industry, as a whole, is poised for mainstream acceptance.” Assets Under Management and Performance As of December 31, 2009, assets under management (“AUM”) managed by WisdomTree or against WisdomTree Indexes by third parties under license from WisdomTree was $6.7 billion and ETF AUM was $6.0 billion, both up 22% from WisdomTree’s fundamentally weighted ETFs experienced relatively strong investment performance through the fourth quarter. Approximately 76% of the $5.1 billion invested in WisdomTree’s 42 equity ETFs on December 31, 2009 were in funds that, since their respective inceptions, have outperformed their benchmarks through that date. 26 of WisdomTree’s 42 equity ETFs outperformed their comparable benchmarks since inception and through the fourth quarter of 2009. For more information about WisdomTree ETFs, please click here or visitwww.wisdomtree.com. Recent Business Activity Fourth Quarter Financial Highlights Comparison to the third quarter of 2009 Revenues Total revenues for the fourth quarter increased 33.6% to a record $7.6 million as compared to $5.7 million in the third quarter. Average ETF assets under management increased 30% in the fourth quarter as compared to the third quarter primarily due to $911 million of net inflows as well as $166 million of market appreciation. The average advisory fee earned during the fourth quarter was 0.54%, up from 0.53% in the third quarter primarily due to higher inflows into the Company’s Emerging Market ETFs. Expenses Total expenses increased 18.1% to $12.8 million from $10.8 million in the third quarter primarily due to higher marketing related expenses and stock-based compensation expenses. Excluding stock-based compensation, depreciation and amortization charges, proforma operating expenses increased 12.3% to $9.2 million from $8.2 million in the third quarter. Full-Year Results Total revenues decreased 2.7% to $21.5 million during the year ended December 31, 2009 from $22.1 million in the comparable period in 2008 primarily due to lower average assets levels experienced in the first quarter of 2009, which is partly offset by the significant increases in AUM experienced in the fourth quarter of the year. Total expenses decreased 14.5% to $43.3 million during the year ended December 31, 2009 from $50.7 million in the same period of last year. Excluding stock-based compensation and depreciation and amortization charges, proforma operating expenses decreased 19.7% to $32.8 million from $40.8 million over the comparable period. This was primarily due to lower discretionary advertising spending as a result of negative market conditions during the year. Also decreasing were fund-related costs as a result of lower average assets under management during the first quarter of 2009 as compared to the same period in 2008. Balance Sheet As of December 31, 2009, WisdomTree had total assets of $25.7 million, which consisted primarily of cash and cash equivalents of $11.5 million and investments of $9.3 million. WisdomTree has no debt. There were approximately 114.5 million shares issued as of December 31, 2009. Fully diluted shares issued and outstanding were approximately 135.9 million as of December 31, 2009. Fourth Quarter 2009 Earnings Call Information WisdomTree will discuss its results and operational highlights during a conference call on Tuesday, February 9 at 9:00 a.m. ET. The call-in number will be (888) 679-8034 passcode 44922793. Anyone outside the U.S. or Canada should call (617) 213-4847, passcode 44922793. The slides used during the presentation will be available at www.wisdomtree.com/ir. For those unable to join the conference call at the scheduled time, an audio replay will be available on www.wisdomtree.com/ir. About WisdomTree WisdomTree® is an innovative exchange-traded fund (“ETF”) sponsor and asset manager using its own fundamentally weighted index methodology. WisdomTree also licenses its indexes to third parties for proprietary products and offers a platform to promote the use of WisdomTree ETFs in 401(k) plans. Approximately $6.6 billion in assets currently are managed by WisdomTree or are managed against WisdomTree Indexes by third parties under license from WisdomTree. For more information, please visitwww.wisdomtree.com. WisdomTree is the marketing name for WisdomTree Investments, Inc. and its wholly owned subsidiaries WisdomTree Asset Management, Inc. and WisdomTree Retirement Services, Inc. WisdomTree Asset Management, Inc. is a registered investment advisor and is the investment advisor to the WisdomTree Trust and the WisdomTree ETFs. The WisdomTree Trust is a registered open-end investment company. Each WisdomTree ETF is a series of the WisdomTree Trust. WisdomTree Retirement Services, Inc. supports the use of the WisdomTree ETFs in retirement plans by financial professionals.
For the Twelve Months Ended For the Twelve Months Ended December 31,
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
For the Three Months Ended
December 31,
December 31,
December 31,
December 31,
2009
2009
2008
2009
2008
(Audited)
Revenues
Advisory fees
$
7,428
$
5,536
$
4,056
$
20,812
$
21,643
Other income
208
180
165
676
431
Total revenues
7,636
5,716
4,221
21,488
22,074
Expenses:
Compensation and benefits
4,775
5,153
2,750
18,943
20,338
Fund management and administration
3,674
3,317
3,910
13,387
15,167
Marketing and business development
2,101
1,113
989
5,257
9,122
Professional fees
631
432
295
1,780
1,871
Occupancy, communication and equipment
249
283
363
1,087
1,564
Depreciation and amortization
88
88
90
360
337
Other
1,245
423
1,030
2,509
2,257
Total expenses
12,763
10,809
9,427
43,323
50,656
Operating loss
(5,127
)
(5,093
)
(5,206
)
(21,835
)
(28,582
)
Interest and investment income
95
105
245
607
1,537
Net loss
$
(5,032
)
$
(4,988
)
$
(4,961
)
$
(21,228
)
$
(27,045
)
Net loss per share - basic and diluted
$
(0.05
)
$
(0.05
)
$
(0.05
)
$
(0.21
)
$
(0.27
)
Weighted average common shares - basic and diluted
108,374
101,857
100,955
103,397
100,236
WISDOMTREE INVESTMENTS, INC
NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)
For the Three Months Ended
December 31,
December 31,
December 31,
December 31,
2009
2009
2008
2009
2008
Revenues
Advisory fees
$
7,428
$
5,536
$
4,056
$
20,812
$
21,643
Other income
208
180
165
676
431
Total revenues
7,636
5,716
4,221
21,488
22,074
Operating expenses:
Compensation and benefits
2,807
2,877
1,030
11,026
12,392
Fund management and administration
3,674
3,317
3,910
13,387
15,167
Marketing and business development
2,101
1,113
989
5,257
9,122
Professional fees
130
191
420
688
1,478
Occupancy, communication and equipment
249
283
363
1,087
1,564
Other
195
375
490
1,309
1,050
Total operating expenses
9,156
8,156
7,202
32,754
40,773
Operating loss
(1,520
)
(2,440
)
(2,981
)
(11,266
)
(18,699
)
Stock-based compensation
3,519
2,565
2,135
10,209
9,546
Depreciation and amortization
88
88
90
360
337
Interest and investment income
(95
)
(105
)
(245
)
(607
)
(1,537
)
Net loss
$
(5,032
)
$
(4,988
)
$
(4,961
)
$
(21,228
)
$
(27,045
)
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except per share amounts)
December 31,
2009
2008
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
11,476
$
13,275
Investments
2,627
4,593
Accounts receivable
2,884
1,530
Other current assets
961
875
Total current assets
17,948
20,273
Fixed assets, net
977
1,266
Investments
6,693
13,191
Other long-term assets
85
126
Total assets
$
25,703
$
34,856
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Fund management and administration payable
$
5,055
$
8,966
Compensation and benefits payable
2,587
2,012
Accounts payable and other liabilities
1,603
1,207
Total current liabilities
9,245
12,185
Other liabilities
430
615
Total liabilities
9,675
12,800
Stockholders' equity
issued: 114,535,630 and 105,244,385
1,145
1,052
outstanding: 110,105,507 and 101,339,143
Additional paid-in capital
149,487
134,383
Accumulated other comprehensive income
(3
)
Accumulated deficit
(134,604
)
(113,376
)
Total stockholders' equity
16,028
22,056
Total liabilities and stockholders' equity
$
25,703
$
34,856
WISDOMTREE INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
For the Twelve Months Ended
December 31,
December 31,
2009
2008
(Audited)
Cash flows from operating activities
Net loss
$
(21,228
)
$
(27,045
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and other
583
675
Stock-based compensation
10,209
9,546
Loss on sub-lease
--
139
Deferred rent
(185
)
(36
)
Accretion to interest income
(68
)
111
Net change in operating assets and liabilities:
Accounts receivable
(1,354
)
468
Other assets
(45
)
579
Fund management and administration payable
(3,911
)
2,600
Compensation and benefits payable
575
(1,531
)
Other accounts payable and other liabilities
396
(1,121
)
Net cash used in operating activities
(15,028
)
(15,615
)
Cash flows from investing activities
Purchase of fixed assets
(295
)
(703
)
Purchase of investments
(7,290
)
(16,809
)
Proceeds from the redemption of investments
15,825
31,260
Net cash provided by investing activities
8,240
13,748
Cash flows from financing activities
Net proceeds from sale of common stock
4,989
--
Proceeds from exercise of stock options and warrants
--
4
Net cash provided by financing activities
4,989
4
Net decrease in cash and cash equivalents
(1,799
)
(1,863
)
Cash and cash equivalents - beginning of period
13,275
15,138
Cash and cash equivalents - end of period
$
11,476
$
13,275
Supplemental disclosure of cash flow information
Cash paid for income taxes
$
3
$
5
WisdomTree Investments, Inc.
Key Operating Statistics (Unaudited)
For the Three Months Ended
For the Twelve Months Ended
December 31,
December 31,
December 31,
December 31,
2009
2009
2008
2009
2008
Total assets under management (in thousands)
ETFs
5,978,605
4,901,755
3,180,133
5,978,605
3,180,133
Non-ETFs
689,103
567,627
462,513
689,103
462,513
End of period assets
6,667,708
5,469,382
3,642,646
6,667,708
3,642,646
Total ETFs (in thousands)
Beginning of period assets
4,901,755
3,663,004
4,074,954
3,180,133
4,558,796
Inflows/(Outflows)
910,989
558,437
29,955
1,772,764
906,847
Market appreciation/(depreciation)
165,861
680,314
(924,776
)
1,025,708
(2,285,510
)
End of period assets
5,978,605
4,901,755
3,180,133
5,978,605
3,180,133
Average assets during the period
5,438,756
4,181,938
3,176,375
3,963,943
4,327,160
International ETFs (in thousands)
Beginning of period assets
2,912,661
2,082,340
2,301,003
1,723,244
2,985,606
Inflows/(Outflows)
368,099
400,985
10,011
931,129
284,914
Market appreciation/(depreciation)
103,568
429,336
(587,770
)
729,955
(1,547,276
)
End of period assets
3,384,328
2,912,661
1,723,244
3,384,328
1,723,244
Average assets during the period
3,193,815
2,397,470
1,763,032
2,264,042
2,552,438
Sector ETFs (in thousands)
Beginning of period assets
322,145
222,085
361,435
246,501
546,565
Inflows/(Outflows)
34,154
52,241
(32,180
)
58,413
(47,184
)
Market appreciation/(depreciation)
1,888
47,819
(82,754
)
53,273
(252,880
)
End of period assets
358,187
322,145
246,501
358,187
246,501
Average assets during the period
338,336
268,661
262,956
257,344
453,033
US ETFs (in thousands)
Beginning of period assets
1,271,172
1,039,480
983,435
986,568
1,026,625
Inflows/(Outflows)
(2,514
)
42,970
241,244
136,949
409,325
Market appreciation/(depreciation)
60,939