WisdomTree Investments
WisdomTree Announces Third Quarter 2010 Results
Thursday 28 October 2010
Company reports record AUM and record revenues
Second consecutive quarter of positive proforma operating income
$1.2 billion net inflows for the third quarter
New York, NY – (BUSINESS WIRE) – October 28, 2010 – WisdomTree (Pink Sheets: WSDT - News), an exchange-traded fund (“ETF”) sponsor and asset manager, today reported a GAAP net loss of $1.5 million in the third quarter of 2010, as compared to $1.9 million for the second quarter of 2010. Proforma operating income, which excludes stock-based compensation, depreciation and amortization, and interest and investment income, was $0.5 million in the third quarter, as compared $0.2 million in the second quarter.
WisdomTree CEO Jonathan Steinberg commented, “WisdomTree reported strong results for the third quarter, including record revenues with ETF assets up 32% for the quarter, having captured 3.5% of overall ETF industry inflows. Our business continues to perform well, generating our second consecutive quarter of positive operating income.”
Mr. Steinberg continued, “WisdomTree continues on a strong growth path which has accelerated in the recent quarter, driven by the diversification of our product set in new asset classes, the lengthening performance track records of existing funds and the development of several strategic alliances.”
Summary Financial Highlights
Recent Business Highlights
On August 9, 2010, the Company launched the WisdomTree Emerging Markets Local Debt Fund (ELD). The Fund has approximately $380 million in assets as of October 27, 2010.
On September 8, 2010, Advisors Asset Management (AAM) announced a collaboration with WisdomTree to add the Company’s ETFs to AAM’s product platform and to serve as the external marketing agent for the WisdomTree ETFs in the Independent Broker-Dealer channel.
On October 25, 2010, the Company announced a collaboration with Mexico-based Compass Group to distribute WisdomTree ETFs throughout
On September 24, 2010, the Company launched the WisdomTree Dreyfus Commodity Currency Fund (CCX).
Assets Under Management and Performance
As of September 30, 2010, assets under management (“AUM”) managed by WisdomTree or against WisdomTree Indexes was $9.0 billion, up 64% from September 30, 2009 and up 30% from June 30, 2010. ETF AUM was $8.3 billion, up 69% from September 30, 2009 and up 32% from June 30, 2010. Net inflows into WisdomTree ETFs were $1.2 billion in the third quarter, primarily in emerging market ETFs.
Approximately 79% of the $6.7 billion invested in WisdomTree’s 34 equity ETFs on September 30, 2010 were in funds that, since their respective inceptions, have outperformed their competitive benchmarks through that date. 21 of WisdomTree’s 34 equity ETFs have outperformed their competitive benchmarks since inception and through the third quarter of 2010. For more information about WisdomTree ETFs including standardized performance, please click here or visit www.wisdomtree.com.
Third Quarter Financial Highlights
Revenues
Total revenues for the quarter increased 76.0% to a record $10.1 million as compared to the third quarter of last year and increased 8.2% from the second quarter of 2010. These increases were primarily due to higher average assets under management from strong net ETF inflows and positive market movement as well as higher average revenue capture due to the mix of ETF inflows into our funds.
Expenses
Total expenses increased 7.8% to $11.6 million from $10.8 million in the third quarter of last year. This increase was primarily due to higher third party profit sharing, marketing and business development, and fund management and administration expenses partly offset by lower compensation and benefits expense. Excluding stock-based compensation and depreciation and amortization charges, proforma operating expenses increased 17.7% to $9.6 million from $8.2 million in the third quarter of last year.
Compared to the second quarter, total expenses increased 3.9% from $11.2 million in the second quarter. This increase was primarily due to higher marketing and business development and fund management administration expenses partly offset by lower compensation and benefits expense. Excluding stock-based compensation and depreciation and amortization charges, proforma operating expenses increased 5.2% from $9.1 million in the first quarter.
· Compensation and benefits expense decreased 14.5% to $4.4 million compared to the third quarter of last year and decreased 4.2% compared to the second quarter of 2010 primarily due to lower stock-based compensation. Excluding stock-based compensation, this expense increased 3.0% compared to the third quarter of last year due to higher headcount and increased 3.0% from the second quarter of 2010 due to higher accrued incentive compensation as a result of higher levels of net ETF inflows.
· Fund management and administration expenses increased 7.6% to $3.6 million compared to the third quarter of last year. This increase was due to increased fund administrative expenses from higher average asset balances, particularly in the Company’s emerging market funds, and legal related expenses, partly offset by lower index related costs. Compared to the second quarter of 2010, this expense increased 8.0% due to higher legal fees as well as accounting fees associated with two funds launched in the third quarter.
· ?Marketing and business development expenses increased 35.8% to $1.5 million in the third quarter compared to the third quarter of last year and 28.9% from the second quarter of 2010 primarily due to higher advertising, client conferences and fees for website enhancements.
· ?Professional fees increased 84.0% to $0.8 million in the third quarter compared to the third quarter of last year and 12.4% from the second quarter of 2010. These increases in both periods were primarily due to higher variable stock-based compensation expense for advisors and higher corporate consulting related expenses.
· ?Occupancy, communications and equipment as well as depreciation and amortization expenses remained relatively unchanged during the third and second quarters of 2010 and third quarter of 2009.
· Other expense increased 12.2% to $0.4 million in the third quarter compared to the third quarter of last year primarily due to higher administrative expenses. Expenses decreased 5.2% compared to the second quarter of 2010 due to lower administrative expenses.
· ?Third party profit sharing expense increased to $0.6 million from $0.1 million in the third quarter of last year. This increase is primarily due to higher average assets under management and revenues related to the Company’s Currency and Fixed Income ETFs. Third party profit sharing arrangements represents the amount paid to (or received from) the Bank of New York Mellon, after netting revenues and direct costs, for its collaboration with the Company’s Currency and
· Fixed Income ETFs. This expense remained unchanged in the third quarter compared to second quarter of 2010.
· ?Stock-based compensation expense decreased 23.3% to $2.0 million compared to the third quarter of last year primarily due to lower fixed expense as equity awards granted in prior years become fully vested. This expense decreased 2.3% compared to the second quarter of 2010 primarily due to lower fixed expense partly offset by higher variable expense due to the increase in the Company’s stock price.
Year-to-Date Results
Total revenues more than doubled to $28.0 million during the first nine months of 2010 from $13.9 million in the comparable period in 2009, as a result of higher asset levels due to higher levels of net inflows, positive market conditions and higher average revenue capture.
Total expenses increased 15.1% to $35.2 million during the first nine months of 2010 from $30.6 million in the same period of last year. Excluding stock-based compensation and depreciation and amortization charges, proforma operating expenses increased 20.4% to $28.4 million from $23.6 million in the same period last year. This increase was primarily due to higher third-party profit sharing arrangements, marketing and business development, compensation and benefits, professional fees and fund management and administration expenses, all related to an increase in assets under management in the first nine months of 2010 as compared to 2009.
Balance Sheet
As of September 30, 2010, WisdomTree had total assets of $25.6 million, which consisted primarily of cash and cash equivalents of $11.8 million and investments of $8.3 million. WisdomTree has no debt. There were approximately 115.1 million shares issued as of September 30, 2010. Fully diluted shares issued and outstanding were approximately 136.9 million as of September 30, 2010.
Third Quarter 2010 Earnings Call Information
WisdomTree will discuss its results and operational highlights during a conference call on Friday, October 29, 2010 at 9:00 a.m. ET. The call-in number will be (888) 680-0893
passcode 52786616. Anyone outside the
About WisdomTree
WisdomTree® is an 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 $9.5 billion in assets currently are managed by WisdomTree or are managed against WisdomTree Indexes. For more information, please visit www.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.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund’s before investing. To obtain a prospectus containing this and other important information, please call 1-866-909-WISE (9473). Read the prospectus carefully before you invest.
There are risks involved with investing including the possible loss of principal.
Past fund performance is not indicative of future fund results.
WisdomTree Funds are distributed by ALPS Distributors, Inc.
Jonathan Steinberg is a registered representative of ALPS Distributors, Inc.
ALPS Distributors, Inc. is not affiliated with Dreyfus, Advisors Asset Management or Compass Group.
Contact:
Media Contact:
Stuart Bell
WisdomTree Investments, Inc.
(917) 267-3702
or
WisdomTree Investor Relations Contacts:
KCSA Strategic Communications
Jeffrey Goldberger / Todd Fromer
(212) 896-1249 / (212) 896-1215
jgoldberger@kcsa.com / tfromer@kcsa.com