WisdomTree Investments
WisdomTree Announces First Quarter 2010 Results
Thursday 29 April 2010
Total Assets under management increase 11% from Q4 2009 to record $7.4 billion
$582 million net inflows for the quarter 22 out of 34 equity funds outperformed benchmarks since inception through Q1
New York, NY – (BUSINESS WIRE) – April 29, 2010 – WisdomTree (Pink Sheets: WSDT - News), an exchange-traded fund (“ETF”) sponsor and asset manager, today reported a GAAP net loss of $3.6 million in the first quarter of 2010, as compared to $5.0 for the fourth 2009. Proforma operating net loss, which excludes stock-based compensation, depreciation and amortization, and interest and investment income, was just below $1.0 million in the quarter first quarter, a 34.3% improvement from a proforma operating net loss of $1.5 million in the fourth quarter.
WisdomTree CEO Jonathan Steinberg commented, “WisdomTree garnered more than 7% of the ETF industry market share in the first quarter and continued to raise assets in emerging market equities and currencies. We continued to build awareness of emerging market currencies as an asset class, led by the WisdomTree Dreyfus Chinese Yuan Fund (CYB). CYB is now our second largest fund and is poised to benefit from the potential appreciation of the Chinese yuan, a trend many investors are watching.”
Mr. Steinberg continued, “We are off to a strong start in the second quarter with an impressive $423 million in net inflows already captured as of April 29, 2010. On the back of this progress, the Company has further strengthened its financial position and is now generating positive cash-flow. We continue to balance prudent cost management while still investing in important growth initiatives and we believe we are positioned to see significant operating leverage in the business going forward.”
Assets Under Management and Performance
As of March 31, 2010, assets under management (“AUM”) managed by WisdomTree or against WisdomTree Indexes was $7.4 billion, up 11% and ETF AUM was $6.7 billion, up 12% from December 31, 2009. Net inflows into WisdomTree ETFs were $582 million in the first quarter, primarily in emerging market currency and emerging market equity ETFs. Included in this amount was $152 million of outflows related to previously announced fund liquidations which occurred on March 29, 2010.
WisdomTree’s fundamentally weighted ETFs experienced relatively strong investment performance through the first quarter. Approximately 78% of the $5.4 billion invested in WisdomTree’s 34 equity ETFs on March 31, 2010 were in funds that, since their respective inceptions, have outperformed their comparable benchmarks through that date. 22 of WisdomTree’s 34 equity ETFs have outperformed their comparable benchmarks since inception and through the first quarter of 2010. For more information about WisdomTree ETFs, please click here or visit www.wisdomtree.com.
Recent Business Activity
On March 29, 2010, WisdomTree completed the planned closure and liquidation of 10 ETFs.
On April 1, 2010, the WisdomTree Japan Total Dividend Fund (DXJ) was renamed the WisdomTree Japan Hedged Equity Fund and began to hedge its Japanese yen exposure. Since the change was made, DXJ has taken in approximately $38 million.
On April 27, 2010, nine of WisdomTree’s ETFs were cross-listed in
First Quarter Financial Highlights
Comparison to the fourth quarter of 2009
Revenues
Total revenues for the quarter increased 13.7% to a record $8.7 million as compared to $7.6 million in the fourth quarter. Average ETF assets under management increased 16% in the first quarter as compared to the fourth quarter primarily due to $582 million of net inflows as well as $152 million of market appreciation. Included in the quarter were fund liquidations of $152 million which occurred on March 29, 2010. The average advisory fee earned during the first quarter and fourth quarter was 0.54%.
Expenses
Total expenses decreased to $12.3 million from $12.8 million in the fourth quarter primarily due to lower stock issuance costs, marketing and business development and fund management and administration expenses. Partly offsetting these decreases were higher compensation and benefits and professional fees. Excluding stock-based compensation and depreciation and amortization charges, proforma operating expenses increased 5.7% to $9.7 million from $9.2 million in the fourth quarter.
- ?Compensation and benefits expenses increased 10.1% to $5.3 million from $4.8 million in the first quarter primarily due to an increase in accrued incentive compensation due to higher levels of inflows, as well as payroll taxes associated with vesting of restricted stock.
- ?Fund management and administration expenses decreased 7.8% to $3.4 million from $3.7 million in the fourth quarter. Included in the first quarter was a one-time reduction adjustment of $0.2 million related to the Company’s previously announced fund closures. In addition, fund administration related expenses decreased due to cost efficiency changes initiated in the Company’s fund operations as well as lower index calculation fees as a result of consolidating vendors. Partly offsetting these decreases was an increase in fund related legal expenses.
- Marketing and business development expenses decreased 22.9% to $1.6 from $2.1 million in the fourth quarter. This expense was higher in the fourth quarter of last year due to increased levels of television advertising to support the Company’s emerging market currency and emerging market equity sales efforts as compared to the first quarter of this year. In addition, the fourth quarter included a one-time charge of $0.2 million to write off an intangible asset.
- Professional fees increased 62.3% to $1.0 million in the first quarter as compared $0.6 million in fourth quarter primarily due to strategic corporate consulting.
- Occupancy, communications and equipment expenses increased 7.2% to $0.3 million in the first quarter from $0.2 million in the fourth quarter. The fourth quarter of last year included a one-time reduction of overhead costs related to the Company’s sub-leased space.
- Other expenses decreased 66.7% to $0.4 million in the first quarter from $1.3 million in the fourth quarter. The fourth quarter of last year included an expense of $1.0 million related to the Company’s final issuance of common stock to Treasury Equity LLC as a result of the satisfaction of certain conditions related to the Company’s Currency ETFs.
- Partner sharing arrangements increased to $0.2 million in the first quarter from ($0.04) million in the fourth quarter. Net revenue sharing represents the amount paid to (or received from) the Bank of NY Mellon, after netting revenues and costs, for its collaboration with the Company’s Currency ETFs. This amount increased primarily due to significantly higher average AUM as a result of the Company’s currency sales efforts.
- Stock based compensation expenses decreased 27.6% to $2.5 million in the first quarter from $3.5 million in the fourth quarter. As referred to above, the fourth quarter of last year included an expense of $1.0 million related to the Company’s final issuance of common stock to Treasury Equity LLC as a result of the satisfaction of certain conditions related to the Company’s Currency ETFs.
Balance Sheet
As of March 31, 2010, WisdomTree had total assets of $24.6 million, which consisted primarily of cash and cash equivalents of $11.2 million and investments of $7.9 million. WisdomTree has no debt. There were approximately 114.9 million shares issued as of March 31, 2010. Fully diluted shares issued and outstanding were approximately 136.9 million as of March 31, 2010.
First Quarter 2010 Earnings Call Information
WisdomTree will discuss its results and operational highlights during a conference call on Friday, April 30, 2010 at 9:00 a.m. ET. The call-in number will be (888) 679-8037 passcode 45913077. 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 $7.8 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.
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