WisdomTree Investments
WisdomTree Announces Third Quarter 2009 Results
Thursday 29 October 2009
$558 million net inflows for the quarter
Assets under management increase 32% from Q2 to record $5.5 billion
New York, NY – (BUSINESS WIRE) – Thursday, October 29, 2009 – WisdomTree (Pink Sheets: WSDT - News), an industry leading index developer and exchange-traded fund (“ETF”) sponsor, today reported a GAAP net loss of $5.0 million in the third quarter of 2009, a 4.0% improvement from a net loss of $5.2 million in the second quarter. Proforma operating net loss, which excludes stock-based compensation, depreciation and amortization, and interest and investment income, was $2.4 million in the quarter, a 26.2% improvement from a net loss of $3.3 million in the second quarter.
WisdomTree CEO
Mr. Steinberg continued, “We continue to see strong net inflows in October, particularly in our Currency Income ETFs. Through October 29, total inflows into the currency family were $XX, representing XX% of the category industry wide. We have taken an active role in educating financial professionals about the importance of currencies as an asset class within a diversified portfolio. We expect continued growth in this category.”
Assets Under Management and Performance
As of September 30, 2009, assets under management (“AUM”) managed in WisdomTree ETFs, Indexes and other accounts was $5.5 billion and ETF AUM was $4.9 billion, up 32% and 33.8% respectively from June 30, 2009. Net inflows into WisdomTree ETFs were $558 million in the third quarter.
WisdomTree’s fundamentally weighted ETFs experienced relatively strong investment performance through the third quarter. Approximately 74% of the $4.5 billion invested in WisdomTree’s 42 equity ETFs on September 30, 2009 were in funds that, since their respective inceptions, have outperformed their benchmarks through that date. 25 of WisdomTree’s 42 equity ETFs outperformed their comparable benchmarks since inception through the third quarter. For more information about WisdomTree ETFs, please click here or visit www.wisdomtree.com.
Third Quarter Financial Highlights
Comparison to the second quarter of 2009
Revenues
Total revenues for the third quarter increased 28.7% to $5.7 million as compared to $4.4 million in the second quarter. Average ETF assets under management increased 24.8% primarily due to $680 million of market appreciation as well $558 million of net inflows. The average advisory fee earned during the third quarter was 0.53%, up from 0.51% in the second quarter primarily due to higher inflows into the Company’s emerging market ETFs and greater market appreciation in this market.
Expenses
Total expenses increased 10.2% to $10.8 million from $9.8 million in the second quarter primarily due to higher compensation and fund management and administrations related expenses. Excluding stock-based compensation, depreciation and amortization charges, proforma operating expenses increased 5.3% to $8.2 million from $7.7 million in the second quarter.
68% percent of the increase in revenues flowed through to the bottom line, improving the Company’s operating loss over the second quarter.
- Compensation and benefits expenses increased 20.8% to $5.2 million from $4.3 million in the second quarter primarily due to higher stock-based compensation expense. Excluding stock-based compensation, compensation and benefits expense increased 10.2% to $2.9 million from $2.6 million due to the accrual of higher incentive compensation expenses due to higher inflows.
- Fund management and administration expenses increased 3.5% to $3.3 million from $3.2 million in the second quarter due to higher average asset balances.
- Marketing and business development expenses were flat at $1.1 million in the third quarter as lower television advertising was offset by higher sales and business development related expenses.
- Professional fees were flat at $0.4 million in the third quarter as compared to the second quarter. Excluding stock based compensation, professional fees increased 39.4% to $0.2 million from $0.1 million primarily due to regulatory compliance consulting during the quarter.
- Occupancy, communications and equipment expenses were flat at $0.3 million.
- Other expenses were also flat at $0.4 million. Revenue sharing with The Bank of New York-Mellon for the Company’s Currency and Fixed Income ETF collaboration increased due to higher average assets under management for these products. This increase was offset by lower general and administrative expenses.
Year-to-Date Results
Total revenues decreased 22.4% to $13.9 million during the first nine months of 2009 from $17.9 million in the comparable period in 2008, as a result of lower asset levels related to the credit crisis and downturn in the economy which began in the second half of 2008 and continued into the first half of 2009.
Total expenses decreased 25.9% to $30.6 million during the first nine months of 2009 from $41.2 million in the same period of last year. Excluding stock-based compensation and depreciation and amortization charges, proforma operating expenses decreased 29.7% to $23.6 million from $33.6 million in the same period last year. This decrease was primarily due to lower marketing and compensation related expenses due to cost reduction actions initiated by management in the second half of 2008 along with lower fund management and administration costs due to lower average asset balances.
Balance Sheet
As of September 30, 2009, WisdomTree had total assets of $22.5 million which consisted primarily of cash and cash equivalents of $8.3 million, and investments of $9.6 million. WisdomTree has no debt. There were approximately 107.1 million shares issued as of September 30, 2009. Fully diluted shares issued and outstanding were approximately 128.5 million as of September 30, 2009.
Financing
In October 2009, the Company completed a financing raising $5.0 million through the issuance of approximately 6.7 million shares of common stock. The proceeds from this financing will be used for general business purposes. As of October 29, 2009, the Company has 113,776,263 shares of common stock issued and outstanding (including 4,793,637 shares of unvested restricted stock) and 21,402,959 options outstanding with a weighted average strike price of $0.57.
Third Quarter 2009 Earnings Call Information
WisdomTree will discuss its results and operational highlights during a conference call on Friday, October 30 at 9:00 a.m. ET. The call-in number will be (888) 713-4215 passcode 15327435. Anyone outside the
About WisdomTree
WisdomTree® is a leading ETF sponsor and innovative index developer 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 $5.7 billion in assets currently are managed by WisdomTree or are managed against WisdomTree Indexes by third parities under license from WisdomTree. For more information, please visit www.wisdomtree.com or www.wisdomtree401k.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
sbell@wisdomtree.com
WisdomTree Investor Relations Contacts:
KCSA Strategic Communications
Jeffrey Goldberger / Todd Fromer
+1 212.896.1249 / +1 212.896.1215
jgoldberger@kcsa.com / tfromer@kcsa.com