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01/11 14:26
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call demonstrates strong growth in various AUM categories, including gold and digital assets, and positive strategic moves like the Ceres acquisition. The Q&A section reveals optimism about future growth, especially in digital assets and tokenization, despite some vague responses. The market strategy and shareholder return plans are promising, suggesting a positive stock price movement. Given the market cap of approximately $1.5 billion, these factors are likely to result in a 2% to 8% increase in stock price over the next two weeks.
Global AUM $137.2 billion, a record high, driven by strong organic growth and favorable market conditions. This includes record U.S. AUM of $88.3 billion, record European AUM of $48.3 billion, and digital AUM of almost $600 million.
Global Net Inflows $2.2 billion in the third quarter, bringing year-to-date inflows through September 30 to $8.8 billion, an annualized organic growth pace of 11%. Year-to-date inflows include $2.5 billion in the U.S., $5.8 billion in Europe, and roughly $550 million in digital assets. Significant contributors include European gold and cryptocurrency products, European defense fund, and digital money market fund.
Adjusted Revenues $125.6 million during the quarter, an increase of 11.5% from the second quarter and up approximately 14.7% versus the prior year quarter, driven by higher average AUM. Year-to-date adjusted revenues have grown 10.7%, driven by higher average AUM and higher other revenues attributable to European listed products, partly offset by a lower average fee capture.
Adjusted Net Income $34.5 million or $0.23 per share for the quarter. Adjusted net income excludes the loss on extinguishment of convertible notes of $13 million, acquisition-related costs of $2.4 million, and other miscellaneous items.
Gross Margin 82.2% in the third quarter, an increase of over 100 basis points versus the second quarter due to higher AUM levels.
Interest Income $4 million during the third quarter, higher than the previous run rate of approximately $2 million per quarter due to temporarily investing the capital raised from convertible note issuance for the Ceres acquisition.
Gold Strategies AUM $22 billion, reflecting 57% growth year-to-date. These strategies brought in over $1 billion of net inflows in the quarter alone.
Model AUM Approximately $5.85 billion, up more than 50% year-to-date. Adviser adoption remains strong, with the number of advisers using models increasing sharply.
Digital Assets AUM Around $600 million, with peak levels near $900 million, driven largely by flows into blockchain-enabled money market fund.
Digital Assets: WisdomTree Connect platform and WisdomTree Prime are live with on-chain transfer capabilities. Exited the quarter with $600 million in AUM, with peak levels near $900 million. Adoption led by stablecoin issuers and on-chain native businesses.
Gold Strategies: Physical gold and gold overlay strategies now exceed $22 billion in AUM, reflecting 57% growth year-to-date. Over $1 billion of net inflows in the quarter.
Model Portfolios: Model AUM grew to $5.85 billion, up more than 50% year-to-date. Adviser adoption is strong, with 13 new custom model clients onboarded in the quarter.
Global AUM: Record global AUM of $137.2 billion, including $88.3 billion in the U.S., $48.3 billion in Europe, and $600 million in digital assets. Net inflows of $2.2 billion in the quarter, with year-to-date inflows of $8.8 billion.
Ceres Acquisition: Acquisition of Ceres Partners closed, adding farmland as a negatively correlated asset class and introducing opportunities in solar projects and AI data centers.
Revenue Growth: Adjusted revenues were $125.6 million, up 11.5% from the second quarter and 14.7% year-over-year. Other revenues increased to $11 million, driven by European listed products.
Expense Management: Gross margin increased to 82.2% in Q3, expected to rise to 83% in Q4. Adjusted interest expense increased due to convertible notes for the Ceres acquisition.
Diversification: Achieved diversification across asset classes, client types, and geographies. Entered private assets with the Ceres acquisition.
Digital Asset Strategy: Focus on blockchain-enabled money market funds and seamless redemption processes to build trust and wallet share.
Convertible Notes Issuance: The issuance of convertible notes in mid-August to facilitate the Ceres acquisition has increased adjusted interest expenses from $5 million to $8 million in the third quarter, with an anticipated rise to $11 million in the fourth quarter. This could strain financial resources and impact profitability.
Ceres Acquisition Performance Fees: Ceres' revenue includes a 20% performance fee, which is dependent on the underlying returns of the farmland managed. This introduces variability and uncertainty in revenue projections, as historical performance may not be indicative of future results.
Digital Asset Fluctuations: Digital asset flows are subject to week-to-week fluctuations, creating unpredictability in AUM levels and revenue from this segment.
European AUM Revenue Forecasting: Revenue from European AUM is difficult to forecast due to its dependence on asset-based and transaction-based fees, which can vary with market conditions.
Interest Income Decline: Interest income is expected to revert to earlier levels of $2 million to $3 million in the fourth quarter, down from $4 million in the third quarter, reducing a source of financial inflow.
Ceres Acquisition Operating Expenses: Ceres' estimated annualized operating expenses are approximately $15 million, with 80% related to compensation. This adds a significant fixed cost to operations, impacting overall expense management.
Gross Margin: Anticipated to increase to 83% in the fourth quarter, resulting in an overall gross margin of about 82% for the full year.
Adjusted Interest Expense: Expected to be approximately $11 million in the fourth quarter, reflecting the full quarter impact of financing related to the Ceres acquisition.
Interest Income: Projected to revert to earlier levels of approximately $2 million to $3 million in the fourth quarter.
Weighted Average Diluted Shares: Anticipated to be 146 million to 149 million in the fourth quarter, considering the impact of share repurchases and convertible notes.
Ceres Acquisition Revenue and Expenses: Ceres' trailing 12-month historical revenues were approximately $40 million, with annualized operating expenses estimated at $15 million. Performance fees will depend on farmland returns, and historical revenues may not indicate future performance.
Model AUM Growth: Model AUM grew to approximately $5.85 billion, up more than 50% year-to-date, with strong adviser adoption and new custom model clients onboarded.
Digital Assets Growth: Exited the quarter with around $600 million in AUM, with peak levels near $900 million. Strong traction year-to-date and a robust pipeline ahead.
Share Repurchase: During the third quarter, WisdomTree repurchased 6.8 million shares of common stock in connection with their recently completed convertible note issuance. This repurchase impacted the weighted average diluted shares, which were 150.7 million during the third quarter. The company anticipates the weighted average diluted shares to be 146 million to 149 million in the fourth quarter, considering the full quarter impact of the repurchased shares.
The earnings call demonstrates strong growth in various AUM categories, including gold and digital assets, and positive strategic moves like the Ceres acquisition. The Q&A section reveals optimism about future growth, especially in digital assets and tokenization, despite some vague responses. The market strategy and shareholder return plans are promising, suggesting a positive stock price movement. Given the market cap of approximately $1.5 billion, these factors are likely to result in a 2% to 8% increase in stock price over the next two weeks.
The earnings call and Q&A reveal strong financial performance with a 33% EPS growth, increased operating margins, and record AUM. The acquisition of Ceres Partners and expansion in the digital assets space signal promising growth. While guidance remains unchanged, the positive outlook on client growth and strategic initiatives in farmland and stablecoins are encouraging. The market cap suggests a moderate reaction, leading to a positive sentiment prediction of a 2% to 8% increase in stock price.
The earnings call highlights strong financial performance with EPS up 33% and record AUM. Despite market volatility, the company shows resilience through significant net inflows and strategic initiatives like AI integration. The Q&A session reveals cautious optimism with ongoing partnerships and AI deployment, although management's vague responses on specifics slightly temper enthusiasm. The lack of a shareholder return plan is a minor drawback, but overall, the positive financial metrics and strategic growth initiatives outweigh concerns, suggesting a positive stock price movement over the next two weeks.
The earnings call presents strong financial performance with record AUM and significant net inflows, alongside a 33% increase in EPS. Despite unchanged guidance, the company's strategic initiatives, including digital asset expansion and new fund launches, indicate positive growth prospects. The Q&A section reveals cautious optimism with ongoing partnerships and crypto expansion, but lacks specific guidance. The market cap suggests moderate sensitivity to news, aligning with a positive outlook of 2% to 8% stock price increase, driven by financial strength and strategic growth.
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