• Assets Under Management (AUM): $109.8 billion, up almost 10% from the prior year.
• Adjusted Operating Margin: Expanded by 680 basis points year-over-year.
• Adjusted Revenue: $110.5 million for the quarter, up 1% sequentially and approximately 22% higher year-over-year.
• Adjusted Net Income: $25.3 million or $0.17 per share for the quarter.
• Compensation to Revenue Ratio (2025 Guidance): Forecasted to range from 28% to 30%.
• Gross Margin (2025 Guidance): Anticipated to be about 81% to 82% compared to 80.2% in the past year.
• Third-Party Distribution Expense (2025 Guidance): Expected to range from $11 million to $12 million.
• Interest Expense (2025 Guidance): Anticipated to be approximately $20 million higher than the prior year.
• Interest Income (2025 Guidance): Expected to be approximately $7 million.
• Weighted Average Diluted Shares (2025 Guidance): Anticipated to be 149 million to 150 million.
• Model Users and Assets: Over 2,500 model users and $3.83 billion in model assets, reflecting 29% user growth and 28% model asset growth year-over-year.
• Digital AUM: $31 million in total digital AUM, including $3 million in WisdomTree Prime AUM.
• Daily User Transactions: Averaged 143 daily user transactions in Q4.

• Warning! GuruFocus has detected 2 Warning Sign with WT.

Release Date: January 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• WisdomTree Inc (NYSE:WT) reported a 10% increase in assets under management (AUM) to $109.8 billion by the end of 2024.
• The company achieved a 70% increase in adjusted earnings per share (EPS) and a 50% rise in stock price year-over-year.
• Adjusted revenues grew by 22% compared to the same period last year, driven by higher average AUM and diversified revenue streams.
• The models business saw significant growth, with a 29% increase in model users and a 28% rise in model assets year-over-year.
• WisdomTree Inc (NYSE:WT) is well-positioned in the digital assets space, with early investments in tokenization and blockchain-enabled finance, despite regulatory challenges.

Negative Points

• Institutional client outflows and market volatility in Japan and commodity markets posed challenges in 2024.
• Regulatory headwinds have delayed the implementation timeline for digital assets and blockchain initiatives by about two years.
• Non-recurring costs related to custody migration and higher professional fees impacted fund management expenses.
• The company anticipates higher adjusted interest expenses due to incremental debt raises for repurchasing preferred stock.
• Only 2,300 out of 26,000 opened accounts on WisdomTree Prime are funded, indicating a gap in user engagement.

Q & A Highlights

Q: What does WisdomTree's competitive landscape look like in a more open environment under the new administration? A: Will Peck, Head of Digital Assets, explained that the new administration is significantly more pro-innovation, which is expected to lead to more regulatory clarity and legislative support for crypto and blockchain. This environment will likely catalyze WisdomTree's efforts, particularly in crypto exchange-traded products and tokenization. WisdomTree has been a leading flow gatherer in Europe and is well-positioned to continue this trend as competition increases.

Q: Are there any areas or capabilities of particular interest for M&A and partnerships? A: Jonathan Steinberg, CEO, mentioned that potential areas for M&A include ETF sponsors, product lines from other asset managers, and technology. WisdomTree is actively exploring opportunities and is open to transformative strategic partnerships, indicating a proactive approach to growth.

Q: With the momentum in crypto funds in Europe, what are the individual offerings, and how might they expand? A: Jeremy Schwartz, EVP and Global Head of Research, highlighted that WisdomTree offers a broad suite of crypto products in Europe, including Bitcoin, Ethereum, Solana, Cardano, and others. The company expects to expand these offerings, and with the new U.S. administration, similar innovations are anticipated in the U.S. market.

Q: Can you provide more details on the use cases for WisdomTree Prime and Connect? A: Will Peck noted that tokenized money market funds are a significant use case, offering yield and diversification benefits. WisdomTree Prime allows immediate investment into money market funds with spending capabilities via a debit card. WisdomTree Connect, launched recently, targets on-chain firms seeking yield and diversification, providing a seamless experience with regulatory and security comfort.

Q: What is the strategy for expanding portfolio consultation services, and how significant is it to the overall strategy? A: R. Jarrett Lilien, President and COO, explained that portfolio consultations are a key tool for penetrating the advisor market. These services help deepen engagement with advisors, leading to increased model user growth and asset penetration. The strategy aims to grow model users by 25-30% and model assets by 35-40% annually.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.