WisdomTree, Inc.

Greetings and welcome to the WisdomTree first quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during this conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to our host, Jessica Zaloum, Head of Corporate Communications. Thank you. You may begin.

Good morning. Before we begin, I would like to reference our legal disclaimer available in today's presentation. This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. A number of factors could cause actual results to differ materially from the results discussed in forward-looking statements, including but not limited to the risks set forth in this presentation and in the risk factors section of the Wisentrie Annual Report on Form 10-K for the year ended December 31st, 2022. Wisentrie assumes no duty and does not undertake to update any forward-looking statements. Now, it is my pleasure to turn the call over to Wisentrie CFO, Brian Edmondson.

Thank you, Jessica, and welcome everyone. Let me begin by sharing our results for the first quarter along with commentary on our expense guidance before turning the call over to Jarrett and Jono for additional updates on our business. First quarter marks a strong start to the year, having generated 6.3 billion of net flows, the third best quarter in our history. Flows were well balanced between our U.S. listed and European products, with assets gathered primarily in our fixed income commodity, emerging markets, and international equity categories. It has now been 10 consecutive quarters generating positive flows. And our first quarter flows translates into a 31% annualized organic flow growth rate. Our AUM ended the quarter at 90.7 billion, a new milestone and a record level, up almost 11% from the prior quarter, primarily from positive flows, but also favorable market movements. Our AUM currently stands at $91.2 billion, slightly higher from the end of March, having benefited from further positive market movement. Next slide. Revenues are $82 million, an increase of 12% from the fourth quarter due to our higher average AUM. We also recognized higher other income stemming from large flows into some of our European listed products. This revenue may change quarter over quarter depending upon AUM changes due to market movement or the velocity of flows arising from these products. Adjusted net income was $11.2 million or $0.07 a share. Our non-GAAP results exclude a non-cash after-tax gain of $20.6 million for a future gold commitment payment as well as a loss of $9.7 million recognized on the extinguishment of our convertible notes and $5.9 million in other net non-operating losses. Next slide. Our adjusted operating expenses are up 4.7% for the quarter. The largest contributor was compensation as we experienced elevated seasonality in the amount of compensation we report in the first quarter due to payroll taxes, benefits, and other items in connection with the payment of year-end bonuses. Next slide. Now a few comments on our forecasted expense guidance. We are narrowing our forecasted compensation guidance by increasing the low end of our range given the strong start to the year. We now estimate compensation to range from 100 to 106 million. The range considers variability in incentive compensation with drivers including the magnitude of our flows, our share price performance in relation to our peers, as well as revenue, operating income, and operating margin performance. Given the strong start to the year, we anticipate trending toward the high end of this range. Our discretionary spending was $13.2 million in the first quarter. We are reiterating our full-year discretionary spending guidance of $56 to $59 million as we anticipate an uptick in marketing spend. We reported a gross margin of 79.1% in the first quarter. We are maintaining our gross margin guidance of 78% for the year given anticipated product launches, changes in other income which may rise or fall depending upon the magnitude of flows of our European listed products, and uncertain market conditions. Our contractual gold payment expense is forecasted to be $18 million. assuming gold prices remain flat at current levels. As a reminder, this expense is based on us paying 9,500 ounces of gold on an annual basis and is measured based upon monthly average gold prices. Our third-party distribution expense was $2.2 million in the first quarter. We are currently trending toward the high end of our full-year guidance of approximately $8 to $9 million. Our adjusted tax rate was 22.7% for the quarter, and we are maintaining our tax rate guidance of 23%. And this past quarter, we refinanced 130 million of our 175 million convertible notes that were coming due in the second quarter. The remaining outstanding notes will be settled in June of this year. Our interest costs for the second quarter is estimated to be 4.1 million, which should then reduce to 3.5 million per quarter going forward. That's all I have. I will now turn the call over to Jared.