WisdomTree, Inc.

Hello, and welcome to the Wisdom Tree Q4 2023 earnings conference call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Jessica Zalum, Head of Corporate Communications. Please go ahead, Jessica.

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 Wisentree's annual report on Form 10-K for the year ended December 31st, 2022. Wisentree assumes no duty and does not undertake to update any forward-looking statements. Now, it is my pleasure to turn the call over to Wisentree CFO, Brian Edmondson.

Thank you, Jessica, and good morning, everyone. I will begin my remarks with a recap of 2023 and our fourth quarter results. followed by our 2024 expense guidance before turning it over to Jarrett and Jono for additional updates on our business. 2023 has been a year of transformation and table setting for the future. We generated 10.4 billion of inflows during the year, which translated into a 13% organic flow growth rate. And flow diversification is driving our average fee capture on our flows upward which was about two times greater than our fee capture in the prior year. And while we experienced modest outflows in the fourth quarter, revenue grew organically as we captured positive run rate revenues on our flows as we outflowed from lower fee products while inflowing into products with a higher fee capture. Continued organic growth and positive market conditions has resulted in the achievement of record revenue and AUM levels while capital management actions undertaken by management has driven meaningful margin expansion and EPS accretion. The buyout of our gold royalty obligation in the spring was 15% accretive and drove operating margin expansion by over 500 basis points. This transaction also cleaned up our balance sheet, eliminating a perpetual obligation and reduced the volatility in our quarterly financial results. Consideration paid included $50 million in cash and the issuance of preferred stock convertible into 13 million shares of our common stock. In November, we repurchased these shares for $84.4 million, 40 million of which was paid up front and the remainder payable in equal annual installments over the next three years with no requirement to pay interest. The implied price per share is $6.02. when considering the interest-free financing element of the transaction and the stock repurchase was approximately 7% accretive. These actions taken together with record AUM of a hundred billion at year end serve as a strong foundation and jumping off point as we turn the page into 2024. Revenue growth going forward is naturally derived from our AUM ending the year at a level greater than our average AUM over this past year. That, coupled with continuing organic growth and favorable market conditions, as well as disciplined expense and capital management, is the formula for margin expansion and EPS accretion. Our AUM currently stands at $100.6 billion, up slightly from the end of December, resulting from $300 million of inflows and positive market movement. Next slide. Revenues were 90.8 million, essentially flat as compared to the third quarter, as the increase in our AUM was more heavily weighted toward the latter part of the year. As just mentioned, our ending AUM of 100 billion, which is greater than our average AUM for the year, serves as a nice tailwind for future growth. For the year, we experienced revenue growth of 16% and adjusted operating income growth of 45%. This translated into 540 basis points of adjusted operating margin expansion or 140 basis points of organic adjusted operating margin expansion when excluding the impact of our gold royalty buyout that occurred earlier this year. Adjusted net income for the quarter was 18.6 million or 11 cents per share. Next slide. Our operating expenses were up 1.7% for the quarter, driven by higher marketing, fund costs, and sales-related expenses. We ended the year toward the high end of our compensation and discretionary spending expense guidance. Next slide. Now a few comments on our 2024 expense guidance. We are forecasting our compensation expense to range from 108 to 118 million. This guidance includes planned hires as well as year-end compensation adjustments and the annualization of hires made during 2023. The range considers variability in incentive compensation with drivers including the magnitude of our flows, revenue and operating income growth, margin expansion, and our share price performance in relation to our peers. Also, just a reminder that we experience elevated seasonality in the amount of compensation we report in the first quarter as we recognize payroll taxes, benefits, and other items in connection with year-end bonuses. We estimate first quarter compensation expense to be approximately 30 to 31 million. Discretionary spending is anticipated to range from 64 to 68 million as compared to 59.3 million recognized in 2023. The modest uptick incorporates planned expenses for our national rollout of WisdomTree Prime, including our measured approach toward marketing and other related costs. Our gross margin is anticipated to be about 79 to 80% at current AUM levels and taking into consideration fund launches anticipated during the course of the year. If AUM scales higher from continued organic growth or favorable market conditions, we would anticipate further gross margin expansion. Our third-party distribution expense is anticipated to range from 10 to 11 million as we expand our partnerships and grow AUM on the platforms. Our adjusted interest expense is forecasted to be about $14 million as compared to almost $15 million in 2023 as we paid down $45 million of debt this past June. Our adjusted interest expense is exclusive of any interest cost we are required to impute under GAAP related to our interest-free financing of the shares we repurchased from the World Gold Council in November of this past year. Our interest income is estimated to be approximately $4 million in 2024, taking into consideration the magnitude of our investable assets and current interest rates. Our adjusted tax rate is expected to be about 24% to 25%, a slight uptick versus last year, to account for the full-year impact of the UK rate change to 25% that went in effect on April 1st of last year. And our weighted average diluted shares are estimated to be between 166 and 168 million as compared to 171 million this past quarter. The decline is primarily due to the recognition of the remaining half of the 13.1 million share equivalents recently repurchased as that repurchase occurred midway through the fourth quarter. That's all I have. I will now turn the call over to Jared.