WisdomTree, Inc.

Greetings and welcome to the WisdomTree Q2 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jessica Leloum, Head of Corporate Communications. Thank you, Jessica. 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 risk set forth in this presentation and in the risk factor section of WisdomTree's annual report on Form 10-K for the year ended December 31st, 2023, and quarterly report on Form 10-Q for the quarter ended March 31st, 2024. WisdomTree assumes no duty and does not undertake to update any forward-looking statements. Now, it is my pleasure to turn the call over to WisdomTree CFO, Brian Edmondson.

Thank you, Jessica, and good morning, everyone. I'll be covering our second quarter results along with commentary on our forward-looking guidance before turning the call over to Jarrett and Jono for additional updates on our business. We ended the quarter with record AUM of $109.7 billion, driven primarily by favorable market conditions. And while our flows were largely muted during the quarter due to outflows from our commodity products, which tend to be tactical in nature, we continue observing strong engagement in our U.S.-listed ETFs and offshore USITS ETF suite. These products generated a combined $1.9 billion of net inflows during the quarter and nearly $4.2 billion of net inflows year-to-date, representing an 11% annualized pace of year-to-date organic growth. Our flow profile over the course of the year has remixed our blended fee rate higher, averaging approximately 37 basis points during the quarter. Our record AUM continues to drive revenue growth and expanding margins, demonstrating the scalability of our business model. Next slide. Revenues were $107 million during the quarter, an increase of 10.5 percent from the first quarter and up approximately 25 percent versus the prior year quarter, driven by higher average AUM. We also observed an 87 percent increase in other revenue versus the first quarter due to updates in asset-based revenue arrangements on certain European-listed products. Other revenue totaled 8.1 million this quarter and reflects ETP revenues captured away from the expense ratio providing further revenue diversification. Looking back over the longer term, the magnitude of other revenue generated this quarter is almost five times what was realized in June of 2022. There are asset-based and transaction-based elements driving other revenue. And while difficult to forecast, we would suggest the magnitude of other revenue generated in this most recent quarter serves as a fair approximation of what we could expect going forward. On a year-to-date basis, our revenues have grown 21.5 percent, and our adjusted operating margin was 32.6 percent, representing expansion of over 840 basis points versus the prior year, or 480 basis points organically, when adjusting for the impact of our gold royalty buyout, which was accomplished in May of last year. Our adjusted net income for the quarter was $27.1 million, or 16 cents a share. Next slide. Now a few comments on our forecasted guidance. We are updating our forecasted compensation expense guidance, which will be provided as a percentage of revenue going forward, rather than as a range of fixed dollar amounts. Having taken into consideration a variety of scenarios, including the potential magnitude of our flows over the course of the year, revenue and operating income growth, forecasted margin expansion, and our share price performance in relation to our peers, we currently estimate our comp-to-revenue ratio to be 28% to 29% for the year. This range is largely aligned with current street estimates and would represent a compensation ratio lower than the 31.4% we realized last year. Our discretionary spending was 30.5 million year-to-date. We are reiterating our full-year discretionary spending guidance of 64 to 68 million. The range is largely dependent on the magnitude of marketing spend associated with WisdomTree Prime over the remainder of the year as we continue testing messages to further define our target customers while enhancing the app with additional features. Due to seasonality, The discretionary spend for the remainder of the year will likely be more skewed toward the fourth quarter. We reported a gross margin of 81.2 percent in the second quarter, and we are updating our gross margin guidance to be between 80 and 81 percent for the year, a one percentage point improvement considering current AUM levels and higher forecasted other revenue going forward. If AUM scales higher from continued organic flow growth or favorable market conditions, we would anticipate further gross margin expansion. Our third-party distribution expense is $5 million year-to-date. We are maintaining our guidance of $10 to $11 million for the year. We are also maintaining our annual adjusted interest expense guidance of $14 million. As a reminder, our adjusted interest expense guidance is exclusive of any interest costs we are required to impute under GAAP. related to our interest-free financing of the shares we repurchased from the World Gold Council last November. Our interest income year-to-date was $2.8 million, and we are maintaining our interest income guidance for the year to be about $5 million, based upon the magnitude of our forecasted interest-earning assets. Our adjusted tax rate was 25 percent in the second quarter, and our guidance of 24 to 25 percent remains unchanged. And our weighted average diluted shares were 165.9 million year to date. And our guidance of 166 to 168 million for the year remains unchanged as well. As a reminder, this guidance does not take into consideration any variability in shares associated with our convertible notes. Our current stock, which is approaching $11 per share, is higher than the 954 conversion price related to convertible notes scheduled to mature in 2028. While our notes require principal to be paid in cash, our diluted shares would need to be increased for any incremental shares associated with the conversion option once our stock price exceeds 954 per share. An illustration is included within our earnings presentation to assist in quantifying the incremental shares associated with the conversion option going forward. That's all I have. I'll now turn the call over to Jarrett.