WisdomTree Inc
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
WT$19.48+2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0001214659-24-013626
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001214659-24-018545
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 177 previous paragraphs and 181 current paragraphs.
102 unchanged; 59 reworded; 17 added; 12 removed; 4 previous and 3 current paragraphs rearranged.
Tables are not compared: 34 previous and 37 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
U.S. equity markets recovered from a correction experienced in early August and there was a rotation into small cap and value stocks. Interest rates fell in anticipation of the Federal Reserve easing cycle leading to strong total returns for fixed income.
Current report
The change in guidance from the prior quarter is due to an increase in debt effectuated to facilitate the repurchase of Series A Non-Voting Convertible Preferred Stock (the “Series A Preferred Stock”) from ETFS Capital, as well as the repurchase of shares of common stock.
Current report
Our weighted average diluted shares were 156.7 million during the three months ended September 30, 2024. We currently estimate our weighted average diluted shares to be between 147.0 million and 148.0 million during the three months ended December 31, 2024 taking into consideration the full quarter impact of the repurchase of the Series A Preferred Stock and additional shares of common stock which occurred in mid-August of 2024. Our weighted average diluted share guidance was previously 166.0 million and 168.0 million during the year ending December 31, 2024.
Current report
Professional fees expense increased 69.8% from $3.7 million during the three months ended September 30, 2023 to $6.3 million in the comparable period in 2024 primarily due to $3.7 million of legal and other related expenses incurred in connection with the SEC ESG Settlement. An equal and offsetting amount is recorded in other revenues as these expenses are expected to be covered by insurance.
Current report
Interest expense increased 45.2% from $3.5 million during the three months ended September 30, 2023 to $5.0 million in the comparable period in 2024 due to a higher level of debt outstanding, partly offset by a lower average interest rate. The increase is also due to the recognition of imputed interest related to the interest-free financing of our repurchase of the shares of Series C Preferred Stock from GBH in November 2023.
Current report
During the three months ended September 30, 2023, we recognized a non-cash impairment charge of $2.7 million, primarily related to our investment in Securrency, Inc., as we marked our investment to its estimated realizable value in connection with Securrency entering into an agreement to be acquired by an unrelated third party.
Current report
Other losses, net
Current report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
Occupancy, communications and equipment expense increased 12.8% from $3.5 million during the nine months ended September 30, 2023 to $3.9 million in the comparable period in 2024 primarily due to higher spending on office equipment.
Current report
Interest expense increased 15.8% from $11.5 million during the nine months ended September 30, 2023 to $13.3 million in the comparable period in 2024 due to a higher level of debt outstanding, partly offset by a lower average interest rate. The increase is also due to the recognition of imputed interest related to the interest-free financing of our repurchase of the shares of Series C Preferred Stock from GBH in November 2023.
Current report
Impairments
Current report
Other losses, net
Current report
Adjusted net income, as reported on a non-GAAP basis during the three and nine months ended September 30, 2024, also excludes a loss of $11.4 million recognized upon the repurchase of our Series A Preferred Stock, which was convertible into 14.75 million shares of common stock from ETFS Capital and $1.9 million of stock repurchase excise taxes. Under U.S. GAAP, these amounts are excluded from net income but are required to be added to net income to arrive at income available to common stockholders in the calculation of earnings per share.
Current report
We have the following convertible notes outstanding as of September 30, 2024:
Current report
As of September 30, 2024, we had an aggregate principal amount of $520,845 outstanding of the 2026 Notes, the 2028 Notes and the 2029 Notes (collectively, the “Convertible Notes”).
Current report
In addition, on August 13, 2024, we repurchased all of our then-outstanding Series A Non-Voting Convertible Preferred Stock, which was convertible into 14,750,000 shares of our common stock, from ETFS Capital for aggregate cash consideration of approximately $143.8 million. See Note 11 to our Consolidated Financial Statements for additional information.
Current report
Other revenues are earned from swap providers associated with certain of our European listed ETPs, the nature of which are based on a percentage of the ETPs’ average daily net assets. We also earn transaction-based income on flows associated with certain European listed ETPs. There is no significant judgment in calculating amounts due, which are invoiced monthly or quarterly in arrears and are not subject to any potential reversal. Progress is measured using the practical expedient under the output method resulting in the recognition of revenue in the amount for which we have a right to invoice.
Removed paragraphs (12)
Previous report
Emerging markets outperformed developed markets in the second quarter of 2024. U.S. shares gained, led higher by the information technology and communication service sectors. Annual U.S. inflation eased slightly and the labor market remained strong. Eurozone shares moved lower in the second quarter of 2024 amid political uncertainty and sticky inflation.
Previous report
Professional fees expense decreased 20.9% from $8.3 million during the three months ended June 30, 2023 to $6.6 million in the comparable period in 2024 due to non-recurring expenses incurred during the three months ended June 30, 2023 to settle our deferred consideration—gold payments obligation and our acquisition of WisdomTree Transfers, Inc. (formerly Securrency Transfers, Inc.).
Previous report
Other losses and gains, net
Previous report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous report
Contractual gold payments
Previous report
Other gains and losses, net
Previous report
Issuance of Convertible Notes
Previous report
On June 14, 2021, we issued and sold $150.0 million in aggregate principal amount of 3.25% Convertible Senior Notes due 2026 (the “2021 Notes”) pursuant to an indenture dated June 14, 2021, between us and the trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A.
Previous report
On June 16, 2020, we issued and sold $150.0 million in aggregate principal amount of 4.25% Convertible Senior Notes due 2023 (the “June 2020 Notes”) pursuant to an indenture dated June 16, 2020, between us and the trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A. On August 13, 2020, we issued and sold $25.0 million in aggregate principal amount of 4.25% Convertible Senior Notes due 2023 at a price equal to 101% of the principal amount thereof, plus interest deemed to have accrued since June 16, 2020, which constituted a further issuance of, and formed a single series with, our June 2020 Notes (the “August 2020 Notes” and together with the June 2020 Notes, the “2020 Notes”).
Previous report
After the repurchase and settlement at maturity of the 2020 Notes and the issuance of the 2023 Notes (such 2023 Notes, together with the 2021 Notes, the “Convertible Notes”), we had $280.0 million in aggregate principal amount of Convertible Notes outstanding.
Previous report
Convertible Notes
Previous report
See Note 7 to our Consolidated Financial Statements for information.
Reworded paragraphs (59)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and the related notes and the other financial information included elsewhere in this Report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below. For a more complete description of the risks noted above and other risks that could cause our actual results to materially differ from our current expectations, please see Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and the related notes and the other financial information included elsewhere in this Report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below. For a more complete description of the risks noted above and other risks that could cause our actual results to materially differ from our current expectations, please see Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and in subsequent reports filed with or furnished to the SEC. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.
Previous wording
We are a global financial innovator, offering a well-diversified suite of ETPs, models, solutions and products leveraging blockchain technology. We empower investors and consumers to shape their future and support financial professionals to better serve their clients and grow their businesses. We are leveraging the latest financial infrastructure to create products that provide access, transparency and an enhanced user experience. Building on our heritage of innovation, we are also developing and have launched next-generation digital products, services and structures, including Digital Funds and tokenized assets, as well as our blockchain-native digital wallet, WisdomTree Prime. WisdomTree Prime is available in the U.S. in 44 states and to approximately 79% of the U.S. population.
Current wording
We are a global financial innovator, offering a well-diversified suite of ETPs, models, solutions and products leveraging blockchain technology. We empower investors and consumers to shape their future and support financial professionals to better serve their clients and grow their businesses. We are leveraging the latest financial infrastructure to create products that provide access, transparency and an enhanced user experience. Building on our heritage of innovation, we are also developing and have launched next-generation digital products, services and structures, including Digital Funds and tokenized assets, as well as our blockchain-native digital wallet, WisdomTree Prime and institutional platform, WisdomTree Connect. WisdomTree Prime is available in the U.S. in 45 states and to approximately 80% of the U.S. population.
Previous wording
We had approximately $109.7 billion in AUM as of June 30, 2024. Our family of ETPs includes products that provide exposure to equities, fixed income, commodities, leveraged-and-inverse, currency, cryptocurrency and alternatives strategies. We have launched many first-to-market products and pioneered alternative weighting we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective funds that are built to perform. Most of our equity-based funds employ a fundamentally weighted investment methodology, which weights securities based on factors such as dividends, earnings or investment factors, whereas most other industry indexes use a capitalization weighted methodology. These products are distributed through all major channels in the asset management industry, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers primarily through our sales force. We believe technology is altering the way financial advisors conduct business and through our Advisor and Portfolio Solutions programs we offer technology-enabled and research-driven solutions including portfolio construction, asset allocation, practice management services and digital tools to help financial advisors address technology challenges and grow and scale their businesses.
Current wording
We had approximately $112.6 billion in AUM as of September 30, 2024. Our family of ETPs includes products that provide exposure to equities, commodities, fixed income, leveraged-and-inverse, cryptocurrency, currency and alternatives strategies. We have launched many first-to-market products and pioneered alternative weighting we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective funds that are built to perform. Most of our equity-based funds employ a fundamentally weighted investment methodology, which weights securities based on factors such as dividends, earnings or investment factors, whereas most other industry indexes use a capitalization weighted methodology. These products are distributed through all major channels in the asset management industry, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers primarily through our sales force. We believe technology is altering the way financial advisors conduct business and through our Advisor and Portfolio Solutions programs we offer technology-enabled and research-driven solutions including portfolio construction, asset allocation, practice management services and digital tools to help financial advisors address technology challenges and grow and scale their businesses.
Previous wording
The S&P 500, MSCI EAFE Index (local currency), MSCI EMU Index (local currency), MSCI Japan Index (local currency), MSCI Emerging Markets Index (U.S. dollar) and gold prices increased by 9.9%, 8.0%, 8.1%, 12.8%, 2.4% and 5.3%, respectively, during the quarter. The U.S. dollar strengthened 0.7% and 5.9% versus the euro and the Japanese yen, respectively, and weakened 0.1% versus the British pound during the quarter.
Current wording
The S&P 500, MSCI EAFE Index (local currency), MSCI EMU Index (local currency), MSCI Japan Index (local currency), MSCI Emerging Markets Index (U.S. dollar) and gold prices increased by 9.1%, 7.9%, 8.2%, 11.4%, 3.4% and 12.8%, respectively, during the quarter. The U.S. dollar weakened 4.2%, 5.7% and 13.1% versus the euro, British pound and the Japanese yen, respectively, during the quarter.
Previous wording
U.S. listed ETF industry net flows were $208.9 billion for the three months ended June 30, 2024. U.S. equity and fixed income gathered the majority of those flows.
Current wording
U.S. listed ETF industry net flows were $283.2 billion for the three months ended September 30, 2024. U.S. equity and fixed income gathered the majority of those flows.
Previous wording
European listed ETP industry net flows were $53.9 billion for the three months ended June 30, 2024. Equity and fixed income gathered the majority of those flows.
Current wording
European listed ETP industry net flows were $67.1 billion for the three months ended September 30, 2024. Equity and fixed income gathered the majority of those flows.
Previous wording
The AUM of our U.S. listed exchange traded funds, or U.S. listed ETFs, increased from $78.1 billion at March 31, 2024 to $79.7 billion at June 30, 2024 due to market appreciation and net inflows.
Current wording
The AUM of our U.S. listed exchange traded funds, or U.S. listed ETFs, increased from $79.7 billion at June 30, 2024 to $81.3 billion at September 30, 2024 due to market appreciation, partly offset by net outflows.
Previous wording
The AUM of our European listed (including internationally cross-listed) ETPs, or European listed ETPs, increased from $29.1 billion at March 31, 2024 to $30.0 billion at June 30, 2024 due to market appreciation, partly offset by net outflows.
Current wording
The AUM of our European listed (including internationally cross-listed) ETPs, or European listed ETPs, increased from $30.0 billion at June 30, 2024 to $31.3 billion at September 30, 2024 due to market appreciation, partly offset by net outflows.
Previous wording
The following table sets forth our revenues and net income for the most recent five quarters.
Current wording
The following table sets forth our revenues and net income/(loss) for the most recent five quarters.
Previous wording
Our compensation to revenue ratio for the year ending December 31, 2024 is currently estimated to range from 28% to 29% (our prior compensation expense guidance was $108.0 million to $118.0 million). Our estimated compensation to revenue ratio takes into consideration planned hires for 2024 and variability in incentive compensation, with drivers including the magnitude of flows, revenues and operating income growth, margin expansion and share price performance in relation to our peers.
Current wording
Our compensation to revenue ratio for the year ending December 31, 2024 is currently estimated to range from 28% to 29% (unchanged from the prior quarter). Our estimated compensation to revenue ratio takes into consideration planned hires for 2024 and variability in incentive compensation, with drivers including the magnitude of flows, revenues and operating income growth, margin expansion and share price performance in relation to our peers.
Previous wording
Discretionary spending includes marketing, sales, professional fees, occupancy and equipment, depreciation and amortization and other expenses. During the six months ended June 30, 2024, discretionary spending was $30.5 million. We currently estimate discretionary spending for the year ending December 31, 2024 to range from $64.0 million to $68.0 million (unchanged from our guidance range provided last quarter). Due to seasonality, the discretionary spend for the remainder of the year will likely be more skewed toward the fourth quarter.
Current wording
Discretionary spending includes marketing, sales, professional fees, occupancy and equipment, depreciation and amortization and other expenses. During the nine months ended September 30, 2024, discretionary spending was $45.3 million. We currently estimate discretionary spending for the year ending December 31, 2024 to range from $62.0 million to $65.0 million (previously $64.0 million to $68.0 million).
Previous wording
Not included in the guidance above are non-recurring expenses in response to an activist campaign, including $5.0 million incurred during the six months ended June 30, 2024.
Current wording
Not included in the guidance above are non-recurring expenses in response to an activist campaign, including $5.0 million incurred during the nine months ended September 30, 2024, and $4.1 million of legal and other related expenses expected to be covered by insurance.
Previous wording
We define gross margin as total operating revenues less fund management and administration expenses. Gross margin percentage is calculated as gross margin divided by total operating revenues. Our gross margin was 80.3% during the six months ended June 30, 2024 and we have updated our gross margin guidance for the year ending December 31, 2024 to be between 80% and 81% (previously 79.0% to 80.0%) considering current AUM levels and higher forecasted other revenues going forward. If AUM increases from continued organic flow growth or favorable market conditions, we would anticipate further gross margin expansion.
Current wording
We define gross margin as total operating revenues less fund management and administration expenses. Gross margin percentage is calculated as gross margin divided by total operating revenues. Our gross margin was 80.5% during the nine months ended September 30, 2024. We currently estimate our gross margin guidance for the year ending December 31, 2024 to be between 80% and 81% (unchanged from the prior quarter) considering current AUM levels and higher forecasted other revenues going forward. If AUM increases, we would anticipate further gross margin expansion.
Previous wording
We currently estimate third-party distribution fees to range from $10.0 million to $11.0 million (unchanged from our guidance range provided last quarter), which is dependent upon the AUM growth on our respective platforms.
Current wording
We currently estimate third-party distribution fees to range from $10.0 million to $11.0 million (unchanged from the prior quarter), which is dependent upon the AUM growth on our respective platforms.
Previous wording
We currently estimate our interest expense for the year ending December 31, 2024 to be $16.5 million, which is inclusive of approximately $2.6 million of interest cost we are required to impute under U.S. GAAP related to our interest-free financing of the shares of Series C Non-Voting Convertible Preferred Stock (the “Series C Preferred Stock”) we repurchased from GBH in November 2023.
Current wording
We currently estimate our interest expense for the year ending December 31, 2024 to be $18.9 million (previously $16.5 million), which is inclusive of approximately $2.6 million of interest cost we are required to impute under U.S. GAAP related to our interest-free financing of the shares of Series C Non-Voting Convertible Preferred Stock (the “Series C Preferred Stock”) we repurchased from GBH in November 2023.
Previous wording
We currently estimate our interest income for the year ending December 31, 2024 to be $5.0 million, based upon the magnitude of our forecasted interest earning assets.
Current wording
We currently estimate our interest income for the year ending December 31, 2024 to be $6.0 million (previously $5.0 million), based upon the magnitude of our forecasted interest earning assets.
Previous wording
This estimated rate may change and is dependent upon our actual taxable income earned in relation to our forecasts as well as any other items which may arise that are not currently forecasted. Such items may include, but are not limited to, increases or decreases in valuation allowances and any stock-based compensation windfalls or shortfalls. Additional corporate tax legislation could also impact our normalized effective tax rate.
Current wording
This estimated rate may change and is dependent upon our actual taxable income earned in relation to our forecasts as well as any other items which may arise that are not currently forecasted. Such items may include, but are not limited to, the non-deductible loss on extinguishment on convertible notes, a non-deductible civil money penalty of $4.0 million relating to the SEC ESG Settlement, increases or decreases in valuation allowances and any stock-based compensation windfalls or shortfalls. Additional corporate tax legislation could also impact our normalized effective tax rate.
Previous wording
We currently estimate our weighted average diluted shares to be between 166.0 million and 168.0 million during the year ending December 31, 2024. This guidance does not take into consideration any variability in shares associated with our convertible notes. While our convertible notes require principal to be paid in cash, our diluted shares would need to be increased for any incremental shares associated with an exercise of the conversion option if our stock price exceeds the applicable conversion price of our convertible notes of $9.54 per share for the 5.75% Convertible Senior Notes due 2028 and $11.04 per share for the 3.25% Convertible Senior Notes due 2026.
Current wording
This guidance does not take into consideration any variability in shares associated with our convertible notes. While our convertible notes require principal to be paid in cash, our diluted shares would need to be increased for any incremental shares associated with an exercise of the conversion option if our stock price exceeds the applicable conversion price of our convertible notes of $9.54 per share for the 5.75% Convertible Senior Notes due 2028, $11.04 per share for the 3.25% Convertible Senior Notes due 2026 and $11.82 per share for the 3.25% Convertible Senior Notes due 2029.
Previous wording
Advisory fee revenues increased 20.7% from $82.0 million during the three months ended June 30, 2023 to $98.9 million in the comparable period in 2024 primarily due to higher average AUM. Our average advisory fee was 0.36% and 0.37% during the three months ended June 30, 2023 and 2024, respectively.
Current wording
Advisory fee revenues increased 17.4% from $86.6 million during the three months ended September 30, 2023 to $101.7 million in the comparable period in 2024 primarily due to higher average AUM. Our average advisory fee was 0.37% and 0.36% during the three months ended September 30, 2023 and 2024, respectively.
Previous wording
Other revenues increased 53.0% from $8.1 million during the six months ended June 30, 2023 to $12.4 million in the comparable period in 2024 due to higher other revenues attributable to our European listed products.
Current wording
Other revenues increased 200.9% from $3.8 million during the three months ended September 30, 2023 to $11.5 million in the comparable period in 2024 due to higher other revenues attributable to our European listed products and $3.7 million of legal and other related expenses, expected to be covered by insurance, incurred in connection with the SEC ESG Settlement described in Note 14 to our Consolidated Financial Statements.
Previous wording
Compensation and benefits expense increased 17.0% from $26.3 million during the three months ended June 30, 2023 to $30.8 million in the comparable period in 2024 due to higher incentive and stock-based compensation expense, as well as increased headcount. Headcount was 291 and 304 at June 30, 2023 and 2024, respectively.
Current wording
Compensation and benefits expense increased 5.2% from $28.0 million during the three months ended September 30, 2023 to $29.4 million in the comparable period in 2024 due to higher stock-based compensation expense and headcount. Headcount was 299 and 314 at September 30, 2023 and 2024, respectively.
Previous wording
Fund management and administration expense increased 13.6% from $17.7 million during the three months ended June 30, 2023 to $20.1 million in the comparable period in 2024 primarily due to higher average AUM. We had 80 U.S. listed ETFs and 264 European listed ETPs at June 30, 2023 compared to 78 U.S. listed ETFs and 272 European listed ETPs at June 30, 2024.
Current wording
Fund management and administration expense increased 16.5% from $18.0 million during the three months ended September 30, 2023 to $21.0 million in the comparable period in 2024 primarily due to higher average AUM. We had 80 U.S. listed ETFs and 273 European listed ETPs at September 30, 2023 compared to 78 U.S. listed ETFs and 274 European listed ETPs at September 30, 2024.
Previous wording
Marketing and advertising expense increased 14.4% from $4.5 million during the three months ended June 30, 2023 to $5.1 million in the comparable period in 2024 primarily due to higher spending related to our U.S. listed products.
Current wording
Marketing and advertising expense increased 27.8% from $3.8 million during the three months ended September 30, 2023 to $4.9 million in the comparable period in 2024 primarily due to higher spending related to digital assets and our U.S. listed products.
Previous wording
Depreciation and amortization expense increased 245.5% from $0.1 million during the three months ended June 30, 2023 to $0.4 million in the comparable period in 2024 due to amortization of software development costs.
Current wording
Depreciation and amortization expense increased 45.6% from $0.3 million during the three months ended September 30, 2023 to $0.4 million in the comparable period in 2024 due to amortization of software development costs.
Previous wording
Third-party distribution fees expense increased 42.8% from $1.9 million during the three months ended June 30, 2023 to $2.7 million in the comparable period in 2024 due to AUM growth we are experiencing on our various platforms and new platform relationships.
Current wording
Third-party distribution fees expense increased 10.7% from $2.7 million during the three months ended September 30, 2023 to $3.0 million in the comparable period in 2024 due to AUM growth we are experiencing on our various platforms and new platform relationships.
Previous wording
Interest expense was essentially unchanged from the three months ended June 30, 2023. Our effective interest rate during the three months ended June 30, 2023 and 2024 was 5.0% and 4.95%, respectively.
Current wording
Our effective interest rate during the three months ended September 30, 2023 and 2024 was 5.0% and 4.4%, respectively.
Previous wording
Interest income increased 43.8% from $1.0 million during the three months ended June 30, 2023 to $1.4 million in the comparable period in 2024 due to a higher level of interest-earning assets.
Current wording
Interest income increased 126.9% from $0.8 million during the three months ended September 30, 2023 to $1.8 million in the comparable period in 2024 due to a higher level of interest-earning assets.
Previous wording
During the six months ended June 30, 2023, we recognized a loss on extinguishment of convertible notes of $9.7 million arising from the repurchase of $115.0 million in aggregate principal amount of our 2020 Notes.
Current wording
During the three months ended September 30, 2023, we recognized a loss on extinguishment of convertible notes of $30.6 million arising from the repurchase of $104.2 million in aggregate principal amount of our 2028 Notes.
Previous wording
Other losses and gains, net were $1.3 million and ($1.3) million during the three months ended June 30, 2023 and 2024, respectively. The three months ended June 30, 2024 include losses of $1.3 million and $0.3 million on our investments and financial instruments owned, respectively. Gains and losses also generally arise from the sale of gold earned from management fees paid by our physically-backed gold ETPs, foreign exchange fluctuations and other miscellaneous items.
Current wording
Other losses, net were $1.3 million and $3.1 million during the three months ended September 30, 2023 and 2024, respectively. The three months ended September 30, 2024, includes a $4.0 million civil money penalty in connection with the SEC ESG Settlement. Also included are net gains of $0.8 million and $0.6 million on our financial instruments owned and investments, respectively. Gains and losses also generally arise from the sale of gold earned from management fees paid by our physically-backed gold ETPs, foreign exchange fluctuations and other miscellaneous items.
Previous wording
Our effective income tax rate for the three months ended June 30, 2023 was 6.1%, resulting in income tax expense of $3.6 million. The effective tax rate differs from the federal statutory rate of 21% primarily due to a non-taxable gain on revaluation/termination of deferred consideration—gold payments and a decrease in the deferred tax asset valuation allowance on losses recognized on our investments. These items were partly offset by non-deductible executive compensation.
Current wording
Our effective income tax rate during the three months ended September 30, 2024 was 216.0%, resulting in income tax expense of $8.4 million. The effective tax rate differs from the federal statutory rate of 21.0% primarily due to a non-deductible loss on extinguishment of convertible notes, a non-deductible civil money penalty of $4.0 million and non-deductible executive compensation. These items were partly offset by a lower tax rate on foreign earnings.
Previous wording
Our effective income tax rate during the three months ended June 30, 2024 was 26.3%, resulting in income tax expense of $7.8 million. The effective tax rate differs from the federal statutory rate of 21.0% primarily due to non-deductible executive compensation, an increase in the deferred tax asset valuation allowance on losses recognized on our investments and state and local income taxes. These items were partly offset by a lower tax rate on foreign earnings.
Current wording
Our effective income tax rate during the three months ended September 30, 2023 was 31.0%, resulting in income tax expense of $5.8 million. The effective tax rate differs from the federal statutory rate of 21.0% primarily due to an increase in the deferred tax asset valuation allowance on losses recognized on the Company’s investments and non-deductible executive compensation.
Previous wording
Advisory fee revenues increased 19.9% from $159.6 million during the six months ended June 30, 2023 to $191.4 million in the comparable period in 2024 primarily due to higher average AUM. Our average advisory fee was 0.36% during the six months ended June 30, 2023 and 0.37% during the comparable period in 2024.
Current wording
Advisory fee revenues increased 19.0% from $246.2 million during the nine months ended September 30, 2023 to $293.1 million in the comparable period in 2024 primarily due to higher average AUM. Our average advisory fee was 0.36% during the nine months ended September 30, 2023 and 0.37% during the comparable period in 2024.
Previous wording
Other revenues increased 117.6% from $3.7 million during the three months ended June 30, 2023 to $8.1 million in the comparable period in 2024 due to higher other revenues attributable to our European listed products.
Current wording
Other revenues increased 100.3% from $12.0 million during the nine months ended September 30, 2023 to $23.9 million in the comparable period in 2024 due to higher other revenues attributable to our European listed products and $4.1 million of legal and other related expenses expected to be covered by insurance, incurred in connection with the SEC ESG Settlement.
Previous wording
Compensation and benefits expense increased 15.1% from $53.7 million during the six months ended June 30, 2023 to $61.8 million in the comparable period in 2024 due to higher incentive and stock-based compensation expense and increased headcount.
Current wording
Compensation and benefits expense increased 11.7% from $81.7 million during the nine months ended September 30, 2023 to $91.2 million in the comparable period in 2024 due to higher incentive and stock-based compensation expense and increased headcount.
Previous wording
Fund management and administration expense increased 15.0% from $34.9 million during the six months ended June 30, 2023 to $40.1 million in the comparable period in 2024 primarily due to higher average AUM and product launches.
Current wording
Fund management and administration expense increased 15.5% from $52.9 million during the nine months ended September 30, 2023 to $61.1 million in the comparable period in 2024 primarily due to higher average AUM and product launches.
Previous wording
Marketing and advertising expense increased 12.3% from $8.5 million during the six months ended June 30, 2023 to $9.5 million in the comparable period in 2024 primarily due to higher spending related to our U.S. listed products.
Current wording
Marketing and advertising expense increased 17.1% from $12.3 million during the nine months ended September 30, 2023 to $14.4 million in the comparable period in 2024 primarily due to higher spending related to digital assets and our U.S. listed products.
Previous wording
Sales and business development expense increased 9.4% from $3.3 million during the three months ended June 30, 2023 to $3.6 million in the comparable period in 2024 primarily due to increases in travel and events spending.
Current wording
Sales and business development expense increased 10.4% from $9.7 million during the nine months ended September 30, 2023 to $10.7 million in the comparable period in 2024 primarily due to increases in travel and events spending, as well as higher market data spending.
Previous wording
Contractual gold payments expense decreased from $6.1 million during the six months ended June 30, 2023 to zero in the comparable period in 2024 due to the termination of our deferred consideration—gold payments obligation on May 10, 2023. See Note 9 to our Consolidated Financial statements for additional information.
Current wording
Contractual gold payments expense decreased from $6.1 million during the nine months ended September 30, 2023 to zero in the comparable period in 2024 due to the termination of our deferred consideration—gold payments obligation on May 10, 2023. See Note 9 to our Consolidated Financial Statements for additional information.
Previous wording
Professional fees decreased 15.1% from $12.0 million during the six months ended June 30, 2023 to $10.2 million in the comparable period in 2024 primarily due to lower activist campaign expenses and non-recurring expenses incurred in the prior year to settle our deferred consideration—gold payments obligation and our acquisition of WisdomTree Transfers, Inc.
Current wording
Professional fees increased 4.9% from $15.8 million during the nine months ended September 30, 2023 to $16.5 million in the comparable period in 2024 primarily due to $4.1 million of legal and other related expenses incurred in connection with the SEC ESG Settlement. An equal and offsetting amount is recorded in other revenues as these expenses are expected to be covered by insurance. This increase was partly offset by lower activist campaign expenses and non-recurring expenses incurred in the prior year to settle our deferred consideration—gold payments obligation and our acquisition of WisdomTree Transfers, Inc.
Previous wording
Depreciation and amortization expense increased 248.3% from $0.2 million during the six months ended June 30, 2023 to $0.8 million in the comparable period in 2024 due to amortization of software development costs.
Current wording
Depreciation and amortization expense increased 132.4% from $0.5 million during the nine months ended September 30, 2023 to $1.2 million in the comparable period in 2024 due to amortization of software development costs.
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Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Sales and business development expense was essentially unchanged from the three months ended September 30, 2023.
Current report — wording carried from elsewhere
Loss on Extinguishment of Convertible Notes
Current report — wording carried from elsewhere
During the nine months ended September 30, 2024, we recognized a loss on extinguishment of convertible notes of $30.6 million, arising from the repurchase of $104.2 million in aggregate principal amount of our 2028 Notes. During the nine months ended September 30, 2023, we recognized a loss on extinguishment of convertible notes of $9.7 million, arising from the repurchase of $115.0 million in aggregate principal amount of our 4.25% Convertible Senior Notes due 2023.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
We recognized a gain on revaluation/termination of deferred consideration—gold payments of $41.4 million during the three months ended June 30, 2023. This obligation was settled on May 10, 2023 for approximately $137.0 million. See Note 9 to our Consolidated Financial Statements for additional information.
Previous report — wording carried elsewhere
Sales and business development expense increased 14.7% from $6.3 million during the six months ended June 30, 2023 to $7.3 million in the comparable period in 2024 primarily due to increases in travel and events spending.
Previous report — wording carried elsewhere
Occupancy, communications and equipment expense was essentially unchanged from the six months ended June 30, 2023.
Previous report — wording carried elsewhere
Gain on revaluation/termination of deferred consideration—gold payments