WisdomTree Q4 2024 Earnings Report

MakeMyTrip EPS Results

• Actual EPS: $0.17
• Consensus EPS: $0.19
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: N/A

MakeMyTrip Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $110.70 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

MakeMyTrip Announcement Details

• Quarter: Q4 2024
• Date: 1/31/2025
• Time: Before Market Opens
• Conference Call Date: Friday, January 31, 2025
• Conference Call Time: 11:00AM ET

MakeMyTrip (NASDAQ:MMYT), an online travel company, sells travel products and solutions in India, the United States, Singapore, Malaysia, Thailand, the United Arab Emirates, Peru, Colombia, Vietnam, and Indonesia. The company operates through three segments: Air Ticketing, Hotels and Packages, and Bus Ticketing. Its services and products include air tickets; hotels and packages; rail tickets; bus tickets; and car hire, as well as ancillary travel requirements, such as visa processing and facilitating access to travel insurance. The company allows travelers to research, plan, book, and purchase travel services and products through its websites, such as makemytrip.com, goibibo.com, redbus.in, makemytrip.com.sg, and makemytrip.ae; and other technology-enhanced distribution channels, such as call centers, travel stores, and travel agents network, as well as mobile service platform. The company serves leisure and corporate travelers. MakeMyTrip Limited was incorporated in 2000 and is based in Gurugram, India.

MakeMyTrip Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Greetings and welcome to the WisdomTree Q4 2024 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jessica Zaloom, Head of Corporate Communications.

[Operator]

Thank you. You may begin.

[Jessica Zaloom, Head of Corporate Communications & Public Relations at WisdomTree]

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 in the Risk Factors section of WisdomTree's Annual Report on Form 10 ks for the year ended December 31, 2023, and in subsequent reports filed with or furnished to the Securities and Exchange Commission. WisdomTree assumes no duty and does not undertake to update any forward looking statements.

[Jessica Zaloom, Head of Corporate Communications & Public Relations at WisdomTree]

Now, it is my pleasure to turn the call over to Wixentree CFO, Brian Edmonson.

[Bryan Edmiston, Chief Financial Officer at WisdomTree]

Thank you, Jessica, and good morning, everyone. I'll begin my remarks with a recap of 2024 and our 4th quarter results, followed by our 2025 expense guidance before turning the call over to Jarrett and Jono for additional updates on our business. The year 2024 was marked by numerous accomplishments. We closed the year with AUM of $109,800,000,000 up almost 10% from the prior year. This growth further showcased the operating leverage in our business model, highlighted by year over year adjusted operating margin expansion of 680 basis points.

[Bryan Edmiston, Chief Financial Officer at WisdomTree]

These results, combined with the execution of strategic capital management initiatives, including the highly accretive repurchase of ETFS Capital's preferred stock earlier this year, as well as last year's retirement of our gold royalty obligation, have driven an increase of over 70% in our adjusted EPS and a 50% increase in our stock price year over year. Next slide. Adjusted revenues were $110,500,000 during the quarter, up 1% sequentially and approximately 22% higher than the same period last year, driven by higher average AUM. The year over year improvement also reflects higher other revenues attributable to our European listed products, representing sustainable revenue capture and providing further revenue diversification away from the expense ratio. On a year to date basis, our adjusted revenues have grown over 21% and our adjusted operating margin was 33.6%, representing expansion of over 6 80 basis points versus the prior year.

[Bryan Edmiston, Chief Financial Officer at WisdomTree]

Our adjusted net income for the quarter was $25,300,000 or $0.17 a share. These results reflect higher fund management expenses arising from non recurring costs related to our custody migration and higher professional fees as we recognize the remaining contractual costs from the WisdomTree Prime service provider as we continue expanding our capabilities to further enhance the platform with internal resources. The net impact of these non recurring items was about $0.01 a share. Next slide. Now a few comments on our 2025 expense guidance.

[Bryan Edmiston, Chief Financial Officer at WisdomTree]

We are forecasting our compensation to revenue ratio to range from 28% to 30%, which includes planned hires as well as compensation adjustments and the annualization of hires made during 2024. The range considers variability in incentive compensation with drivers including the magnitude of our flows, revenue, operating income and margin targets and our share price performance in relation to our peers. In addition, the high end of the range contemplates unfavorable market conditions, recognizing that a meaningful portion of our compensation expense is fixed in nature. And as a reminder, we experienced elevated seasonality in the amount of compensation we report in the Q1 as we recognize payroll taxes, benefits and other items in connection with year end bonuses. We estimate 1st quarter compensation expense to be approximately $34,000,000 to $35,000,000 Discretionary spending is anticipated to range from $68,000,000 to $72,000,000 as compared to $64,800,000 in 2024.

[Bryan Edmiston, Chief Financial Officer at WisdomTree]

The modest uptick in spend contemplates additional marketing spend

[Bryan Edmiston, Chief Financial Officer at WisdomTree]

related

[Bryan Edmiston, Chief Financial Officer at WisdomTree]

to both digital assets and ETFs, investments in sales related initiatives, including further promotions of our portfolio solutions offerings, higher amortization of capitalized software and other costs. Our gross margin is anticipated to be about 81% to 82% compared to 80.2% this past year. Our updated guidance takes into consideration current AUM levels, changes in service providers and anticipated fund launches. And as a reminder, our Q4 gross margin was adversely impacted by non recurring costs incurred in connection with our custody migration this past quarter. Our 3rd party distribution expense is anticipated to range from $11,000,000 to $12,000,000 as we expand our partnerships and grow AUM on the platforms.

[Bryan Edmiston, Chief Financial Officer at WisdomTree]

Our annual adjusted interest expense guidance is anticipated to be approximately $20,000,000 higher than the prior year due to incremental debt raised last August to facilitate the repurchase of preferred stock from ETFS Capital. As a reminder, this guidance excludes interest costs we are required to impute under GAAP related to our interest free financing of shares we repurchased from the World Gold Council in 2023. Our interest income is anticipated to be approximately $7,000,000 largely aligned with the interest income recognized in the prior year based upon the magnitude of our forecasted interest earning assets and projected interest rates. And our weighted average diluted shares were 158,800,000 during 2024. We anticipate our weighted average diluted shares to be 149,000,000 to 150,000,000 in 2025, taking into consideration the full year impact of the 20,000,000 shares we repurchased last August.

[Bryan Edmiston, Chief Financial Officer at WisdomTree]

As a reminder, this guidance does not take into consideration any variability in shares associated with our convertible notes. That's all I have. I will now turn the call over to Jared.

[Jarrett Lilien, President and COO at WisdomTree]

Thank you, Brian, and good morning, everyone. As we close out 2024, I'm proud to reflect on a year that has positioned us for sustained earnings growth and margin expansion. Today, I'll share highlights of the past year and then some thoughts on the rest of this year focusing on flows, models, operational efficiencies and progress in digital assets and tokenization. Beginning with flows, 2024 started strong but wasn't without its challenges. Institutional clients utilized USFR for cash rerisking strategies leading to outflows.

[Jarrett Lilien, President and COO at WisdomTree]

The Japan carry trade faced disruptions impacting DXJ, our currency hedge Japan fund and commodity markets experienced significant volatility. Despite these challenges, we delivered meaningful outcomes. The number of clients using WisdomTree products grew by 5% with the average number of products held per client rising by 4% signaling deeper client engagement. Meanwhile, our mobiles business continued to stand out as a core growth engine leveraging differentiated products such as our Seagull WisdomTree models. We ended the year with over 2,500 model users and 3,830,000,000 in model assets reflecting 29% user growth and 28% model asset growth year over year.

[Jarrett Lilien, President and COO at WisdomTree]

With an accessible market of over 85,000 advisors and $18,000,000,000,000 in assets, we've made significant inroads and our focus has now fully shifted to growing model users and model assets. For 2025, we're projecting 25% to 30% annual growth in model users and 35% to 40% annual growth in model assets. Overall, we continue to see models as an important driver of sustainable organic growth in the years ahead. Switching to operational efficiency, disciplined expense management and operational focus have delivered strong results. In 2024, revenue grew 21% year over year, while adjusted operating income grew by more than 52%.

[Jarrett Lilien, President and COO at WisdomTree]

Strategic balance sheet improvements, including preferred stock repurchases further boosted earnings growth. Looking forward, our operating and capital deployment strategies remain focused on enhancing earnings while maintaining flexibility for future opportunities. Finally, let's turn to digital assets and blockchain enabled finance where we've made meaningful progress despite facing significant regulatory headwinds. With so many market participants now scrambling to get involved, our early investments in the space and our commitment to innovation have positioned us at the forefront of this transformative movement. That said, the journey has not been without its challenges.

[Jarrett Lilien, President and COO at WisdomTree]

As I mentioned, regulatory headwinds have delayed our implementation timeline by about 2 years and we are still working to secure additional state level approvals including Texas which are essential to unlocking new opportunities for growth. Furthermore, we do not yet have seamless access to the on chain community, which is our primary target market. These obstacles have made our path to full scale engagement slower than we initially anticipated. However, we are at a critical inflection point on an off ramps for blockchain assets and traditional payments are close to being activated, which will provide the seamless access to the target market that we've been building towards. Coupled with the additional state approvals that are now within reach and the blockchain friendly approach of the new administration, we believe we are well positioned to drive significant traction in 2025.

[Jarrett Lilien, President and COO at WisdomTree]

To provide greater transparency and track our progress, we will begin sharing quarterly updates on key metrics including open and funded accounts on WisdomTree Prime, daily user transactions and total platform AUM. As we enter 2025, we've established a baseline to grow from and we start with 26,000 opened accounts and 2,300 funded accounts on WisdomTree Prime. We also averaged 143 daily user transactions in Q4 reflecting regular engagement from those accounts. And we now have $31,000,000 in total digital AUM, including $3,000,000 in WisdomTree Prime AUM. Overall, while we face delays and challenges along the way, the pieces are falling into place and we are well positioned to capitalize on the momentum ahead and establish even stronger traction in this exciting and transformative space.

[Jarrett Lilien, President and COO at WisdomTree]

And with that, I'll now hand it over to Jono.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Good morning, everyone, and thank you, Jared. As we reflect on 2024, I want to build on Jared's points by highlighting 3 themes. 1, growth and revenue diversification 2, disciplined execution and 3, strategic innovation. Growth and revenue diversification remains a priority in 2025 and builds on 2024, which is a breakout year in this regard. We are committed to continuing to diversify revenue streams and grow revenue beyond the expense ratio.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Our firm wide total revenue yield, which includes the $28,000,000 of other revenue booked in 2024 is both more resilient and expanded faster than our expense ratio revenue. Also as Jared outlined, we will continue to increase both the number of clients and deepen our engagement with those clients, which drives organic AUM growth. Specifically, we will further increase both model users and model AUM per user. Models have become an essential tool for advisors and our solutions are extremely well positioned to meet the demand arising from this growing macro wealth management trend. Switching to disciplined execution, the results are clear in the 2024 numbers.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Earnings per share was up 73% year over year, driven by 21% revenue growth, expanded operating margins that drove a 52% growth in adjusted operating income. And in 2024, we bought back over 19,000,000 shares or roughly 12% of the shares outstanding. These are the results of a disciplined approach and that will continue in 2025. Looking ahead, we are employing this disciplined approach to how we deploy AI. We are more fully embedding AI into our daily workflows, which is enhancing our scalability and will drive additional value creation through better and quicker decisions.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

I expect you'll hear more from us regarding AI in the coming quarters. Additionally, WisdomTree has been opportunistic around accretive capital deployment in years past, so we've been incredibly proactive in the past 2 years. I fully expect that we will continue with this more aggressive approach in 2025 and beyond. That could include further stock buybacks, but we will also explore inorganic growth opportunities like M and A and partnerships if they are accretive and strategic. Our last theme, strategic innovation has always been WisdomTree's foundation.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

From ETFs to self indexing, we've constantly anticipated market shifts. For quite some time, we've been asking ourselves what could disrupt ETFs the way ETFs disrupted mutual funds. We believe the answer lies in tokenization. Here are a few key developments. Tokenized real world assets, which today are mostly in stable coins, has grown from near 0 in 2017 to over $200,000,000,000 in AUM today.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

This highlights the utility of public blockchains and actually shows a higher early growth curve and ETF adoption in the early 90s. WisdomTree has a stable coin today and our tokenized money market fund and floating rate treasury funds are well suited for stablecoin like solutions and demonstrates the broader potential of real world assets on public blockchains. I'm excited to say WisdomTree Connect has onboarded its first customers, supporting tokenized money market funds on Ethereum. From there, we will look to expand the adoption of our total tokenized product lineup furthering including gold equities and the rest of our tokenized funds. From the start, we knew that obtaining state and federal approvals was critical and we have always been vocal about our commitment to responsible DeFi.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

That's how we describe our vision of how the market will unfold in the coming years. Simply, it's the intersection of innovation and responsible regulation that will lead to a transformative user experience. The new pro innovation Trump administration offers a clear opportunity to expand our capabilities like on and off ramps for blockchain assets and payments. This new regulatory approach paves the way for faster approvals that will drive faster digital asset growth. The momentum in tokenized assets is accelerating and our early investments in this space position us well to capitalize on this trend.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

In closing, in 2024, we've laid the groundwork for continued success and I'm excited about the opportunities ahead in 2025 and beyond. Thank you and I look forward to your questions.

[Jeremy Campbell, Director of Investor Relations at WisdomTree]

All right. Thanks, Jono. This is Jeremy Campbell, Head of Investor Relations. Similar to prior quarters, we're going to take a quick question from our shareholder base and then open it up to the analyst community. I'm going to direct this question to Will Peck, Head of Digital Assets.

[Jeremy Campbell, Director of Investor Relations at WisdomTree]

And Will, the question is, it seems like the new administration is a bit more friendly to crypto and blockchain. What does WisdomTree's competitive landscape look like in a more open environment?

[William Peck, Head of Digital Assets at WisdomTree]

Good morning. Thanks, Jeremy, for the question. So first of all, I think it's more than just a bit more friendly. I think we're seeing a real step function change in this pro innovation stance versus where things were just a couple of months ago coming out of D. C.

[William Peck, Head of Digital Assets at WisdomTree]

So over the next coming years, I think there's going to be some legislation from Congress. I think there's also going to be importantly more regulatory clarity both from securities regulators and federal banking regulators. And I think that's just going to be an overall catalyst for WisdomTree's efforts. So speaking specifically about these efforts, I mean, OneSpace is obviously a crypto exchange rate of funds, exchange rate of products. It's been extremely competitive in that market.

[William Peck, Head of Digital Assets at WisdomTree]

It's been competitive in Europe for a long time. But we were actually the leading flow gatherer in 2024 in Europe. That suite of products is incredibly well positioned going forward. And I expect we're going to continue to have a good year, particularly as more and more money comes into the space. The second part I'd answer is around tokenization.

[William Peck, Head of Digital Assets at WisdomTree]

So I think tokenization, particularly tokenized money market funds and treasuries, has gotten very competitive very quickly, and I expect more competition going forward. We feel like we're in a great spot though, and the investments we've been making over the past 3 years has really built a real competitive moat for us. I'd highlight 3 things in that competitive moat. The first is our technical platform. So we've invested in building our tokenization platform.

[William Peck, Head of Digital Assets at WisdomTree]

This is much more than just creating a token. It's data structures, it's smart contracts, it's public private key management in order to bring like all these filings and ideas actually into reality. The second point I'd make is the 40 Act. So that's WisdomTree U. S.

[William Peck, Head of Digital Assets at WisdomTree]

Bread and butter. We're incredibly familiar with that structure. That's the highest regulatory standards in the U. S. For products.

[William Peck, Head of Digital Assets at WisdomTree]

And a lot of our efforts have been out of the 40 Act here in the United States. A lot of the other early efforts from other competitors have been offshore in under regulated or unregulated structures. That's allowed them to win some early money offshore, but I think it's going to be limiting certainly in terms of getting to U. S. Retail over time.

[William Peck, Head of Digital Assets at WisdomTree]

And we expect particularly with the election, there's going to be a lot more U. S. Retail interest in this space, use of stablecoins over time. And the 3rd point I'd make is just broader regulatory innovation. Anyone can copy a fund filing, that's not hard to do, but it's much harder to put together both the technical platform and the suite of regulated entities around that, including the New York Trust Company, for example.

[William Peck, Head of Digital Assets at WisdomTree]

So this is important both for unlocking the user experience benefits of tokenization, but also for WisdomTree unlocking the true economics of this. So to summarize, definitely expect more competition going forward, particularly post election, but we feel like we're incredibly well positioned to date with these competitive moats that I highlighted. Jeremy, back to you.

[Jeremy Campbell, Director of Investor Relations at WisdomTree]

Great. Thanks, Will. Operator, you can go ahead and open up the lines for questions from the analysts.

[Operator]

Thank you. We will now be conducting a question and answer Our first questions come from the line of Brennan Hawken with UBS. Please proceed with your questions.

[Brennan Hawken, Senior Analyst - Equity Research at UBS Group]

Good morning. Thanks for taking my questions. Jono,

[Brennan Hawken, Senior Analyst - Equity Research at UBS Group]

I'd like to start you said something

[Brennan Hawken, Senior Analyst - Equity Research at UBS Group]

that caught my attention in your prepared remarks on M and A and partnerships. I know that you might want to tip your hand. So

[Brennan Hawken, Senior Analyst - Equity Research at UBS Group]

please understand the spirit of

[Brennan Hawken, Senior Analyst - Equity Research at UBS Group]

the question, but are there any areas or capabilities that are particular interest as you explore this?

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Well, first, we've acquired, so it could be ETF sponsors. We've acquired 2 already. It could also include product lines of other asset managers. We've done this before or other asset classes. It could also be in the area of technology.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Now that's very broad, but we see in technology the potential for transformative strategic partnerships. But I guess the bottom line for us is we're on our front foot. We're leaning into this. We're seeing a lot of conversations and opportunities. Okay, Brennan?

[Brennan Hawken, Senior Analyst - Equity Research at UBS Group]

Yes, yes. I get it. And I'd love to follow-up on that question on the new administration in crypto because we've seen we've actually seen some action already with the SEC rescinding the rule around banking entities. We have seen more recently the SEC approving some spot Bitcoin ETFs. So when you look at the early actions of the regulators and the administrations, what's been most interesting and what are you watching for to really fire up the excitement around potential change here?

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

So sort of the low hanging fruit had been the SEC and the just the launching of crypto ETPs. That was sort of the easy momentum. Where the regulators on the past 4 years, the prior administration were most aggressive, it was by discouraging the banking industry from touching the asset class in any way. And when you think about what we're trying to do with WisdomTree Prime and WisdomTree Connect, in many ways, we're trying to mainstream the asset class where it can sit next to other assets, but also other banking services. And so we should and so I sense that that's changing with from the banks very, very quickly.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

We shared these new metrics with you. And to put it all into perspective, we're not even at the starting line. As Jared said, we're probably 2 years behind because of the regulatory environment of the last 4 years. Not all states have given us the approved our licenses for money transfer. We haven't been able to get the on and off ramps to payments and to the on chain community because the banks have been so afraid to let anything from the on chain community to touch their rails.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

So it's been you sense that there really is a change coming. And in our conversations, it is coming. So we sense it. To build on the add a little bit more perspective on the metrics that we showed though, I do want to say that we've been just incredibly prudent in our spending to date. And I just want to mention that all of our spending has been in our guidance for the last 4 years, including this year that digital assets, tokenization, crypto, the on chain community today is a multi $1,000,000,000,000 opportunity and we expect it to grow significantly from here.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

And as Will said, as I said in my remarks as well, we're excited by the new administration. It feels like it's an inflection point for us. And when I play to my background and obviously my background is ETFs. And I want to be careful that I don't over index to that experience. But I do see significant overlap between tokenization and ETFs.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Both are innovative regulated financial services, both started with a retail focus, they're transparent, both reduce friction and add to the user experience. When you think about ETFs, the timeline, the Amex spent 7 years in front of the SEC before they got limited approval. Then between 1993 May of 2000, there were only 3 ETFs in the market. And then in June of 2000, Barclays Bank made a bold bet and launched the iShares franchise and the industry came alive. So my point is that if you judge to the opportunity of ETFs by how long it took or how long it took for the market to develop, you might have abandoned it or missed the opportunity completely or at least under invested against the opportunity.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

So I guess what I would say, my perspective is, in many ways, this new administration it feels like it's the year 2000 for the crypto tokenization market and that we've laid the foundation for faster regulatory approvals and faster growth going forward.

[Brennan Hawken, Senior Analyst - Equity Research at UBS Group]

Yes. Yes. I hear your point about over indexing. I'm trying to stay mentally flexible too. It's a little hard, but I hear you and thanks for the color.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Thank you.

[Operator]

Thank you. Our next questions come from the line of Mike Grondahl with Northland Securities. Please proceed with your questions.

[Mike Grondahl, Senior Research Analyst at Northland Capital Markets]

Hey, thanks guys. With all the momentum in those crypto funds in Europe, could you remind us of the individual offerings you have over there and how that might look in 6 months to 12 months just as you expand and grow that in Europe and maybe in other geographies?

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Jeremy Schwartz, our CIO, do you want to start here or is it Will?

[Jeremy Schwartz, Global Chief Investment Officer at WisdomTree]

I could give some context. So Will mentioned this is Jeremy Schwartz talking here. Will mentioned we were a leader in cryptocurrencies for Europe last year. What we have a broad suite, we started with Bitcoin, but we now have from Bitcoin in Ethereum, obviously the top 2, but we have Solana, we have Cardano, Polkadot, we have a basket that's equal weighted between Bitcoin and Ethereum. We have a broader market portfolio.

[Jeremy Schwartz, Global Chief Investment Officer at WisdomTree]

We have an Altcoin. So it shows you that Europe has been we talked a lot about the innovation in the U. S. Coming in the new administration. Europe was sort of ahead of the U.

[Jeremy Schwartz, Global Chief Investment Officer at WisdomTree]

S, which is not often the case, but they have been in these product offerings. And I think you're seeing more filings in the U. S, but we're also in the market we've been in the market established in Europe. We expect good things. We also have Ripple.

[Jeremy Schwartz, Global Chief Investment Officer at WisdomTree]

Ripple was one of our faster growing cryptos last year up to around $250,000,000 $300,000,000 based on the market price on the day. But it's been a good robust offering. We plan to do more.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

And let me just add, let me just add, Mike, that under this new administration in the U. S, you would expect to see the industry to roll out in the U. S. In a similar fashion, I would expect to what you saw in Europe. So if the administration hadn't changed, it wouldn't have been easy to get past just Bitcoin.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

But I do believe you'll see a lot of innovation and product to come to market this year and in the coming years in crypto in the U. S.

[Mike Grondahl, Senior Research Analyst at Northland Capital Markets]

Got it. You do think that's possible in 2025?

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Yes, I do.

[Mike Grondahl, Senior Research Analyst at Northland Capital Markets]

Got it. Great. And can I ask on those funds you mentioned in Europe, how are staking fees treated?

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Will, is that you? Would that be you to take this or Jerry?

[William Peck, Head of Digital Assets at WisdomTree]

Yes, I can take this. So I mean, your question is around proof of stake coins that might be held physically in these products. And when the coins are staked, right, it generates a stake in yield, staking reward. Some of that is shared with investors, some of it's shared by WisdomTree, and it's all kind of a function of how much is staked in those products as well. So I think it's a good investor experience and it's something that us and other issuers have been offering.

[Mike Grondahl, Senior Research Analyst at Northland Capital Markets]

Got it. Hey, thanks guys.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Thank you.

[Operator]

Thank you. Our next question comes from the line of George Sutton with Craig Hallum. Please proceed with your questions.

[Logan Lillehaug, Associate Analyst at Craig-Hallum]

Thank you. Good morning. This is Logan on for George. I appreciate the color on some of the prime and giving the metrics. Kind of on that topic, I was wondering if you could give us just a little bit more, I mean, understanding that it's very early days and there's still some regulatory stuff to work through.

[Logan Lillehaug, Associate Analyst at Craig-Hallum]

Anything you can give us on kind of what are the use cases that seem to be hitting home so far? I mean, whether it be funds that people are gravitating towards, I mean, you guys came out with the ability to spend out of certain funds a few months back, just kind of the use cases that seem to be working in the early days?

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Will, that's you.

[William Peck, Head of Digital Assets at WisdomTree]

Yes, absolutely. So I think the biggest thing is tokenized money market funds, both WisdomTree Prime and WisdomTree Connect and the functionality that that unlocks. For us, the ticker is WTGXX, the WisdomTree Government Money Market Digital Fund. And I'll cover your WisdomTree Prime, one of the great use cases that we've highlighted is that you can fund with Fiat in the near future will support stablecoin funding, immediately invest into the money market fund that's earning a great yield right now, right at the risk free rate for our short term rates.

[William Peck, Head of Digital Assets at WisdomTree]

And we also support spending on top of that through the WisdomTree Prime Visa debit card, which just anecdotally is something that people love and love to use. The other point I'd highlight is around WisdomTree Connect, where we only launched this platform in September. We're just really going to market now. We've already got clients onboarded. I think we've got an exciting pipeline that we'll be able to update you guys on over the coming weeks months.

[William Peck, Head of Digital Assets at WisdomTree]

But that use case is very clear in terms of on chain firms wanting yield and diversification, right? So think of a pool of capital that's held on chain by some sort of DAO or other institution that's wanting to invest in things other than just crypto tokens or stable coins that have no yield, right? And so for them being able to seamlessly access Tokai's money market fund, immediately earn that yield, it's just a better experience, not to mention the kind of additional regulatory and security comfort that Aphoradiyak Money Market Fund provides. So we're really off to the races with WisdomTree Connect and I'm excited for what we're going to be doing with that over the course of 2025.

[Logan Lillehaug, Associate Analyst at Craig-Hallum]

Appreciate that. That's helpful. And then maybe shifting to the advisor strategy. I mean, you guys have talked about expanding the portfolio consultation services recently. And then my understanding is that when you guys do a consultation, you have a better win rate, better ability to grab AUM.

[Logan Lillehaug, Associate Analyst at Craig-Hallum]

Just maybe any color you can give us on kind of what that what the expansion really looks like and how big how significant is that to the overall strategy going forward as we think about I mean, I think you guys talked about 25% to 30% growth this year. I mean, is that something you're going to look to expand over the next few years or how significant is that?

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Jarrod, would you like me to take it or do you want to take it?

[Jarrett Lilien, President and COO at WisdomTree]

I can kick it off. Okay. Look, I think that's really the right question. The last couple of years with our whole models business, we've been looking to establish ourselves and that meant getting through gatekeepers and we kept talking about what's our addressable or accessible market, how many advisors have access, what kind of advisor assets have access to our models. I think we've checked that box.

[Jarrett Lilien, President and COO at WisdomTree]

We've now got, as we've said, more than 85,000 advisors, have access and over $18,000,000,000,000 of assets, which is in about 2 thirds of the advised assets. So now our focus is turn to penetrating that market. And that's where we talked about we want to grow our model users by 25% to 30%. We're going to grow our model assets by 35% to 40% because what we're doing while we're also growing the users, we're going deeper with the existing users and that will get a multiplier effect in growing the model assets. So portfolio reviews or consultations is another major tool in penetrating that market.

[Jarrett Lilien, President and COO at WisdomTree]

And we do find that when we offer that service, it's a really good, advisor friendly service, which is really our goal is to just help our advisors be better. So it's a tool that's very popular. But then on our side, it draws us closer to the advisor. We now have a better idea of what they're working with, of what their portfolios look like, and it allows us to help them in a deeper way. So that's part of it's a major part of the strategy that's going to help us drive engagement in the overall models business this year and beyond.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Great answer, Jared. The only thing I'll say is that it's just turned on in a more dynamic way just now. So that one particular portfolio consultation just turned on.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

So great question. Thank you.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Any other?

[Logan Lillehaug, Associate Analyst at Craig-Hallum]

No, that is it. I appreciate you taking my questions.

[Operator]

Thank you. Our next questions come from the line of Chris Kotowski with Oppenheimer. Please proceed with your questions.

[Chris Kotowski, Managing Director at Oppenheimer & Co. Inc.]

Yes. I was just going to say thank you for Slide 13. It gives us a baseline. I'm just curious about the statistic though of 26,000 accounts and only 2,300 of them funded. Who's opening all those accounts and why would one open the account if one wasn't intending on using it?

[Chris Kotowski, Managing Director at Oppenheimer & Co. Inc.]

Or do you expect those people to start funding it or just struck me as odd?

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Will, will you take the first shot at this?

[William Peck, Head of Digital Assets at WisdomTree]

Yes, absolutely. So I think I'd make an overall comment that I think for FinTech apps generally, I think the baseline ratio of funded accounts to open accounts is probably lower than you might intuitively expect, right? You're like, why would this person give me their Social Security number if they're not planning on funding? And in all the conversations we've had, all the data we've seen, that's just a consistent thing in retail FinTech fab generally, right? So I think just lower your baseline rate for what that should be, but we definitely want to drive this number higher.

[William Peck, Head of Digital Assets at WisdomTree]

Like what we're seeing today is we want to continue to drive this number higher and I'm in these numbers every day and I can tell you over the past couple of weeks months that number is increasing. As you know, doing things like improving the onboarding process, right, or improving funding methods, targeting better in our digital marketing. So I expect that number to go up. We will definitely be remarketing to people who've opened an accounts, right. These are people that we can easily remarket to, they can easily fund from there.

[William Peck, Head of Digital Assets at WisdomTree]

So I expect to convert some percentage of them and then just have new accounts coming through, we expect them to convert to funded users more quickly.

[Chris Kotowski, Managing Director at Oppenheimer & Co. Inc.]

Okay. Great. Thank you.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Just touch on on chain community and the on ramps for a second, though, just reiterate that.

[William Peck, Head of Digital Assets at WisdomTree]

Yes. And this is a point that Jared made in the script and John had touched on earlier is, we view our primary target market being the on chain community, which we just can't well support yet without stablecoin on and off ramps. So this goes back to kind of uncertainty from the federal banking regulators that this is just something that we've not been able to bring forward yet, but we've got a good plan in place over the course of the first half of this year to add that product feature, which will really allow this community to fund more easily and get the benefits of diversifying and yield in this way. So when that happens, I think you'll better be able to judge that ratio.

[Chris Kotowski, Managing Director at Oppenheimer & Co. Inc.]

Okay. Great. Thank you.

[Operator]

Thank you. There are no further questions at this time. I'd now like to hand the floor back over to Jonathan Steinberg for any closing remarks.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

Thank you. Yes, I would like to make a final point. To the analysts, I would say, humbly, we deserve a significant expansion of multiple. Our growth rates both historical and going forward including year to date momentum with over $1,000,000,000 in inflows year to date justifies it. Our business model AUM of $115,000,000,000 are an absolute record this morning and only 300 employees.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

It's the envy of the industry. Our areas of focus, WisdomTree is levered to 3 of the biggest trends in asset management, global ETFs, models and solutions and tokenization. The only thing that we don't have is private assets. My point is the value of the franchise is not reflected in our $1,500,000,000 market cap. It's very frustrating and I guarantee you outsiders looking in see a lot of value that's not reflected in our stock today.

[Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree]

So again, I feel strongly that it's really justified that our multiple expands. I'll just leave you with that thought. So thank you all for your interest and we'll talk to you next quarter. Have a great day.

[Operator]

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Have a great weekend.

Participants

Analysts

• Jessica Zaloom, Head of Corporate Communications & Public Relations at WisdomTree
• Bryan Edmiston, Chief Financial Officer at WisdomTree
• Jarrett Lilien, President and COO at WisdomTree
• Jonathan Steinberg, Founder & Chief Executive Officer at WisdomTree
• Jeremy Campbell, Director of Investor Relations at WisdomTree
• William Peck, Head of Digital Assets at WisdomTree
• Brennan Hawken, Senior Analyst - Equity Research at UBS Group
• Mike Grondahl, Senior Research Analyst at Northland Capital Markets
• Jeremy Schwartz, Global Chief Investment Officer at WisdomTree
• Logan Lillehaug, Associate Analyst at Craig-Hallum
• Chris Kotowski, Managing Director at Oppenheimer & Co. Inc.