Q4 2023 WisdomTree Inc Earnings Call

Hello, and welcome to the Wisdom tree Q4, 2023 earnings conference call and webcast. If anyone should require operator assistance. Please press star zero on your telephone keypad, Oh question and answer session will follow the formal presentation.

Operator: Hello, and welcome to the WisdomTree Q4 2023 Earnings Conference Call-In Webcast. If anyone should require operator assistance, please press star zero on your telephone keypad.

Operator: A question and answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star 1 on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Jessica Zaloum, Head of Corporate Communications. Please go ahead, Jessica.

Can you may be placed in the question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded its now my pleasure to turn the call over to Jessica <unk> head of corporate Communications. Please go ahead, Jessica good morning, before we begin I would like to reference our legal disclaimer available in todays presentation.

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

Jessica: This presentation may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Jessica: [noise] of factors could cause actual results to differ materially from the results discussed in forward looking statements, including but not limited to the risks set forth in this presentation and in the risk factors section of wisdom tooth annual report on Form 10-K for the year ended December 31st 2002.

Jessica: 22, whereas injury assumes no duty and does not undertake to update any forward looking statements now it's my pleasure to turn the call over to wasting Tree's CFO, Brian admin space.

Brian: Thank you Jessica and good morning, everyone.

Brian: I'll begin my remarks, with a recap of 2023 and our fourth quarter results.

Brian Edmundson: I will begin my remarks with a recap of 2023 and our fourth quarter results, followed by our 2024 expense guidance before turning it over to Jarrett and Jono for additional updates on our business. 2023 has been a year of transformation and setting the table for the future. We generated 10.4 billion inflows during the year, which translated into a 13% organic flow growth rate. Flow diversification is driving our average feed capture on our flows upward, which was about two times greater than our feed capture in the prior year.

Brian: Followed by our 'twenty 'twenty four expense guidance before turning it over to Jarrett and Johnno for additional updates on our business.

Brian: 2023 has been a year of transformation and table setting for the future.

Brian: We generated $10 4 billion of inflows during the year, which translated into a 13% organic flow growth rate.

Brian: And flow diversification is driving our average fee capture on our flows upward which was about two times greater than our fee capture in the prior year.

And while we experienced modest outflows in the fourth quarter revenue grew organically as we captured positive run rate revenues on our flows.

Brian Edmundson: And while we experienced modest outflows in the fourth quarter, revenue grew organically as we captured positive run rate revenues on our flows as we outflowed from lower fee products while inflowing into products with a higher fee capture. Continued organic growth and positive market conditions have resulted in the achievement of record revenue and AUM levels. While capital management actions undertaken by management have driven meaningful margin expansion and EPS accretion. The buyout of our gold royalty obligation in the spring was 15% accretive and drove operating margin expansion by over 500 basis points. This transaction also cleaned up our balance sheet, eliminating a perpetual obligation and reduced the volatility in our quarterly financial results. Consideration paid included $50 million in cash and the issuance of preferred stock convertible into 13 million shares of our common stock. In November, we repurchased these shares for $84.4 million, 40 million of which was paid up front, and the remainder payable in equal annual installments over the next three years with no requirement to pay interest.

As we outflows from lower fee products, while in flowing into products with a higher fee capture.

Brian: Continued organic growth and positive market conditions has resulted in the achievement of record revenue and AUM levels.

Brian: Well capital action, while capital management actions undertaken by management has driven meaningful margin expansion and EPS accretion.

Brian: The buyout of our gold royalty obligation in the spring was 15% accretive.

Brian: And drove operating margin expansion by over 500 basis points.

Brian: This transaction also cleaned up our balance sheet, eliminating a perpetual obligation and reduce the volatility in our quarterly financial results.

Brian: Consideration paid included $50 million in cash and the issuance of preferred stock convertible into 13 million shares of our common stock.

Brian: In November we repurchased these shares for $84.4 million.

Brian: $40 million of which was paid upfront and the remainder payable in equal annual installments over the next three years with no requirement to pay interest.

Brian: The implied price per share is $6 in two sense when considering the interest free financing element of the transaction.

Brian Edmundson: The implied price per share is $6.02 when considering the interest-free financing element of the transaction, and the stock repurchase was approximately 7% accretive. These actions, taken together with a record AUM of $100 billion at year-end, serve as a strong foundation and jumping-off point as we turn the page into 2024. Revenue growth going forward is naturally derived from our AUM ending the year at a level greater than our average AUM over this past year. That, coupled with continuing organic growth and favorable market conditions, as well as disciplined expense and capital management, is the formula for margin expansion and EPS accretion. Our AUM currently stands at $100.6 billion, up slightly from the end of December, resulting from $300 million of inflows and positive market movement. Next slide.

Brian: And the stock repurchase was approximately 7% accretive.

Brian: These actions taken together with record AUM of 100 billion at year end.

Brian: Serve as a strong foundation in jumping off point as we turned the page into 'twenty 'twenty four.

Brian: Revenue growth going forward is naturally derived from our AUM ending the year at a level greater than our average AUM over this past year.

Brian: That coupled with continuing organic growth and favorable market conditions as well as disciplined expense and capital management is.

Brian: This is the formula for margin expansion and EPS accretion.

Our AUM currently stands at 100.6 billion up slightly from the end of December resulting from $300 million of inflows and positive market movement.

Brian: Next slide.

Brian: Revenues were $98 million essentially flat as compared to the third quarter as the increase in our AUM was more heavily weighted toward the latter part of the year.

Brian Edmundson: Revenues were $90.8 million, essentially flat as compared to the third quarter, as the increase in our AUM was more heavily weighted toward the latter part of the year. As we just mentioned, our ending AUM of $100 billion, which is greater than our average AUM for the year, serves as a nice tailwind for future growth. For the year, we experienced revenue growth of 16% and adjusted operating income growth of 45%. This translated into 540 basis points of adjusted operating margin expansion, or 140 basis points of organic adjusted operating margin expansion when excluding the impact of our gold royalty buyout that occurred earlier this year. Adjusted net income for the quarter was $18.6 million, or $0.11 per share.

Brian: As just mentioned our ending AUM of 100 billion, which is greater than our average AUM for the year serves as a nice tailwind for future growth.

Brian: For the year, we experienced revenue growth of 16% and adjusted operating income growth of 45%.

This translated into 540 basis points of adjusted operating margin expansion.

Brian: 140 basis points of organic adjusted operating margin expansion when excluding the impact of a gold royalty buyout that occurred earlier this year.

Adjusted net income for the quarter was $18.6 million.

Brian: Or <unk> 11 per share.

Brian Edmundson: Next slide. Our operating expenses were up 1.7% for the quarter, driven by higher marketing, fund costs, and sales-related expenses. We ended the year toward the high end of our Compensation and Discretionary Spending Expense Guide. Next slide. Now a few comments on our 2024 expense guide. We are forecasting our compensation expense to range from $108 to $118 million. This guidance includes planned hires as well as year-end compensation adjustments and the annualization of hires made during 2023. The range considers variability in incentive compensation with drivers including the magnitude of our flows.

Brian: Next slide.

Brian: Our operating expenses were up 1.7% for the quarter, driven by higher marketing fund costs and sales related expenses.

Brian: We ended the year toward the high end of our compensation and discretionary spending expense guidance.

Brian: Next slide.

Brian: Now a few comments on our 'twenty 'twenty four expense guidance.

Brian: We are forecasting our compensation expense to range from $108 million to $118 million.

Brian: This guidance includes planned hires as well as at year end compensation adjustments and the annualized <unk> of hires made during 2023.

Brian: The range considers variability in incentive compensation with drivers, including the magnitude of our flows.

Brian Edmundson: Revenue and Operating Income Growth, Margin Expansion, and our Share Price Performance in Relation to Our Peers. Also, just a reminder that we experience elevated seasonality in the amount of compensation we report in the first quarter as we recognize payroll taxes, benefits, and other items in connection with year-end bonuses. We estimate first quarter compensation expense to be approximately $30 to $31 million.

Brian: Revenue and operating income growth margin expansion.

Brian: And our share price performance in relation to our peers.

Brian: Also just a reminder, that we experienced elevated seasonality and the amount of compensation that we report in the first quarter as we recognized payroll taxes benefits and other items in connection with year end bonuses.

We estimate first quarter compensation expense to be approximately $30 million to $31 million.

Brian: Discretionary spending is anticipated to range from $64 million to $68 million as compared to 59.3 million recognized in 2023.

Brian Edmundson: Discretionary spending is anticipated to range from $64 to $68 million, as compared to $59.3 million recognized in 2023. The modest uptick incorporates planned expenses for our national rollout of WisdomTree Prime, including our measured approach to marketing and other related costs. Our gross margin is anticipated to be about 79% to 80% at current AUM levels and taking into consideration fund launches anticipated during the course of the year. However, if AUM scales higher from continued organic growth or favorable market conditions, we would anticipate further gross margin expansion. Our third-party distribution expense is anticipated to range from $10 to $11 million as we expand our partnerships and grow AUM on the platform. Our adjusted interest expenses are forecasted to be about $14 million as compared to almost $15 million in 2023, as we paid down $45 million of debt this past June. Our adjusted interest expense is exclusive of any interest cost we are required to impute under GAAP related to our interest-free financing of the shares we repurchased from the World Gold Council in November of this past year.

Brian: The modest uptick incorporates planned expenses for our national rollout of wisdom tree Prime.

Including our measured approach towards marketing and other related costs.

Brian: Our gross margin is anticipated to be about 79% to 80% at current AUM levels and taking into consideration fund launches anticipated during the course of the year.

Brian: If AUM scales higher from continued organic growth.

Brian: Our favorable market conditions, we would anticipate further gross margin expansion.

Brian: Our third party distribution expense is anticipated to range from $10 million to $11 million.

Brian: As we expand our partnerships and grow AUM on the platforms.

Brian: Our adjusted interest expense is forecasted to be about $14 million.

Brian: As compared to almost $15 million in 2023.

Brian: As we paid down $45 million of debt this past June.

Brian: Our adjusted interest expense is exclusive of any interest costs, we are required to impute under GAAP.

Brian: Related to our interest free financing of the shares we repurchased from the World Gold Council and November of this past year.

Brian Edmundson: Our interest income is estimated to be approximately $4 million in 2024, taking into consideration the magnitude of our investable assets and current interest rates. Our adjusted tax rate is expected to be about 24 to 25 percent. Slide uptick versus last year to account for the full year impact of the UK rate change to 25% that went in effect on April 1st of last year. And our weighted average diluted shares are estimated to be between 166 and 168 million, as compared to $171 million this past quarter. The decline is primarily due to the recognition of the remaining half of the 13.1 million share equivalents recently repurchased, and that repurchase occurred midway through the fourth quarter. That's all I have.

Brian: Our interest income is estimated to be approximately 4 million in 2024.

Brian: Taking into consideration the magnitude of our investable assets and current interest rates.

Brian: Our adjusted tax rate is expected to be about 24% to 25% of <unk>.

Brian: Slight uptick versus last year to account for the full year impact of the U K rate change to 25%.

Brian: It went into effect on April one of last year.

Brian: And our weighted average diluted shares are estimated to be between 166 and $168 million.

As compared to 171 million this past quarter.

Brian: The decline is primarily due to the recognition of the remaining half of the 13.1 million share equivalents recently repurchase.

Brian: Is that repurchase occurred midway through the fourth quarter.

Brian: That's all I have I will now turn the call over to Jarrod.

Operator: I will now turn the call over to Jared. Thank you, Brian, and good morning, everyone. We're incredibly proud of our accomplishments in 2023. We have industry-leading organic growth, and www.wisdomtree.com. We have strong momentum built over several years, which we now carry into 2024 and beyond. As Brian mentioned, our 10 plus billion of net inflows in 2023 generated best-in-class organic growth versus our peers, extending our annual inflow streak to three consecutive years, where we have gathered over 27 billion in cumulative net inflows during that timeframe. Our ability to consistently drive strong organic growth is helping us reach new milestones. In December, WisdomTree reached $100 billion in assets under management for the first time, and we are now focused on delivering the next $100 billion. But how do we get there?

Jarrod: Thank you, Brian and good morning, everyone.

Jarrod: We're incredibly proud of our accomplishments in 2023, we had industry, leading organic growth and expanding operating margins and our leadership position in <unk> to assets and blockchain enabled finance, we have strong momentum build over several years.

Jarrod: Which we now carry into 2024 and beyond.

Jarrod: As Brian mentioned, our 10 plus billion of net inflows in 2023 generated best in class organic growth versus our peers.

Jarrod: Extending our annual inflow streak to three consecutive years, where we have gathered over 27 billion in cumulative net inflows during that timeframe.

Further.

Our ability to consistently drive strong organic growth is helping us reach new milestones in December wisdom tree reached 100 billion in assets under management for the first time and we are now focused on delivering the next 100 billion. So how do we get there at <unk>.

Jarrett Lilien: It starts with our differentiated product lineup, where we have products and solutions for every market environment and every part of the market cycle. In 2024, we will continue to augment our product lineup with the types of innovative and differentiated fund launches that are WisdomTree hallmarks. Separately, we will continue to drive flow growth by deepening relationships with existing clients, while also adding new clients, as we did in 2023. Last year, we deepened relationships and saw a 20% lift in the number of clients that hold multiple WisdomTree products, while at the same time, we grew our overall client base by more than 20%. Growing and deepening relationships with existing clients, while at the same time adding new ones, are growth compounders and represent a pipeline of future inflows.

Darts with our differentiated product lineup, where we have products and solutions for every market environment and every part of the market cycle.

Jarrod: In 2024, we will continue to augment our product lineup with the types of innovative and differentiated fund launches and her wisdom tree hallmarks.

Jarrod: Separately, we will continue to drive flow growth by deepening relationships with existing clients. While also adding new clients as we did in 2023 last year, we deepened relationships and saw a 20% lift in the number of clients that hold multiple wisdom tree products.

Jarrod: Well at the same time, we grew our overall client base by more than 20% growing and deepening relationships with existing clients. While at the same time, adding new ones are growth compounds <unk> and represent a pipeline of future inflows are.

Jarrett Lilien: A key additional growth driver is building upon momentum in our models business. Given this increased momentum, we're going to begin showcasing quarterly metrics that will better allow analysts and investors to benchmark our success and better understand and underwrite the steady cadence of our future growth. To begin, our definition of model AUM is AUM in a model where we control the allocation decision.

Jarrod: A key additional growth driver is building upon momentum in our models business. Given this increased momentum we're going to begin showcasing quarterly metrics that will better allow analysts and investors to benchmark, our success and better understand and underwrite the steady cadence.

Some of our future growth.

Speaker Change: To begin.

Speaker Change: Our definition of model.

Speaker Change: <unk> is a U M in a model, where we control the allocation decision. We feel this distinction is important as some of our peers include single Tickers in home office or advisor models in their figures, we do not set.

Jarrett Lilien: We feel this distinction is important as some of our peers include single tickers in the home office or advisor models in their figures. We do not. Second, we are now branding our models initiative as WisdomTree Portfolio Solutions, which encompasses all 3.2 billion of total assets sitting in model strategies where WisdomTree drives the portfolio allocation, whether it's at a wire house or in the RIA independent broker dealer channel. In the US, there are roughly 300,000 financial advisors in aggregate with over 27 trillion in assets under management. This is our addressable market. Today, our accessible market, which is the number of advisors and RIAs who have access to our models, is about 70,000. And our current penetration of this accessible market is under 3%, meaning that today we have 2,000 advisors that are using at least one of our models. For more color, of the 2,000 current model clients, more than 1,000 were added in the past 12 months.

Second we are now branding our models initiatives as wisdom tree portfolio solutions, which encompasses all 3.2 billion of total assets sitting in model strategies, where wisdom tree drives the portfolio allocation, whether its in a wire house or in the R. A a.

Speaker Change: Pinion independent broker dealer channel.

Speaker Change: In the U S. There are roughly 300000 financial advisors in aggregate with over 27 trillion in assets under management. This is our addressable market.

Speaker Change: Day, our accessible market, which is the number of advisors and RNA as who has the access to our models is about 70000 and our current penetration of this accessible market is under 3%, meaning that today. We have 2000 advisors that are using at least.

Speaker Change: One of our models.

Speaker Change: Providing more color of the 2000 current model clients more than 1000 were added in the past 12 months overall in 2023, our organic model.

Jarrett Lilien: Overall, in 2023, our Organic Model AUM growth was nearly 40%, while our Advisor client growth was over 100%. And this gives us visibility and confidence in our model flow growth over the next several quarters, as our experience tells us that AUM growth follows client growth. Overall, growing our accessible market, penetrating this accessible market, and adding new advisors while deepening wallet share with current advisors as they gather additional assets for their end customers translates into a strong pipeline of future AUM and earnings growth. And as Brian detailed earlier, we are doing this on well-managed expense guidance that will help us continue to deliver high incremental margins and drive expanded operating margins and earnings growth in 2024. In sum, I'm extremely bullish about 2024 and beyond as we continue to drive organic growth, expand our margins, and continue to lead the industry's evolution in tokenized assets and blockchain-enabled finance. And with that, let me now turn it over to Jon.

Speaker Change: <unk> growth.

Speaker Change: Growth was nearly 40%, while our advisor client growth was over 100% and this gives us visibility and confidence in our model slow growth over the next several quarters as our experience tells us that AUM.

Speaker Change: AUM growth follows client growth.

Speaker Change: Overall growing our accessible market penetrating the successful market and adding new advisors, while deepening wallet share with current advisors as they gather additional assets for their end customers.

Speaker Change: <unk> into a strong pipeline of future AUM and earnings growth and as Brian detailed earlier, we are doing this unwell manage expense guidance that will help us continue to deliver high incremental margins and drive expanded operating margins and earnings growth.

2024.

Speaker Change: In sum I'm extremely bullish about 'twenty 'twenty four and beyond as we continue to drive organic growth expand our margins and continue to lead the industry's evolution into <unk> assets and blockchain enabled finance and with that let me now turn it over to Jonathan.

Jonathan: Thank you Jarrod and good morning, everyone.

Jonathan L. Steinberg: Thank you, Jarrett, and good morning, everyone. What a terrific year 2023 has been. Over 100 billion in AUM, over 10 billion in inflows, over 500 basis points of margin expansion, and a 42% increase in earnings per share. Building on recent years of strong momentum, I'm very bullish on WisdomTree's future. And while I'm proud that WisdomTree achieved a hundred billion dollars in ads, I'm optimistic that the next $100 billion will take significantly less time.

Jonathan: What a terrific year of 2023 awards.

Jonathan: Over 100 billion of AUM over $10 billion of inflows over 500 basis points of margin expansion and a 42% increase in earnings per share.

Jonathan: Building on recent years of strong momentum I am very bullish on wisdom tree future.

Jonathan: While I'm proud that wisdom tree achieved 100 billion of assets I'm optimistic that the next 100 billion will take significantly less time.

Jonathan: One of the reasons for that optimism is the expectation that token is deshaun and wisdom tree prime will contribute significantly to our overall organic growth in the years ahead.

Jonathan L. Steinberg: One of the reasons for that optimism is the expectation that tokenization and WisdomTree Prime will contribute significantly to our overall organic growth in the years ahead. WisdomTree has put a lot of hard work into cementing our leadership status and tokenization. However, the market is moving quickly, and some of our traditional finance peers are starting to talk up the enormous opportunity in tokenization. This is not only a validation of our tokenization strategy but also underscores the importance of WisdomTree's strong early mover position, the attractiveness of our strategy, and the need to maintain our multi-year head start. Regarding digital access

Jonathan: Wisdom tree has put a lot of hard work to cement our leadership status in <unk>.

Jonathan: However, the market is moving quickly and some of our traditional finance peers are starting to talk up the enormous opportunity in <unk>.

Jonathan: This is not only a validation of our <unk> strategy, but also underscores the importance of wisdom tree strong early mover position the attractiveness of our strategy and the need to maintain our multi year head start.

Jonathan: Regarding digital asset.

Jonathan L. Steinberg: Similar to last quarter, I want to frame my remarks around our key goals. First, increase the availability of WisdomTree Prime across the United States, back at www.wisdomtree.com. Third, deploy a targeted marketing effort to drive user growth. Fourth, Explore Opportunities for Strategic Partnerships on the geographic front. We've made additional progress since last quarter's call with five additional states. WisdomTree Prime is now available to approximately 70% of the U.S. population across 38 states. However, there are a lot of variables in receiving state approvals, which differ by state, with some states taking longer than anticipated.

Jonathan: Similar to last quarter I want to frame my remarks around our key goals.

Jonathan: First increasing the availability of wisdom tree pie across the United States.

Jonathan: Second enhance the prime experience through additional products and features.

Jonathan: Third deploy a targeted marketing effort to drive user growth and for <unk>.

Floor opportunities for strategic partnerships.

Jonathan: On the geographic front.

We've made additional progress since last quarter's call with five additional states.

Jonathan: Wisdom tree Prime is now available to approximately 70% of the U S population across 38 states.

Jonathan: There are a lot of variables in receiving state approvals, which differ by state with some states taking longer than anticipated but.

Jonathan: But we are in the homestretch and confident that most of the rest of the population.

Jonathan L. Steinberg: But we are in the home stretch, and I'm confident that most of the rest of the population will join us. We'll have access to WisdomTree Prime in the coming weeks. We are continually looking at different products or features that enhance the value proposition of the prime experience. In December, we launched three WisdomTree Stiegel-branded digital funds where customers can deploy a model-like experience with just one click. Additionally, our digital money market fund is now live and available to customers inside WisdomTree Prime. And finally, I'm pleased to announce that the debit card is currently live in internal product testing and being successfully used at merchants, including through Apple Pay, and is slated to be available to WisdomTree Prime customers by the end of February, as previously discussed.

Jonathan: We will have access to wisdom tree pride in the coming weeks.

Jonathan: We are continually looking at different products or features that enhance the value proposition of the prime experience.

In December we launched three wisdom tree Eagle branded digital funds, where customers can deploy a model like experience with just one click.

Jonathan: Additionally, our digital money market fund is now live and available to customers inside wisdom tree Prime and finally I'm pleased to announce that the debit card is currently live in internal product testing and being successfully used at merchant.

Jonathan: Including through Apple pay and is slated to be available to wisdom tree prime customers by the end of February.

Jonathan: As previously discussed.

Jonathan L. Steinberg: We believe it's wise to limit marketing spend until we are available across most of the U.S. and we have our initial full suite of product and service features. To us, that is being prudent with our capital. Our nationwide rollout is now expected to start by late Q1, early Q2. That's the point where you should expect us to lean into the marketing efforts that will begin to generate both downloads and growth in funding. However, I want to stress that the guidance that Brian gave this morning fully contemplates all of the planned WisdomTree Pride marketing spend. 2024.

Jonathan: We believe it's wise to limit marketing spend until we are available across most of the U S and we have our initial full suite of product and service features.

Jonathan: For us that is being prudent with our capital.

Jonathan: Our nationwide rollout is now expected to start by late Q1 early Q2.

Jonathan: That's the point, where you should expect us to lean into the marketing efforts that will begin to generate both downloads and growth in funded accounts.

Jonathan: However, I want to stress that the guidance that Brian gave this morning.

Jonathan: Fully contemplates all of the planned wisdom tree product marketing spend for 2024.

Jonathan L. Steinberg: Finally, we see a meaningful opportunity to leverage strategic relationships to drive both growth of the WisdomTree Prime platform and revenue opportunities outside of Prime. We have several active B2B and B2B2C conversations in the pipeline, and we think that many of those efforts will further diversify our revenue streams and offer new top-line growth opportunities. For example, we see a significant opportunity to distribute our funds on Gold Token to and through established partners, platforms, and ecosystems outside of WisdomTree Prime. These types of relationships will naturally be episodic in nature, so we may not have an update for you each quarter, but each would likely be meaningful in nature when they do cross the finish line.

Jonathan: Finally, we see a meaningful opportunity to leverage strategic relationships to drive both growth.

Jonathan: The wisdom tree prime platform as well as what revenue opportunities outside of prime.

Jonathan: We have several active b to b and B to B to C conversations in the pipeline and we think that many of those efforts will further diversify our revenue streams and offer new topline growth opportunities.

For example, we see a significant opportunity to distribute our funds on gold token Q and through established partners platforms and ecosystems outside of wisdom tree product.

Jonathan: These types of relationships will naturally be episodic in nature. So we may not have an update for you each quarter.

Jonathan: But each would likely be meaningful in nature, when they do cross the finish line.

Jonathan: As I have mentioned in recent quarters, it's a very exciting time for wisdom tree we.

Jeremy Campbell: As I have mentioned in recent quarters, it's a very exciting time for WisdomTree. We have best-in-class organic growth, a meaningful margin expansion opportunity, and leverage on the secular shift toward tokenization. And now, Operator, will you please turn the call over to Jeremy Campbell, our Head of Investor Relations, to field some questions from our shareholders? All right. Thanks, Jono. Good morning, everybody. Like prior quarters, we're gonna take some questions here from the say platform from our retail shareholders. A few this quarter. We're all kind of along the same lines.

Jonathan: We have best in class organic growth, a meaningful margin expansion opportunity and leverage to the secular shift towards <unk>.

Jonathan: And now operator would you please turn the call over to Jeremy Campbell, our head of Investor Relations.

Jeremy Campbell: Yield some questions from our shareholders.

Jeremy Campbell: Alright, Thanks, John and good morning, everybody.

Jeremy Campbell: We like prior quarters, where it takes some questions here from the <unk> platform from our retail shareholders.

Jeremy Campbell: A few this quarter were all kind of along the same lines I want to condense them actually into just one question and my Justice to our President and COO Jarrett Lilien. Jared. The question is we are now about three weeks into the bitcoin Etfs going live what are some of the early takeaways and what's your plan to grow in a crowded field.

Jeremy Campbell: I want to condense them actually into just one question, and my address is to our President and COO, Jarrett Lilien. Jarrett, the question is, we are now about three weeks into the Bitcoin ETFs going live. What are some of the early takeaways? And what's your plan to grow in a crowded, All right. Thanks, Jeremy.

Jarrett Lilien: Alright, Thanks, Jeremy Yeah, let's start with a few takeaways.

Jarrett Lilien: Yeah, let's start with a few takeaways. First of all, this was really a unique situation where you had 11 beta funds that all came to the market at the same time and all with cutthroat fees and fee waivers. A second takeaway is that while demand was solid, not all of it was new money. There was a lot of swapping out of Grayscale and ProShares into other products. And also, many competitors were able to use their own balance sheets to put money into funds or use discretionary allocations from other funds or were able to lean on captive distribution to drive early flows. So, you put that all together, and it's a very unique launch.

Jarrett Lilien: First of all this was really a unique situation, where you had 11 beta funds that all came to the market at the same time and all with cut throat fees and fee waivers.

Jarrett Lilien: Second takeaway is that while demand was solid not all of it was new money. There's a lot of swapping out of grey scale and pro shares and into other products and also many competitors were able to use their own balance sheet too.

Jarrett Lilien: Put into funds are used discretionary allocations from other funds, where we're able to lean on captive distribution to drive early flows.

Jarrett Lilien: So you pull that all together a very unique launch yes, some solid demand, but also some noise in the early numbers.

Jarrett Lilien: Yes, some solid demand, but also some noise in the early numbers. In terms of WisdomTree, just remember, for us, this is another ETF launch. We launch over 20 funds each year, and if you look at our track record, we've generated three consecutive years of organic growth and industry-leading organic growth last year. Also, remember that we are managing eight crypto ETPs in Europe with over half a billion in AUM, where we generated 37% organic growth last year. And this year so far, we are leading European crypto inflow growth. So, overall, we're confident in our ability and our track record of growing AUM. That said, it does take time, especially in our model because these products are not yet available on many advisor platforms, which is where we would expect to see most of our flows.

Jarrett Lilien: In terms of wisdom tree just to remember for US. This is another ETF launch we launch over 20 funds each year and you look at our track record we've generated three consecutive years of organic growth and industry, leading organic growth last year.

Jarrett Lilien: Also remember that we are managing today eight crypto etp's in Europe with over half a billion of AUM, where last year, we generated 37% organic growth in this year. So far we are a leading European crypto inflow growth so over.

Jarrett Lilien: We're confident in our ability and our track record in growing AUM that said.

It does take time, especially.

In in our model because these products are not yet available in many advisor platforms, which is where we would expect to see most of our flows but I'd make one final point really a larger point is that we believe the best use case for bitcoin is not in an ETF, but it.

Jarrett Lilien: But I'd make one final point, really a larger point, is that we believe the best use case for Bitcoin is not in an ETF but is actually inside of WisdomTree Prime, where not only can you hold Bitcoin together with other digital assets, but you also get added utility in the form of payments and peer-to-peer functionality that doesn't come with an ETF.

Jarrett Lilien: Actually inside of wisdom tree Prime.

Jarrett Lilien: Where not only can you hold bitcoin together with other digital assets. You also get added utility in the form of payments and peer to peer functionality that doesn't come with an ETF. So that's the the early look.

Jeremy Campbell: So, that's the early look, and obviously, more to come. Great. Thanks, Jarrett.

Operator: All right, Operator. We can open up the lines here to take some questions from the analyst community at this point. Sure. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Jarrett Lilien: And obviously more to come.

Speaker Change: Great. Thanks Derrick.

Speaker Change: Operator, we can open up the lines here to take some questions from the analyst community at this point.

Speaker Change: Certainly if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he'd like to remove your question from a Q1 moment. Please while we poll for questions.

Operator: You may press star 2 if you'd like to move your question. One moment, please, while we poll for questions. Our first question is coming from Adam Beatty from UBS. Your line is now live. Thank you, and good morning.

Speaker Change: Our first question is coming from Adam Beatty from UBS. Your line is now live.

Adam Beatty: Thank you and good morning wanted to ask about portfolio solutions. Appreciate the new metrics I think the the way you're measuring it and tracking it makes a lot of sense and it looks like as we look at the addressable market versus the accessible market that.

Adam Beatty: I wanted to ask about portfolio solutions. I appreciate the new metrics. I think the way you're measuring it and tracking it makes a lot of sense. It looks like, as we look at the addressable market versus the accessible market, that WisdomTree has already managed to capture over half the addressable AUM, you know, with less than 25% of the advisors. So that, to me, suggests that there might be a bit of a shift in your approach toward maximizing that accessible market that you've kind of already got on the table. So, you know, check me on that, whether or not that's correct, and then maybe you could talk about your goals for the year in that context. Thank you. Thanks, Adam. Jarrett, why don't you start?

Adam Beatty: That wisdom tree is already managed to capture over half the the addressable way you am you know with less than 25% of the advisers. So that to me suggests that there might be a bit of a shift in your approach toward maximizing that accessible market that you've kind of already got on the table. So check me on that whether or not.

Speaker Change: That's correct and then maybe if you could talk about your goals for the year in that context. Thank you.

Speaker Change: Thanks, Adam.

Jarrett why don't you start.

Speaker Change: Sure.

Jarrett Lilien: Sure. Yeah, I think you have it right. Of course, you know, we would like to keep increasing that accessible market. But again, you read it right.

Jarrett Lilien: Yes, I think you have it right.

Of course, we would like to keep increasing that accessible market.

Jarrett Lilien: But you know again you read it right are real key is penetrating what we have today.

Jarrett Lilien: Our real key is penetrating what we have today, and we're already seeing that. I mean, the confidence that we have is, you know, again, now 2,000 advisors using our models with 1,000 coming in the last year. We're also able to see sort of vintages of seasoning, what it means when somebody starts and where they get to after three months, six months, a year, what have you. So you're absolutely right

Speaker Change: And we're already seeing that I mean, the confidence that we have is again.

Speaker Change: Now 2000 advisers using our models with a thousand coming in the last year. We're also able to see sort of vintages of CS.

Speaker Change: Seasoning, what it means when somebody starts and where they get to after three months six months a year or what have you.

Speaker Change: So you're absolutely right, it's all about the penetrating that accessible market.

Jarrett Lilien: It's all about penetrating that accessible market. That's really the main goal for 24. Excellent. Thank you. I appreciate that.

Speaker Change: It's really the main goal for 'twenty four.

Speaker Change: Excellent. Thank you I appreciate that and then just one more maybe for Brian around operating margin and potential upside there. It looks like you know pretty good cost control the guidance for 'twenty for works works to be you know to have some opportunity and yet the gross margin you know it's kind of.

Brian Edmundson: And then just one more maybe for Brian around operating margin and potential upside there. It looks like, you know, pretty good cost control. The guidance for 24, you know, looks to be, you know, looks to have some opportunity. And yet the gross margin, you know, it's kind of, you know, more or less where it was before. And he didn't guide adjusted operating margins.

Brian: You know more or less where it was before and you didn't guide adjusted operating margin. So if that's a better way to talk about it feel free to do that but just wondering what kind of operating leverage you might see to the extent that you hit the high end of your other targets. Thank you.

Brian Edmundson: So if that's a better way to talk about it, feel free to do that. But I was wondering what kind of operating leverage you might see to the extent that you hit the high end of your other targets. Thanks. Yeah, so look, there is certainly operating leverage in our business model. We showed expansion of 540 basis points this past year, and if you strip out the impact of the gold, the gold buyout was 140 basis points of organic expansion. As we go forward from here, it's really a story about scale. It's a story about continued organic growth.

Yes. So look there is certainly operating leverage in our business model.

Brian: We show an expansion of 540 basis points. This past year, and if you strip out the impact of the gold the gold a buyout was 140 basis points.

Brian: Of organic expansion.

Brian: As we go forward from here its really a story about scale. It's a story about continued organic growth. It's a story about cooperating market conditions and capitalizing on our strategic initiatives.

Brian Edmundson: It's a story about cooperating with market conditions and capitalizing on our strategic initiative. But when you think about..., expansion going forward, I'd suggest that you view our ability to expand margins through the lens of achieving incremental margins greater than 50% in up revenue environments. And that would imply a very long runway with respect to margin expansion as we scale. Excellent. Got it. Thank you very much.

Brian: But when you think about <unk>.

Brian: Expansion going forward I'd suggest that you view, our ability to expand margins through the lens of <unk>.

Brian: Achieving incremental margins greater than 50%.

Brian: Up revenue environments, and that would imply a very long runway with respect to margin expansion as we scale.

Speaker Change: Excellent got it thank you very much.

Speaker Change: Yeah.

Operator: Thank you. The next question today is coming from Mike Brown from KBW. Your line is now live.

Speaker Change: Thank you next question today is coming from Mike Brown from <unk>. Your line is now live.

Mike Grondahl: Okay, great. Thanks for taking my questions.

Mike Grondahl: Okay, great. Thanks for taking my question. I was looking at slide 14, and on that slide, you lay out some use cases for tokenization across the industry. Can you just expand on how you think this trend can progress for the industry? How has investor uptake been? What's the education required?

Mike Grondahl: Just looking at slide 14 and on.

Mike Grondahl: On that slide you lay out some use cases for <unk> across the industry.

Can you just expand on how you think this trend can progress for the industry. How is investor uptake then what's the education required.

Will Peck: And I guess maybe expand on, you know, why this could be a better rapper or better mousetrap than the ETF? And you know, how will that dynamic play out over the next five or 10 years? Hey Will, Will Peck, head of WisdomTree Digital Access, why don't you give it the very first crack? Yeah, happy to.

Mike Grondahl: And I guess, maybe expand on why this could be a better.

Mike Grondahl: Wrapper or better mousetrap than the ETF and how will that dynamic play out over the next.

Mike Grondahl: Five or 10 years.

Speaker Change: It will we will pack head of wisdom tree digital assets why don't you take the first crack at this.

Speaker Change: Yeah happy to so just on slide 14, we're showing where a lot of our traditional and alternative asset management. Our competitors are doing the state's Muslim banks clearly it's been a.

Will Peck: So, you know, in 5.14, we're showing where a lot of our traditional and alternative asset management competitors are doing in the space as well as some banks. Clearly, there's been a large uptick in activity. There's been some live products, but a lot of this has been POCs so far, proof of concepts, things like that.

Speaker Change: Now a large uptick in activity theres been some wide product, but a lot of this had been POC. So far you know proof of concepts and things like that.

Will Peck: So, in terms of actual investor demand at this point, you're seeing some stuff in the DeFi space in terms of tokenization of real-world assets, but it's still very early. In terms of the advantages, I like to focus on three things: liquidity, transparency, and standardization.

Speaker Change: So in terms of actual investor demand at this point and are you seeing some stuff in the <unk> space in terms of token additional real world assets, but it's still very early.

Speaker Change: In terms of your advantages I'd like to focus on three things liquidity transparency standardization. Those are three things that you can see in terms of the benefits that <unk> can provide versus traditional rails for financial assets.

Will Peck: Those are three things that you can see in terms of the benefits that tokenization provides versus traditional rails for financial institutions. So, you know, we're very encouraged by what we're seeing in the industry so far, but we're also encouraged by our ability and nimbleness to actually bring live products to market, which we think is going to give us an advantage versus a lot of other people today. So does that answer your question?

Speaker Change: So we're very encouraged by what we're seeing in the industry. So far but we're also encouraged by our ability and nimbleness to actually bring life product to market, which we think is going to give us an advantage versus a lot of other people today.

So does that does that answer your question.

Will Peck: I guess maybe if you could just expand a little bit on, you know, the... The key advantages versus ETFs and perhaps what that growth potential could mean in the longer term and maybe what's the key impediment to delivering on that. Yeah, so again, I see the key advantages versus ETFs or, you know, kind of traditional ways to hold assets being liquidity, transparency, and standardization, right? So, liquidity, the ability to trade something 24-7, 365, if you're getting the right market participants in there; transparency, kind of providing much greater visibility to market participants in terms of who's holding what assets, where it's sitting at in different parts of the life cycle And then finally, around standardization, you know, I think blockchains, you look at something like an ERC-20 token in a wallet, the ability to hold any asset like that, and all you need is a compatible wallet, we think has a lot of potential and power versus traditional assets or traditional ways of holding assets over time.

Speaker Change: I guess, maybe if you could just expand a little bit on the.

Speaker Change: The key advantages versus Etfs, and perhaps what that.

Speaker Change: No growth potential could be longer term and maybe whats the kiehn pad next to delivering on that growth potential.

Speaker Change: Yes, so again I see the key advantages versus etfs or kind of traditional waste a whole lot of assets being liquidity transparency and standardization right. So liquidity the ability to trade something 20, $473 65, if you're getting the right market participants in their transparency kind of providing much greater visibility to market parts.

Speaker Change: Distance in terms of who's holding what assets, where it's sitting out in different parts of the lifecycle and then finally around standardization.

Speaker Change: I think blockchain you look at like something you know in <unk>.

Speaker Change: <unk> taken in a wallet the ability to hold any asset like that and all you need is a compatible wallet. We think has a lot of potential in tower versus kind of traditional assets are traditional ways of holding assets over time. So those are the three advantages that I'd like to focus on.

Will Peck: So those are the three advantages that I like to focus on. In terms of the market opportunity, we've said for sighted cities, that we could see something like $5 trillion in tokenized assets, tokenized securities over the next five, 10 years. You'll see people ranging from up to $10 trillion in some of their projections or things like that. I mean, I think the big catalyst, a lot of people point to regulation. I think regulation is starting to get there.

Speaker Change: In terms of the market opportunity we see.

Speaker Change: Ted.

<unk> City said something like $5 billion in Cocainize athletes took a nice securities over the next 510 years, you'll see people ranging from potentially and in some of their projections or things like that.

Speaker Change: I think the big catalyst you know a lot of people point to regulation I think the regulation is starting to get there to me, it's actually doing life products like going out there trying to acquire customers putting stuff in the market, which you really havent seen so much yet in terms of the tokens nation of rolled asset space. So that's what we're doing now with new century plan, that's what we're doing with our institutional.

Jonathan L. Steinberg: To me, it's actually doing live products, going out there, trying to acquire customers, putting stuff in the market, which you really haven't seen so much of yet in terms of the tokenization of the rural asset space. So that's what we're doing now with WisdomTree Prime. That's what we're doing with our institutional user portal, and I think you'll see some kind of continued growth and adoption from there. Mike, let me add, this is Jono, that... One of them.

Speaker Change: User portal and I think youll see some kind of continued growth and adoption from there.

Speaker Change: Mike Let me add this is John <unk>.

John: One of the real advantages I would say it will be around the user experience.

Jonathan L. Steinberg: The real advantages, I would say, will be around the user experience. By that, I mean you're going to get much greater control of your assets as opposed to the infrastructure that exists today, where your savings, your vesting, and your payments are all connected much more closely. That kind of flexibility will prove to be, I think, of tremendous excitement to investors over time. I think when you ask questions like, where will this go over time? I think that for those that can remember the early days of ETFs, they thought it might be a niche structure, but the user experience was so much better that it's actually conquered every single liquid asset that exists. And I believe that the trend line, long-term, for tokenization will be the same, but more so. Everything, I believe, over periods of time, will be tokenized, and you'll get not just things like crypto sitting seamlessly with traditional assets, but you'll also see... illiquid assets or private assets sitting seamlessly with liquid assets.

John: And by that I mean, you are going to get much greater control of your assets as opposed to the infrastructure that exists today, where your savings Youre vesting and your payments are all connected much more closely that kind of flexibility will prove to be I.

John: Think of tremendous excitement to investors over over time I think when you asked about like where it will just go over time.

John: I think that for those that can remember the early days of Etfs, they thought it might be a niche structure, but the user experience was so much better that it's actually Concord every single liquid asset that exists and I believe that the trend line long term for <unk> will be the.

John: Same.

John: But more so do that.

John: Everything I believe over periods of time will be token eyes, and you'll get not just things like crypto sitting seamlessly with traditional assets.

John: Youre also going to see.

John: Illiquid assets private assets sitting seamlessly with liquid asset and again all of it much closer to greater functionality like payments. So again, we feel tremendously fortunate at wisdom tree to be launching within our you know at the end of this quarter early next quarter really marketing.

Jonathan L. Steinberg: And again, all of it much closer to greater functionality like payment. So, again, we feel tremendously fortunate at WisdomTree to be launching within, you know, at the end of this quarter, early next quarter, really marketing nationally, but also to be ahead of everyone else in the market. Great, thank you for all that. That's really fascinating. These, I just changed gears to USFR, I guess.

John: <unk>, but also to be ahead of everyone else in the market.

Speaker Change: Great. Thank you for all that color, that's a really fascinating.

Speaker Change: Maybe if I just change gears to.

Speaker Change: <unk> I guess.

Speaker Change: With the fed soon shifting to easing and timing still unclear there, but how do you believe investor sentiment for the USF, our product could progressing in a declining rate environment could there be some growth.

Jeremy Schwartz: The Fed is soon shifting to easing, and the timing still unclear there, but how do you believe investor sentiment for the USFR product could progress in a declining rate environment? There are growth headwinds, but the overall outlook is still good if, you know, assuming rates still stay relatively high versus historical levels. And then conversely, 21% or so of your AUM is tied to fixed income. So how well do you believe the rest of the fixed income franchise will perform in what looks to be a great opportunity for fixed income flows as investors kind of reallocate? Good question.

Speaker Change: The growth headwinds, but ultimately our outlook is still good.

Speaker Change: The rates will stay relatively high versus historical levels, and then Conversely, 21% or so of your U N is tied to fixed income. So how long do you believe the rest of the fixed income franchise will perform and in what looks to be.

Speaker Change: Great opportunity for fixed income flows as investors kind of reallocated.

Speaker Change: Good question. Thank you Jeremy Schwartz, our global CIO why don't you take the first shot at this.

Jeremy Schwartz: Thank you. Jeremy Schwartz, our global CIO, why don't you take the first shot at, You know, this is a conversation we love having today because, actually, the environment for USFR, we think is actually still quite attractive today. And there's an opportunity when we look at the performance through this cycle. You know, USFR got close to five and a half percent yield today. And you look at where the 10 year is, it's still 150 basis points above the 10 year.

Yeah. No. This is a conversation we love having today because actually the environment for you and so far we think is actually still quite attractive today and theres an opportunity when we when you look at the performance through this cycle. So far has got close to five 5% yield today and you look at where the tenure is it still.

Jeremy Schwartz: 150 basis points above the 10 year, so the inverted yield curve.

Jeremy Schwartz: So the inverted yield curve, you had no volatility, you know, because of the very stable rate setting the one week duration. There's still an opportunity to grow USFR given the Fed would have to cut six times to get you down to where USFR is today. And you look at the rising correlation between stocks and bonds; bonds aren't diversifying stocks the way they used to because of the concerns about inflation. And we think that's a longer-term view, when you're buying a 30-year bond, it's not about the inflation dynamic this year, it's what the inflation will be for the next 30 years. And so there is an opportunity that there is still a very positive case, there's still a lot of money in cash earning zero, which is an opportunity for prime investors, people you could spend off of floating rate type treasur But there is still an opportunity that people have 10% in cash, and USFR could still take some more market share from that and also from bonds, which have a lot of volatility.

Jeremy Schwartz: You have had no volatility you know because of the very stable rate resetting the one week duration theres still an opportunity to grow U S F or given the fed would have to cut fixed times to get you down to where.

Jeremy Schwartz: The U S as far as today and you look about the rising correlation between stocks and bonds bonds are diversifying in stocks the way they used to because of the concerns about inflation and we think that's a longer term when you're buying a 30 year bond and thought about the inflation dynamic this year whats the inflation for the next 30 years.

Jeremy Schwartz: And so there is a opportunity to that.

Jeremy Schwartz: Theres still a very positive case theres still a lot of money in cash, earning zero, which is an opportunity for prime for people with having people you could spend off of floating rate type treasuries, earning five 5% and not earn zero in your bank, but there is still an opportunity that people have 10% in cash and you have to far can still take some more market.

Sure from that and also from bonds, which have a lot of volatility.

Jeremy Schwartz: But we do have beyond that; we have a very robust fixed income suite, we have a few multi-billion dollar core funds or two, particularly core funds that each have a billion dollars that can help for people wanting to add duration with an enhanced stewardship approach, including when we launched last year that generated a billion dollars in its first year. And we're continuing to launch existing and new funds. We launched one in December as a core plus fund, and we've got some more treasury funds to sort of help clients that became first-time users of wisdom tree with USFR. We're looking to help them extend duration with some new launches as well.

Jeremy Schwartz: We do have.

Jeremy Schwartz: Beyond beyond that we have a very robust fixed income suite, we have a few multibillion dollar.

Jeremy Schwartz: Fine or two particularly core funds that used to have $1 billion that can help for people wanting to add duration with enhanced the old approach, including when we launched last year that can reach $1 billion in there.

Jeremy Schwartz: Its first year, and we're continuing to launch existing and new funds I mean, we walked one in December as a core plus fund we've got some more treasury funds to sort of help clients that became first time users of wisdom tree with USA far we're looking to help them extend duration with some new watch it as well so there's existing.

Jeremy Schwartz: So there are existing new products, as we always do, but there's still a great story about just how the current market environment is still actually attractive for USFR. Okay, great. Thank you very much. Thank you. Next question is coming from Keith Housum from North Coast Research. Your line is now live. Good morning, guys. Please appreciate the color on the portfolio solutions as well.

Jeremy Schwartz: New products as we always do but theres still a great story on just any framework environment is still actually attractive for us so far.

Jeremy Schwartz: Okay.

Speaker Change: Okay, great. Thank you very much.

Speaker Change: Thank you next question is coming from Keith House them from Northcoast Research. Your line is now live.

Keith Housum: Good morning, guys I appreciate the color on the portfolio of solutions as well.

Keith Housum: If we can dig a little bit deeper here, you guys mentioned trying to deepen the relationship with your customers there. How, in fact, do you guys plan on deepening those relationships? And then what is your competition level with those people that you want to deepen your relationship with? Jarrett, do you want to start?

Keith Housum: Dig little bit deeper there as mentioned trying to deepen the relationship with your customers. There. How in fact, you guys plan on deepening those relationships and then what is your competition level at those people that you want a deeper relationship with.

Keith Housum: Jaret you want to start.

Jarrett Lilien: Sure. You know, look at the various platforms, and we're competing with the biggest names out there and doing extremely well. And I think we're doing extremely well because of our sort of holistic focus. We have content, we have a lot of tools that people can use to do analysis, and we're able to generate customers.

Jaret: Sure you know when you look at the various platforms and we're competing with the with the biggest names out there and doing extremely well and I think we're doing extremely well because of our sort of holistic focus.

Jaret: We have content, we have a lot of tools that people can use to do analysis, we're able to generate customized reports for advisers to use with their end clients. So there is a you know that's that's really one of the big reasons for that branding change it's more than just model.

Jaret: It's this holistic approach.

Jaret: But.

One of the things that we also do is we work very closely with advisors to.

Jaret: Get them up and models and get them using models I talk about on many of these calls if you go back over the last few years that one of the bigger macro trends in wealth management is actually financial advisers, using centralized models or home office models, and we're right at the front of.

Jaret: The line there, helping them do that in terms of growth and how we go about it. It's it's sort of along the lines of what I was just speaking about is helping people.

Transition to using models.

Jaret: Which still there's room to go of people you know in that macro trend getting there, but once they're using them getting them more comfortable in using maybe more than one model and then helping them bring more and more of their clients.

Jaret: On to the program and that's what I talked about earlier with seasoning and that's why I'm also so.

Jaret: Bullish about the growth I feel it's in the pipeline, where again, we know that the assets follow the client growth and again we had.

Jaret: About 40% AUM growth in models last year, but over a 100% client growth. So that the growth strategy is really about again penetration and seasoning those clients as they come on board, while we continue to add new clients to the program.

Speaker Change: Great. Thank you.

Speaker Change: Thank you next question today is coming from Michael Cyprus from Morgan Stanley. Your line is now live.

Michael J. Cyprys: Great. Thanks, I just wanted to follow up a little bit on the commentary around took innovation the benefits that you've outlined some very compelling, but I understand it's still very early days I was hoping you can elaborate a bit on some of the hurdles that's holding back further adoption.

Michael J. Cyprys: Including more broadly across the industry and what catalysts do you think could accelerate that adoption and how long do you think this can take is it a five years as a 10 year journey in terms of more widespread adoption and what sort of progress might we see in 'twenty four that can really help move the dial on adoption across the industry.

Speaker Change: Thank you Michael we'll let me first start.

I would say the biggest hurdle to adoption.

Speaker Change: Good regulation, the regulatory environment to bring this about has been extraordinary though we've had tremendous progress whether it's a bitcoin ETP launch in the U S. The digital funds approved by the FCC all the 38 states money transfer lie.

Speaker Change: This consists of cheap, but regulation doesn't just happen overnight those approvals are really.

Speaker Change: Take a long time, but we really are at the end of this journey and the greatest thing that I can say is that we started this journey.

In reality.

Speaker Change: Three and four years ago. So that we are while people are now talking about <unk> and they're doing proof proof of concepts, we're actually launching a business on it and so I think that is the thing that will that take the longest amount of time.

Why you're going to see adoption is the same reason that you saw adoption in etfs it'll be a better experience.

Speaker Change: Fast or cheaper more functionality those kinds of elements matter to people and a better experience around your assets and money is allowing wisdom tree to go from just competing for your investments where listen I'm very proud again of that that 100 billion that we've accomplished over.

The last 16, 17 years, but to be able to go after savings for those that have been following wisdom tree for years.

Speaker Change: The savings account is a black and white T D and it matters to people that they get more income out of their savings account and more utility.

Speaker Change: And more efficiency out of all of these assets. So I think that's what's going to drive it will be the better user experience and you're going to start seeing it at wisdom tree.

Speaker Change: Coming years really starting in Q2 with the you know.

Speaker Change: More actual downloads and funded accounts, but will why don't you add to this.

Will: No I think you've covered a lot of it John I mean, the one thing I'd point out on page 14, you know a lot of people have just because like a token has the potential to be more liquid than another asset doesn't mean that unless there's actually liquidity provision and demand that it will trade more right. So I think you've seen over the past few years. Some people are like Oh I'm Gonna token is this.

Will: <unk> fallen dental magically start trading we all know that's not how it works, it's actually about the underlying demand for it. So I think is exciting about what we've done both on the retail side with wisdom tree Prime and also in terms of institutional and B to be use cases is building the portals to kind of meet clients, where they are and actually demonstrating in creating the better utility.

Will: Around these assets as opposed to just putting them out there and hoping they start trading. So I think what wisdom tree is doing is going be a big catalyst for the space I think the continued growth of distribution and evolving regulation as it can be a catalyst for the space. So I think 2024, it can be a very good year.

Speaker Change: Great and just a follow up question on capital management I was hoping you could update us on your priorities around the use of our cash generation, how you're thinking about that from here and more broadly on the strategic M&A, where that could be most additive to wisdom tree at this point I think he may have sold down your stake in the currency, maybe you could just update us.

Speaker Change: That relationship there. Thank you.

Speaker Change: Brian why don't you start with capital management fees.

Speaker Change: Yeah.

Speaker Change: So we've been very active over the past few years.

Speaker Change: Youre well aware, we retired a gold royalty obligation that was a $90 million cash outlay.

Speaker Change: We have another 44 million payable over the next three years, we paid down our debt a $45 million. This past June.

Over the last four years, putting aside the.

Speaker Change: Repurchase of the Gold Council stock, we bought back 15 million shares spent $70 million just on stock repurchases generally I think.

Speaker Change: Going forward.

Speaker Change: Our dividend as our primary commitment.

Speaker Change: Buybacks are something that's always on the table.

Speaker Change: The buyback is something that we weigh against our desire to ultimately reduce our debt further keeping in mind that we have another $150 million that's maturing in 2026.

Speaker Change: If there's a question as to whether or not we would early retire debt, it's something we'd be weighing the return that we couldnt state earned by simply investing our cash use so far is at five and a half today were.

Speaker Change: We're paying three in the quarter on the debt that's maturing in two years so.

Going forward, it's really about debt and leverage optimization and potentially some further stock buybacks.

Speaker Change: And let me add you know about strategic M&A we've.

Speaker Change: It's been a secondary strategy for wisdom tree, though it's been a strategy that we have implemented a number of times. So when we do it we have very high hurdles in the past everything has been accretive.

Speaker Change: In our M&A.

Speaker Change: We would have very high hurdles if it's within.

Speaker Change: The ETF business.

Speaker Change: And with respect to some investments that we've made or.

Speaker Change: How we might use capital.

Speaker Change: In light of you mentioned the currency the currency was a strong investment.

We spoke about <unk> and how you know.

Speaker Change: People have token is things like office buildings and paintings and a lot of it hasn't really generated any traction.

Speaker Change: Not all tokens are created equal.

Speaker Change: And before the currency, we couldn't really envision how the tokens became better than Etfs.

Speaker Change: And with that and it dropped ability, we really had a vision that has served us incredibly well over the last four years in.

Speaker Change: Now, we think blockchain enabled financial services will rollout and the cost of our investment into currency, we've got to speak to many many participants about how they view coconuts Asian, what I think is interesting it may be under under covered.

Speaker Change: It was D T C C, which required us to currency, so the leading infrastructure company in the United States acquired our <unk>.

Speaker Change: Investment in blockchain infrastructure I believe that the future of blockchain infrastructure is going to be coming out of D. C C and there'll be following.

Speaker Change: On the path that wisdom tree has begun so.

Speaker Change: We don't have to make a left turn or a pivot the market is moving in our direction I think that's very very bullish.

Speaker Change: If we see opportunities.

Speaker Change: To enhance.

Speaker Change: Our digital efforts that you might look to make other strategic investments, but again.

Speaker Change: These are secondary.

Speaker Change: Opportunities to advance the strategic priorities of the firm to what very high hurdles, if we do anything.

Speaker Change: Great. Thanks, so much.

Speaker Change: Thank you we've reached end of our question and answer session I'd like to turn the floor back over to management for any further or closing comments.

Speaker Change: I just wanted to thank everybody for their attention today and we'll speak to you shortly have a great day.

Speaker Change: Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.