Q1 2024 WisdomTree Inc Earnings Call
Okay.
Operator: Greetings. This time all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference today, please press star zero on your telephone keypad. As a reminder, this conference today is being recorded. At this time, I'll turn the conference over to Jessica Zaloom, Head of Corporate Communication. Jessica, you may begin.
Speaker Change: Greetings and welcome to the Wisdom tree first quarter 2024 earnings call.
Speaker Change: This time, all participants are in listen only mode.
Speaker Change: <unk> and answer session will follow the formal presentation.
Speaker Change: If anyone if he likes.
Speaker Change: Quite operator assistance during the conference today, Please press star zero from your telephone keypad.
Speaker Change: As a reminder, this conference today is being recorded.
At this time I'll turn the conference over to Jessica Zillow head of corporate Communications, Jessica you may begin.
Jessica Zaloom: 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, 2023. WisdomTree assumes no duty and does not undertake to update any forward-looking statements. Now, it is my pleasure to turn the call over to WisdomTree CFO, Bryan Edmiston.
Jessica Zaloom: 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.
Jessica Zaloom: 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 that forth in this presentation and in the risk factors section with injuries annual report on Form 10-K for the year ended December 31st 2020.
Jessica Zaloom: Three.
Within tree assumes no duty and does not undertake to update any forward looking statements.
Jessica Zaloom: Now, it's my pleasure to turn the call over to Woods interim CFO, Brian in Spain.
Bryan Joseph Edmiston: Thank you, Jessica, and good morning, everyone. Let me begin by sharing our results for the first quarter along with commentary on our expense guidance before turning the call over to Jarrett and Jono for additional updates on our business. We continue to demonstrate our ability to grow organically, having generated $2 billion of net inflows during the quarter. Sustainable flows have been a continuing theme with over three years of positive momentum, and our results this quarter illustrate the breadth and depth of our product lineup and serve as a proof point in our ability to put points on the board away from USFR.
Brian: Thank you Jessica and good morning, everyone.
Brian: Let me begin by sharing our results for the first quarter, along with commentary on our expense guidance before turning the call over to Jarrett and journal for additional updates on our business.
Brian: We continue to demonstrate our ability to grow organically, having generated 2 billion of net inflows during the quarter.
Brian: Sustainable slowly she had been a continuing theme with over three years of positive momentum.
Results this quarter illustrate the breadth and depth of our product lineup.
Brian: Serve as a proof point in our ability to put points on the board away from the U S. So far.
Bryan Joseph Edmiston: Our $2 billion of inflows were broad and diverse and generally into products with higher fees, which has remixed our blended fee rate higher, setting the table for higher revenue capture for the second quarter. Our inflows, coupled with positive market movement, resulted in us ending the quarter with a record AUM of $107.2 billion. This is driving revenue growth and expanding margins, demonstrating the scalability of our business model. Continuing organic growth coupled with disciplined expense and capital management alongside positive market conditions is the formula for further margin expansion and accelerated EPS growth. Next slide.
Brian: Our 2 billion of inflows were broad and diverse and generally into products with higher fees, which is remixed our blended fee rate higher setting the table for higher revenue capture for the second quarter.
Brian: Our inflows coupled with positive market movement resulted in us ending the quarter with record AUM of $107 2 billion.
Brian: This is driving revenue growth and expanding margins demonstrating the scalability of our business model.
Brian: Continuing organic growth, coupled with disciplined expense and capital management alongside positive market conditions is a formula for further margin expansion and accelerated EPS growth.
Brian: Next slide.
Bryan Joseph Edmiston: Revenues were $96.8 million, an increase of 6.6% in the fourth quarter and up 18% from the prior year quarter, driven by higher average AUM. We have also observed adjusted operating margins expanding by over 820 basis points versus the first quarter of last year or 280 basis points organically when adjusting for the impact of our gold royalty buyout, which we accomplished in the second quarter of last year. Our adjusted net income for the quarter was $20.3 million, or $0.12 a share. Next slide.
Brian: Revenues were $96 8 million, an increase of six 6% in the fourth quarter and up 18% from the prior year quarter, driven by higher average a U N.
We have also observed adjusted operating margins expanding over 820 basis points versus the first quarter of last year were 280 basis points organically when adjusting for the impact of our gold royalty buyout, which we accomplished in the second quarter of last year.
Brian: Our adjusted net income for the quarter was $20 3 million or 12 cents a share.
Brian: Next slide.
Brian: Our adjusted operating expenses were up 5% for the quarter.
Bryan Joseph Edmiston: Our adjusted operating expenses are up 5% for the quarter. The largest contributor was compensation, as we experience elevated seasonality in the amount of compensation we report in the first quarter due to payroll taxes, benefits, and other items in connection with the payment of year-end bonuses. Fund management expenses were also higher, driven by higher average AUM. Next slide.
Brian: The largest contributor was compensation, because we experienced elevated seasonality and the amount of compensation. We report in the first quarter due to payroll taxes benefits and other items in connection with the payment of year end bonuses.
Brian: Fund management expenses were also higher driven by higher average AUM.
Brian: Next slide.
Brian: Now a few comments on our forecasted expense guidance.
Bryan Joseph Edmiston: Now a few comments on our forecasted expense guide. Our forecasted compensation expense remains unchanged, ranging from $108 to $118 million. This guidance considers variability in incentive compensation with drivers including the magnitude of our flows, revenue and operating income growth, margin expansion, and our share price performance in relation to our peers. Where we sit today, a quarter into the year, and given the strong start, we would anticipate trending towards the upper half of this range. Our discretionary spending was $14.9 million in the first quarter.
Brian: Our forecasted compensation expense remains unchanged ranging from $108 million to $118 million.
Brian: This guidance considers variability in incentive compensation with drivers, including the magnitude of our flows revenue and operating income growth margin expansion and our share price performance in relation to our peers.
Brian: Where we sit today a quarter into the year and given the strong start we would anticipate trending towards the upper half of its range.
Brian: Our discretionary spending was $14 9 million in the first quarter.
Bryan Joseph Edmiston: We are reiterating our full-year discretionary spending guidance of $64 to $68 million as we anticipate an uptick in marketing spend in connection with our national rollout of WisdomTree Prime. We reported a gross margin of 79.4% in the first quarter. We are maintaining our gross margin guidance of 79 to 80%, considering current AUM levels and 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 was $2.3 million in the first quarter.
Brian: We are reiterating our full year discretionary spending guidance of $64 million to $68 million as we anticipate an uptick in marketing spend in connection with their national rollout, we can treat prime.
Brian: We reported a gross margin of 79, 4% in the first quarter.
Brian: We are maintaining our gross margin guidance of 79% to 80%.
Brian: Cedar in current AUM levels and fund launches are anticipated during the course of the year.
Brian: It's a U N scales higher from continued organic growth with favorable market conditions, we would anticipate further gross margin expansion.
Brian: Our third party distribution expense was $2 3 million in the first quarter.
Bryan Joseph Edmiston: We are maintaining our guidance of 10 to 11 million for the year. We are also maintaining our annual adjusted interest expense guidance of $14 million. As a reminder, our adjusted interest expense guidance is exclusive of any interest costs we are required to impute under GAAP related to our interest-free financing of the shares we repurchased from the World Gold Council last November. Our interest income during the first quarter was $1.4 million. We are increasing our interest income guidance for the year by $1 million to $5 million based upon the magnitude of our forecasted interest earning assets.
Brian: We are maintaining our guidance of 10 to 11 million for the year.
Brian: We are also maintaining our annual adjusted interest expense guidance of $14 million.
Brian: As a reminder, our adjusted interest expense guidance 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 last November.
Brian: Our interest income during the first quarter was $1 4 million.
Brian: We are increasing our interest income guidance for the year by 1 million to $5 million based upon the magnitude of our forecasted interest earning assets.
Bryan Joseph Edmiston: Our adjusted tax rate was 24.9% in the first quarter, and our guidance of 24% to 25% remains unchanged. Additionally, our weighted average diluted shares were $165.3 million during the first quarter, and our guidance of $166 to $168 million for the year remains unchanged as well. That said, this guidance does not take into consideration any incremental shares associated with our convertible notes. Our current stock price of roughly $9 per share is up over 30% year-to-date and is approaching the $9.54 conversion price related to our convertible notes scheduled to mature in 2028.
Brian: Our adjusted tax rate was 24, 9% in the first quarter and our guidance of 24% to 25% remains unchanged.
Brian: And our weighted average diluted shares were $165 3 million during the first quarter and our guidance of $166 million to $168 million for the year remains unchanged as well.
Brian: That said this guidance does not take into consideration any incremental shares associated with our convertible notes.
Brian: Our current stock price of roughly $9 per share is up over 30% year to date and is approaching the 954 conversion price related to our convertible notes scheduled to mature in 2028.
Bryan Joseph Edmiston: While the notes require principal to be paid in cash, our diluted shares would need to be increased for any incremental shares associated with the conversion option once our stock price exceeds $9.54 per share. An illustration is included within our earnings presentation to assist in quantifying the incremental shares associated with the conversion option going forward. That's all I have. I will now turn the call over to Jared.
Brian: While the notes require principle to be paid in cash our diluted shares would need to be increased for any incremental shares associated with the conversion option.
Brian: Once our stock price exceeds $9 54 per share.
Brian: An illustration is including included within our earnings presentation to assist in quantifying the incremental shares associated with the conversion option going forward.
Brian: That's all I have I will now turn the call over to Jerry.
Brian: Yeah.
Jerry: Alright, Thanks, Brian and good morning, everyone.
Jarrett: All right, thanks, Bryan, and good morning, everyone. We are excited to report another strong quarter with robust net inflows, record AUM, and expanding operating margins, which all reflect our continued leadership in delivering innovative products and solutions for every market environment in every part of the cycle. We're also excited about our progress in tokenized assets and blockchain-enabled finance, which are reshaping the future of our industry and creating new opportunities for growth and value creation.
Jerry: We are excited to report another strong quarter with robust net inflows record a U N and expanding operating margins, which all risk lacked our continued leadership in delivering innovative products solutions for every market environment in every part of the cycle.
Speaker Change: We're also excited about our progress into can highest assets in black gene enabled finance, which are reshaping the future of our industry and creating new opportunities for growth and value creation.
Jarrett: As Bryan mentioned, Q1 started with nearly $2 billion of net inflows driven by the breadth and depth of our product lineup, especially in higher fee funds. Our India earnings fund and our currency hedge strategies attracted strong demand, as did commodity funds such as silver and copper. In total, the fee rate on our gross inflows was 49 basis points, which helped drive our overall blended fees higher.
Speaker Change: As Brian mentioned Q1 started with nearly $2 billion of net inflows driven by the breadth and depth of our product lineup.
Speaker Change: Especially in the higher fee funds, our India earnings fund and our currency hedge strategies attracted strong demand as did commodity funds such as cell guarantee copper in total the fee rate on our gross inflows was 49 basis points, which helped drive.
Speaker Change: Our overall blended fees higher combined with the supportive market. We ended Q1 with record AUM of $107 2 billion up 18, 2% year over year and seven 1% sequentially. We are proud of these results which.
Jarrett: Combined with a supportive market, we ended Q1 with a record AUM of 107.2 billion, up 18.2% year over year and 7.1% sequentially. We are proud of these results, which reflect our ability to deliver consistent and diversified growth across our product suite. Models also continue to be a steady growth driver. As a reminder, our approach is to grow the number of advisors who have access to our models, while also further penetrating that market and growing the number of advisors actively using WisdomTree models. Based on our current pipeline, we expect our accessible market to grow to about 80,000 advisors by year-end. That's up from 70,000 at the end of last year.
Speaker Change: Our ability to deliver consistent and diversified growth across our product suite.
Speaker Change: Models also continues to be a steady growth driver.
Speaker Change: As a reminder, our approach is to grow the number of advisers, who have access to our models. While also further penetrating that market and growing the number of advisors actively using waste and treat models.
Speaker Change: Based on our current pipeline, we expect our accessible market to grow to about 80000 advisors by year end.
Speaker Change: From 70000 at the end of last year.
Jarrett: Additionally, after adding 1,000 new advisor model users in 2023, we're on track to maintain that cadence of new advisor growth in 2024. The ongoing traction in models has driven growth in model AUM to about 3.5 billion at the end of March, outpacing the growth of our firm-wide AUM. Overall, we remain very bullish on the long runway for asset growth in the quarters and years ahead. We're also pleased to report that we delivered another strong quarter of margin expansion and earnings growth, demonstrating our scalable operating model and our ability to leverage our AUM growth.
Speaker Change: Additionally, after adding a thousand new advisor model users in 2023, we're on track to maintain that cadence of new advisor growth in 2024.
Speaker Change: The ongoing traction in models has driven growth in motto AUM to about $3 5 billion at the end of March outpacing the growth of our firm wide AUM overall, we remain very bullish on the long runway for model assets growth in the quarters and years ahead.
We're also pleased to report that we delivered another strong quarter in margin expansion and earnings growth demonstrating our scalable operating model and our ability to leverage our AUM growth. Our total operating margin increased by 820 basis points year over year.
Jarrett: Our total operating margin increased by 820 basis points year over year to 30%, of which 540 basis points was from smart deal making and opportunistically buying out the gold royalty payment last spring, and 280 basis points was organically driven by growth and operational efficiency. Our adjusted earnings per share increased by 71% year over year to $0.12, reflecting top line growth and margin expansion going to the bottom line.
Speaker Change: <unk> to 30% of which 540 basis points was from smart deal, making and Opportunistically buying out the gold royalty payment last spring and 280 basis points was organically driven by growth and operational efficiency.
Speaker Change: Our adjusted earnings per share increased by 71% year over year to 12 cents, reflecting top line growth and margin expansion dropping to the bottom line. We remain focused on driving expanded operating margins and earnings growth in 2024 and beyond.
Jarrett: We remain focused on driving expanded operating margins and earnings growth in 2024 and beyond. And we continue to believe that tokenized assets and blockchain-enabled finance represent a huge growth opportunity for WisdomTree as they open new markets, attract new customers, and create new revenue streams in 2020. We talked about our AUM growth opportunity driven by our diversified product suite models. We talked about our scalable operating model and how growth and operational efficiency would drive margin expansion.
Speaker Change: And we continue to believe that token is datasets and blockchain enabled financed represent a huge growth opportunity for wisdom tree as they opened new markets attract new customers and create new revenue streams.
Speaker Change: Back in 2020.
Speaker Change: We talked about our AUM growth opportunity driven by our diversified product suite models, we talked about our scalable operating model and how growth and operational efficiency will drive margin expansion and we've talked about the potential of token aged assets and blockchain enabled finance.
Jarrett: We talked about the potential of tokenized assets and blockchain-enabled finance. And each quarter since, we have delivered on those opportunities. And each quarter, our growth momentum shines brighter. Our margins have been expanding, and we further solidify our position in tokenized assets. We used to be alone in talking about many of these themes, but now we have some company. We like to say that if you want to know what the industry is going to do tomorrow, look at what WisdomTree is doing today.
Speaker Change: Each quarter since we have delivered on those opportunities and each quarter, our growth momentum shines brighter our margins have been expanding and we further solidify our position in <unk> assets, we used to be alone in talking about many of these themes, but now we had some company.
Speaker Change: We like to say that if you want to know what the industry is going to do tomorrow look at what wisdom tree is doing today in.
Jarrett: In conclusion, we are confident that we have the right strategy, the right products, the right team, and the right culture to continue to create value for our clients and shareholders in the long term. We remain extremely bullish about 2024 and beyond, and we will continue to drive organic growth, expand our margins, and lead the industry's evolution in tokenized assets and blockchain-enabled finance. And with that, let me now turn it over to Jonathan. Thank you, Jarrett, and good morning, everyone. It's been a great start to the year.
Speaker Change: In conclusion, we are confident that we have the right strategy the right products the right team and the right culture to continue to create value for our clients and shareholders in the long term, we remain extremely bullish about 2024 and beyond and we continue to drive organic growth.
Speaker Change: And our margins and lead the industry's evolution and token highest assets and blockchain enabled finance.
Speaker Change: And with that let me now turn it over to Jonathan.
Jonathan Laurence Steinberg: Thank you, Jarrett. And good morning, everyone.
Jonathan: Thank you Jarrod and good morning, everyone.
Jonathan Laurence Steinberg: It's been a great start to the year. Record AUM, strong flows, and higher fees. 820 basis points of margin expansion, driving a 71% increase in earnings per share versus the first quarter of last year. We are executing on the key drivers that will propel the next 100 billion of AUM growth, those drivers being ETFs, Model Portfolios, Tokenization, and WisdomTree Prime. Importantly, I want to remind everyone that all of the digital spend, including marketing, is fully baked into our guidance for 2024. Important to remember as marketing really begins in early May.
Great start to the year record AUM strong flows higher fees 820 basis points of margin expansion driving a 71% increase in earnings per share versus the first quarter of last year.
Jonathan: We are executing on the key drivers that will propel the next 100 billion of AUM growth.
Jonathan: Those drivers being Etfs model portfolios okay.
Innovation and wisdom tree prime.
Jonathan: Importantly, I want to remind everyone that all of the digital spend including marketing is fully baked into our guidance for 2024.
Jonathan: Important to remember as marketing really begins in early may.
Jonathan Laurence Steinberg: Now, the most important milestone in the quarter was the receipt of WisdomTree's Trust Charter from the New York State Department of Financial Services. DFS is the premier regulator for digital asset businesses in the U.S., and the operation of a trust company in this space has been a core component of our strategy. Simply put, we think that the trust company is a strong counterparty for our retail and institutional customers, and we think it will open up a number of business opportunities for us going forward.
Jonathan: Now the most important milestone in the quarter was the receipt of wisdom trees Trust charter from the New York State Department of financial services.
Jonathan: DFS is the premier regulator for digital App that businesses in the U S and the operation of a trust company in this space has been a core component of our strategy.
Jonathan: Simply put we think that the trust company has a strong counterparty for our retail and institutional customers and we think it will open up a number of business opportunities for us going forward.
Jonathan: More specifically.
Jonathan Laurence Steinberg: The Trust Charter does two things for us. First, it allows us to onboard New York customers to WisdomTree Prime. Second, the trust company gives us the ability to offer products and perform services under DFS supervision with associated legal protection. Specifically, the trust company can perform fiduciary custody of digital assets, issue DFS-approved stablecoins, and manage stablecoin reserves.
Jonathan: The Trust charter just two things for US first it allows us to onboard New York customers to wisdom tree Prime.
Jonathan: The Trust company gives us the ability to offer products and perform services under DFS supervision with associated legal protections.
Jonathan: Specifically the trust company cancel form.
Jonathan: You shared custody of digital assets.
Jonathan: Issue DFS approves stable coin and.
Jonathan: And manage stable coin reserves.
Jonathan Laurence Steinberg: Now, from an availability perspective, and including the upcoming launch in New York, 75% of the U.S. population across 41 states have access to WisdomTree Prime on the product and feature front. We also hit another key milestone in the first quarter with the launch of our debit card for prime users. The card is available both physically and digitally through Apple and Google Pay platforms, and it ties a WisdomTree Prime customer's asset balance to the payment ecosystem. Initially, customers will be able to auto-debit from their dollar token balances, but we will expand that functionality to other asset classes like our money market fund, gold, and crypto in the coming quarters.
Jonathan: Now from an availability perspective, and including the upcoming launch in New York, 75% of the U S population across 41 states have access to wisdom tree Prime.
Jonathan: On the product and feature front.
Jonathan: We also hit another key milestone in the first quarter with the launch of our debit cards to prime users.
Jonathan: The card is available both physically and digitally through Apple and Google pay platforms and ties of wisdom tree prime customers asset balance to the payments ecosystem.
Jonathan: Initially customers will be able to auto debit from the dollar token balances, but we will expand that functionality to other asset classes like our money market fund gold and crypto in the coming quarters.
Jonathan: With the trust charter and the launch of the debit card.
Jonathan Laurence Steinberg: With the trust charter and the launch of the debit card, as I already mentioned, in early May, we will be increasing our marketing efforts going forward. It's too early to share any takeaways, but this is the effort that will generate further downloads, funded accounts, and activities. This is just the beginning.
Jonathan: As I already mentioned in early May we will be increasing our marketing efforts going forward.
Jonathan: It's too early to share any takeaways, but this is the effort that will generate further downloads funded accounts and activity.
Jonathan: This is the beginning.
Jonathan Laurence Steinberg: We are seeing increasing interest in tokenization in the asset management space, as many of you may have noticed. Our combination of retail and institutional distribution. Our regulatory life and our broad suite of tokenized assets and funds of cross-asset classes positions us as an early leader in the space. We are looking to build on this advantage in the coming months. This is only the beginning, as I continue to mention in recent calls. It's a very exciting time for WisdomTree. We have best-in-class organic growth, a meaningful margin expansion opportunity, and leverage to the secular shift toward tokenization. Now, I'm turning the call over to Jeremy Campbell, WisdomTree's Head of Investor Relations.
Jonathan: We are seeing increasing interest in <unk> in the asset management space as many of you may have noted.
Jonathan: Our combination.
Jonathan: Of retail and institutional distribution.
Jonathan: Our regulatory licenses and our broad suite of Cocainize assets in funds across asset classes positions us as the early leader in this space.
Jonathan: We are looking to press this advantage in the coming months.
Jonathan: This is only the beginning.
As they continue to mentioned in recent calls.
Jonathan: So very exciting time for wisdom tree.
Jonathan: We have best in class organic growth meaningful margin expansion opportunity and leverage to the secular shift towards coastal coconuts nation.
Jonathan: Now, let's turn the call over to Jeremy Campbell Wisdom tree head of Investor Relations.
Jeremy Edward Campbell: Thank you, Jeremy. If you'd like to ask a question at this time, you may press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
Jeremy Edward Campbell: All right. Thank you John and good morning, everybody.
Jeremy Edward Campbell: Operator, let's open up lines and go directly to just some questions from our analysts.
Jeremy Edward Campbell: Thank you Jeremy.
Jeremy Edward Campbell: I'd like to ask a question at this time you May press Star one from your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Speaker Change: Let me first start to if you like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Operator: One moment, please, while we poll for questions. Thank you. And our first question is coming from the line of Adam Beatty with UBS. Please proceed with your questions.
Speaker Change: One moment, please we poll for questions.
Speaker Change: Thank you and our first question is coming from the line of Adam Beatty with UBS. Please proceed with your questions.
Adam Quincy Beatty: Thank you and good morning. I wanted to ask, as you roll out Prime and some of the retail initiatives, there have been some prominent examples in recent years of other firms trying to go from, you know, an institutional kind of setup to a more retail approach and then backing away from that strategy. So just wanted to get your thoughts on, you know, obviously, you've seen that, studied it, you know, how WisdomTree's offering is differentiated and how you'll succeed there. Thanks.
Adam Quincy Beatty: Thank you and good morning, I wanted to ask as you roll out prime and some of the retail initiatives there.
Adam Quincy Beatty: There have been some kind of prominent examples in recent years of other firms you are trying to go from you know an institutional kind of setup to it to a more retail approach and then backing away from that strategy. So just wanted to get your thoughts on you know obviously you've seen that studied it.
Adam Quincy Beatty: Our wisdom trees offering is differentiated and how you succeed there. Thanks.
Jonathan Laurence Steinberg: Thank you. So Adam, let me start and then maybe Will, you'll jump in. First, I'd say that WisdomTree is already and has from the very beginning been a direct-to-consumer brand within investments. So online brokerage accounts have seen our TV ads starting 17 years ago and, you know, have been interacting with us on a direct-to-retail basis from the very beginning. This is fully integrated into what we're doing with Prime, further dipping into the consumer space for sure.
Speaker Change: Thank you so.
Speaker Change: Adam Let me start and then maybe will you will jump in.
Speaker Change: First I'd say that.
Speaker Change: Wisdom tree is already and has from the very beginning been a direct to consumer brand within investments.
Speaker Change: So online brokerage accounts.
Speaker Change: <unk> seen our TV ads are starting 17 years ago and.
Speaker Change: Have been interacting with us on a direct to retail basis.
Speaker Change: From the very beginning.
Speaker Change: This is fully integrated into what we're doing with prime.
Speaker Change: Further delves into the consumer space for sure.
Jonathan Laurence Steinberg: It isn't a new business line, though; it really is built on the infrastructure of the core business. And we're starting with the sort of the low-hanging fruit of investors, people most interested in money, people that we've known or gotten to know over the course of the past 20 years. And it'll build incrementally over time. But by keeping our costs extremely low as we do this, I think that we'll be able to find a cost-effective marketing message.
Speaker Change: It is it a new business line, though it really is built on the infrastructure of the core business and we're starting with the sort of the low hanging fruit.
Speaker Change: Investors people most interested in money people that we know we've gotten to know over the course of the past 20 years and it will build incrementally over time.
Speaker Change: But by keeping our costs extremely low.
Speaker Change: As we do this I think that we'll be able to find a cost effective marketing message and thats. The reason for the early testing in small incremental bites, which is what we've said from the very beginning and so what we're talking about it in May is just.
Jonathan Laurence Steinberg: And that's the reason for the early testing in small, incremental bites, which is what we've said from the very beginning. And so what we're talking about in May is just an increase in marketing spend. And it'll just continue to be increased in incremental ways for the rest of the year. But Will, what would you add to that?
Speaker Change: An increase in marketing spend and it'll just continue to be increased in incremental ways through the for the rest of the year, but what would you add to that.
William Bradley Peck: No, I think a lot of that was covered well, Jono. I just said, you know, we're doing both, and I think they're mutually kind of beneficial and self-reinforcing. I mean, one of the, you know, excuse me, cool parts about our tokenization platform is that it's the same platform being applied both to retail and institutional. We've spoken a lot about Prime, but we're going to have more announcements coming up for that institutional portal that we've alluded to in the past. So it's both, and they're both, you know, mutually self-reinforcing, and there's a good flywheel effect on both sides.
Speaker Change: No I think a lot of that was covered well John I'd, just add we're doing both and I think theyre mutually beneficial and self reinforcing.
Speaker Change: One of the.
Speaker Change: She is my quote parts about our <unk> platform is it the same platform being applied both to retail and institutional we've spoken a lot about prime we're gonna be have more announcements coming up for that institutional portal that we've alluded to in the past so it's both and they're both.
Speaker Change: Mutually software enforcing and is it good flywheel effect from both of them.
Adam Quincy Beatty: Fair enough. Yeah, I appreciate the context around direct-to-retail. And I want to follow up on kind of the flywheel effect on the synergies. One of the things that we sometimes hear from investors is, you know, there tends to be a mentality, and we'll just sort of address the point a little bit, but there tends to be a mentality of prime and tokenization being separate from the core business of WisdomTree. So maybe you could talk a little bit about the synergies and how, you know, some of the marketing spend might help your legacy business as well. Thanks.
Speaker Change: Fair enough yeah, I appreciate the context around around direct to retail and I wanted to follow up on kind of the flywheel effect on the synergies one of the things that we sometimes hear from investors is you know there tends to be a mentality you know and we will just sort of address the point a little bit, but there tends to be a mentality of prime and <unk> being separate.
From the core business of wisdom tree. So maybe if you could talk a little bit about the synergies and how some of the marketing spend might help you know your legacy business as well thanks.
Jonathan Laurence Steinberg: Well, not should I take the step. Go ahead.
Speaker Change: Should I take that.
Speaker Change: Go ahead, I'll start John I'm happy to start I mean, I think that it's completely leveraging the core competencies of wisdom tree right. A token is fund or a token highest asset looks very similar in a lot of ways right to like an exchange traded product instead of being listed on the New York stock exchange or <unk>.
Jonathan Laurence Steinberg: I'll start, Jono. I'm happy to start.
Jonathan Laurence Steinberg: I mean, I think that it's completely leveraging the core competencies of WisdomTree, right? A tokenized fund or a tokenized asset looks very similar in a lot of ways to an exchange-traded product. Instead of being listed on the New York Stock Exchange or, you know, fixed in Switzerland, it could be listed on a, you know, kind of available on a blockchain. So it's very similar core competencies to what we have. I think, you know, maybe a different distribution set right now, but it's definitely leveraging kind of what WisdomTree does today.
Speaker Change: Fixed in Switzerland, It could be listed on a kind of available on blockchain. So it's very similar core competencies to what we have I.
I think maybe a different distribution set right now, but it's definitely leveraging kind of what <unk> does today.
Jonathan Laurence Steinberg: Great. Thank you. Sorry. Go ahead, Jon.
Speaker Change: Great. Thank you.
Oh, sorry go ahead Charlie.
Jonathan Laurence Steinberg: We're just tapping into regulatory prowess, product development prowess, marketing prowess, even our engineering team, which had been building the solutions business of the core business, has been tapped and expanded to help with, you know, the user interface and other elements of the technology bills of our digital assets. And so, synergy all along, as well as overlapping vendor relationship management. So, those are some of the elements that just come to mind in terms of how well the WisdomTree footprint was or is for trying to tackle the digital asset opportunity.
Speaker Change: Capping into regulatory prowess.
Speaker Change: <unk> prowess.
Marketing prowess, even our engineering team, which had been building the solutions business.
Speaker Change: Core business has been tapped and expanded to help with.
Speaker Change: The user interface and other elements of the technology build of our digital assets.
Speaker Change: No.
Speaker Change: Energy, all along well as well as overlapping vendor relationship management. So those are some of the elements that just come to mind in terms of.
Speaker Change: How well the wisdom tree footprint was.
Speaker Change: Or is or trying to tackle the digital asset opportunity.
Speaker Change: Got it. Thank you guys very much appreciate it.
Keith Michael Housum: Got it. Thank you, guys.
Speaker Change: Our next question is from the line of Keith hasn't with Northcoast Research. Please proceed with your question.
Jonathan Laurence Steinberg: Our next question is in the line of Keith Housum with North Coast Research. Good morning, guys. So I appreciate the commentary on WisdomTree. But if we come back to the ETF part of the business, perhaps Jonah, you can give a little summary about the new product creation over the past, say, you know, four or five quarters and then what the vision is for new product creation going forward.
Keith: Good morning, guys. So I appreciate the commentary on wisdom tree, but if we come back to the ETF part of the business, perhaps John or you can give you the summary about the new product creation over the past day.
Keith: Five quarters, and then what the vision is for a new product creation going forward.
Jonathan Laurence Steinberg: Well, I'm going to, I'll very, very quickly touch on it, but Jeremy Schwartz, I'll turn it over to you. You know, one of the things that we've done and we have expanded one of our internal brands, Quality, as a family and as a foundational factor that we build a lot of our funds on. We started by not only overweighting the original factor funds to Quality, but then we built a more specific Quality family.
John: Well I'm going to be.
John: Very very quickly touch on it but Jeremy Schwartz I'll turn it over to you.
Jeremy D. Schwartz: One of the things that we've done and we is.
Jeremy D. Schwartz: Band It one of our internal brands.
Jeremy D. Schwartz: Polity.
Jeremy D. Schwartz: As a family and that is a foundational a factor that we build a lot of our funds on we started but not only did the original factor funds overweight to quality, but then we built the more specific quality family we started with.
Jonathan Laurence Steinberg: We started with Quality Dividend Growth, our largest equity fund. We've taken that internationally in recent years into the usage format. And we recently, in the last year, launched Quality Growth, which has had an extraordinary performance. And this past quarter, first quarter, or maybe it's actually more recently than that; it could have been in the second quarter, we launched the usage version of Quality Growth. But Jeremy, why don't you talk a little bit more about some of the product strategies that we've launched recently?
Jeremy D. Schwartz: Our quality dividend growth, our largest equity fund we've taken that internationally in recent years into the use at format and we recently over the last year.
Jeremy D. Schwartz: Launched quality growth, which has had just an extraordinary performance in this past quarter first quarter or maybe it's actually more recently than that it could have been in the second quarter that we launched the use at version of quality growth, but Jeremy why don't you talk a little bit more about some of the product strategies that we've <unk>.
Jeremy D. Schwartz: Launched recently.
Jeremy D. Schwartz: Yeah, we've been continually trying to diversify the product set for market environments where you have something for all market environments. And I think what you've seen with quality growth and our investment in thematics is that exact play out, you know, in our usage family. We have about a billion and a half in thematics across over 10 different, you say, more sector-specific versions of not just the tech sector but cloud, and cyber, and AI.
Jeremy: Yeah, we've been continually trying to diversify the product set for market environments, where you have something in all market environments, and I think what you've seen with quality growth and our investment in thematic is that exact playing out in our UCITS family. We have about 1 billion of half informatics across over 10.
Jeremy: Different you say more sector specific versions of not just the tech sector, but cloud and cyber and AI and and so now you have a real growth led a type of fund family you can compete in and in the U S. We have almost a 1 billion and that somatic range. So two and a half a billion dollars in these sort of.
Jeremy D. Schwartz: And so now you have a real growth-led type of fund family you can compete in. And in the US, we have almost a billion in that thematic range, so two and a half billion in these sort of sector-specific growth areas. The quality dividend growth family in the firm is up to almost $15 billion across the US and Europe, or maybe even more than $15 billion across that family, and is taking a lot of those inflows.
Jeremy: Sector specific growth areas, the quality dividend growth family in the firm is up too.
Jeremy: Uh huh.
Jeremy: Almost $15 billion across the U S and in Europe, or maybe even more than 15 billion across that that family and is taking a lot of those those inflows and we continue to broaden out how do we go beyond USA far for fixed income we've been investing in broader enhanced yield indexes for.
Jeremy D. Schwartz: And we're, you know, continuing to broaden out how do we go beyond USFR for fixed income. We've been investing in broader, enhanced yield indexes for, you know, bringing a longer duration exposures and our efficient core family for equities, which combines stocks with bond futures is another way people can add duration to portfolios. And we're seeing that both in the US and recently launched that in Europe. So we continue to try to be innovative in the funds that we launch and try to help diversify the overall business with that approach. Great.
Jeremy:
Jeremy: A longer duration exposures and our efficient core family for equities, which combined stocks with bond futures as another way people can add duration to portfolios and we're seeing that both in the U S and recently launched that in Europe. So we.
Jeremy: We continue to try to be innovative in the funds that we launch and try to help diversify the overall business with with that approach.
Keith Michael Housum: Great. If I can follow up there, and I'm sure AUM is the, you know, easiest way to measure success in some of these new funds, but how do you guys evaluate the success of these funds outside of just, you know, AUM growth?
Speaker Change: Great if I can follow up there and I'm sure <unk>.
Speaker Change: The easiest way to measure success in some of these new funds, but how do you guys evaluate the success of these funds.
Speaker Change: Just AUM growth.
Jarrett: Maybe I can jump in. This is, well, Jarrett jumping in for just a quick one.
Speaker Change: Maybe Jeremy can jump in as well.
Speaker Change: Eric jumping in for just a quick one I think and Jeremy you can you can talk about measuring the new launches, but our overall strategy is about growth and so growth is about having that diversified.
Jarrett: I think, and Jeremy, you can talk about measuring the new launches. But, you know, our overall strategy is about growth. And so growth is about having that diversified product suite and then enhancing it with innovative launches. And that's been a strategy that's been working for us very well over the last several years. We're looking to generally launch about 20 new funds a year, and we're not changing that. That's sort of the pace we're looking at this year as well.
Speaker Change: Products suite.
And then enhancing it with innovative launches and that's been a strategy that's been working for us very well over the last several years, where we're looking to generally launch about 20, new funds a year and we're not changing that that's sort of the pace. We're looking at this year as well and again, it's a strategy that's.
Jarrett: And again, it's a strategy that's working well for us, as evidenced by, you know, more than three years of consistent organic growth that really is leading the industry in terms of organic growth. So it's a very sound strategy, and we're continuing with it.
Speaker Change: Working well for us as evidenced by.
Speaker Change: More than three years of consistent organic growth it really leading the industry in terms of organic growth. So it's a very sound strategy and we're continuing with it.
Jeremy D. Schwartz: Jeremy, did you want to add anything? The only thing.
Speaker Change: Jeremy you want to add any.
Jeremy D. Schwartz: The only thing I would say is, in addition to the individual products, we continue to launch more models, and you'll hear us talking about how to get diversified flow. It's going beyond the single ticker sale, and the model portfolio business is really the best way, and we continue to launch innovative models as well. Certainly, we've had a lot of success with the Siegel branded models for the big platforms, and that's also part of our prime offering, the Siegel Token Fund, which is the overlap between sort of the prime business and the traditional business and how there are synergies there. But we continue to launch very interesting new models that leverage our new funds. So I think you'll see, you can see that as another source of growth for us.
Jeremy: The only thing I would say is in addition to the individual products. We continue to launch more models and you'll hear us talk about how to get diversified flow, it's going beyond the single ticker sale in our model portfolio business is.
Jeremy: It really the best way and we could see launch innovative models as well certainly we've had a lot of success with the Seagull branded models for the big platforms and that's also part of our prime offering as Segal token fund, which is the overlap between sort of the prime business in the traditional business and how they there is synergies there.
Jeremy: But we continue to launch.
Jeremy: Very interesting new models that leverage our new fun. So I think you'll see you could see that as another source of growth for us.
Speaker Change: Great. Thank you.
Michael J. Cyprys: Our next question is from the line of Michael Cyprys with Morgan Stanley. Great, thank you.
Speaker Change: Our next question is from the line of Michael Cyprus with Morgan Stanley. Please proceed with your questions.
Michael J. Cyprys: Great, thank you. We wanted to dig in a bit on the models, if we could. I was hoping you'd maybe talk about some of the steps you're taking to drive greater adoption with new advisors using your models. I think you mentioned that 70,000 advisors right now is sort of the accessible market that, from my understanding, is likely to expand this year. Just curious how penetrated you are within that 70,000 in terms of the number that are actually using your models and some of the talk about some of the steps that you're taking to improve that penetration.
Michael J. Cyprys: Great. Thank you I wanted to dig in a bit on the models. If we could I was hoping you could maybe talk to some of the steps you're taking to drive greater adoption with new advisers. Using your models. I think you mentioned that 70000 advisers right now is sort of the accessible market understand that's likely to expand this year just curious how.
Michael J. Cyprys: Penetrated you are within that 70000 in terms of the number that are actually using your models and some of the talk about some of the steps that you're taking to improve that penetration.
Michael J. Cyprys: Garrett.
Jarrett: Yeah, well, that's one of our major focuses. And, you know, we talked about it last quarter that, you know, there's a formula there. We want to expand the accessible market. So that's the number of financial advisors that can access our models. And at the end of the year, that was at 70,000.
Michael J. Cyprys: Yeah.
Michael J. Cyprys: One of our major focus is and we talked about it last quarter is that.
Michael J. Cyprys: It sits there.
Garrett: Is it a formula there we want to.
Garrett: Expand the accessible market. So those are the number of financial advisors that can access our models and at the end of the year that was at 70000, and then of course, you want to penetrate that accessible market and as of the end of last year, we had taken a number.
Jarrett: And then, of course, you want to penetrate that accessible market. And as of the end of last year, we had taken the number to 2000 advisors, so our penetration was under 3%. And that's one of the exciting things is that we still have a lot more of that addressable market to penetrate. Now, so far this year, we've already seen growth on both; we're growing the accessible market. And today, you know, the accessible market, we've been really successful in getting on to some of the best platforms with the firms that are most focused on this trend. So we're on Merrill's platform, Morgan Stanley's platform, LPL's platform. And that's a big part of the effort; how do we get on more platforms and grow our accessible market? But then, then the game is on.
Garrett: 2000 advisers, so our penetration was under 3% and that's one of the exciting things is that.
We still have a lot more of that addressable market to penetrate now so far this year, we've already seen growth on both we are growing the accessible market and today the accessible market. We've been really successful on getting onto some of the best platforms with.
Garrett: The firms that are most focused on this trend. So are on Merrill's platform Morgan Stanley's platform Lpl's platform and Thats, a big part of the effort how do we get on more platforms and grow our accessible market. But then then the game is on and now you are the doors open and you have to.
Jarrett: And now you're the door is open, and you have to walk through it and start convincing the individual advisors of how good our product is. And that's done with, you know, very good sales, a lot of great research, a lot of great models. As Jeremy mentioned earlier, we've got a not-so-secret weapon with Jeremy Siegel. And we go in, and we try to win the hearts and minds of our customers. And last year, we doubled the number of advisors using our models.
Garrett: Walk through it and start convincing the individual advisors of how good our product is and that's done with very good.
Garrett: A lot of Great research a lot of great models as Jeremy mentioned earlier, we've got a not so secret weapon with Jeremy Siegel.
Garrett: And we go in and we try to win the Hearts and minds and last year, we took our.
Garrett: The number of advisers using our models and we doubled the number from 1000 to 2000, we were rough.
Jarrett: We were rough, adding roughly 250 new advisors per quarter. We're on that same pace this year. So, you know, another great thing about this business is you have real visibility into the pipeline. So already out there, as we said in the prepared remarks, we have great visibility of that accessible market, we expect it to be 80,000 and possibly more by the end of the year, based on just what we know is in the pipeline.
Garrett: Adding roughly 250, new advisers per quarter, we're on that same pace this year. So.
Garrett: Another great thing about this business is you have real visibility into the pipeline so already out there as we said in our prepared remarks.
Garrett: Have great visibility to that.
Garrett: Assessable market, we expect it to be 80000, and possibly more by the end of the year by just what we know is in the pipeline and then we also can see that we're growing our penetration.
Jarrett: And then we can also see, you know, that we're growing our penetration. And another thing is just sort of the seasoning. We know when someone starts on their first day with one of our models, it might be for one of their clients, and they're testing it out, and we know as they get more comfortable, they start using the models for a bigger portion of that client's portfolio and then start adding more clients. And so we're at the very early stages because a lot of the advisors that have started with us are early in the seasoning process. So I've given you a lot there, but we're growing the addressable market, we're growing our penetration, and we're also beginning to season those advisors that we've onboarded.
Garrett: And another thing.
Garrett: Is just sort of see.
Garrett: Seasoning, we know when someone starts on their first day with one of our models it might be for one of their clients and they are testing it out.
Garrett: And we know as you get more comfortable they start using the models for a bigger portion of that client's portfolio.
Garrett: And then start adding more clients and so we're at the very early stages because.
Garrett: A lot of the advisors that have started with US are early in the seasoning process. So giving you a lot there, but we're growing the addressable market, we're growing our penetration and we're also beginning to season those advisers that we've on boarded.
Michael J. Cyprys: Great, thanks so much. And just a follow-up question on WisdomTree Prime, I was hoping you could maybe talk about your go-to-market strategy, talk about some of the steps that you're going to be taking to bring awareness to the offering and bring customers directly to WisdomTree. And what does this sort of success look like to you as you look out over the next couple years? And I understand from your earlier comment that you've been a DTC business for a bit, but maybe you could just remind us what portion of the ETFs today are held in self-directed brokerage accounts. Thanks.
Speaker Change: Great. Thanks, so much and just a follow up question on the wisdom tree Prime I was hoping you could maybe talk about your go to market strategy talk about some of the steps that youre going to be taken to bring awareness to the offering and bring customers directly to wisdom tree and what is sort of success look like to you as you look out over the next couple of years and understand it.
Speaker Change: To your earlier comment that you've been a D to C business for a bit but maybe you could just remind us on what portion of the Etfs today are held in self directed brokerage accounts. Thanks.
Speaker Change: Will do you want to start.
William Bradley Peck: Will, do you want to start?
William Bradley Peck: Yeah, I'm happy to start. And then, you know, if you have anything else to add, John, I think it was just that it's like you've been talking about in the past. Lean marketing, focusing on digital and organic first. So that could be targeting the app store, search ads, things like that, for people who are looking at some of the themes that we've got. A very clear example of that would be digital gold. There is a large universe of people out there who find gold very appealing.
Will: Yes, I'm happy to start and then if you have anything else that you can please add genre I think it was just that it's like we've been talking about in the past.
Will: Lean marketing focusing on digital and organic first so that could be targeting app store search AD things like that for people who are looking at some of the themes that we've got a very clear example of that would be digital gold theres, a large universe of people out there who are buying gold very appealing digital gold product with instant settlement is.
William Bradley Peck: A digital gold product with instant settlement is appealing to them. We want to target that user and continue to monetize that user.
Will: Selling to them, we want to target that user and continue to monetize that user. So that's the type of people that were going to be targeting an addition to the organic and press strategy that we've got going on as well and a big piece of that has been adding features and also adding states and being available to additional people in the U S. So the.
William Bradley Peck: So that's the type of people that we're going to be targeting, in addition to the organic and press strategy that we've got going on as well. And a big piece of that has been adding features and also adding states and being available to additional people in the US. So the New York, you know, TrustCo announcement was a big part of that. And being open to New York customers in the coming weeks will be a big part of that. So that's the type of marketing strategy that we're going to be leaning toward.
Will: In New York.
Will: <unk> announcement was a big part of that being open to New York customers in the coming weeks will be a big part of that so that's the type of marketing strategy that we're gonna be leaning into.
Jeremy D. Schwartz: And I would say from a penetration rate on the core business to retail just AUM, it's something I don't have an exact number for, but it's sort of a nine to $10 billion number. Oh, yeah, $9 billion number out of the total, with the U.S. being more retail-oriented than Europe, and that $9 billion is in brokerage, self-directed.
Will: And I would say from that.
Will: Penetration on the core business to retail just AUM, it's something.
Will: I don't have it exact but it's sort of a 9% to $10 billion number.
Speaker Change: Oh, Yes, 99 $9 billion number out of the total.
Speaker Change: With the U S being more retail oriented than Europe.
Speaker Change: And that $9 billion in brokerage self directed.
Jeremy D. Schwartz: and that $9 billion is in Brookridge Self-Directed.
Speaker Change: Yes.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Operator: As our monitors like to ask a question, you may press star 1. Our next question comes from the line of George Sutton. It's Craig Helm. Please answer your question.
As a reminder to ask a question you May press Star one.
Speaker Change: Our next question comes from the line of George Sutton with Craig Hallum. Please proceed with your question.
George Sutton: Good morning, this is Adam on behalf of George. Thanks for taking my questions.
Speaker Change: Good morning. This is Adam on for George Thanks for taking my questions.
George Sutton: With respect to WisdomTree Prime and the receipt of the NYDFS approval, I was curious, has this helped push forward any of the conversation with respect to third-party white labeling? Will, do you want to start?
Adam Quincy Beatty: With respect to wisdom tree prime and the receivable the NY DFS approval I was curious as this helped push forward any of the conversation with respect to third party white labeling.
Speaker Change: Will do you want to start.
William Bradley Peck: Yes. Yes, it would. Now, I think, like John said earlier in the call, the Trust Charter opens up New York customers to us, but it's also a really strong regulated counterparty for people to be doing business with. So, for lots of B2B and B2B2C opportunities, the Trust Charter is a great kind of way to do that. And you actually see other businesses in the market today who have that Trust Charter and have lots of white labeling style strategies around that.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: No I think the like John said earlier in the call. The Trust charter opens up New York customers to us, but it's also a really strong regulated counterparty for people to be dealing business with so on Lee.
Speaker Change: Lots of <unk> and <unk> opportunities.
Speaker Change: The trust charter is a great kind of way to do that and you actually see other businesses in the market today, who have that trust charter who have lots of white labeling style strategies around that so that very much as a.
William Bradley Peck: So, that very much is a good step along that kind of just white labeling, but B2B and B2B2C more broadly. Great. And then I know it's early days with respect to the debit card offering, but I was curious if there's any insights you could share about the initial response from existing users. The initial response has been great. Yes, I just jumped in there.
Speaker Change: A good step along that kind of just quite labeling for <unk> to see more probably.
Speaker Change: Great and then I know, it's early days with respect to the debit card offering but I was curious if theres any insights you can share about the initial response from existing users.
Speaker Change: Initial response has been great yes.
Speaker Change: Sorry, just jumped in there it's actually been very helpful. In terms of our marketing strategy and we've seen an uptick with debit card messaging, we're seeing people open the cards beginning to spend on it. So the debit card has been a it's always been a key component of it and that's being borne out in our marketing so far.
William Bradley Peck: It's actually been very helpful in terms of our marketing strategy. We've seen an uptick in debit card messaging; we're seeing people, you know, open the cards and beginning to spend on them. So the debit card has been, it's always been a key component of it, and that's being borne out in the marketing so far. Great. And then just with respect to flow so far through Q2, obviously, there's a little bit of a headwind in the European business. I was curious if you had any additional color on what's driving that.
Speaker Change: Great and then just with respect to flows so far through Q2, obviously theres a little bit of a headwind in the European business. I was curious if you had any additional color on what's driving that.
Jeremy D. Schwartz: Jeremy or Jarrett, do you want to start, one of you? Sure, I can.
Speaker Change: Jeremy or Geoff do you want to start one of you.
Jeremy: Sure I can give a start and Gerry you jump in.
Jeremy D. Schwartz: Sure, I can give a start, and Jared, you can jump in. You know, what we've seen is some money in motion. We've seen some repositioning, especially in commodities. So, you've seen some big moves.
Jeremy: What we've seen is some money in motion.
Jeremy: <unk> seen some repositioning, especially in commodities, so you've seen some big moves.
Jarrett: And in Europe, you tend to see that it's a chunky business. It tends to move, you know, in big blocks at one time and then come back into the market. So in terms of customer distribution, though, the still growing number of customers still feel very positive. And one area where you can really see that is in our UCITS business, which is now over $6 billion. And that is an important part of the European growth strategy, and again, the product development strategy is to continue to launch UCITS.
Speaker Change: And in Europe, you tend to see that it's chunky business.
Speaker Change: It tends to move in big blocks at one time, and then comes back into the market.
Gerry: So in terms of customer distribution, though still growing the number of customers still feel very positive and one area, where you can really see it is in our UCITS business.
Gerry: She is now over $6 billion and that is an important part of the European growth strategy is and again that product development strategy is to continue to launch UCITS, we launched.
Jarrett: We launched the Q-Grow UCIT yesterday, I believe in Europe, and we've seen inflows into UCITS every year since 2014. So, still feeling very good about what's going on in Europe, but the nature of the business is pretty lumpy when money moves around and people change their allocations. Also, though, you know, it's great to talk about the US. For, I know that last year and the year before, a lot of people were asking, okay, are you worried about USFR?
Gerry: Q grow use it.
Gerry: Yesterday, I believe in Europe and.
Gerry: And we've seen inflows into UCITS every year since 2014, so still feeling very good about what's going on in Europe, but the nature of the business is pretty chunky win when money moves around and people change their allocations.
Gerry: Also though.
It's great to talk about the U S for I know a lot last year and the year before a lot of people were asking okay are you worried about USSR because we've seen some great flows there.
Jarrett: Because we'd seen some great flows there, and our point always was, no, this is a core holding number one. So we're not, you know, even when interest rates change direction, we're not expecting large outflows. You might see some, but more importantly, as a core holding and for many, a cash substitute, it puts us in the position to be in the conversation about where that money goes. And you saw that in the first quarter in spades, where you saw some money moving out of USFR but moving into things like D-Grow, into India, into the currency hedge strategies, into models, and really helping drive something really significant in the first quarter was the quality of the overall flows into basically higher-fee products, but driving real revenue growth. So, you know, a lot of great things going on with the flows, both in Europe and the US
Gerry: Our point always was no. This is a core holding number one so we're not even when interest rates change direction, we're not expecting large outflows you may see some but more importantly, as a core holding in for.
Gerry: For many of cash substitute it puts us in a position to be in the conversation of where that money goes and you saw that in the first quarter in spades, where you saw some money moving out of USF, our moving into things like D grow into India into the curve.
Gerry: Currency hedge strategies in the models.
Gerry: And really helping drive something really significant in the first quarter was the quality of the overall flows.
Gerry: <unk> basically higher fee products, but driving real revenue growth.
So.
Gerry: A lot of great things going on with the flows both in Europe and U S.
Speaker Change: Thank you.
Operator: At this time, we've reached the end of our question and answer session. I'll turn the floor back to management for closing remarks.
At this time, we have reached end of our question and answer session I'll turn the floor back to management for closing remarks.
Jonathan Laurence Steinberg: This is me, Jono Steinberg. I don't think we have any closing remarks. We want to thank you all for your time and attention and support, and we'll speak to you next quarter. Thanks, everybody. Have a great day.
Speaker Change: This is me Jon Steinberg I don't think we have any closing remarks, we want to thank you all for your time and attention and support and we'll speak to you next quarter. Thanks, everybody have a great day.
Operator: This will conclude today's conference. You may disconnect your lines at this time and have a wonderful day.
Speaker Change: This will conclude today's conference you may disconnect. Your lines at this time and have a wonderful day.