Q3 2024 WisdomTree Inc Earnings Call
If the wisdom tree third quarter 2024 earnings call at this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the call. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce <unk>.
As a reminder, this conference is being recorded it is now my pleasure to introduce Jeremy Campbell head of Investor Relations. Thank you Jeremy you may begin.
Jeremy Campbell: Good morning.
Jeremy Campbell: Before we begin I would like to reference our legal disclaimer available in todays presentation.
Jeremy Campbell: This presentation may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095.
Speaker Change: Jeremy Campbell head of Investor Relations. Thank you Jeremy you may begin.
Speaker Change: Good morning.
Jeremy Campbell: A number of factors could cause actual results to differ materially from the results discussed in forward, leading statements, including but not limited to the risks set forth in the presentation and the risk factors section of <unk> annual report on Form 10-K for the year ended 12, 31, 2023 and then.
Before we begin I would like to reference our legal disclaimer available in todays presentation.
Jeremy Campbell: This presentation may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095.
Jeremy Campbell: A number of factors could cause actual results to differ materially from the results discussed in forward, leading statements, including but not limited to the risks set forth in the presentation and the risk factors section of weakened through the annual report on Form 10-K for the year ended 12, 31, 2023 and then.
Jeremy Campbell: Subsequent reports filed with or furnished to the securities and Exchange Commission.
Jeremy Campbell: Wisdom tree assumes no duty and does not undertake to update any forward looking statements.
Speaker Change: Now my pleasure to turn the call over with increased CFO, Brian Edmondson.
Jeremy Campbell: Subsequent reports filed with or furnished to the securities and Exchange Commission.
Brian Edmondson: Thank you Jeremy and good morning, everyone.
Jeremy Campbell: Wisdom tree assumes no duty and does not undertake to update any forward looking statements.
Brian Edmondson: I'll be covering our third quarter results along with commentary on our forward looking guidance before turning the call over to Jarrett and Johnno for additional updates on our business.
Now my pleasure to turn the call over with increased CFO Brian.
Brian Edmondson: We ended the quarter with record AUM of $112 6 billion.
Brian: Thank you Jeremy and good morning, everyone.
Brian: I'll be covering our third quarter results along with commentary on our forward looking guidance before turning the call over to Jarrett and Johnno for additional updates on our business.
Brian Edmondson: Withstanding the $2 4 billion of outflows, we observed during the third quarter.
Brian Edmondson: The outflows were largely from our currency hedged Japan product Dx J.
We ended the quarter with record AUM of $112 6 billion.
Our floating rate treasury product USSR.
Brian Edmondson: In tactical commodity trading.
Brian: Notwithstanding the $2 4 billion of outflows, we observed during the third quarter.
Brian Edmondson: While flows proved to be a headwind this quarter.
Brian: The outflows were largely from our currency hedged Japan product Dx J.
Brian Edmondson: Favorable market conditions, ultimately drove our AUM higher and to record levels.
Our floating rate treasury product <unk>.
Brian Edmondson: We also remained very active on the capital management front.
Brian: In tactical commodity trading.
Brian Edmondson: Over the last year and a half we've delivered highly accretive transactions.
Brian: While flows proved to be a headwind this quarter.
Brian: Favorable market conditions, ultimately drove our AUM higher and to record levels.
Including the retirement of our gold royalty obligation and the repurchase of preferred stock from the World Gold Council.
Brian: We also remained very active on the capital management front.
Brian Edmondson: Which was accomplished on favorable terms.
Over the last year and a half we've delivered highly accretive transactions.
Brian Edmondson: During this quarter, we repurchased the preferred stock convertible into $14 75 million shares of common stock.
Brian: Including the retirement of our gold royalty obligation and the repurchase of preferred stock from the World Gold Council.
Brian Edmondson: From Etfs capital for $144 million or $9 75 per share.
Brian: Which was accomplished on favorable terms.
Brian Edmondson: This transaction had no restrictions and has no impact on Etfs capital voting threshold, which remains at approximately 10% of shares outstanding.
Brian: During this quarter, we repurchased the preferred stock convertible into $14 75 million shares of common stock.
Brian: From Etfs capital.
Brian: For 144 million or $9 75 per share.
Brian Edmondson: Our decision to proceed its repurchase was pre conditioned on our ability to achieve an accretive outcome.
Brian: This transaction had no restrictions and has no impact on Etfs capitals voting threshold, which remains at approximately 10% of shares outstanding.
Brian Edmondson: This required us to raise financing through the issuance of new convertible notes.
Brian Edmondson: And afforded us the opportunity to retire a substantial portion of our notes maturing in 2028.
Brian: Our decision to pursue this repurchase was pre conditioned on our ability to achieve an accretive outcome.
Brian Edmondson: Which we're currently in the money.
Brian Edmondson: We also repurchased five 7 million shares of our common stock in connection with the raise.
Brian: This required us to raise financing through the issuance of new convertible notes.
Brian: And afforded us the opportunity to retire a substantial portion of our notes maturing in 2028.
Brian Edmondson: Taken altogether, we raised an incremental $240 million of convertible notes.
Brian: Which we're currently in the money.
Brian Edmondson: While reducing the interest rate from 575% to three in a quarter.
Brian: We also repurchased five 7 million shares of our common stock in connection with the raise.
Brian Edmondson: And increasing the conversion price from $9 54 to one 582.
Brian: Taken altogether, we raised an incremental $240 million of convertible notes.
The proceeds from the financing were used to reduce our diluted shares by approximately $20 million.
Brian: While reducing the interest rate from 575% to three in a quarter.
Brian Edmondson: And ultimately led to a 9% accretive transaction.
Brian: And increasing the conversion price from $9 54 to <unk> 82.
Brian Edmondson: Our record AUM continues to drive revenue growth and expanding margins, while capital management actions further accelerate EPS growth.
Brian: The proceeds from the financing were used to reduce our diluted shares by approximately $20 million.
Brian: And ultimately led to a 9% accretive transaction.
Next slide.
Brian Edmondson: Our adjusted revenues were $109 4 million during the quarter, an increase of two 3% from the second quarter.
Brian: Our record AUM continues to drive revenue growth and expanding margins, while capital management actions further accelerate EPS growth.
Brian Edmondson: And up approximately 25% versus the prior year quarter.
Brian: Next slide.
Brian Edmondson: Driven by higher average AUM.
Brian: Our adjusted revenues were $109 4 million during the quarter, an increase of two 3% from the second quarter.
Brian Edmondson: The comparison versus the prior year quarter also includes higher other revenues.
Brian Edmondson: <unk>, our European listed products have grown meaningfully.
Brian: And up approximately 25% versus the prior year quarter.
Brian Edmondson: And represents a substantial revenue capture away from the expense ratio.
Brian: Driven by higher average AUM.
Brian: The comparison versus the prior year quarter also includes higher other revenues attributable to our European listed products, which have grown meaningfully.
Brian Edmondson: Providing further revenue diversification.
Brian Edmondson: On a year to date basis, our adjusted revenues have grown over 20%.
Brian Edmondson: And our adjusted operating margin was 34, 3% rep.
Brian: And represents a substantial revenue capture away from the expense ratio.
Brian Edmondson: Representing expansion of over 820 basis points versus the prior year were 590 basis points organically.
Brian: Providing further revenue diversification.
On a year to date basis, our adjusted revenues have grown over 20%.
When adjusting for the impact of our gold royalty buyout, which was accomplished in may of last year.
Brian: And our adjusted operating margin was 34, 3% rep.
Brian Edmondson: Our adjusted net income for the quarter was $28 8 million or 18 cents per share.
Brian: Representing expansion of over 820 basis points versus the prior year were 590 basis points organically.
Brian Edmondson: Next slide.
When adjusting for the impact of our gold royalty buyout, which was accomplished in may of last year.
Brian Edmondson: Now a few comments on our forecasted guidance.
Brian Edmondson: Our.
Brian Edmondson: <unk> spending was $45 4 million year to date.
Brian: Our adjusted net income for the quarter was $28 8 million or 18 cents per share.
Brian Edmondson: We are narrowing our full year discretionary spending guidance to range from $62 million to $65 million.
Brian: Next slide.
Brian: Now a few comments on our forecasted guidance.
Brian Edmondson: Previously $64 million to $68 million.
Brian: Our discretionary spending was $45 4 million year to date.
Brian Edmondson: The range considers fourth quarter seasonality and is also largely dependent on the magnitude of marketing spend associated with wisdom tree prime over the remainder of the year.
Brian: We are narrowing our full year discretionary spending guidance to range from $62 million to $65 million.
Brian Edmondson: Our annual adjusted interest expense guidance is being updated to be approximately $16 million.
Previously <unk> $64 million to $68 million.
Brian: The range considers fourth quarter seasonality and is also largely dependent on the magnitude of marketing spend associated with wisdom tree prime over the remainder of the year.
Brian Edmondson: <unk> 14 million due.
Brian Edmondson: Due to the incremental debt raised to facilitate the repurchase of preferred stock from Etfs capital.
Our annual adjusted interest expense guidance is being updated to be approximately $16 million pre.
Brian Edmondson: As well as the repurchase of 5 million shares of common stock as well.
Brian Edmondson: Our adjusted interest expense run rate should be about $5 million per quarter.
Brian: Previously 14 million.
Due to the incremental debt raised to facilitate the repurchase of preferred stock from Etfs capital.
Brian Edmondson: Which as a reminder, excludes 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: As well as the repurchase of 5 million shares of common stock as well.
Brian: Our adjusted interest expense run rate should be about $5 million per quarter.
Brian Edmondson: Our interest income year to date was $4 6 million and we are updating our interest income guidance for the year to be about 6 million previously 5 million based upon the magnitude of our forecasted interest earning assets.
Brian: Which as a reminder, excludes 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.
And our weighted average diluted shares were $156 7 million during the third quarter.
Brian: Our interest income year to date was $4 6 million and we are updating our interest income guidance for the year to be about $6 million previously 5 million based upon the magnitude of our forecasted interest earning assets.
Brian Edmondson: We anticipate our weighted average diluted shares to be $147 million to $148 million in the fourth quarter, taking into consideration the full quarter impact of the 20 million shares repurchased in August.
Brian: And our weighted average diluted shares were $156 7 million during the third quarter.
Brian Edmondson: As a reminder, this guidance does not take into consideration any variability in shares associated with our convertible notes.
Brian: We anticipate our weighted average diluted shares to be $147 million to $148 million in the fourth quarter, taking into consideration the full quarter impact of the 20 million shares repurchased in August.
Brian Edmondson: Our compensation gross margin third party distribution and tax guidance remains unchanged from last quarter.
Brian: As a reminder, this guidance does not take into consideration any variability in shares associated with our convertible notes.
Brian Edmondson: That's all I have I will now turn the call over to Jarrett.
Thank you, Brian and good morning, everyone.
Brian: Our compensation gross margin third party distribution and tax guidance remains unchanged from last quarter.
Jarrett: As Brian noted the third quarter was driven by falling interest rates a weaker dollar profit taking in commodities and typical summer seasonality, which weighed on our net flows.
Speaker Change: That's all I have I will now turn the call over to Jarrett.
Thank you, Brian and good morning, everyone.
Jarrett: However, despite these headwinds we made meaningful progress across several fronts and ended the quarter at record levels. During the quarter, we achieved record AUM of 113 billion.
Jarrett: As Brian noted the third quarter was driven by falling interest rates a weaker dollar profit taking in commodities and typical summer seasonality, which weighed on our net flows.
Jarrett: Delighting, the sturdiness of our business model and the strength of our product offering.
Jarrett: However, despite these headwinds we made meaningful progress across several fronts and ended the quarter at record levels. During the quarter, we achieved record AUM of 113 billion.
Jarrett: Our disciplined execution and years of Smart management are paying off as we also recorded our highest revenue figures to date and continue to expanding our operating margins scale benefits and cost discipline helped us deliver over 800 basis points of operating.
Jarrett: Highlighting the sturdiness of our business model and the strength of our product offering.
Jarrett: Our disciplined execution and years of Smart management are paying off as we also recorded our highest revenue figures to date and continue to expanding our operating margins scale.
Jarrett: Margin expansion compared to the same period last year.
Jarrett: This margin growth coupled with strategic strategic actions such as the issuance of the convertible note and the simultaneous stock buyback that Brian mentioned significantly boosted shareholder value. This transaction alone resulted in a 9% boost to earnings versus.
Jarrett: Scale benefits and cost discipline helped us deliver over 800 basis points of operating margin expansion compared to the same period last year.
This margin growth coupled with strategic strategic actions such as the issuance of the convertible note and the simultaneous stock buyback that Brian mentioned significantly boosted shareholder value. This transaction alone resulted in a 9% boost to earnings versus <unk>.
Jarrett: Prior forecast overall.
Jarrett: Our focus on growth margin expansion smart capital management and strategic growth initiatives helped drive an 80% increase in earnings versus the year ago period.
Jarrett: Prior forecast overall.
Jarrett: Looking ahead, we remain optimistic about our global product suite, and our alignment with key secular growth drivers in both wealth and asset management.
Jarrett: Our focus on growth margin expansion smart capital management and strategic growth initiatives helped drive an 80% increase in earnings versus the year ago period.
One of those secular drivers is our models business driven by continued demand for flexible and efficient portfolio solutions. We continue to expand our accessible market with the number of advisors able to access our models set to grow from 70000 to 80.
Jarrett: Looking ahead, we remain optimistic about our global product suite, and our alignment with key secular growth drivers in both wealth and asset management.
Jarrett: One of those secular drivers is our models business driven by continued demand for flexible and efficient portfolio of solutions. We continue to expand our accessible market with the number of advisors able to access our models set to grow from 70000 to 80.
Jarrett: 5000 in the coming weeks.
Jarrett: In addition to expanding our reach deepening penetration within the existing adviser base remains a priority.
Jarrett: The number of advisors actively using at least one of our models grew to more than 2500, this quarter, reflecting steady progress.
Jarrett: 5000 in the coming weeks.
Jarrett: In addition to expanding our reach deepening penetration within the existing adviser base remains a priority.
There is still ample room for growth and building stronger relationships and broadening adoption continue to be key objectives by fostering these deeper relationships, we're enhancing asset retention and generating more predictable higher quality revenue streams in summary, despite mark.
Jarrett: The number of advisors actively using at least one of our models grew to more than 2500, this quarter, reflecting steady progress.
Jarrett: There is still ample room for growth and building stronger relationships and broadening adoption continue to be key objectives by fostering these deeper relationships, we're enhancing asset retention and generating more predictable higher quality revenue streams in summary, despite mark.
Jarrett: That dynamic see seasonality this was a strong quarter achieving record AUM expanding margins and delivering robust earnings growth as we move forward. We will continue to align with key secular growth drivers and we will continue to leverage our scalable model and exercise.
Jarrett: <unk> dynamics weak seasonality. This was a strong quarter achieving record AUM expanding margins and delivering robust earnings growth as we move forward. We will continue to align with key secular growth drivers and we will continue to leverage our scalable model and exercise.
Speaker Change: Disciplined expense and capital management I'll now turn it over to John <unk> to share more about our strategic initiatives.
John: Thank you Jarrett.
Speaker Change: Good morning, everyone and thank you for joining us.
John: I am pleased to share wisdom tree third quarter results and provide an update on the progress. We've made as already discussed we generated strong earnings this quarter and while the market has its challenges we remain confident in our positioning and the steps, we're taking to shape the future.
Jarrett: Disciplined expense and capital management.
Speaker Change: I'll now turn it over to John <unk> to share more about our strategic initiatives.
John: Thank you Jarrett.
Speaker Change: Good morning, everyone and thank you for joining us.
John: I am pleased to share wisdom tree third quarter results and provide an update on the progress. We've made as already discussed we generated strong earnings this quarter and while the market Hasnt challenges, we remain confident in our positioning and the steps, we're taking to shape the future.
John: It's under management reached a record 113 billion, our operating margin expanded by 800 basis points to 37, 3% operating margin in the quarter.
John: We saw earnings per share grew by 80% year over year.
John: Assets under management reached a record 113 billion, our operating margin expanded by 800 basis points.
John: These results underscore our disciplined execution and the strength of our business model.
John: While today's call reflects strong financial performance I want to focus on an area that we believe will be transformative for wisdom tree in the future.
With 37, 3% operating margin in the quarter.
Our earnings per share grew by 80% year over year.
John: These results underscore our disciplined execution and the strength of our business model.
John: Token as nations.
John: We are positioning ourselves as an early mover in this space and our strategy is anchored around three distinct platforms.
John: While today's call reflects strong financial performance I want to focus on an area that we believe will be transformative for wisdom tree in the future.
John: Wisdom tree prime.
John: Wisdom tree connect.
John: And both are built on top of our third.
John: <unk>.
John: We are positioning ourselves as an early mover in this space and our strategy is anchored around three distinct platforms.
John: Token issuance platform.
Let's start with an update on wisdom tree prime or direct to retail platform. Many of you are already familiar with prime which is designed to bring blockchain enabled finance directly to consumers. We are on track to make prime available.
John: Wisdom tree prime.
John: Wisdom tree connect.
John: And both are built on top of our third.
John: Token issuance platform.
John: Let's start with an update on wisdom tree prime or direct to retail platform. Many of you are already familiar with prime which is designed to bring blockchain enabled finance directly to consumers. We are on track to make prime available.
John: Across the U S by year end, and we're continuing to build momentum by adding valuable features to enhance the user experience.
John: For example, we recently launched dynamic spending.
John: Functionality that allows customers to spend directly from their money market fund balances via a debit card. This is just the beginning we are planning to expand dynamic spending to other asset classes soon and our product roadmap roadmap is robust with several exciting updates on the horizon.
John: Across the U S by year end, and we're continuing to build momentum by adding valuable features to enhance the user experience.
Our operating margin expanded by 800 basis points to 37, 3% operating margin in the quarter.
For example, we recently launched dynamic spending.
Functionality that allows customers to spend directly from their money market fund balances via a debit card. This is just the beginning we are planning to expand dynamic spending to other asset classes June and our product roadmap roadmap is robust with several exciting updates on the horizon.
And who saw earnings per share grew by 80% year over year.
John: Sure.
Speaker Change: These results underscore our disciplined execution and the strength of our business model.
John: Now, let me introduce a newer component to our token <unk> vision wisdom.
John: Wisdom tree connect.
Speaker Change: While today's call reflects strong financial performance I want to focus on an area that we believe will be transformative for wisdom tree in the future.
John: The vision for wisdom tree connected to enable customers over time to interact with any wisdom tree issued token in any wallet across supported blockchain.
John: Sure.
John: Now, let me introduce a newer component to our <unk> vision wisdom.
Speaker Change: <unk>.
Speaker Change: We are positioning ourselves as an early mover in this space and our strategy is anchored around three distinct platforms.
John: Wisdom tree connect marked the first time wisdom tree digital funds will be available directly to clients with their own wallet infrastructure, including businesses and other institutional users wisdom tree connectors or business to business platform for token ice product distribution, but also.
John: Wisdom tree connect.
John: The vision for wisdom tree connected to enable customers over time to interact with any wisdom tree issued token in any wallet across supported blockchain.
Speaker Change: Wisdom tree prime.
Speaker Change: Wisdom tree connect.
Speaker Change: And both are built on top of our third.
John: Wisdom tree connect marks the first time wisdom tree digital funds will be available directly to clients with their own wallet infrastructure, including businesses and other institutional users wisdom tree connectors or business to business platform for token ice product distribution, but also.
Speaker Change: Token issuance platform.
Speaker Change: Let's start with an update on wisdom crime or direct to retail platform. Many of you are already familiar with prime which is designed to bring blockchain enabled finance directly to consumers. We are on track to make prime available.
John: Sets wisdom tree up to serve many other use cases in the future we announced wisdom tree connect just a few weeks ago and I'm happy to report that it is now live and is already onboarding institutional users.
John: Sets wisdom tree up to serve many other use cases in the future we announced wisdom tree connect just a few weeks ago and I am happy to report that it is now live and is already onboarding institutional users.
Speaker Change: Across the U S by year end, and we're continuing to build momentum by adding valuable features to enhance the user experience.
John: Finally, let's talk about our infrastructure that unrealized these customer facing platforms, our token issuance platform.
For example, we recently launched dynamic spending.
John: This platform represents our ability to token is a broad range of product.
Speaker Change: Punctuality that allows customers to spend directly from their money market fund balances via a debit card. This is just the beginning we are planning to expand dynamic spending to other asset classes soon and our product roadmap roadmap is robust with several exciting updates on the horizon.
John: Either for ourselves we're on behalf of <unk>.
John: Finally, let's talk about our infrastructure that unrealized these customer facing platforms, our token issuance platform.
John: On behalf of others the vertical integration of our tech stack is a key advantage, allowing us to expand our blockchain enabled product suite without relying on external partners.
John: This platform represents our ability to token is a broad range of product.
John: Either for ourselves, we're on behalf of or on behalf of others. The vertical integration of our tech stack is a key advantage, allowing us to expand our blockchain enabled product suite without relying on external partners.
John: Looking ahead, the token issuance platform could open up additional growth opportunities for wisdom tree, whether through Coke innovation as a service where other ancillary ancillary revenue streams.
Speaker Change: Yeah.
Speaker Change: Now, let me introduce a newer component to our token is nation vision.
Speaker Change: Wisdom tree connect.
Speaker Change: The vision for wisdom tree connected to enable customers over time to interact with any wisdom tree issued token in any wallet across supported blockchain.
John: We see significant potential in these three platforms as we continue to scale and innovate to meet the needs of this exciting emerging opportunity.
John: Looking ahead, the token issuance platform could open up additional growth opportunities for wisdom tree, whether through Coke innovation as a service or other ancillary ancillary revenue streams.
John: Together wisdom few prime wisdom tree connect.
Speaker Change: Wisdom tree connect marks the first time wisdom tree digital funds will be available directly to clients with their own wallet infrastructure, including businesses and other institutional users wisdom tree connectors or business to business platform for token ice product distribution, but also.
John: The token issuance platform formed the backbone of our <unk> strategy.
John: We see significant potential in these three platforms as we continue to scale and innovate to meet the needs of this exciting emerging opportunity.
John: While we arent disclosing every initiative because of competitive considerations I want to emphasize that we were making substantial progress behind the scenes.
John: Together wisdom few prime wisdom tree connect and the token issuance platform formed the backbone of our <unk> strategy.
John: The optionality embedded in these platforms is considerable and we believe they will create meaningful revenue opportunities.
Sets wisdom tree up to serve many other use cases in the future we announced wisdom tree connect just a few weeks ago and I'm happy to report that it is now live and is already onboarding institutional users.
John: While we arent disclosing every initiative because of competitive considerations.
John: Looking ahead, we remain optimistic the steps, we're taking now are laying a foundation for sustainable growth.
I want to emphasize that we are making substantial progress behind the scenes.
John: The optionality embedded in these platforms is considerable and we believe they will create meaningful revenue opportunities.
John: Long term.
Speaker Change: Finally, let's talk about our infrastructure that unrealized these customer facing platforms, our token issuance platform.
John: With our <unk> strategy in place along with our ongoing focus on innovation and customer centric product development in the global ETF industry. We believe wisdom tree is particularly well positioned to capitalize on the evolving financial landscape.
John: Looking ahead, we remain optimistic the steps we are taking now are laying a foundation for sustainable growth.
Speaker Change: This platform represents our ability to token is a broad range of product.
Speaker Change: Either for ourselves, we're on behalf of or on behalf of others. The vertical integration of our tech stack is a key advantage, allowing us to expand our blockchain enabled product suite without relying on external partners.
John: Long term.
John: Our <unk> strategy in place along with our ongoing focus on innovation and customer centric product development in the global ETF industry. We believe wisdom tree is particularly well positioned to capitalize on the evolving financial landscape.
John: Thank you.
Speaker Change: Operator, please turn the call over to our head of Investor Relations, Jeremy Campbell to take some questions from our shareholders.
Speaker Change: Looking ahead, the token issuance platform could open up additional growth opportunities for wisdom tree, whether through Coke innovation as a service or other ancillary ancillary revenue streams.
Alright, Thanks John.
Jeremy Campbell: Good morning, everybody similar to prior quarters, where I think a couple of questions from retail shareholders and then open it up to the analyst community on the lines.
John: Thank you.
Operator, please turn the call over to our head of Investor Relations, Jeremy Campbell to take some questions from our shareholders.
Speaker Change: So I'm going to direct this first question too Jeremy Schwartz, our global CIO and question for Jeremy is what are the implications of the election on your broad market outlook for the next year and was increased product suite in particular.
Speaker Change: We see significant potential in these three platforms as we continue to scale and innovate to meet the needs of this exciting emerging opportunity.
Jeremy Campbell: Alright, Thanks, John and good morning.
Jeremy Campbell: Everybody similar to prior quarters, where I think a couple of questions from retail shareholders and then Oh.
Jeremy Campbell: Put it up to the analyst community on the lines.
Together wisdom few prime wisdom tree connect.
Jeremy Campbell: So I'm going to direct this first question too Jeremy Schwartz, our global CIO.
Jeremy Schwartz: Alright, Jeremy very good question, the most topical things around the election and the current market I think center on three core issues.
The token issuance platform formed the backbone of our token as Asian strategy.
Jeremy Campbell: And question for Jeremy is what are the implications of the election on your broad market outlook for the next year and wisdom tree product suite in particular.
Speaker Change: While we arent disclosing every initiative because of competitive considerations.
Jeremy Schwartz: One first the U S markets look more expensive than normal and that implies.
Speaker Change: I want to emphasize that we were making substantial progress behind the scenes.
Jeremy Schwartz: Alright, Jeremy very good question, the most topical things around the election and the current market I think center on three core issues.
Jeremy Schwartz: A little bit lower forward looking towards returns that <unk> experience, you have debt and deficits abound, and all forecasts regardless of the election outcome, saying, we still have a lot of debt issuance and their sustainability questions around that and having countries manage these kind of debt loads and deficits.
The optionality embedded in these platforms is considerable and we believe they will create meaningful revenue opportunities.
Jeremy: One first the U S markets look more expensive than normal and that implies.
Speaker Change: Looking ahead, we remain optimistic the steps, we're taking now are laying a foundation for sustainable growth.
Jeremy: A little bit lower forward looking towards returns that they've experienced you have debt and deficits abound and all forecast regardless of the election outcome, saying, we still have a lot of debt issuance and their sustainability questions around that and having countries manage these kind of debt loads and deficits.
Speaker Change: Long term.
Speaker Change: With our <unk> strategy in place along with our ongoing focus on innovation and customer centric product development in the global ETF industry. We believe wisdom tree is particularly well positioned to capitalize on the evolving financial landscape.
Jeremy Schwartz: While it tends to be inflation and people countries had to inflate away that so there is no question investors are looking for assets that protect from an inflation, especially right now and with definitely concerns you on less exposure to the long end of the bond market. The book I coauthored with Professor Siegel.
Jeremy: While it tends to be inflation and people countries inflate away that so there is no question investors are looking for assets that protect from inflation, especially right now and with definitely concerns you want less exposure to the long end of the bond market. The book I coauthored with Professor Siegel.
Thank you.
Speaker Change: Operator, please turn the call over to our head of Investor Relations, Jeremy Campbell to take some questions from our shareholders.
Jeremy Schwartz: Stops for long runs shows why we can stop or the ultimate inflation hedges companies pass along higher input cost for higher prices of stocks, we see as real assets and the ultimate real asset, but commodities in our book a commodity business like coal and do you see that moving substantially higher this year is proving a very useful inflation hedge.
Jeremy Campbell: Alright, Thanks, John and good morning, everybody similar to prior quarters, where it took a couple of questions from retail shareholders and then open it up to the analysts community on the line.
Jeremy: Stops for long runs shows why we can stop or the ultimate inflation hedges companies pass along higher input cost for higher prices of stocks, we see as real assets and the ultimate real asset, but commodities in our book a commodity business like gone do you see that moving substantially higher this year is proving a very useful inflation hedge.
Jeremy Campbell: So I'm going to direct this first question too Jeremy Schwartz, our global CIO.
Jeremy Schwartz: With all the extra geopolitical conflicts, we have around the world and the debt concerns and inflation concerns we see clients still under allocated to commodities at large and we have opportunities to grow that space globally, but at a high level I love, our positioning of our AUM and revenue breakdown given those three.
Jeremy Campbell: And question for Jeremy is what are the implications of the election on your broad market outlook for the next year and wisdom tree product suite in particular.
Alright, Jeremy very good question, the most topical things around the election and the current market I think center on three core issues.
Jeremy: With all the extra geopolitical conflicts, we have around the world and the debt concerns and the inflation concerns we see clients still under allocated to commodities at large and we have opportunities to grow that space globally.
Jeremy Schwartz: Central considerations for the market, particularly you think about a standard 60 40 stock bond portfolio for the markets at large our run rate revenues now, 70% global stocks, 20% commodities, a little bit less than 10% fixed income skewed to short duration solutions, which is very attractive given that market.
Jeremy Campbell: One first the U S markets look more expensive than normal in that.
Jeremy: At a high level.
Speaker Change: Our positioning of our AUM and revenue great John given those three.
Speaker Change: Central considerations for the market, particularly you think about our standard 60, 40 stock bond portfolio for the markets in March our run rate revenues now, 70% global stocks, 20% commodities, a little bit less than 10% fixed income skewed to short duration solutions, which is very attractive given that market size.
Jeremy Schwartz: And the market backdrop and on.
Jeremy Schwartz: <unk>, while the S&P at 22 times earnings.
Jeremy Schwartz: The U S is definitely the best growth market in the world higher multiples bring higher risk of disappointment. When you look at our $60 billion in equities that we manage we have an aggregate p/e ratio of just 16 times earnings across that $60 billion and Thats, a six 5% earnings yield versus.
Speaker Change: And the market backdrop and on valuations, while the S&P 22 times earnings.
Speaker Change: The U S is definitely the best growth market in the world higher multiples.
Speaker Change: Higher risk of disappointment when you look at our 60 billion in equities that we manage we have an aggregate fee ratio of just 16 times earnings across that $60 billion and Thats, a six 5% earnings yield versus <unk>.
Jeremy Schwartz: As you know something like four six for the S&P 500, that's a quite attractive value proposition for our equity book.
Jeremy Schwartz: Book of business.
Jeremy Schwartz: On fixed income after the fed cut 50 basis points, there's a lot of commentary about adding to duration or.
Our economics team advised that was wrong on the yield curve remains inverted that is not its natural state. We do not think the version will last forever. Our senior Congress again Professor Siegel has said the 10 year should become an inverted and move closer to four 5% to 5%.
Something like $4 six for the S&P 500, that's a quite attractive value proposition for our equity.
Speaker Change: Book of business.
Speaker Change: Fixed income after the fed cut 50 basis points, there's a lot of commentary about adding to duration.
Our economics team advised that was wrong on the yield curve remains inverted that is not its natural state. We do not think the inversion will last forever. Our senior economists again Professor Siegel has said the 10 year should become uninvited and closer to four 5% to 5% and so while we have diversified our fixed.
Jeremy Schwartz: And so while we've diversified our fixed income exposures as a firm we've had more launches innovative interesting solutions to add duration. We're also quite happy with the exposures that we have and where our book of business today is today.
Jeremy Schwartz: We see the six trillion in money market funds.
Jeremy Schwartz: Still growing we see a compelling case for them to keep growing banks don't pay you appropriate interest rates on the vast majority of their client accounts. So there is opportunities still to grow U S. S far our floating rate Treasury T. F. It's been a compelling solution for advisors, who want to earn better returns on their cash and you heard John talk about the <unk>.
Speaker Change: Income exposures as a firm we've had more launches innovative interesting solutions to add duration. We're also quite happy with the exposures that we have and where our book of business. Today is today, we see the six trillion in money market funds still growing we see a compelling case for them to keep growing banks don't pay you appropriate interest rates.
<unk> card that is also quite exciting technology, we can leverage across our client base spending off of higher earning assets. So that's also quite exciting.
Speaker Change: On the vast majority of their client accounts. So there is opportunities still to grow U S. S far our floating rate Treasury TF, it's been a compelling solution for advisors, who want to earn better returns on their cash and you heard John will talk about the debit card that is also quite exciting technology, we can leverage across our client base spend.
Jeremy Schwartz: But in summarizing for the election for the current backdrop, we think we're very well positioned to address all the client needs looking ahead.
Speaker Change: Great. Thanks, Jeremy.
Speaker Change: <unk> off of higher earning assets. So that's also quite exciting but.
Speaker Change: Direct this next question to our President and COO Jarrett Lilien Jarrett. The question is can the wisdom tree still expand operating margins from current levels.
Speaker Change: In summarizing for the election for the current backdrop, we think we're very well positioned to address all the client needs looking ahead.
Jarrett Lilien: Yes. Thanks.
Speaker Change: Great. Thanks, Jeremy.
Jarrett Lilien: Look operating margins are something that we pay close attention to and we think we have years of margin expansion ahead of us and that is due to our constant our confidence in growth, but coupled with our high incremental margins, which are over 50%.
Speaker Change: I'm going to direct this next question to our President and COO Jarrett Lilien Gerrick. The question is can the wisdom tree still expand operating margins from current levels.
Speaker Change: Yes. Thanks.
Jarrett Lilien: Look our operating margins are something that we pay close attention to and we think we have years of margin expansion ahead of us and that is due to our constant our confidence in growth, but coupled with our high incremental margins, which are over 50%.
Jarrett Lilien: And our confidence in growth stems from having a really broad and deep product set product suite that we feel can win business in any market environment, but then just jumping on to what Jeremy was just talking about our outlook for the markets seems to fit extremely well.
Jarrett Lilien: And our confidence in growth stems from having a really broad and deep product set product suite that we feel can win business in any market environment, but then just jumping on to what Jeremy was just talking about our outlook for the markets seems to fit extremely well.
Jarrett Lilien: With our product suite and then we've got our models business that provides steady and sticky flows.
Jarrett Lilien: Our leadership in <unk>. So we have all of these growth initiatives that give us a lot of confidence in continued growth and again.
Jarrett Lilien: With our product suite and then we've got our models business that provides steady and sticky flows.
Jarrett Lilien: You take strong growth prospects, you couple those with higher incremental margins and smart management and the result is.
Jarrett Lilien: Our leadership in <unk>. So we have all of these growth initiatives. It gives us a lot of confidence in continued growth and again you take strong growth prospects you couple those with higher incremental margins and smart management and the result is.
Jarrett Lilien: Again, our confidence in margin growth that will continue to expand for the next several years.
Speaker Change: Great. Thanks, Jared operator, please feel free to open up the lines to fill some questions from our analysts.
Jarrett Lilien: Is.
Jarrett Lilien: Again, our confidence in margin growth that will continue to expand for the next several years.
Speaker Change: Thank you will not be conducting a question and answer session. If you'd like to ask a question. 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 to remove your question from Mchugh for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Great. Thanks, Jared operator, please feel free to open up the lines.
Speaker Change: Two questions from our analysts.
Speaker Change: Thank you will not be conducting a question and answer session. If you'd like to ask a question. 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 to remove your question from Mchugh for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Our first questions come from the line of Brennan Hawken with UBS. Please proceed with your questions.
<unk>.
Speaker Change: Good morning, Thanks for taking my question.
Speaker Change: Interesting to see the expansion that you laid out on prime.
I don't think that you've indicated this in past, but maybe as you continue to expand the use cases, we can get a little greater color into what kind of impact the prime investments are having on the P&L.
Speaker Change: Our first questions come from the line of Brennan Hawken with UBS. Please proceed with your questions.
Speaker Change: Good morning, Thanks for taking my question.
Speaker Change: Interesting to see the expansion that you.
Speaker Change: What's the what's a rough approximation for.
Speaker Change: You laid out on prime.
Speaker Change: I don't think that you've indicated this in past, but maybe as you continue to expand the use cases, we can get a little greater color into what kind of impact the prime investments are having on the P&L.
Speaker Change: Annual spend on this continued development.
Speaker Change: Brian do you want to take this.
Speaker Change: Yes.
Our forecast they were forecasted to be in the low to mid <unk> for for this year Brian.
Speaker Change: What's the what's a rough approximation for.
Speaker Change: Annual spend.
Okay. Okay got it I think I think that's up from a few years ago, where I don't want to say it was like high teens or so.
On this continued development.
Speaker Change: Brian do you want to take this.
Speaker Change: High teens, correct, that's right yeah, yeah, okay, great. Thanks.
Speaker Change: Yes.
Speaker Change: Our forecast they were forecasted to be in the low to mid <unk> for for this year Brian.
Speaker Change: And then.
Speaker Change: Do you guys have any stats or indications of course, it's too early for the new b to b, but the consumer platform has been out there for a few years now.
Okay. Okay got it I think I think that's up from a few years ago, where I don't want to say it was like high teens or high teens correct. That's right yeah, yeah, okay, great. Thanks.
What statistics can you share that would suggest the take up rate.
Speaker Change: And then do you guys have any stats or indications of.
Of course, it's too early for the new B to B.
Speaker Change: And where consumers are.
Speaker Change: And how it's resonating so that we can understand what the ROI is spin on this.
Speaker Change: But the consumer platform has been out there for a few years now.
Speaker Change: What statistics can you share that would suggest the take up rate.
Speaker Change: Thanks Brendan.
Speaker Change: As we said I think on last fall, we will update our statistics are digital asset on Q4, as we give guidance for the year ahead and will establish a baseline on digital asset.
Speaker Change: And and where consumers are.
Speaker Change: And how it's resonating so that we can understand what the ROI is spin on this.
Speaker Change: And though we began rolling out prime of about a year ago. It still only in something like 85% of the country. So it has been a challenging regulatory environment to roll. This outlook has taken longer than we anticipated.
Speaker Change: Thanks Brendan.
Speaker Change: So as we said I think on last fall, we will update our statistics on digital asset on Q4, as we give guidance for the year ahead and will establish a baseline on digital asset.
Speaker Change: And though we began rolling out prime.
Speaker Change: To that earlier question about the elections, we do think.
Speaker Change: About a year ago, it still only at something like 85% of the country. So it has been a challenging regulatory environment to roll. This out too has taken longer than we anticipated.
Speaker Change: The upcoming election will.
Speaker Change: Be constructive with the development of digital assets going forward, regardless of who wins, maybe particularly if trump wins, but regardless of who wins.
Speaker Change: To that earlier question about the elections, we do think.
Speaker Change: So, we'll we'll give you more guidance on the next call.
Speaker Change: The upcoming election will.
Speaker Change: Okay didn't mean to try to front run there and yes.
Speaker Change: Be constructive for the development of digital assets going forward, regardless of who wins, maybe particularly if trump wins, but regardless of who wins and so we will we will give you more guidance on the next call.
Speaker Change: To that point, John I saw it sets available in New York I just downloaded this morning, so looking forward to checking it out thanks.
Speaker Change: I appreciate it.
Speaker Change: Okay didn't mean to try to front run there and yes to that point John I saw it sets available in New York I just downloaded this morning, so looking forward to checking it out thanks.
Speaker Change: Thank you our next questions come from the line of George Sutton with Craig Hallum. Please proceed with your questions.
Speaker Change: Thank you our wisdom tree prime user here in Minnesota So.
I wondered if you could answer relative to what will soon be 85000 advisors. What is currently 2500 of those advisors.
Speaker Change: I appreciate it.
Speaker Change: Thank you our next questions come from the line of George Sutton with Craig Hallum. Please proceed with your questions.
George Sutton: Thank you our wisdom tree prime user here in Minnesota So.
Speaker Change: Using your models can you just talk about what is the mid term expectation for where.
George Sutton: I wonder if.
George Sutton: Yeah.
Speaker Change: That penetration can grow you've talked about trillions of dollars sort of being exposed as opportunity, though just wanted to get a sense of what youre thinking more on a midterm basis.
George Sutton: As to what will soon be 85000 advisors. What is currently 2500 of those advisors.
George Sutton: Using your models can you just talk about what is the mid term expectation for where.
Speaker Change: Yeah.
Speaker Change: Sure.
George Sutton: That penetration can grow you've talked about trillions of dollars sort of being exposed as opportunity, though just wanted to get a sense of what youre thinking more on a midterm basis.
Jarrett Lilien: Yeah. Yeah. This is this is jarrett so.
Speaker Change: <unk>.
Speaker Change: You put your finger on it we've been focused on a couple of things growing that accessible market and actually it's grown bigger we've had some nice wins there.
George Sutton: Yeah.
Sure.
George Sutton: Yes, yes. This is.
Speaker Change: We had been.
Jarrett Lilien: This is jarrett so.
Speaker Change: Talking about that being 70000 and now we've got that too.
Jarrett Lilien: You put your finger on it we've been focused on a couple of things growing that accessible market and actually it's grown bigger we've had some nice wins there.
Speaker Change: 285000, and actually I think that will continue to grow as well, but the rubber really hits the road with.
Jarrett Lilien: It had been.
Jarrett Lilien: Talking about that being 70000, and now we got that too.
Speaker Change: With our penetration and last year, we added.
1000 advisors.
Jarrett Lilien: 285000, and actually I think that will continue to grow as well, but the rubber really hits the road with with.
Speaker Change: And I think that's a reasonable baseline I would hope we could actually do better than that as we get.
Speaker Change: Sort of better at Onboarding, but as I've talked about many times before there are really multiple wins you first have to win to get yourself on that platform and then you need to really go into hand to hand combat and when each adviser.
Jarrett Lilien: Our penetration and last year, we added.
Jarrett Lilien: Thousand advisors.
Jarrett Lilien: And I think that's a reasonable baseline I would hope we could actually do better than that as we get.
Jarrett Lilien: Sort of better at on boarding, but as I've talked about many times before they are really multiple wins you first have to win to get yourself on the platform and then you need to really go into hand to hand combat and when each adviser.
Speaker Change: So we've had great success with those first wins getting onto platforms and now we're also having success with it and combat so there's there's momentum building.
But I think a baseline expectation you could you could use a thousand a year.
Jarrett Lilien: So we've had great success with those first wins getting onto platforms and now we're also having success with it and combat. So there is a there is momentum building.
Speaker Change: But I will say that we recently added.
Speaker Change: An expanded portfolio consultation service, which I believe will lead to wider.
Jarrett Lilien: But I think our baseline expectation you could you could use a thousand a year.
Speaker Change: Model adoption as well so.
Speaker Change: I mean, it's an area that we've invested in like Jared had said on.
Jarrett Lilien: But I will say that we recently added.
Jarrett Lilien: An expanded portfolio consultation service, which I believe will lead to wider.
Speaker Change: The earlier question and.
Speaker Change: The baseline is a thousand new advisors a year.
Speaker Change: Yes, and again Thats why I think it's a good baseline, but our hope would be even to be able to do better than that because as we get in there we learn more about how to add more quickly interact how to better service things like John just mentioned that the portfolio consultation. That's a great example of a takeaway from <unk>.
Jarrett Lilien: Model adoption as well so.
Speaker Change: I mean, it's an area that we've invested in like Jared It said.
Speaker Change: The earlier question and.
Speaker Change: The baseline is a thousand new advisors a year.
And again, that's why I think it's a good baseline, but our hope would be even to be able to do better than that because as we get in there we learn more about how to add more quickly interact how to better service things like John just mentioned that the portfolio consultation that is a great example of a takeaway from onboard.
Speaker Change: Boarding that there are additional services that we can provide that make us a better partner.
We're still we're still very happy very encouraged and very optimistic about the growth here.
Speaker Change: Great and then just my second and last question for Johnno relative to broadening out was include crime or adding wisdom tree connect.
That there are additional services that we can provide that make us a better partner. So we're still we're still very happy very encouraged and very optimistic about the growth here.
Speaker Change: It's interesting because you're also bringing down your guidance, a little bit or discretionary spend so I wonder if you could just sort of give us a sense of are there new efficiencies, you're finding or is it just holding off on some of the marketing spend it until you have the national distribution.
Speaker Change: Great and then just my second and last question for Johnno relative to broadening out was include prime or adding wisdom tree connect.
Speaker Change: It's interesting because you're also bringing down your guidance, a little bit or discretionary spend so I wonder if you could just sort of give us a sense of are there new efficiencies, you're finding or is it just holding off on some of the marketing spend until you have the national distribution.
Speaker Change: There is definitely more efficiencies, we're constantly looking at efficiencies.
Speaker Change: <unk>.
Speaker Change: On a constant part of the job.
Speaker Change: And we.
Speaker Change: The business model is certainly showing that as we scale.
Speaker Change: There's definitely more efficiencies, we're constantly looking at efficiencies.
Speaker Change: It's just a very strong business model.
Speaker Change: There is a little bit of the rolling out Prime a little more slowly adds it's taken longer to get the full rollout of states as well as additional services, but it's very much as it was at the beginning of last year. When we gave the guidance that it would be a very iterative.
A constant part of the job.
Speaker Change: And.
<unk> business model is certainly showing that as we scale.
Speaker Change: It's just a very strong business model.
Speaker Change: There is a little bit.
Speaker Change: Rolling out Prime a little more slowly add it's taken longer to get the full rollout of our states as well as additional services, but it's very much as it was at the beginning of last year. When we gave the guidance that would be a very iterative.
Speaker Change: <unk> to the rollout.
Speaker Change: It'll be the same next year as well I don't want to run the guidance, but.
Speaker Change: We're still at a very early stages, but still very optimistic.
Speaker Change: And Jonathan if I can jump in here he had to ballpark kind of digital assets and one of the great things with wisdom from connect is that it's great to get that platform out there. That's always been part of the plan as part of the investment we've been making excuse me in this platform and thats not rely on kind of discretionary marketing spend right. That's our people who are kind of a brand business.
Speaker Change: <unk> to the rollout.
Speaker Change: It'll be the same next year as well I don't want a FERC around the guidance but.
Speaker Change: We're still at a very early stages, but still very optimistic.
And China, if I could jump in here he had to ballpark kind of digital assets and one of the great things with wisdom tree connect is that it's great to get that platform out there. That's always been part of the plan as part of the investment we've been making excuse me in this platform and thats not rely on kind of discretionary marketing spend right. That's our people who are kind of a brand business.
Speaker Change: We've got lots of 101 relationships able to get different sort of institutional and platform sales. So that's something we're excited about which should have a relatively.
Speaker Change: A relatively high ROI in terms of getting customers on that platform.
Speaker Change: Thanks to that point well thanks, guys.
Speaker Change: We've got lots of one on one relationships able to get different sort of institutional and platform sales. So that's something we're excited about which should have a relatively.
Speaker Change: Thank you our next questions come from the line of Michael Cyprus with Morgan Stanley. Please proceed with your questions.
Speaker Change: A relatively high ROI in terms of getting customers on that platform.
Michael Cyprus: Alright, good morning, Thanks for taking the question.
Michael Cyprus: When we look at the 2500 advisors that are using at least one of your models.
Speaker Change: Thanks for that thanks, guys.
Speaker Change: Thank you our next questions come from the line of Michael Cyprus with Morgan Stanley. Please proceed with your questions.
Michael Cyprus: Just curious how embedded you are with that group of 2500 advisers in other words I guess, if you look across what portion have adopted your models across most of the book versus what portion of those 2500 advisers have more limited usage of your models from from from their customer set and what are some of the steps that you can take to <unk>.
Michael Cyprus: Alright, good morning, Thanks for taking the question.
Michael Cyprus: When we look at the 2500 advisors that are using at least one of your models.
Michael Cyprus: Just curious how embedded.
Michael Cyprus: Our with that group of 2500 advisers in other words I guess, if you look across what portion have adopted your models across most of the book versus what portion of those 2500 advisers have more limited usage of your models from from from their customer set and what are some of the steps that you can take to drive greater penetration and adoption even within.
Michael Cyprus: Five greater penetration and adoption, even within that 2500 adviser force.
Speaker Change: Jared do you mind, if I start.
Speaker Change: It's earlier days.
Speaker Change: It's early days in the models business and there definitely is a snowball effect.
Jared: And so to your question of how we penetrated the 2500 advisers, it's early days with many of them.
Michael Cyprus: That 2500 Advisory Board.
Speaker Change: Jared do you mind, if I saw it.
Speaker Change: It's earlier days.
Jared: Performance has been very strong and we are anticipating those 2500 advisors will continue to roll.
Jared: It's early days in the models business and there definitely is a snowball effect.
Jared: And so to your question of how we penetrated the 2500 advisers, it's early days with many of them.
Jared: Our models business out more broadly to their full book of business. So to that point very early but sharply add anything.
Jared: Performance has been very strong and we are anticipating those 2500 advisors will continue to roll.
Jared: The only thing I would just add is.
Speaker Change: Again, we always talk about positioning.
Jared: Our models business out more broadly to their full book of business.
Speaker Change: Positioning ourselves.
Speaker Change: In front of the major secular moves in the industry one of them you.
Speaker Change: To that point very early but Jackup fleet add anything.
Speaker Change: You could say, it's tokenism mission and other one obviously as Etfs, but another one is the use of models by financial advisers and so we're out in front of a trend the money is moving in that direction. So the advisers that we are working towards some are new advisors, who are starting their practice and that will be.
Speaker Change: The only thing I would just add is.
Speaker Change: Again, we always talk about.
Speaker Change: Positioning ourselves.
Speaker Change: In front of the major secular moves in the industry one of them you could say as <unk> and other one obviously as Etfs, but another one is the use of models by financial advisers and so we're out in front of a trend the money is moving in that direction. So the advisers that we.
Speaker Change: Models only.
Speaker Change: And we're in with them early and we will grow as they grow and with others. We're transitioning we're helping them transition from <unk>.
We are working towards some are new advisors, who are starting their practice and there'll be models only.
Speaker Change: Many models or no real centralized model to more of a centralized theme that makes them more scalable and more effective so.
And we're in with them early and we will grow as they grow and with others. We're transitioning we're helping them transition from.
Speaker Change: Agree entirely johnno, it's early days, but where they're at the early stages of a advisors utilizing models and so we will penetrate more we're seeing that.
Speaker Change: Many models or no real centralized model to more of a centralized.
Speaker Change: That makes them more scalable and more effective so.
Speaker Change: And we're also seeing that as our advisors grow.
Speaker Change: Agree entirely johnno, it's early days, but where they're at the early stages of a advisors utilizing models and so we will penetrate more we're seeing that and we're also seeing that as.
Speaker Change: Growth.
Speaker Change: And just any sense on how much that's contributing to flows I think you mentioned $3 5 billion of AUM.
Speaker Change: These models today with the 2500 advisors just how much flows hows that progressing how persistent is that what sort of volatility you see associated with that.
Our advisors grow.
<unk> growth.
Generally we've said between 10 and 12%.
And just any sense on how much that's contributing to flows I think you mentioned $3 5 billion in AUM across these models today with the 2500 advisors just how much flows how is that progressing how how persistent is that what sort of volatility you see associated with that.
Speaker Change: And again I'd like to see that percentage increase but that's been holding as it is a pretty good proxy.
Speaker Change: Great and if I can just ask a follow up question on the.
Speaker Change: Generally we've said between 10 and 12%.
Speaker Change: The digital <unk>.
Speaker Change: <unk> said that you launched the digital money market Fund I think you mentioned thats available for clients, including institutions, just curious what sort of feedback you're hearing so far on the institutional customer side, maybe talk about your approach to building out that customer set a bit more and what's the scope for our interest in partnering with other maybe intermediary platforms, including those in the digital space that have.
Speaker Change: And again I'd like to see that percentage increase but that's been holding is a pretty good proxy.
Speaker Change: Great and if I could just ask a follow up question on the <unk>.
Speaker Change: Digital funds that you launched the digital money market Fund I think you mentioned that's available for clients, including institutions, just curious what sort of feedback you're hearing so far on the institutional customer side, maybe talk about your approach to building out that customer set a bit more and what's the scope for our interest in partnering with other maybe intermediary platforms, including Lowe's.
Speaker Change: Large retail customer sets.
Speaker Change: Will please take that yeah, yeah definitely.
Speaker Change: So right now theres $177 billion and stable coins.
USD <unk> stable clients worldwide, and we've got $2 billion in Cocainize treasuries money market funds, a lot of that being kind of from offshore jurisdiction. So I expect over time the stable coin market is going to continue to grow and we're also going to see a much higher penetration of yield bearing assets like this which really serves a similar need but it's a much better product.
Speaker Change: In the digital space that have large retail customer sets.
Speaker Change: Will please take that yeah, yeah definitely.
Speaker Change: So right now theres $177 billion in stable coins.
Speaker Change: USD <unk> stable coin to worldwide and we've got $2 billion in Cocainize treasuries money market funds, a lot of that being kind of from offshore jurisdictions. So I expect over time the stable coin market is going to continue to grow and we're also going to see a much higher penetration of yield bearing assets like this which really serves a similar need but has a much better product.
Speaker Change: And a lot of ways.
Speaker Change: And then what Youre seeing out there so right now we're seeing a lot of great kind of.
Speaker Change: Initial demand for this type of product that is really meeting a need for the crypto native community.
Speaker Change: And we're looking forward to continuing to move the ball forward there.
Speaker Change: And a lot of ways.
Speaker Change: Then then what Youre seeing out there so right now we're seeing a lot of great kind of.
Speaker Change: Any interest scope for partnerships with direct to consumer intermediary platforms that may have interest in it seems like this could be interesting product can fit nicely on some of those platforms.
Initial demand for this type of product, that's really meeting a need for the crypto native community and we're looking forward to continuing to move the ball forward there.
Speaker Change: Oh, 100% I mean, I think the <unk> model and this is exactly what wisdom could connect opens up for us so.
Speaker Change: Any interest scope for partnerships with direct to consumer intermediary platforms that may have interest in it seems like this could be interesting product fit nicely on some of those platforms.
Speaker Change: There's a lot of initial early conversations on that now and I expect over time, that's going to really pick up going forward.
Great and we're onboarding customers already since we've launched it just a few weeks ago.
Speaker Change: 100% I mean, I think the <unk> model and this is exactly what wisdom could connect opens up for us so.
Speaker Change: There's a lot of initial early conversations on that now and I expect over time, that's going to really pick up going forward.
Speaker Change: Thank you. Our next question is come from the line of Mike Grondahl with Northland Securities. Please proceed with your questions.
Speaker Change: Great and we're onboarding customers already since we launched it just a few weeks ago.
Mike Grondahl: Hey, guys. Thanks two.
Mike Grondahl: Two questions.
Mike Grondahl: One is just.
Mike Grondahl: Any new or newer ETF just to call out how they're doing what kind of reception you're seeing.
Speaker Change: Thank you. Our next question is come from the line of Mike Grondahl with Northland Securities. Please proceed with your questions.
Mike Grondahl: And then secondly.
Mike Grondahl: You've clearly had some really nice momentum here in the business.
Mike Grondahl: Hey, guys. Thanks to.
Mike Grondahl: Two questions.
Mike Grondahl: One is just any.
Mike Grondahl: What are kind of two priorities you guys have for 25 to kind of keep this momentum going thank you.
Mike Grondahl: Any new or newer ETF just to call out how theyre doing what kind of reception you're seeing.
Mike Grondahl: And then secondly.
Speaker Change: Jeremy would you talk about Q growth and maybe something else that you might want to highlight.
Mike Grondahl: You've clearly had some really nice momentum here in the business.
Mike Grondahl: What are kind of two priorities you guys have for 25 to kind of keep this momentum going thank you.
Jeremy Campbell: Sure Yeah, we I mentioned in my opening comments about the market backdrop just.
Jeremy Schwartz: The valuations on our whole book of business being 16 times when SB 22, but we did launch one of our franchises is quality and we've always had a quality dividend franchising our largest fund in the U S is quality dividend growth, it's approaching $15 billion in equity in U S assets with a decade here.
Speaker Change: Jeremy would you talk about.
Speaker Change: <unk> growth and maybe something else that you might want to highlight.
Jeremy: Sure Yeah, we I mentioned in my opening comments about the market backdrop just.
Jeremy: The valuations on our whole book of business being 16 times when the FY 'twenty two but we did launch one of our franchises is quality and we've always had a quality dividend franchises, our largest fund in the U S. It's quality dividend growth approaching $15 billion in equity in U S assets with a decade here.
Jeremy Schwartz: But there are a lot of feedback is can you apply your quality franchise to the growth of the universe.
Jeremy Schwartz: And when you think when you look at how Q T. R. W. <unk>.
Jeremy Schwartz: At the end of 2022, so it's not quite even two years old you're talking about a half a billion now in the U S. It's been beating the NASDAQ what's been one of the toughest benchmarks to beat and it is.
Jeremy: But there are a lot of feedback is can you apply your quality franchise to the growth side of the universe.
Jeremy Schwartz: Hell of a lot of them sort of large magnificent seven stocks, but it wont always you know it's got a bunch of proprietary screens to try to identify the best growth stocks in the market.
Jeremy: And when you when you look at how Q T. R. W. <unk>.
Jeremy: At the end of 2022, so it's not quite even two years old and thought about a half a billion now in the U S. It's been beating the NASDAQ, which was one of the toughest benchmarks to be and.
Jeremy Schwartz: And it'll be interesting to see as that evolves over time, but it's been a strong performer since launch both from the actual relative performance versus the NASDAQ, but also from an ATM perspective, we launched it in Europe.
Jeremy: It's held a lot of them sort of large magnificent seven stocks, but it wont always you know it's got a bunch of proprietary screens to try to identify the best growth stocks in the market and it'll be interesting to see as that evolves over time, but it's been a strong performer since launch book from a actual relative performance versus the NASDAQ, but also from an AUM perspective, we launched it in Europe.
Jeremy Schwartz: And so I think we are very excited that which leverages our core.
With some tree process and then we're doing other really interesting things in Europe. We're.
Jeremy Schwartz: We're doing a lot more with semantics, we were excited about our new megatrend fund that sort of rotating between somatic performance has been strong we're excited about where that's going to go and crypto in Europe has been one of the leading platforms for crypto products in Europe, we have good expectations for that continuing next year.
And so I think we were very excited to that which leverages the core.
Jeremy: We have some free process and then we're doing other really interesting things in Europe.
Jeremy: We're doing a lot more with semantics, we were excited about our new megatrend fund that sort of rotating between somatic performance has been strong we're excited about where that's going to go and crypto in Europe has been one of the leading platforms for crypto products in Europe, we have good expectations for that continuing next year.
Speaker Change: Thanks, Jeremy.
Mike what was the second half of your question.
Mike Grondahl: Yeah, just hey, you guys have had really nice momentum in the business to keep that momentum going what are what are the two major priorities for 2025, and you kind of start to look forward.
Speaker Change: Thanks, Jeremy.
Speaker Change: Yeah.
Speaker Change: Mike what was the second half of your question.
We're gonna give our guidance next quarter, but I would just say that we'll continue on.
Mike Grondahl: Yeah, just hey, you guys have had really nice momentum in the business to keep that momentum going what are what are the two major priorities for 2025, and you kind of start to look forward.
The secular trends that we've invested against for the last few years. So we're going to continue to invest in product.
Speaker Change: Yeah.
Speaker Change: Globally, we're going to continue to invest in our portfolio of solutions, we're going to continue to roll out.
We're going to give our guidance next quarter, but I would just say that we'll continue on.
Speaker Change: Digital assets and <unk> functionality, and lastly, always watch towards creating additional efficiencies.
Speaker Change: The secular trends that we've invested against the last few years. So we're going to continue to invest in product.
Speaker Change: Globally, we're going to continue to.
Speaker Change: Best in our portfolio of solutions, we're going to continue to roll out.
Speaker Change: Throughout the business so auto.
Speaker Change: I think it'll be more of the same.
Speaker Change: Digital assets and <unk> functionality, and lastly, always watch words, creating additional efficiencies.
Speaker Change: Fair enough. It's working thanks, guys. Thank you I appreciate that.
Speaker Change: Thank you we have reached the end of our question and answer session I would now like to hand, the call back over to Jonathan Steinberg for any closing comments.
Through Apple business so auto.
Speaker Change: I think it'll be more of the same.
Jonathan Steinberg: I just want to thank all of you for your time and consideration and we will speak to you next quarter have a great day everybody.
Speaker Change: Fair enough. It's working thanks, guys. Thank you I appreciate that.
Speaker Change: Thank you we have reached the end of our question and answer session I would now like to hand, the call back over to Jonathan Steinberg for any closing comments.
Speaker Change: Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time enjoy the rest of your day.
Jonathan Steinberg: I just want to thank all of you for your time and consideration and we will speak to you next quarter have a great day everybody.
Speaker Change: Yeah.
Speaker Change: Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time enjoy the rest of your day.