Q4 2024 WisdomTree Inc Earnings Call
Speaker Change: Greetings and welcome to the WisdomTree Q4 2024 Earnings Call. At this time, all participants are in a listen-only mode.
Speaker Change: The question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jessica Zaloom, Head of Corporate Communications. Thank you. You may begin.
Speaker Change: Good morning. Before we begin, I would like to reference our legal disclaimer available in today's presentation.
Speaker Change: 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.
Speaker Change: in the Risk Factor section of Wisentry's annual report on Form 10-K for the year ended December 31, 2023 and in subsequent reports filed with or furnished to the Securities and Exchange Commission.
Speaker Change: Wisintry assumes no duty and does not undertake to update any forward-looking statements.
Speaker Change: Now, it is my pleasure to turn the call over to WakingTree CFO, Bryan Edmiston.
Bryan Edmiston: Thank you, Jessica, and good morning, everyone. I'll begin my remarks with a recap of 2024 and our fourth quarter results, followed by our 2025 expense guidance before turning the call over to Jarrett and Jono for additional updates on our business.
The year 2024 was marked by numerous accomplishments.
Bryan Edmiston: We close the year with AUM of $109.8 billion, up almost 10% from the prior year.
Bryan Edmiston: Its growth further showcased the operating leverage in our business model, highlighted by year-over-year adjusted operating margin expansion of 680 basis points.
Bryan Edmiston: These results, combined with the execution of strategic capital management initiatives, including the highly accretive repurchase of ETFS Capital's preferred stock earlier this year, as well as last year's retirement of our gold royalty obligation,
Bryan Edmiston: have driven an increase of over 70% in our adjusted EPS.
Bryan Edmiston: and a 50% increase in our stock price year over year.
Next slide.
Bryan Edmiston: Adjusted revenues were $110.5 million during the quarter, up 1% sequentially and approximately 22% higher than the same period last year, driven by higher average AUM.
Bryan Edmiston: The year-over-year improvement also reflects higher other revenues attributable to our European-listed products.
Bryan Edmiston: representing Sustainable Revenue Capture and providing further revenue diversification away from the expense ratio.
Bryan Edmiston: On a year-to-date basis, our adjusted revenues have grown over 21%, and our adjusted operating margin was 33.6%, representing expansion of over 680 basis points versus the prior year.
Bryan Edmiston: Our adjusted net income for the quarter was $25.3 million, or $0.17 a share.
Bryan Edmiston: These results reflect higher fund management expenses arising from non-recurring costs.
Bryan Edmiston: related to our custody migration and higher professional fees as we recognize the remaining contractual costs from the WisdomTree Prime service provider as we continue expanding our capabilities to further enhance the platform with internal resources.
Bryan Edmiston: The net impact of these non-recurring items was about a penny a share.
Next slide.
Now a few comments on our 2025 expense guidance.
Bryan Edmiston: We are forecasting our compensation-to-revenue ratio to range from 28 to 30 percent.
Bryan Edmiston: which includes planned hires as well as compensation adjustments and the annualization of hires made during 2024.
Bryan Edmiston: The range considers variability in incentive compensation, with drivers including the magnitude of our flows,
Revenue, Operating Income, and Margin Targets
and our share price performance in relation to our peers.
Bryan Edmiston: In addition, the high end of the range contemplates unfavorable market conditions, recognizing that a meaningful portion of our compensation expense is fixed in nature.
Bryan Edmiston: And as a reminder, we experience elevated seasonality in the amount of compensation we report in the first quarter as we recognize payroll taxes, benefits, and other items in connection with year-end bonuses.
Bryan Edmiston: We estimate first quarter compensation expense to be approximately $34 to $35 million.
Bryan Edmiston: Discretionary spending is anticipated to range from $68 to $72 million.
as compared to $64.8 million in 2024.
Bryan Edmiston: The modest uptick in spend contemplates additional marketing spend related to both digital assets and ETFs.
Bryan Edmiston: investments in sales related initiatives including further promotions of our portfolio solutions offerings
higher amortization of capitalized software, and other costs.
Bryan Edmiston: Our gross margin is anticipated to be about 81% to 82% compared to 80.2% this past year.
Our updated guidance takes into consideration current AUM levels.
Changes in service providers and anticipated fund launches.
Bryan Edmiston: And as a reminder, our Q4 gross margin was adversely impacted by non-recurring costs incurred in connection with our custody migration this past quarter.
Bryan Edmiston: Our third-party distribution expense is anticipated to range from 11 to 12 million as we expand our partnerships and grow AUM on the platforms.
Bryan Edmiston: Our annual adjusted interest expense guidance is anticipated to be approximately $20 million higher than the prior year due to incremental debt raised last August to facilitate the repurchase of preferred stock from ETFS capital.
Bryan Edmiston: Our interest income is anticipated to be approximately $7 million.
Bryan Edmiston: Largely aligned with the interest income recognized in the prior year based upon the magnitude of our forecasted interest, earning assets and projected interest rates.
Bryan Edmiston: And our weighted average diluted shares were 158.8 million during 2024, we.
Bryan Edmiston: We anticipate our weighted average diluted shares to be a $149 million to $150 million in 2025.
Bryan Edmiston: Taking into consideration the full year impact of the 20 million shares we repurchased last August.
Bryan Edmiston: As a reminder, this guidance does not take into consideration any variability in shares associated with our convertible notes.
Bryan Edmiston: That's all I have I will now turn the call over to Jerry.
Jerry: Thank you, Brian and good morning, everyone.
Jerry: As we closed out 2024, I'm proud to reflect on a year that has positioned us for sustained earnings growth and margin expansion.
Jerry: Today I'll share highlights of the past year and then some thoughts on the rest of this year focusing on flows models operational efficiencies and progress in digital assets and Tokyo station.
Jerry: Beginning with flows in 2024 started strong but wasn't without its challenges.
Jerry: <unk> clients utilized U S Saar for cash re risking strategies leading to outflows.
Jerry: Pan carry trade face disruptions impacting Dx, Jay our currency hedge Japan fund and commodity markets experienced significant volatility.
Jerry: Despite these challenges we delivered meaningful outcomes the number of clients using wisdom Street products grew by 5% with the average number of products held per client rising by four per person signaling deeper client engagement.
Jerry: Meanwhile, our <unk> business continued to stand out as a core growth engine leveraging differentiated products such as our Seagull wisdom tree models. We ended the year with over 2500 model users and 383 billion in model assets, reflecting 20.
Jerry: 9% user growth and 28% model asset growth year over year with an accessible market of over 85000 advisors and 18 trillion in assets. We've made significant inroads in our focus has now fully shifted to growing model users.
Jerry: And model assets for 2025, we're projecting 25% to 30% annual growth in model users and 35% to 40% annual growth and model assets. Overall, we continue to see models as an important driver of sustainable organic.
Jerry: Growth in years ahead.
Jerry: Switching to operational efficiency disciplined expense management and operational focus and delivered strong results in 2024.
Jerry: Revenue grew 21% year over year, while adjusted operating income grew by more than 52% strategic balance sheet improvements, including preferred stock repurchases further boosted earnings growth.
Jerry: Looking forward, our operating and capital deployment strategies remain focused on enhancing earnings while maintaining flexibility for future opportunities.
Jerry: Finally, let's turn to digital assets and blockchain enabled finance, where we've made meaningful progress despite facing significant regulatory headwinds.
Jerry: With so many market participants now scrambling to get involved our early investments in this space and our commitment to innovation have positioned us at the forefront of this transformative movement.
Jerry: That said the journey has not been without its challenges as I mentioned regulatory headwinds and delayed our implementation timeline by about two years and we are still working to secure additional state level approvals, including Texas.
Jerry: Which are essential to unlocking new opportunities for growth. Furthermore, we do not yet have seamless access to the <unk> community, which is our primary target market.
Jerry: These obstacles that meet our path to full scale engagement slower than we initially anticipated. However, we are at a critical inflection point on and off ramps for blockchain assets in traditional payments are close to being activated which will provide the seamless access to the target market.
Jerry: <unk> that we've been building towards coupled with the additional state approvals that are now within reach in the blockchain friendly approach of the New administration. We believe we are well positioned to drive significant traction in 2025 to.
Jerry: To provide greater transparency and track our progress we will begin sharing quarterly updates on key metrics, including open and funded accounts unwisdom treat time.
Jerry: Early user transactions and total platform AUM as we entered 2025, we establish a baseline to grow from and we start with 26000 opened accounts in 2300 funded accounts unwisdom treat prime we also averaged.
Jerry: 143 daily user transactions in Q4.
Jerry: Reflecting regular engagement from those accounts and we now have 31 million in total digital AUM, including $3 million and wisdom tree Prime AUM overall, while we face delays and challenges along the way the pieces are falling into place and we are well positioned.
Jerry: To capitalize on the momentum ahead and establish even stronger traction in this exciting and transformative space and with that I'll now hand, it over to Jonathan.
Jonathan: Good morning, everyone and thank you Jarrod.
Speaker Change: As we reflect on 2024 I want to build on Jarrett points by highlighting three themes, one growth and revenue diversification to disciplined execution and three strategic innovation.
Speaker Change: Growth and revenue diversification remains a priority in 2025 and builds on 2024, which is a breakout year. In this regard we are committed to continuing to diversify revenue streams and grow revenue beyond the expense ratio.
Speaker Change: Our firm wide total revenue yield which includes the $28 million of other revenue booked in 2024.
Speaker Change: It is both more resilient and expanded faster in our expense ratio of revenue.
Jarrett: Also as Jarrett outlined.
Jarrett: We will continue to increase both the number of clients and deepen our engagement with those clients, which drives organic AUM growth.
Jarrett: Specifically.
Jarrett: We will further increase both model users and my belief and marble AUM per user models have become an essential tool for advisors and our solutions are extremely well positioned to meet the demand arising from this growing macro wealth management trend.
Jarrett: Reaching to disciplined execution.
Jarrett: The results are clear in the 2024 numbers.
Jarrett: Earnings per share was up 73% year over year, driven by 21% revenue growth expanded operating margins that drove a 52% growth in adjusted operating income.
Jarrett: And in 2024, we bought back over 19 million shares or roughly 12% of the shares outstanding.
Jarrett: These are the results of a disciplined approach and that will continue in 2025.
Jarrett: Looking ahead, we are employing this disciplined approach to how we deploy AI.
Jarrett: We are more fully embedding AI into our daily workflows, which is enhancing our scalability and will drive additional value creation through better and quicker decisions I expect you'll hear more from us regarding AI in the coming quarters.
Jarrett: Additionally, wisdom tree has been opportunistic around accretive capital deployment in years past, we've been incredibly proactive in the past two years.
Jarrett: I fully expect that we will continue with this more aggressive approach in 2025 and beyond.
Jarrett: That could include further stock buybacks.
Jarrett: We will also explore inorganic growth opportunities like M&A and partnerships, if they are accretive and strategic.
Jarrett: Our last theme strategic innovation has always been wisdom treats foundation.
Jarrett: From Etfs to self indexing, we've constantly anticipated market shifts.
Jarrett: For quite some time, we've been asking ourselves what could disrupt etfs the way Etfs disrupted mutual funds.
Jarrett: We believe the answer lies in <unk>.
Jarrett: Here are a few key developments.
Jarrett: <unk> real world assets.
Jarrett: Today are mostly in stable coins.
Jarrett: Has grown from near zero in 2017 to over 200 billion in AUM today.
Jarrett: This highlights the utility a public blockchain.
Jarrett: And actually shows a higher early growth curve in ETF adoption in the early nineties.
Jarrett: Wisdom tree has a stable point today and our token is money market fund and floating rate treasury funds are well suited for stable coin like solutions and demonstrates the broader potential of real world assets on public blockchain.
Jarrett: I am excited to say.
Jarrett: Wisdom tree connect has on boarded its first customers supporting token is money market funds on the theory.
Jarrett: From there.
Jarrett: We will look to expand the adoption of our total total <unk> product lineup, furthering including gold equities and the rest of our token ice bonds.
Jarrett: From the start we knew that obtaining state and federal approvals was critical.
Jarrett: And we have always been vocal about our commitment to responsible defy.
Jarrett: That's how we describe our vision of how the market will unfold in the coming years.
Jarrett: Simply it's the intersection of innovation and responsible regulation that will lead to a transformative user experience.
Jarrett: The new Pro innovation Trump administration offers a clear opportunity to expand our capabilities.
Jarrett: Like on and off ramps for blockchain assets and payments.
Jarrett: This new regulatory approach paves the way for faster approvals that will drive faster digital asset growth.
Jarrett: The momentum in token I's assets, it's accelerating and our early investments in this space position us well to capitalize on this trend.
Jarrett: In closing in 2024.
Jarrett: We've laid the groundwork for continued success and I'm excited about the opportunities ahead in 2025 and beyond.
Jarrett: Thank you and I look forward to your questions.
Jarrett: Alright. Thanks, Joe This is Jeremy Campbell head of Investor Relations similar to prior quarters. We're taking quick question from our shareholder base and then open it up to the analyst community.
Speaker Change: From a direct this question to will pack head of digital assets and well. The question is it seems like the new administration is a bit more friendly to crypto and blockchain what does the wisdom crews competitive landscape look like in a more open environment.
Will Pack: Good morning, guys. Thanks, Jeremy for the question. So first of all I think it's more than just a bit more friendly I think we're seeing a real step function change in this pro innovation stance versus where things were just a couple of months ago coming out of D. C.
Will Pack: So over the next coming years, I think there's going to be some legislation from Congress I think Theres also gonna be importantly, more regulatory clarity both from securities regulators and federal banking regulators and I think that's just going to be an overall catalyst for for wisdom tree efforts excuse me.
Will Pack: Speaking specifically about these efforts I mean, one space. It's obviously, a crypto exchange rated funds exchange traded products, it's been extremely competitive in that market its been competitive in Europe for a long time, but we were actually the leading flow gatherer in 2024 in Europe that suite of products is incredibly well positioned going forward and I expect we're going to continue to have.
Will Pack: Goodyear, particularly as more and more money comes into the space.
Speaker Change: The second part I'd answer is around <unk>.
Will Pack: I think Tony <unk>, particularly token is money market funds and treasuries has gotten very competitive very quickly and I expect more competition going forward, we feel like we're in a great spot, though and the investments we've been making over the past three years has really built a real competitive moat for us I'd highlight three things in that competitive moat. The first is our tactical.
Will Pack: Before so we've invested in building our token innovation platform. This is much more than just creating a token status structures smart contracts, it's public private key management in order to bring like all these filings and ideas actually into reality.
Will Pack: Second point I'd make is the 40 act. So that's you know wisdom for U S is bread and butter, we're incredibly familiar with that structure that has the highest regulatory standards in the U S for products and a lot of our efforts had been out of the 40 Act here in the United States a lot of the other early efforts from other competitors have been offshore in under regulated or unregulated structures.
Will Pack: That's allowed them to win some early money offshore, but I think it's going to be limiting certainly in terms of getting to U S retail overtime, and we expect particularly with the with the election theres going to be a lot more U S. Retail interest in this space use of stable coin overtime in.
Will Pack: And the third point I'd make is just broader regulatory innovation you know anyone can copy of fund filing that's not hard to do but it's much harder to put together both the technical platform and a suite of regulated and he's around that including the New York Trust Company. For example, so this is important both for unlocking the user experience benefits of tokens nation, but also for wisdom.
Will Pack: We are unlocking the true economics of this.
Will Pack: So to summarize definitely expect more competition going forward, particularly post election, but we feel like we're incredibly well positioned to date with these competitive moats that I highlighted.
Will Pack: Back to you.
Speaker Change: Great. Thanks, Operator, you can go ahead and open up the lines for questions from the analysts.
Speaker Change: Thank you we will now 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 yourself from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys one Bob.
Speaker Change: Please while we poll for your questions.
Speaker Change: Okay.
Speaker Change: Our first questions come from the line of Brennan Hawken with UBS. Please proceed with your questions.
Brennan Hawken: Hi, good morning, Thanks for taking my questions Johnno I'd like to start you you said something that caught my attention in your prepared remarks on M&A and partnerships.
Speaker Change:
Speaker Change: I know that you don't want to tip your hand.
Speaker Change: So you know please understand the spirit of the question, but are there any areas or capabilities that are of particular interest as you explore this.
Well.
Speaker Change: First.
Speaker Change: We've acquired so it could be ETF sponsors we've acquired two already.
Speaker Change: It could also include product lines of other asset managers, we've done this before where other asset classes.
Speaker Change: It could also be in the area of technology now that's very broad, but we see in technology.
Speaker Change: Potential for transformative strategic partnerships.
Speaker Change: But I guess the bottom line.
Speaker Change: US is we're on our front foot with leaning into this we're seeing a lot of conversations and opportunities.
Brennan Hawken: Okay Brennan.
Speaker Change: Yes.
Speaker Change: I get it and I'd love to follow up on that question on the New administration on crypto because we've seen it.
Speaker Change: <unk> seen some action already.
Speaker Change: The SEC rescinding.
Speaker Change: The rule.
Speaker Change: Around banking entities we.
Speaker Change: I've seen.
Speaker Change: More recently, the SEC approving some spot bitcoin Etfs.
Speaker Change:
Speaker Change: So when you look at the earlier of the regulators and the administrations, what's been most interesting and what are you watching for.
Speaker Change: Two to really fire up the excitement around potential change here.
Speaker Change: So.
Speaker Change: What are the low hanging fruit had been the FCC.
Speaker Change: And the just the launching of crypto Etp's, that's that was sort of the easy <unk>.
Speaker Change:
Speaker Change: Where the regulators on the past four years, the prior administration, where most.
Speaker Change: Rest of it was by discouraging.
Speaker Change: The banking industry from touching the asset class in any way and when you think about what we're trying to do.
With wisdom tree Prime and wisdom tree connect in many ways were trying to main stream the asset class where it can sit next to other assets, but also other banking services.
Speaker Change: And so.
Speaker Change: We ship and so I sense that that's changing with from the banks very very quickly you know we shared these new metrics with you.
Speaker Change: And to put it all into perspective.
Speaker Change: We're not even at the starting line as Jared said, we're probably two years behind.
Speaker Change: The cost of the regulatory environment over the last four years not all states.
Speaker Change: Have given us the approved of licenses for money transfer.
Speaker Change: We haven't been able to get the on and off ramps to payments and to the chain community because the banks have been so afraid to let anything from the unchanged community to touch their rails.
Speaker Change:
Speaker Change: It's been you sense that there really is a change coming.
Speaker Change: And in our conversations it is coming.
Speaker Change: We sense that.
Speaker Change: To build on the.
Speaker Change: To add a little bit more perspective on the.
Speaker Change: Metrics that we showed though I do want to say you know that we've been just incredibly prudent in our spending to date.
Speaker Change: And I just wanted to mention that all of our spending is.
Speaker Change: <unk> been in our guidance for the last four years.
Speaker Change: Including this year.
Speaker Change: That.
Speaker Change: Digital assets <unk> crypto the unchanged community today is a multi trillion dollar opportunity and we expect it to grow significantly from here and as.
Speaker Change: Will said as I said in my remarks, as well you know we're excited by the New administration you. It feels like it's an inflection point for us and when I.
Speaker Change: Blake to my background, and obviously my background just Etfs.
Speaker Change: And I want to be careful that I don't over index to that experience, but I do see significant overlap between <unk> and Etfs.
Speaker Change: Both our innovative regulated financial services books.
Speaker Change: <unk> started with a retail focus their transparent both reduce friction and add to the user experience when you think about Etfs.
Speaker Change: The timeline.
Speaker Change: The Amex spent seven years in front of the SEC before they got limited approval.
Speaker Change: Then between 1993 in May of 2000, there were only three etfs in the market.
Speaker Change: And then in June of 2000, and Barclays Bank made a bold bet and launched the Ishares franchise and the industry came alive. So my point is that if you judge the opportunity.
Speaker Change: Of Etfs by how long it took.
Speaker Change: For how long.
Speaker Change: For the market to develop.
Speaker Change: You might have abandoned it or missed the opportunity.
Lately or at least under invested against the opportunity.
Speaker Change: I guess, what I would say my perspective is in many ways. This new administration it feels like it's the year 2000.
Speaker Change: With the crypto <unk> market and that we have laid the foundation for faster regulatory approvals and faster growth going forward.
Yeah.
Speaker Change: Yeah, I I hear your point about over indexing.
Speaker Change: And I'm trying to stay mentally flexible to it's a little hard, but I, but I hear you and thanks for the color.
Speaker Change: Thank you.
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: Okay. Thanks, guys.
Speaker Change: With all the momentum in those crypto.
Speaker Change: <unk> in Europe could you remind us of the individual offerings you have over there.
Speaker Change: How that might look in six months to 12 months, just as you expand and grow that in Europe, and maybe in other geographies.
Speaker Change: Jeremy Schwartz, our CIO do you want to start here or is it will.
Speaker Change: I could give or give some context. So we'll mentioned this is Jeremy Schwartz.
Speaker Change: Talking here will mentioned, we were a leader in crypto currencies for Europe last year.
Speaker Change: You know what we have a broad suite, we started with bitcoin, but we now have from bitcoin and ethereum, obviously the top two but we have so Lana we have card dano polka dot we have a basket that's equal weighted between bitcoin and a theory them, we have a a broader market portfolio, we have in all coins.
Speaker Change: So it shows you that Europe has been we talked a lot about the innovation in the U S coming in the New administration Europe was sort of a head of the U S, which is not often the case, but they have been in these product offerings and you know I think you're seeing more filings in the U S. But we're also in the market we've been in the.
Speaker Change: Market established in Europe, we expect a good things. We also have ripple a ripple was one of our faster growing.
Speaker Change: Cryptos last last year up to.
Speaker Change: Around 250 300 million based on the market price on the day, but it's been a good robust offering we plan to do more.
Speaker Change: And Randy just to add a.
Let me just add Mike.
Speaker Change: <unk>.
Speaker Change: Under this new administration in the U S. You would expect to see the industry to rollout in the U S. In.
Speaker Change: A similar fashion I would expect to what you saw in Europe. So.
Speaker Change: The administration Hasnt changed it wouldnt have been easy to get past just bitcoin.
Speaker Change: But I do believe you'll see a lot of.
Speaker Change: Innovation and product to come to market this year and in the coming years in crypto in the U S.
Speaker Change: Got it you do think that's possible and twenty-five yes.
Speaker Change: Yes, I do.
Speaker Change: Got it great.
Speaker Change: Can I ask on those funds you mentioned in Europe.
Speaker Change: Power staking fees treated.
Speaker Change: Well is that you would that be union or Jeff yeah.
Speaker Change: Yeah I can take this so I mean your question is around proof of state coins that might be held physically in these products and.
Speaker Change: When we can't win the coins are staked right and generates a stake in the old stinking reward some of that is shared with <unk>.
Speaker Change: Investors some of it's shared by wisdom tree and it's all kind of a function of how much has staked in those products.
Speaker Change: As well so I think it's a good investor experience.
Speaker Change: And it's something that Oh awesome other issuers have been offering.
Speaker Change: Got it hey, thanks, guys.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question is coming from the line of George Sutton with Craig Hallum. Please proceed with your questions.
Speaker Change: Yeah.
Speaker Change: Thank you. Good morning. This is Logan on for George I appreciate the color on some of the prime and giving the metrics.
Speaker Change: Kind of on that on that topic I was wondering if you could give us just a little bit more.
Speaker Change: Understanding that it's very early days and there's still some regulatory stuff to work through anything you can give us on kind of what are the use cases that seem to be hitting home. So far I mean, whether it be funds that people are gravitating towards about you guys came out with the ability to spend out of certain funds. You know a few months back just kind of the use cases that seem to be working in the early days.
Speaker Change: Well that's you.
Speaker Change: Yeah, absolutely. So I think the biggest thing is token as money market funds, both with century Prime and wisdom tree connect and the functionality that a box for for us to Tickers W. T. G X X the wisdom tree government money market Digital fund.
Speaker Change: And I'll cover your wisdom tree Prime what are the great use cases that we've highlighted is that you can find with Fiat in the near future will support stable core funding you know immediately invest into the money market fund this earning.
Speaker Change: A great yield right now right the risk free rate for short term rates and we also support spending on top of that through the wisdom tree profit piece, a debit card, which you know just anecdotally, it's something that people love and love to use the other point I'd highlight is around wisdom tree connect where we only launched this platform in September we're just really going to.
Speaker Change: Now we've already got clients onboard it I think we've got an exciting pipeline that we'll be able to update you guys on over the coming weeks and months.
Speaker Change: But that use case is very clear in terms of on chain firms wanting yield in diversification right. So think of a pool of capital that is held on chain by some sort of Dow or other institution, that's wanting to invest in things other than just you know crypto tokens or stable coins that have no yield right and so for that being able to seamlessly add.
Speaker Change: Access auto guys money market fund immediately earn that yield it's just a better experience not to mention the kind of additional regulatory and security comfort that a 40 Act money market Fund provides so we're really off to the races with wisdom tree connect and I'm excited for what we're going to be doing with that over the course of 2025.
Speaker Change: I appreciate that that's helpful. And then maybe shifting to the advisor strategy. I mean, you guys have talked about expanding the portfolio of consultation services recently.
Speaker Change: And then my understanding is that you know when you guys do a consultation you have a better win rate better ability to grab a U M.
Speaker Change:
Speaker Change: Just maybe any color you can give us on kind of what that you know what the expansion really looks like and how big how significant is that to the overall strategy going forward as we think about I mean, I think you guys talked about 25% to 30% growth. This year I mean is that something you're going to look to to expand over the next few years or how significant is that.
Speaker Change: Jarrett would you like me to take it or do you want to take it.
Speaker Change: I can kick it off.
Speaker Change: Okay.
Speaker Change: Look I think I think that's it.
Speaker Change: It really the right question you know the last couple of years with our whole model business.
Speaker Change: We've been looking to establish ourselves and that meant getting through gatekeepers and we kept talking about what's our addressable.
Speaker Change: Our accessible market, how many advisors have access what kind of advisor assets have access to our models.
Speaker Change: I think we've checked that box, we've now got as we've said more than 85000 advisors.
Speaker Change: Have access in over 18 trillion of assets, which is in about two thirds of the advised assets. So now our focus has turned to penetrating that market and that's where we talked about you know we want to grow our model users by 25% to 30%, we're going to grow our model asked.
Speaker Change: <unk> by 35% to 40% because what were doing while we're also growing the users we're going deeper with the existing users and that'll get a multiplier effect in growing the model assets, so portfolio reviews or consultations.
Speaker Change: Another major tool in penetrating that market and we do find that when we offer that service, it's a really good.
Speaker Change: Advisor friendly service, which is really our goal is to just help our advisors be better.
Speaker Change: So it's a tool that is very popular.
Speaker Change: Then on our side it draws us closer to the advisor we now have a better idea of what they're working with what their portfolio to look like and it allows us to help them in a deeper way. So that's part of it as a major part of this strategy, that's going to help us drive engagement and the overall models business this year and beyond.
Speaker Change: <unk>.
Speaker Change: Great answer Jack the only thing I'll say is that it's just turned on.
Speaker Change: A more dynamic way just nap so that.
Speaker Change: That one particular portfolio consultation just turned on so great question. Thank you.
Speaker Change: Any other.
Speaker Change: No that is it I appreciate you taking my questions.
Speaker Change: Thank you our next questions come from the line of Chris Kotowski with Oppenheimer. Please proceed with your questions.
Speaker Change: Yeah, I was just going to say thank you for slide 13, it gives us a baseline I'm just curious about the statistics are 26000 accounts and are only 2300 of them funded.
Speaker Change: Who's the opening all of those accounts in and why would one open the account it.
Speaker Change: I wasn't intending on using it or.
Speaker Change: Or do you expect those people to start funding it or.
Speaker Change: It just struck me as odd.
Speaker Change: Well when you take the first shot at this.
Speaker Change: Yeah, absolutely. So I think I'd make an overall comment that I think for Fintech apps generally I think the baseline ratio of funded accounts to open accounts is probably lower than you might intuitively expect right you like why would this person give me their social security number if theyre not planning on funding and in all the conversations we've had all the data we've seen that's just a a consistent.
Speaker Change: In retail Fintech fab generally right.
Speaker Change: So I think just lowered your baseline rate for what that should be but we definitely want to drive this number higher like what we're seeing today as we want it.
Speaker Change: To drive this number higher and I'm in these numbers every day and I can tell you over the past couple of weeks and months that number is increasing as you know we're doing things like improving the onboarding process right or improving funding methods targeting better in our digital marketing. So I expect that number to go up we will definitely be re marketing to people who've opened at accounts right. These are people.
Speaker Change: That we can easily remarket to they can easily fund from there. So I expect to convert some percentage of them and then just a new accounts coming through we expect them to convert to funded users more quickly.
Speaker Change: Okay, great. Thank you just touch on unchain community in the on ramps for a second though just reiterate.
And this is a point that Jared made in the script and John touched on earlier as we view our primary target market being the unchanged community, which we just can't well support yet without stable point on and off ramps. So this goes back to kind of uncertainty from the federal banking regulators that this is just something that we've not been able to bring forward yet but.
Speaker Change: We've got a good plan in place over the course of the first half of this year to add that product feature which will really allow this community to fund more easily and get the benefits of.
Speaker Change: Diversifying and yield in this way so when that happens I think you will better be able to judge that that ratio.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thank you there are no further questions at this time I would now like to hand, the floor back over to Jonathan Steinberg for any closing remarks.
Jonathan Steinberg: Thank you, yes, I would like to make a final point.
Jonathan Steinberg: To the analysts I would say humbly, we deserve a significant expansion of multiple.
Jonathan Steinberg: Our growth rates, both historical and going forward, including year to date momentum with over 1 billion in inflows year to date justifies it.
Jonathan Steinberg: Our business model.
Jonathan Steinberg: AUM of 115 billion.
Jonathan Steinberg: Absolute record this morning.
Jonathan Steinberg: Only 300 employees, it's the envy of the industry.
Speaker Change: Our areas of focus wisdom tree is levered to three of the biggest trends in asset management.
Speaker Change: Mobile Etfs model models and solutions in <unk>, the only thing that we don't have as private assets.
Speaker Change: My point is the.
Speaker Change: The value of the franchise, it's not reflected in our billing and a half market cap, it's very frustrating and I guarantee you outsiders looking in the a lot of value that's not reflected in our stock today.
Speaker Change: So again I feel strongly.
Speaker Change: That it's really justified that are multiple expense I'll just leave you with that thought so thank you all for your interest and we'll talk to you next quarter have a great day.
Speaker Change: Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect your lines at this time.
Speaker Change: Have a great weekend.
Speaker Change: Okay.
Speaker Change: Uh huh.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.