Q2 2025 WisdomTree Inc Earnings Call
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The question and answer session will follow the formal presentation. If anyone requires 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.
Please go ahead.
Good afternoon. Before we begin, I would like to reference our legal disclaimer available. In today's presentation, this presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements about our ability to achieve our financial and business goals and objectives and drive stockholder value. This includes our ability to successfully implement our strategic goals relating to our acquisition of Serious Partners.
A number of factors could cause actual results to differ materially from the results discussed in forward-looking statements, including, but not limited to, the risks set forth in this presentation in the risk factor section of WisdomTree's annual reports on Form 10-K for the year ended December 31, 2024, and in subsequent reports filed with or furnished to the Securities and Exchange Commission.
Recently assumed no duty and does not undertake to update any forward-looking statements.
Now, it is my pleasure to turn the call over to WisdomTree, Inc. CEO Jonathan Steinberg.
Thank you, Jessica. Thank you, everyone, for joining us today.
Before we go through our second quarter results, I wanted to begin by discussing our recently announced acquisition of Cirrus Partners.
Honor, during our earnings call six months ago, we stated that we were looking to deploy capital in a way that is accretive, accelerates growth, and gives us exposure to private markets.
We've been disciplined and deliberate in that effort, and today we're delivering on exactly what we said we would do.
Last night, we announced that WisdomTree is acquiring Serious Partners, a leading U.S. farmland investment manager.
This transaction adds real strength to our business today and even more potential over the long term.
Serious expands our platform in a way that's accretive.
Strategic and highly aligned with where we see the future of asset management heading.
While others are paying up for private credit platforms, we focused on opportunities that fit our strengths.
This is a business where our institutional expertise and distribution capabilities can make a meaningful impact going forward.
Where we can help drive the next stage of growth.
Looking at the numbers.
This isn't a creative transaction that accelerates both revenue growth and our margins.
By 2030.
We expect to raise at least 750 million into Farmland. Focus strategies, which would more than double serious current base and performance fee revenues
WisdomTree has long been levered to ETFs and models, and is a pioneer in tokenization with our efforts over the past five years.
This acquisition adds another secular tailwind to our platform.
Private markets, and specifically U.S. farmland, which we believe is one of the most stable and underpinned, underpenetrated asset classes in all of asset management.
Let me explain why.
This team is the right partner, and the Farmland category is such a compelling opportunity.
Serious is the premier partner to the American farmer.
They are among the top 5, us, farmland managers. Nearly $2 billion of farmland has delivered 10.3% net returns for investors since inception.
They bring deep operational expertise and a differentiated footprint in the Upper Midwest, where water is abundant and agricultural fundamentals are strong.
Product structuring and technology can help bring farmland investing to a much broader base of clients, and we see a credible path to managing $10 billion in farmland assets 10 years from now.
Let's dig into the characteristics of farmland as an asset class.
If you turn to slide 5.
You'll see a 20-year risk-return comparison of asset classes.
Farmland delivers equity-like total returns, approximately 10% per year.
With significantly less volatility.
These returns are driven by both appreciation and a strong income component, with unlevered rental yields between 4% and 5%.
What's more, farmland has powerful diversification characteristics.
At.
The, as the lower left chart shows,
Returns are negatively correlated with equities and other traditional asset classes, while being positively correlated with inflation.
That makes Farmland not just a performance play, but also a tool for risk mitigation and inflation protection.
Now, let's turn to slide 6 and see how this plays out in real-world scenarios.
This slide shows farmland performance during three major extended equity drawdowns.
The 2000 technology bust.
The 2008 financial crisis and the 2022 rate hiking cycle.
While equities declined between 18% to 46% during those drawdowns.
Farmland returned positively between 17% and nearly 30%.
That's a dramatic difference, and it makes a strong case for adding this uncorrelated asset to more portfolios.
We Believe many of our existing clients will be interested in this exposure and we're evaluating various ways to bring it to them potentially even including Farmland as in the ca as an allocation in our model portfolios.
now, if we flip to slide 7,
I want to spend a moment on Cirrus performance.
And what sets them apart?
Even before you factor in any optionality from solar.
AI data centers or water.
There is consistently outperforms. The broader Farmland benchmark.
Their strategy is focused and disciplined, targeting high-quality row crops and specialty farmland, primarily in the Upper Midwest, where water availability supports durable yields.
This thoughtful, data-driven approach has resulted in net returns of 10.3% since inception, and above the national cropland index during all time periods.
And on top of the strong.
Core.
They've developed strategic overlays that can further enhance returns.
First Solar.
There is a tactical overlay strategy where they write solar lease options on qualifying farmland. These contracts alone can double rental income and, to fully exercise, can either generate 5x rental income or support a high multiple.
Sales of the properties.
Second, AI data centers.
Certain properties have been acquired by developers building data centers to support AI infrastructure, generating 10x returns in isolated cases. These are lower probability, but high-upside events that add attractive optionality to the investment profile.
Finally, water rights. Serious is actively exploring water management opportunities in drier regions like the Colorado River Basin.
Resource constrained. Future driving even faster growth.
So to summarize.
With this acquisition.
We're entering a resilient income-generating asset class that complements our existing platform and opens up the door to long-term growth. It diversifies our revenue, enhances the ports' operating margins, and gives us new ways to serve clients.
We're excited about the path ahead with that. Let me hand the call over to Brian and Jarrett to walk you through the deal structure, our growth targets, and our second quarter results.
Then we'll take all your questions. Thank you.
Thank you, John.
I'm going to spend a few moments covering the deal terms, accretion, and long-term growth targets.
Consideration paid for this acquisition includes $275 million upfront and cash.
Consideration also includes an earnout payable in the year 2030 of up to $225 million.
Contingent on achieving a 5-year revenue CAGR.
Of 12 to 22%.
During the earnout measurement period of January 1, 2025.
Through December 31st, 2029.
No earnout is payable if revenue growth is less than 12%.
And the earnout is capped at $225 million upon achieving 22% revenue growth or more.
next slide.
We expect this acquisition will immediately increase our fee capture and expand our operating margins.
Although we can give no assurance regarding the nature of our financing and related terms, we have included an illustrative accretion analysis. Assuming the acquisition is debt-financed.
This analysis also highlights operating margin expansion of over 200 basis points.
And revenue capture increases from 38 basis points to 41.
The information on this slide is for illustrative purposes only, as the underlying assumptions may not ultimately materialize.
Next slide.
As we look forward, we are targeting $750 million of organic AUM.
Into farmland-based strategies over the next 5 years.
Which would double our base for your revenues in 2030 from current levels.
Performance fees are predicated on performance and are highly correlated to the mark-to-market of the overall farmland portfolio.
Long-term farmland returns have demonstrated appreciation of approximately 6%.
Implying at least 1.5 to 2 times growth in performance fees over the next 5 years.
We anticipate this acquisition closing in the fourth quarter.
That covers our prepared remarks over this pending acquisition.
Now, turning our attention.
To our second quarter results.
Next slide.
We are delivering strong sustainable momentum, generating $6.6 billion of inflows year-to-date through June.
Flows are broad and diverse, spanning regions, asset classes, and strategies.
We've generated approximately $3 billion into our U.S. listed products.
$3.3 billion into our European products and more than $300 million in digital assets.
And we are capturing interest across our International Equity, U.S. Equity, and fixed income strategies.
Our European Defence Fund with AUM of approximately $3.5 billion.
Continues to outperform, attracting nearly $2.1 billion in flows in the quarter and over $2.8 billion year to date.
This cross-asset, cross-regional momentum is driving organic growth at an annualized rate of 12%.
Combined with favorable market conditions, these inflows have propelled their AUM to a record high of $126 billion as of June 30.
With U.S. listed AUM at $85.2 billion in Europe, at $40.5 billion.
Both all-time highs.
50 million at June 30th and approximately 500 million today.
Our business is operating from a position of strength.
Marked by record, robust inflows and consistent growth across all regions.
Next slide.
Revenues were $112.6 million during the quarter, an increase of 4.2% from Q1 and up approximately 5.2% versus the prior year quarter, driven by higher average AUM.
On a year-to-date basis, our revenues have grown 8.3%, driven by higher average AUM and higher other revenues attributable to our European listed products.
Partly offset by a lower average fee capture.
Our adjusted net income for the quarter was $25.9 million, or $0.18 per share.
Our adjusted net income excludes $2 million of acquisition-related costs.
And other miscellaneous items.
Next slide.
Now, if you could comment on our forecasted guidance.
Our strong organic growth, including the recent success of our European Defence fund and AUM expansion across our distribution platforms.
has led us to update our third-party distribution guidance to range from 14 million to 15 million.
We are also monitoring foreign exchange headwinds to our expense guidance.
As expenses of our international business are denominated primarily in euros and pound sterling.
Today's exchange rates, if they were to hold during the remainder of the year, would have an adverse impact on our discretionary expense guidance by approximately $3 million.
This item is offset by incremental revenues earned on foreign-denominated advisory fees and other revenues such that the overall impact of foreign exchange on our overall net operating results is immaterial.
Our weighted average diluted shares were 146.6 million during the second quarter.
There are no incremental shares associated with our convertible notes.
As our average stock price during the period was less than the conversion price of our notes.
An illustration is included within the appendix to our earnings presentation to disclose the impact of incremental shares related to our convertible notes at today's stock price.
With respect to the pending Cirrus acquisition, our overall expense guidance for the year remains largely unchanged.
The illustrative accretion analysis included in our materials.
Offers a framework for updating your models to reflect the potential impact of the transaction.
Looking ahead, we remain focused on creative capital deployment opportunities, including share repurchases and other strategic initiatives.
That's all I have. I'll now turn the call over to Jared.
All right. Thank you, Brian. And hi, everyone.
At the start of the year, we laid out a vibrant Vision 1 that was ambitious but grounded in discipline and focused on delivering differentiated value for our business. Now, midway through 2025, we can confidently say we're not just tracking to that Vision; we're outperforming it.
This quarter, we hit on every cylinder of our growth engine. We posted record results across the US, Europe, and digital assets, fueled by more than $6.5 billion in net inflows in just the first half of the year. These flows weren't concentrated; they were broad and diverse, with the US, Europe, and digital all contributing. We are now fully focused on carrying that momentum forward into the second half.
Yushen, in Q2, we also announced a strategic investment in Chorus.
And this partnership gives us greater exposure to direct indexing, which is one of the fastest growing segments in asset and wealth management. We believe this move will accelerate our growth in other revenue and deepen our edge in the model portfolio space. Speaking of models, we've already exceeded our 2025 full-year AUA target with more than $5.2 billion in AUA.
We're also on track to hit our advisor growth target as well, now with more than 2,800 advisors using our models.
Looking ahead, we'll use our chorus relationship to make it even easier for advisors and broker-dealers to adopt our models with no additional tech trading or rebalancing costs. That's solving a pain point and unlocking sustainable, scalable growth.
Let's now turn to digital assets, where we're seeing meaningful traction. AUM grew to $350 million at quarter end and now stands over $500 million today, driven primarily by institutional flows through our Connect platform. We are now working with 10 unique clients, and our pipeline continues to grow.
Prime is also progressing, and we just received approval to operate in Texas. Now, we only have Virginia left before we have full countrywide coverage and our on-chain transfer capabilities launched this fall.
Representing a major milestone that unlocks new use cases and deepens our product utility like an ETFs. We know the playbook: grow clients, grow while it shares scale with discipline.
Now, we've also been getting a lot of questions about our stablecoin strategy, especially with Circle's IPO and the Gensler Act in the news. So here's our take: the stablecoin market is projected to grow from $250 billion today to $3.7 trillion by 2030, and we don't see any scenario where that market grows by more than 10x and WisdomTree doesn't meaningfully benefit.
Our stablecoin strategy is built on two products: USD W and WTG.
USD W is a purpose-built stablecoin issued by our New York charter Trust Company.
It powers tokenized investing in Prime and is designed from the ground up for real-world finance, not just crypto trading. It will expand across platforms and chains, reflecting our chain-agnostic infrastructure.
One of USD W's key advantages is structural.
Because our customers receive distributions in USD W, AUM doesn't decline with every dividend or interest payment, giving us a persistent asset base and a powerful structural edge over traditional ETFs. And as more assets move into USD W, we earn net interest income on how balances create another scalable revenue stream.
Wtg is our 40 act money market fund and acts like a yield bearing stable coin. It's already being used as a reserve asset by other stable coin issuers and as a yield solution in on-chain Treasury workflows and importantly, it's interoperable live today across 6 different black chains with seamless functionality across ecosystems and by owning the
Infrastructure, across issuance, reserves, and treasury tools. By being chain agnostic from day one, we've built a unified platform that's ready to scale with the digital economy.
Now we've often said we're underrecognized, but that's beginning to change in 2025. We've received some major honors.
Fortune ranked US 1 of America's most Innovative companies number. 58 overall, number 2 and process, Innovation number 3 in culture FTF news named US 1 of the best digital asset processing Solutions.
Etf.com and we were named best ETF provider in Europe from the online money Awards and these Awards matter, they validate our approach which is innovation-led infrastructure, driven and client centered. And now with Cirrus joining the fold, we add even more horsepower to our growth engine opening up exposure to the structural Tailwinds in private markets and further enhancing our asset mix and earnings power.
So to wrap it up, these are foundational wins, and we're building a platform for continued momentum, greater impact, and sustained outperformance. We said in February that 2025 would look like this, and here we are, delivering on every front. With that, we will now open it up for questions.
We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate that your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset. Before pressing the star keys, please hold for a moment while we pull for questions.
19. Our first question is from Chris Katowski with Oppenheimer and Company.
Uh yeah, a question about serous. Uh, first of all, I'm wondering about uh where they raised funds from and the fund structure. Uh, are they institutional draw down funds or retail Evergreen vehicles and can you talk a little bit about the and, and fundraising plans for the future?
Certainly, uh, thank you for your question. Um,
So, first of all, let me just say that, you know, with this acquisition, we're taking all of the employees of Sirrus, 24 people. It's tremendous.
Easy integration. And what we're really doing is, we're integrating their, uh, investment engine. They're they're prowess in investing and tying it to our distribution. But, um, in terms of their clients, um, Jeremy Schwarz, would you, uh, answer, I think it would be best coming from you.
Sure, um, happy to and, you know, I think you you mentioned the Evergreen or the traditional draw down fund. It's, it's a combination, it's an evergreen fund, so it's not a draw down fund. It it's meant to be as they, when Perry, you've set it up, it was meant to be the real partner for the farmers. And if you are having to sell the Farms, every time you're having to distribute, your traditional private Equity Fund, you wouldn't be a great.
Partner. So, they were forward-looking in setting up this Evergreen structure, uh, and so, you know, their client base is really a cross-section of of, really, our client base in a way. So institutions raas advisors. Uh, and so, you know, I think we the Synergy is that we've got a strong distribution team that will help them, uh, raise capital. And uh, this is a nice diversifying asset class for our traditional client base as well.
Okay. And then as, as a follow up, uh, I'm looking at slide 10, the uh, accretion example and, uh, you know, looking at the Sarah's, uh, pnl. It looks like a significant amount of their revenues come from performance fees. And so, I wonder if you could talk a bit about how durable consistent and predictable, those are
I'll take this. Yep, I'll take this. Hey, Chris, thanks for the, uh, question. Um,
The performance fees will largely be driven by the underlying mark on the Farmland portfolio. But let's walk through the economics of the fund itself, because the performance fees are computed on the funds. Bottom line,
If you think about it, we own roughly 540 properties.
Those properties are leased to farmers, and those leases are generating a steady stream of rental income, with average yields of 4%.
That's rental income. That's recognized by the fund, and it's fairly steady.
And then the fund will also benefit from marketing to market the overall Farmland portfolio. So there's roughly $1.8 billion of AUM today. That's largely the value of the 540 properties.
So you make your own estimates about market appreciation, but over the long term.
Farmland appreciated at roughly 6% on average, and it has had only 9 down years since World War II.
You have the rental income, and you have the unrealized recognized by the fund. You then deduct the fund-related expenses and the management fee.
And that's what gets you to the net profits of the fund, which serves as the basis for the performance fee.
The performance fees. They're not episodic.
Um, you don't need to, uh,
Recognized, or it doesn't require asset realizations. The performance fees are earned on the net profits of the fund, and it's largely driven by the mark.
The rental income earned by the fund generates sufficient cash to pay the performance fees.
And what we just walked through didn't touch upon the embedded optionality in the portfolio regarding solar and AI data centers, as mentioned in John's prepared remarks. About a third of the farmland is under solar lease option.
if those options are exercised,
The farm that was generating 4% yields on average is converted to solar.
And those solar farms will boost the rental income 3 to 5 times versus what the farm had been generating. And that's incremental upside.
The data centers also serve as a real opportunity.
Data centers could attract valuations 10 times the current mark of a farm, meaning selling a farm in the portfolio at 10 times today's value. And again, that's additional incremental upside; the performance fee is going to ebb and flow depending on the market environment. But again, we're talking about an asset class with price returns of 6% on average and only 9 down years since World War II.
And the asset class. It it contains embedded upside when considering the solar and AI data center opportunities. Um, hopefully that helps clarify things. Yeah, and just the Evergreen fund structure is it like kind kind of what we see from some of the other alternative asset managers where, you know, the your investing in illiquid assets and so therefore they're, you know, I mean typical is like the it's 2% a month or 5%, a quarter kind of limits on withdrawals is is a similar structure to that.
Hey, Jeremy Schwarz, can you confirm for me that it's an annual withdrawal, right?
Yes, that's my understanding as well. Right. Okay, right.
Alrighty, thank you. That's it for me.
Our next question is from George Sutton with Craig Howland.
Thank you. I was particularly compelled by the theme that very few of the large asset managers are in this farmland space. You mentioned that you may add this to your model portfolios. I'm wondering why in the world you wouldn't do that given the competitive opportunities.
Thank you for that. Um, know. So, um, I think that we will look for opportunities, um, like adding them allocation store models, maybe even adding, um, a sleeve into selected ETFs where it would be appropriate. Um, and so again, it is such an attractive asset class. Um, I think it's um, underappreciated in the world, and to your point about, um,
You know, not having to compete with, um, the, you know, the black stones and the black rocks of the world. It really is pretty extraordinary. That is a $3.5 trillion market that's so highly fragmented with such attractive return potentials. And we're really finding that we're competing in all seriousness, we're competing with the...
Mormon church. They're the largest owner of Farmland, Bill Gates is. And some of his entities I think make up the second largest investor and we are the fifth largest investor. Um and so we're really coming at this with real scale. Um and I think it's really poised this uh platform to grow. We've been faster. So I thank you for that question.
So, I'm curious with respect to the models, and it's great to hear that you've hit your goals for the year. I don't believe you updated your goals for the year. I'm just curious what the expectation is for the model's business for the rest of the year.
Got it.
Set out goals at the beginning of the year were on track in terms of number of users. Um, but actually that compounding effect of getting new people on an existing people to do, more has been even better than we thought. And that's where it's driven that above Target, um, result uh, for the rest of the year. It's just to continue the progress. Just keep pounding away continued, uh, execution. Um, and we'll think about it, you know? Generally speaking, you know, that was a departure for us by giving that kind of Target, uh, historically, we give expense guidance, but we don't give anything around Revenue, guidance. We leave that to you. This was an exception because we wanted to show our confidence. Um, right now we're not updating um, any of those uh forward-looking thoughts. But I mean our expectation, as I said, is to continue.
To continue to grow, we will execute on what I said: get new users and engage further with existing users.
Jeremy, I have one other question, and congratulations on the approval from the great state of Texas. You've been fairly quiet in your marketing, although you're well ahead of the market in terms of WisdomTree Prime.
What does this mean for your ultimate event type marketing going forward?
Will peek our head of digital assets. Could you answer this?
Yeah, absolutely. So, you know, glad to be able to talk about our success in digital assets this year. I mean, we've been very proud of the AUM growth we've had. And I think certainly, you know, what Jarrett touched on with our overall stablecoin strategy, I think you're really seeing that play out with the AUM growth of WGX.
So you know as we've talked about in the past, I mean it wasn't really a focus of the first half of the year to grow. Whizin free Prime accounts, it's really been about growing a expanding our functionality and getting approvals. Uh, we're well on our way, we've certainly done a lot of AUM growth. Like I said we've added functionality. Uh, we've got approvals in Texas as well, which I think sets us up very well with, you know, a couple more things to start expanding Marketing in the fall but I wouldn't really say it's like 1, Big Bang marketing event, right? We want to be very prudent with shareholder Capital, but I think we've got a great plan leaning into on-chain transfers leaning into the overall growth of the stablecoin ecosystem, which is truly 1 of the stories of financial services, this summer and uh leaning in on that in the fall and uh growing accounts well from there.
Alright, thanks guys.
Our next question is from Michael Cyprus with Morgan Stanley.
Oh, hey. Good morning. Our guests, good afternoon. It's fine. Thanks for taking the question on the, uh, the Serius acquisition. I was hoping you could elaborate a bit on how you plan to help accelerate the growth of that property, the steps you'll be looking to take. And then, if you could just elaborate a bit on the profitability of the management fees, uh, what that looks like versus the profitability on the performance fees. And how you expect the management fee growth of Serius to evolve over the next couple of years? What sort of growth rate are you anticipating there?
So, let me take the first part on how we, um, plan on accelerating, uh, their flows. So first, as I said, you know, uh, this is a very easy integration.
Serious is a 24 person team and we're taking all 24 people, and we have this 5-year earnout, so we're completely aligned. Um, so that's very, very easy. Um, really, for the last 17 to 20 years, Cirrus has really been focused on building their investment prowess. Um, uh, executing acquisition, Farmland, by Farmland, building that Network, and they've really proven to be the best investors in the space.
We think that our distribution particularly in the United States, our 50 plus uh PE person team will be very constructive in bringing their investment prowess to a much broader Financial intermediary, family office High, net, worth teams. Um and so that we should find that we're going to be very very successful in um
Dollars in farmland. Um, so I think that's it. It just feels like 1 plus 1 equals 3 on this particular acquisition.
Jarrett, would you like to add something?
Yeah, just 1 thing. You know, if we look back at when we acquired ETF Securities in Europe, 1 of the benefits that we saw there, a very valuable benefit was the established distribution pipes that that came with that acquisition in a similar way here. When we combine ourselves with Cirrus, we're the ones with the established distribution pipes that are um, are leverageable. Um, and that'll be a big part of the growth too. This is a, you know, as we've been describing, this is a unique differentiated, but very attractive asset class. And we believe that our current distribution or our current clients, uh, will have a great interest. So we, we do believe we can help, uh, scale them, um, you know, uh, very quickly
And Brian, could you answer the second part of this question regarding um, the performance fees? Yeah. It's it's I I think so. And and Mike tell me if uh I'm not answering your question. Some of this, just goes back to the our, our prepared remarks. If we were, if you think about it this way, our Target of 750 million of organic AUM over the next 5 years.
That would double our base fee revenues in 2030 from what we're seeing today.
And when we think about the performance fee,
Um, if you make the assumption that the rate of return, or the price appreciation on farmland is what history has shown to be roughly 6% on average. If you have a 6% on average mark on the farmland portfolio and $750 million of organic AUM, over those 5 years, the performance fee will increase from where it is today; it'll be 1.5 to 2 times growth as it relates to.
Profitability of 1 Revenue stream versus the other. I don't think we necessarily think about it that way. Like our our guidance when we think about our guidance and we we think about Wisdom Tree, uh, in total, you know, our comp ratio is 28 to 30%. This acquisition doesn't change that guidance meaningfully in any way shape or form.
And their non-comp expenses are immaterial in the grand scheme of things. Um, so I think that should help. Hopefully, that helps just, uh, with clarity in regards to the question you're asking.
Great, thanks. That’s helpful. And then, just to follow up on a question. If I could just, on the digital asset side, I think on stablecoins, you mentioned it could be a $3.7 trillion marketplace by 2030. Hoping you could elaborate on what you see as unlocking that magnitude of growth. How much do you anticipate migrating from money funds to stablecoin versus other drivers of growth? And then, just more broadly on your stablecoin and digital asset initiative, can you elaborate on the traction you're seeing? What are some of the hurdles that you're trying to navigate to drive wider adoption and what might be the big milestones as you look out from here?
Well yeah, happy to to take that question. So um, that forecast, I think that actually came from the treasury secretary, uh, in terms of what the stable coin Market could be, you know, 3.3 and a half trillion dollars or something, uh, within the decade. Um, you know, stable coins are 260 billion today that's up. I think something like 60 billion dollars a year to date. Uh and we see post genius act just uh incredible adoption from here. So I mean like 1, use case that I like to give is Corporate is doing uh cross border payments, right? Like treasury management for large, corporates is a very complicated process. Stable coins, can definitely help them simplify that where they don't lose money, kind of sending something overseas for, like, 2 weeks, they can make a transaction with instant finality, instantly very low fees on chain. Um, and that's something where wisdom 2 is actually very well played to play to, right? So 1 thing, you know, and doing some, uh, research around that, I think, if you look at
Ates and other traditional finance use cases. And I wouldn't really say there's big inhibitors right now. We're working through some of the final regulatory aspects. There's some new functionality with some, you know, whether it's exemptive relief or something that we're looking to get. And, um, I don't know, I'm incredibly excited about it. I think it's a huge opportunity for us.
Thanks. Well, great. Thank you.
Our next question is from Michael Grundle with Northland Security.
Hey, thanks, guys. Um, first question, just on the acquisition. You know, you talked about your distribution and your current pipes, which end customer market do you think you're going to go to first? The RIA channel, the institutional market, or family offices?
Which one do you think is best positioned for this farmland opportunity?
Jeremy, do you want to take it? I mean, I can, but do you want to?
Sure. And I'll, I'll, I wanted to add a little bit of the context, on, just the market outlook for the markets and how this fits in. And why I I do think the riaa is the answer on this 1 for where the models can deliver it. And how we think about it, like for um, the the broad markets perspective, you have Bond yielding 425 on the 10 year you got tips yielding 2% so inflation, adjusted bonds just giving you 2% income and when you think about the return drivers we said they did 10% historically but trying to get
That historically, 4 to 5% cash flow. That's an inflation. Adjusted cash flow that is diversifying. So we think this is a, a great long-term asset. So the models team, the custom models I think will be a, a big use case. And that is really the ra and advisor. So that, that high net worth advisor. And so that as we talked about the Jarrett talked about, hitting the goals, and the 5 billion plus in our AUA and the models platform. This is a, a first set of calls that we could be making to people who who might find this asset class diversifying to their portfolios. Uh, and and then beyond that, you know, we'll, we'll we'll continue to find other opportunities.
Shared.
We'll look at and think about your digital asset strategy, you know, kind of what you guys summarize on Slide 20, Slide 21, and Slide 22.
What are two things you're most excited about for the back half of 2025 that drives that?
Success for you guys in digital assets and execution.
Um,
Jack, do you want me to go first, or would you like to start? I can quickly tell you what I find exciting.
You know, very early on in this journey for us, we decided that everything needed to be regulated. Um, this was responsible DeFi, and we went through. We really took the long route by working with various regulators and taking on various structures, like our trust company, uh, the broker-dealer that we have, the state approvals. There was a lot of work that we felt was important. And, you know, the result of that is that, as will mentioned, we think our money market fund is the best structured one in the market. And so, what excites me, one of the things, is that, you know, we're beginning to see that stance payout. Um, the fact that we took the long route that we did, the extra work that we got, worked with regulators, has left us with the best structured product at a time when we're starting to see traction. So, I think that's very exciting.
The other thing that excites me is that, you know, it’s so early in the market that these really fundamental things are exciting. Yield is exciting, and we've got some other yield ideas in the tokenized form that I think are just going to continue to leverage the success that we're starting to see. So those would be two off of the top of my head.
Let me just add. So, you know, when we started this journey, in broadly, digital assets, maybe 6, or 7 years ago now, which includes crypto etps, but it also included, uh, sort of the tokenization, uh, infrastructure, the platform, which you allows us to. Um, we're vertically integrated in all of digital assets, including or having our own ta, um,
Six to seven years ago, you couldn't be quite as confident as you are today that the market was going to really develop the way it is developing. But with this Administration and others in the space talking about tokenization—tokenization of real-world assets—I just feel that we did not, um,
Over.
Estimate, the potential of this market and that starting. So early has given us a real advantage over many of the trade by the traditional Financial Service firms who are in my opinion years behind us in really building this out. People have tokenized, you know, unregulated offshore vehicles. Um, they just haven't made all of the Investments that we have made. That has put us in the position as the market does develop. And for us that market starts with the onchain community, which is now like a 4 trillion dollar market and we're so very, very early and it feels to me that it's breaking exactly how we were hoping. Um, and that the next 3 or 4 years on with this Administration should really allow us um, to scale in the the way we were hoping
Got it. Hey, thanks, guys.
Thank you. Our next question is from Keith Husam with North Coast Research.
Good afternoon, guys. How many questions would the acquisition? But I guess in terms of the current market environment, are there any regulatory or other changes that you deem necessary in order to distribute, you know, the...?
Assets from series in order to customers in order to help grow it.
No, there is not.
Okay, and then secondly um you know this being a private assets, 540 or so Farms, how is the mark to Market done on a regular basis? And is that a a cost that's going to change under you know, your ownership?
It's uh, the the the yeah the process won't change. They mark their Farms every year so they'll and and break it down. They'll do a quarter of the portfolio in the first quarter or a quarter of the portfolio in the second quarter.
So on and so forth throughout the year. Um, they're, you know, they're prospectus lays out their procedure with respect to their appraisers that they use and the Cadence with respect to the appraisers, they can use, they can't use an appraiser for more than 3 years in a row and they have to change to another appraiser. But every property is appraised annually.
Gotcha. And I guess, last question, um, are you guys also taking the private equity part of the company as well? And any thoughts on that going forward?
Um, repeat that question. I'm sorry. Yeah, there are some other private equity investments they have, or some investments in some individual companies outside of Farmland within Serious Partners. Is that being acquired as well, or is that not included?
Brian, it's it's not, it's
Cirrus Partners will continue to manage it, but the economics will stay with the former sellers. One strategy that is particularly relevant is their water strategy, and that will fall under our roof. We will retain the economics there, but as it relates to the two funds, it had $20 to $40 million of assets within those two private equity funds. The economics don't stay with us.
Great. All right. Thank you.
Thank you. There are no further questions at this time. I'd like to hand the floor back over to management for any closing comments.
Thank you. Um, so just a closing thought here, you know, when I was launching Wisdom Trade.
You know, my pitch to the fantastic Michael Steinhart, to the incredible Jeremy Seagull, and to the legendary Jim Robinson was.
You know, I thought I knew how to thrive in a Vanguard world, recognizing the importance of after-fee, after-tax performance. Recognizing the fee compression that the industry was facing and would continue to face in the coming decades. You know, in WisdomTree, we did that by embracing the ETF wrapper before Vanguard and other traditional asset managers got serious about ETFs, and by using proprietary self-indexing strategies and active funds. So, we weren't competing solely on commoditized exposures.
Today, another way to thrive in a Vanguard world.
Is to invest with. There is no beta, and in farmland, there is no beta.
Plus.
Flatly.
Here is the best investor in this asset class, so we are embracing this acquisition. We could not be more proud to be entering this space. We will be in this space for as long as we're an asset management firm, and we look forward in the coming quarters to give you updates on our progress. So, thank you for joining us on this call.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.