Wisdomtree Investments Aktie

Greetings, and welcome to the WisdomTree Second Quarter 2026 Earnings Call. [Operator Instructions] 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 morning. Before we begin, I would like to reference our legal disclaimer available in today's presentation. This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. A number of factors could cause actual results to differ initially from the results discussed in forward-looking statements, including, but not limited to, the risks set forth in this presentation and in the Risk Factors section of WisdomTree's annual report on Form 10-K for the year ended December 31, 2025, and in subsequent reports filed with or furnished to the Securities and Exchange Commission. WisdomTree assumes no duty and does not undertake to update any forward-looking statements.

Now it is my pleasure to turn the call over to WisdomTree's CFO, Bryan Edmiston.

Thank you, Jessica, and good morning, everyone. I'll begin with a review of our second quarter results, followed by updates to our forward-looking guidance before turning the call over to Jarrett and Jono for additional business updates. Our assets under management reached $162.9 billion at quarter end, marking our sixth consecutive quarter of record AUM. Assets increased 7% from March 31, driven by favorable market conditions, positive net inflows and the addition of Atlantic House, which closed on May 1. Record AUM was achieved across both our U.S. and European businesses, reflecting continued growth across our global platform.

During the quarter, we generated $3.1 billion of net inflows, including $2.1 billion in Europe and $1 billion in the U.S. Year-to-date net inflows totaled $9 billion, representing an annualized organic growth rate of approximately 13%. Flows were generated across a broad range of strategies and geographies, contributing to another quarter of strong organic growth. We also completed the acquisition of Atlantic House, adding more than $4 billion of assets under management, along with complementary revenue streams. The acquisition expands our presence in Europe, enhances our capabilities in outcome-oriented and derivatives-based investment solutions and provides additional avenues for growth across our international business.

Alongside our growth initiatives, we continue to execute upon our capital management priorities. During the quarter, we retired approximately $127 million principal amount of our convertible notes maturing in 2026 and 2029, using cash to reduce leverage and simplify our capital structure. We also commenced open market share repurchases during the quarter and have repurchased approximately $29 million through today, representing roughly 1.7 million shares. These repurchases reflect our confidence in the business and our commitment to enhancing shareholder value.

Overall, the first half of the year has been characterized by strong organic growth, targeted strategic expansion and disciplined capital allocation. Together, these initiatives have strengthened our platform and position us well for continued growth and long-term shareholder value creation. Global AUM currently stands at approximately $164 billion, up 1%, reflecting $700 million of net inflows and positive market movements since quarter end.

Next slide. Revenues were $177.2 million during the quarter, an increase of 11% from the first quarter and 57% from the prior year quarter, driven by higher AUM, including the Atlantic House acquisition, contributions from Ceres and growth in other revenues. Ceres contributed $5.4 million of management fees and $6 million of performance fees. Other revenues of $19.5 million reflected higher AUM in our European products and revenues from Atlantic House, partly offset by more moderate European trading activity. Year-to-date revenues increased 53%, driven by higher AUM, elevated trading activity relative to the prior year and contributions from the Ceres and Atlantic House acquisitions.

Operating leverage in our business model, together with our recent acquisitions, resulted in a year-to-date adjusted operating margin of 41.1%, an expansion of 900 basis points compared to the prior year period. Surpassing a 40% operating margin marks an important milestone and underscores the scalability of our operating model as we continue to grow. Adjusted net income for the quarter was $48.1 million or $0.31 per share.

Next slide. Now a few comments on our forward-looking guidance. As mentioned previously, we have commenced open market share repurchases this quarter and expect to continue repurchasing our common stock over time. While we are not committing to a specific level of repurchases each quarter, we anticipate ongoing activity, balancing capital return with our continued focus on deleveraging and maintaining flexibility for strategic initiatives. Our diluted share guidance for the second half of the year is 152 million to 155 million compared with previous guidance of 154 million shares. This guidance reflects repurchases to date of 1.7 million shares and also contemplates incremental shares associated with our convertible notes, assuming the stock price approximating recent levels.

As a reminder, our remaining convertible notes have conversion prices of approximately $19 and $21. An illustration is included within our earnings presentation to assist in quantifying the incremental shares associated with our convertible notes going forward. We are also updating our interest income guidance to $8 million from $10 million, reflecting the allocation of a portion of our interest-earning assets to share repurchases, which we believe is a more efficient use of capital. All other elements of our forward-looking guidance remain unchanged from the guidance we provided last quarter.

That concludes my remarks. I will now turn the call over to Jarrett.

Thanks, Bryan, and good morning, everyone. This was another strong quarter for WisdomTree and more importantly, another quarter that demonstrated the strength of the business we've been building. Repeating some of the metrics that Bryan just listed. In the quarter, we generated $3.1 billion of net inflows. Year-to-date, we've delivered a 13% annualized organic growth rate. We finished the quarter with a record $162.9 billion of assets under management, our sixth consecutive quarter ending at an all-time high. And we delivered adjusted earnings per share of $0.31, while expanding our adjusted operating margin by 900 basis points year-over-year. Those are excellent results, but what I find most encouraging isn't any single number, it's where those results came from.

For several years, we've talked about creating more ways to win, building a business with greater breadth across geographies, client channels, investment capabilities and revenue streams. And this quarter showed exactly what that looks like. Growth came from both the U.S. and Europe. It came from multiple asset classes, multiple client segments and businesses we've deliberately invested in over several years. No single product or market drove the quarter. And that diversification matters because it makes the business more durable. It gives us greater confidence that we can continue to perform across different market environments rather than depending on one product, one theme or one geography.

Portfolio Solutions is another highlight. We've invested heavily in building deeper relationships with advisers through models and SMAs, and that business continues to grow faster than the firm overall. And those are long-term relationships with stickier assets that should become an increasingly important contributor to our organic growth over time. This quarter also demonstrates the strength of our operating model. As we've continued to grow organically, we've translated that growth into higher revenues, expanding margins and higher earnings while continuing to invest in the business.

We're also executing against our broader strategic priorities. During the quarter, we completed the Atlantic House acquisition. We continued integrating Ceres, and we repurchased approximately 1.7 million of our shares and each reflects the disciplined way we're building the firm while thoughtfully allocating capital. So overall, the quarter reinforces something we've been saying for a long time. The strategy is working. We're creating more ways to win. Growth is becoming broader and more durable, and the operating model is delivering exactly as we expected.

And with that, I'll turn it over to Jono.

Thank you, Jarrett, and good morning, everyone. As Bryan and Jarrett have said, this was another strong quarter for WisdomTree with record average AUM, strong diversified net inflows, adjusted operating margin expansion to 42.6% for the second quarter and EPS growth up 72% year-over-year and 15% from last quarter. This quarter also marks an important milestone for WisdomTree, 20 years since we launched our first 20 ETFs. Over the last 2 decades, we have grown from an ETF pioneer into a truly modern global asset manager spanning exchange-traded products, private markets and tokenized financial infrastructure. Years of disciplined investments are tangibly paying off.

Our operating model continues to do exactly what it was designed to do, translate sustained top line growth into expanding profitability and earnings per share growth. For years, we've described the financial model we're building at WisdomTree. Today, we are seeing that model play out. It starts with sustained organic growth, layer on appreciation over time as you generate consistent asset growth, add a stable to improving revenue yield as we diversify into higher-value capabilities like private markets and liquid alternatives and you create the potential for double-digit revenue growth through the market cycle. That revenue growth drives operating leverage.

We've consistently generated incremental margins of more than 50%. That formula has delivered compound annual earnings per share growth of 30% over the past 5 years and more than 50% over the past 3 years. And now with disciplined share repurchases, we've added another lever for long-term earnings per share growth.

Switching gears. As you know, WisdomTree spent years building one of the industry's most advanced tokenization platforms. Today, public markets are assigning billion-dollar valuations to companies focused on tokenized financial infrastructure, yet we believe our own platform, which spans regulated infrastructure, tokenized investment products and institutional distribution capabilities and digital asset services is largely unrecognized in our current valuation.

If WisdomTree were simply a global ETF franchise with industry-leading organic growth, expanding operating margins and consistent earnings per share growth, we believe it should command a meaningfully higher valuation than where our shares trade today. But we are not simply an ETF company. We also have a growing private markets business with meaningfully higher revenue yields and expanded liquid alternatives platform through Atlantic House and a tokenization business that we believe is not reflected in our current share price.

As Bryan mentioned, we repurchased $29 million of our stock at an average price of $17.40. We will continue approaching capital allocation with discipline. And at today's valuation, we believe repurchasing our own shares remains one of the most compelling opportunities to create long-term shareholder value.

In conclusion, 20 years after launching our first ETFs, our vision has remained remarkably consistent. Our business has never been stronger, and we believe we're still in the early innings of what this platform can become. Our vision has never changed. The world around us has. That concludes my remarks. Thank you. We can now open the call up to questions.

[Operator Instructions]

And our first question comes from the line of Chris Kotowski with Oppenheimer.

I wonder just a couple of things. One is we were wondering is there a cadence to the Ceres both flows and also the incentive fees from Ceres -- or should we assume that those are kind of random through the year?

Bryan, do you want to go first on that?

Yes, I can take that question. On the flows, if you recall, we generated, I think it was $75 million in the first quarter. I suggest that's a nice quarter for us. It was about $5 million this quarter, but we just -- we've closed the flagship fund to new investment. We just launched Fund II. So there's a transition period there with respect to flow cadence. I wouldn't necessarily think of flows as fits and starts, although there may be certain periods in the year where it may very well be fits and starts.

But this particular quarter, $3 million in the prior quarter, if memory serves correctly, the first quarter does have some seasonality in it. There is some seasonality with respect to the performance fee structures. This $6 million number, in my mind, is a, call it, more normalized number. If you're thinking about modeling, I guess I'd keep my message consistent, just take our AUM and multiply it by a reasonable rate of return, maybe 7% or 8% and multiply that by a 15% fee capture.

Yes. And I just -- I'd throw one more thing on about Ceres. We're very happy that the Ceres team is part of the WisdomTree team today. And as Bryan said, a little bit of transition or integration right now as we've closed Fund I to new investment, launched Fund II in June. But more importantly, the pipeline looks great. We've got over 100 interested investors that have come from the WisdomTree distribution team, representing over $100 million of assets. So feeling very good today.

Okay. Great. Then the other kind of more technical modeling question is you had Atlantic House in for 2 months of the quarter. And I guess we can see the advisory fees just from the AUM disclosures that you give. But just -- I'm curious in terms of the AUA and the structuring fees that they generate, how would that have looked in your P&L that you disclosed on Page 23? How would it have looked if that were -- if Atlantic House had been in for the whole quarter?

Yes. And I'll take this one again. So you're right, Atlantic House, we closed on May 1. We have 2 months of Atlantic House in our P&L. As it relates to the advisory fees, that should be straightforward because you have our AUM, you have our fees that we're earning on our AUM. That's all embedded in the information that we provide on our website. The other portion of Atlantic House rolls through other revenue. They have a models business. There's about $1.5 billion of assets AUA in their models business. It captures 25 basis points. That's not going to fluctuate meaningfully quarter-to-quarter. So whatever that math is, would establish a good run rate. It will grow over time, but it's not going to be highly sporadic.

The structuring fee stuff, that could ebb and flow each quarter. The prior 12 months, just to provide some kind of indication as it relates to magnitude, in the 2025 year, that number was $13 million for the year. And again, I can't tell you exactly how that's going to come in each quarter because it's dependent upon when a particular product gets structured, launched and issued. But that was their baseline number in '25. We think there's a lot of opportunity to grow that line over time by providing those offerings, not only in the U.K. market, but also in the U.S. and Europe as well.

Right. But we'll see all the Atlantic House revenues in what you classify as other revenues in European.

In other revenue. And then if I were just to shed a little color on other revenue, we were $19 million this quarter, $16 million last quarter. It's probably a good baseline going into the third quarter. We'll have one more month of Atlantic House, but the transaction fees, markets aren't as volatile as they once were in our European products. That might be a partial offset versus Atlantic House rolling in for a full 3 months next quarter.

The next question comes from the line of George Sutton with Craig-Hallum Capital Group.

First, 41% margins, just outstanding. Congratulations. So I wonder, Jono, as we look at this, the market has endorsed and I believe will continue to endorse your M&A strategy. As I look at the AUM breakdown chart, you've got some smaller sleeves, obviously, like the newer private assets or liquid alts. I'm curious how you're thinking of broadening out via future M&A. Would it be in some of these smaller sleeves? Would you be looking for more international distribution? Just curious how you're thinking about that.

Thank you for the question, George. So first, M&A has historically been, and I think will continue to be a secondary strategy, though I think we have proven to be very adept at it, considering that we've made now 3 acquisitions in Europe plus our private assets Ceres acquisition. We have guardrails when we're trying to make acquisitions. We want it to be accretive. We'd like it to be revenue enhancing or revenue capture enhancing and really strategically important to the firm as opposed to just trying to buy AUM for the sake of AUM.

I think you have to be somewhat opportunistic, which we were in both Ceres and in Atlantic House. But I think we'll continue to try to find those winning opportunities. And when we do, we'll, I think, pounce on them, again, particularly if it meets those criteria.

So I'm curious relative to your tokenized plans, where are we in terms of expanding partnerships? And we're in a weird period, I think, in the tokenized market, but we are also hopefully just in front of the CLARITY Act. So I'm just kind of curious how you're thinking of expansion opportunities in that part of the market.

Thank you. Will?

Yes, happy to take this one. The pipeline has never been more robust. I mean it's -- I think as you noted, it's kind of an interesting time, free CLARITY Act. But I think certainly post GENIUS Act, you've just seen an immense amount of investment and interest across different parts of the financial services ecosystem in tokenization and in stablecoins. I mean you saw a big stablecoin consortium announced recently that was bringing a lot of new people in. You've heard major U.S. broker-dealers talk about adding wallet offerings to their platforms. You've seen some of the largest fintechs as well engaging in the space on top of just what we call crypto platforms.

So for us, those are all opportunities. Like that's a very rich pipeline and opportunity set for us to sell products and services into. Right now, that's largely the tokenized money market fund, WTGXX. I'd also highlight that we've got a very novel filing in for a tokenized ETF. What we would believe if it were to launch and become effective would be the first tokenized ETF in the market. We haven't seen anyone thinking about things the way that we are thinking about them with that. And that would just open up a whole new set of opportunities for WisdomTree extending into products beyond the money market funds, so to equities, others.

So I'd say the opportunity set has never been larger than it is today. We feel extremely confident in it and excited about it. And I think maybe it happens with CLARITY or whatever in the next couple of months, nothing is going to slow us down there. We think the things are out of the barn, so to speak, and things are going to keep growing from here.

Right. I will add a little color on this as well, if you don't mind. Recently, Broadridge had a survey of asset managers where 85% of asset managers say tokenization is strategically important. They say tokenization is not an if, it's a when. Personally, I have to be one of the few CEOs in asset management who feels great, who feels extraordinarily confident in our tokenization strategy. As I indicated in my opening remarks, I think we have $1 billion of value in our on-chain platform that has yet to be recognized.

And why does tokenization matter? The practical problem that tokenization addresses is simple. Modern markets increasingly operate in real time 24/7, 365 days a year, while most traditional financial infrastructure still depends on business hours, batch processing and multi-day settlements. That's the mismatch and that tokenization solves. And WisdomTree has demonstrated with our 24/7 trading of our money market fund that we're actually executing currently on the strategy and on the promise of tokenization. So we're feeling great about it going forward.

Speaking of acquire there. Last question, relative to the farm assets, we are obviously seeing a lot of these NIM, not in my backyard concerns relative to data centers. You obviously have a wide portfolio with a lot of different potential use case opportunities, understanding, including solar. But I'm curious specifically about the AI data center opportunity. And I know you've contemplated pursuing some opportunities there. Can you give us a sense of that opportunity?

Jarrett or Will, do you -- Not Will. Jarrett or Jeremy, would you want to take this or I can.

Yes. This is Jeremy Schwartz, our Global CIO. I'm part of our investment committee on the Ceres Group, and we're looking at these things very closely. We always want to work with the communities for sure, and not against them in all those places. But we do see a continued exploration across the portfolio. There's a number of opportunities that the team is looking at.

And these things are not overnight things. People buy options to do the development, and there's a number of conversations ongoing where there is opportunities that we think potentially will still very much come to market. You see the demand for compute and energy and all these things are like the most important theme for the global economy today. And we feel very strong about the position that Ceres has and all the optionality on the best use case of their land. So we do think a number of these things will hit over time, and it just takes time for that to come to fruition.

The next question comes from the line of Wilma Burdis with Raymond James.

How -- can you give us some color on how far you are along in incorporating private farmland into ETFs and what the liquidity profile could look like?

Jeremy, would you want to touch on it?

Yes. We've talked about this on prior calls that, that is one of our goals that we are working for. We don't have an exact time line today, but we're absolutely looking to do it, and we will be thoughtful of how do you do that in a way that manages liquidity of the different publicly traded vehicles on ETFs. So we don't have a specific time today, but it is something that we think is manageable and that we have a plan and working towards it as quickly as we can.

You touched on this a bit earlier, but digital assets seem to have a little bit of outflows this quarter. And it's just been a little bit noisy there in that world in general. Could you talk about the development and just what you're expecting going forward?

Yes. I view -- yes, AUM goes up and down. I think you've seen in the chart that we've had kind of ups and downs along a broader uptrend in some sense, the business of asset management. Like I said in the answer earlier, we're just incredibly excited about the pipeline as it currently stands today and really where the industry is.

So really, the overall market size needs to grow a lot for all of us for WisdomTree to really see the greatest possible benefit from this, and we're seeing a lot of the activity in the market that leads you to believe that the market size is just going to continue to grow, right, that stablecoins will grow from $300 billion in total value outstanding into the trillions that people have forecast. And so we're feeling very optimistic and excited about that growth trajectory and our ability to win and grow share into it.

[Operator Instructions] And the next question comes from the line of Mike Grondahl with Northland Securities.

Congratulations. What are your couple of priorities for Atlantic House in the back half of the year in '27?

Let me -- when we made the acquisition, we bought an asset manager of excellence, but in the derivative block-based defined outcome space. But what's interesting that they really operated solely in the United Kingdom. We expect that we'll be launching ETFs, both in Europe and in the United States using them as the underlying strategy to really develop -- what we've said in the past, expect something like 15 ETFs over the next 18 months between the U.S. and in Europe as well as we touched on earlier, the solutions business, which again generated $13 million last year for them just in the United Kingdom to take that to the rest of the world as well. So I think you'll see a lot of activity, and it's been a very, very successful integration in a very short period of time.

That's great to hear. It will be great to see some of those funds in the U.S. And then just secondly, models portfolio that kind of continues to do well in grab assets. And it's done a lot in a couple of short years. What's next for that?

Yes. I think it's a continuation. And you're right, it has done well. We ended last year with about $6 billion. Today, we currently have $9 billion in model AUA. And importantly, the flows that are going into models are outpacing the ETF business as a whole and are tracking ahead of last year. So momentum is increasing.

But that's part of another one of our strategic initiatives is to continue to not only increase the sort of sustainability of our flows, but the quality of the flows and model flows are stickier. And so going forward, it's really blocking and tackling like it is with every part of the business. We want to increase the number of users and increase the assets per user. We continue to do that, and that's continuing to produce these good results.

This concludes the question-and-answer session. And I'd like to turn the call back over to Jonathan Steinberg for closing remarks.

Thank you. Markets, investors and analysts are starting to recognize WisdomTree's operational successes and superior strategic positioning as demonstrated by our total shareholder return, year-to-date over 50% and over the last 5 years where we are best of all of our public peers. That said, we are still significantly undervalued.

Investors should know that management and our Board are fully committed to closing the valuation gap that exists, and we are highly confident that we will be able to do so. The best is yet to come. And with that, I want to thank you all for your time and attention today, and we will speak to you again next quarter. Thank you. Have a great day.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

Greetings, and welcome to the WisdomTree Q1 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Jessica Zaloom, Head of Corporate Communications. Thank you, Jessica. You may begin.

Good morning. Before we begin, I would like to reference our legal disclaimer available in today's presentation. This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 Factors section of WisdomTree's annual report on Form 10-K for the year ended December 31, 2025, and in subsequent reports filed with or furnished to the Securities and Exchange Commission.

WisdomTree assumes no duty and does not undertake to update any forward-looking statements. Now it is my pleasure to turn the call over to WisdomTree's CFO, Bryan Edmiston.

Thank you, Jessica, and good morning, everyone. I'll begin with a review of our first quarter results, followed by updates to our forward-looking guidance before turning the call over to Jarrett and Jono for additional business updates. .

Our assets under management reached a record $152.6 billion, marking our fifth consecutive quarter of record AUM and up 6% from year-end driven by net inflows and market appreciation. Growth was broad-based with record AUM across our U.S., European and digital asset platforms. We generated $5.9 billion of net inflows globally, a 17% annualized organic growth rate, including $3.1 billion in Europe, $2.6 billion in the U.S., $100 million in digital assets and $75 million in private assets.

Flows were led by our international equity exposures, including our Japan strategies and UCITS thematic products with particular strength in areas such as our European defense and rare earth funds. Fixed income was also a key contributor and our leveraged and inverse suite also generated meaningful inflows, reflecting elevated volatility in the commodity markets.

Notably, flows were skewed toward higher fee products resulting in a 1 basis point increase in our average advisory fee during the quarter. We also just completed our acquisition of Atlantic House, a U.K.-based asset manager with approximately $4 billion in AUM, generating 53 basis points in advisory fees from its defined outcome and derivatives driven strategies. The business also generates complementary revenues including 25 basis points on $1.5 billion of AUA in managed models as well as structuring fees from bespoke investment solutions, which totaled $13 million during 2025.

Taken together, these revenue streams represent an overall revenue yield of approximately 95 basis points. The purchase price is $200 million, which has been financed through recently issued convertible notes. This transaction is expected to increase our overall revenue yield by almost 2 basis points is modestly accretive and further enhances our product capabilities and distribution footprint across Europe, while supporting higher quality revenue growth over time. Overall, our record AUM and strong organic growth underscore the strength of our business, while our disciplined approach to strategic expansion positions us well to continue driving growth and long-term shareholder value. Global AUM currently stands at approximately $164.3 billion, up almost $12 billion or 8% from March 31, driven by favorable market conditions, approximately $800 million of net inflows and the inclusion of Atlantic house.

Next slide. Revenues were $159.5 million during the quarter, an increase of 8% from the fourth quarter and 48% from the prior year quarter driven by higher AUM and growth in other revenues. Other revenues of $16.4 million reflect higher AUM and elevated trading activity in our European products, up from almost $13 million recognized in the prior quarter. Results versus the prior year quarter also include approximately $8 million of revenue contribution from Ceres. Ceres' contribution included management fees and performance fees of $5.2 million and $3 million, respectively. Performance fees reflect normal seasonality tied to performance-based fee structures along with limited activity in the solar portfolio during the quarter.

Our adjusted operating margin has expanded 770 basis points when compared to the prior year quarter. Adjusted net income was $40.6 million or $0.27 per share. Adjusted net income excludes the loss on extinguishment of convertible notes related to the repurchase of a significant portion of our 2026 and 2029 maturities. This refinancing reflects a proactive repositioning of our capital structure, replacing lower conversion price instruments with new convertible notes at a 4.5% coupon and $21.58 per share conversion price, providing meaningful headroom and reducing potential dilution.

This transaction also supports funding for the Atlantic House acquisition, aligning our financing strategy with our broader growth and capital allocation priorities. As a reminder, the Atlantic House acquisition is expected to add approximately $4 billion in AUM, generating 53 basis points in advisory fees, along with complementary revenues from managed models as well as structuring fees from bespoke investment solutions. The transaction closed this morning. Next slide.

Now a few comments on our forward-looking guidance, which includes the impact of the Atlantic House acquisition on our expense base. Our compensation to revenue ratio of 26% to 28% remains unchanged, and we expect to trend towards the upper half of the range, reflecting the addition of Atlantic House which is accretive to our operating margins and earnings, but carries a modestly higher compensation ratio. We are also increasing our gross margin guidance by 1 percentage point, now ranging from 83% to 84%, reflecting continued operating leverage from organic growth as well as the Atlantic House acquisition.

We are also increasing our discretionary spending guidance by $3 million to reflect the inclusion of Atlantic House. Our third-party distribution expense is expected to range from $20 million to $24 million, driven by higher AUM and elevated trading activity primarily across our European platforms, with commodity market volatility influencing where we fall within the range.

Interest expense is forecasted to be approximately $53 million for the year, reflecting our current capital structure and the anticipated retirement of our remaining 2026 and 2029 notes this summer. Quarterly interest expense is expected to be approximately $15 million in the second quarter declining to approximately $14 million in both the third and fourth quarters. We are increasing our interest income guidance by $2 million to $10 million for the year, reflecting the level of our interest-earning assets in the forecasted rate environment.

Our adjusted tax rate is expected to be approximately 24% to 25% compared to 24% previously, reflecting the addition of Atlantic House. And finally, our weighted average diluted shares were 152 million in the first quarter. We expect shares to increase to approximately 155 million to 158 million in the second quarter reflecting the full impact of shares issued in connection with our convertible note refinancing and then declining to approximately 154 million in the second half of the year, following the retirement of the remainder of our 2026 and 2029 notes, which we anticipate settling for cash. That's all I have. I will now turn the call over to Jarrett.

All right. Thank you, Bryan, and good morning. This was another quarter marked by steady broad-based execution and continued momentum across the business. The results were strong, but more importantly, they reflect the consistency of a strategy that is delivering and scaling. As Bryan just highlighted, we generated nearly $6 billion of net inflows in the quarter including $2.6 billion in March, making this our strongest quarter since Q1 of 2023. And what stands out the most, though, is the quality and the breadth of those flows. .

We saw inflows across 7 of our 8 major product categories, reinforcing that WisdomTree is increasingly winning as a diversified platform rather than tied to any single product theme or market call. And that matters because it demonstrates that we can generate growth across market environments and not just when conditions are favorable. This quarter also highlighted how clients are using us. They engage with us across geographies, asset classes and use cases from international developed equity to fixed income to leverage strategies to digital assets.

And in March, in particular, we saw a bear market playbook unfold in real time across our platform. Clients were allocating to both offense and defense, income, liquidity and hedging strategies alongside risk-taking exposures. And what stood out in that environment was how well the platform held up despite an extremely volatile backdrop, AUM ended the quarter at approximately $153 billion and has since recovered to $164 billion including $4 billion from Atlantic House.

And that resilience speaks directly to the strength and utility of our product lineup. Products like USFR continue to serve as an important portfolio ballast and more broadly, you can see the key drivers of that stability and growth. Our UCITS platform continues to lead with over $3.4 billion of inflows year-to-date, and AUM up over 26%. Portfolio Solutions continues to gain traction as a structural growth engine. And in digital, we generated $98 million of inflows in Q1 with AUM reaching a record $867 million, driven primarily by our tokenized money market fund.

Importantly, the story there is evolving. It's increasingly about real use cases and adoption and not just infrastructure. Alongside that organic progress, we also continued to make measured strategic progress. Ceres is now part of the base business, and with the closing of Atlantic house this morning, we are continuing to build out the platform in a disciplined way. Both transactions are consistent with how we think about capital allocation and creating faster, more durable long-term growth, which John will walk through in more detail in a moment.

Overall, there's a difference between having a strategy and delivering on it. And what we are doing is delivering, and we built a proven track record of consistent execution quarter-by-quarter, we are strengthening the platform and building real momentum. And with that, let me turn it over to Jono.

Thank you, Jarrett, and good morning, everybody. What Bryan and Jarrett just walked through really speaks to the strength of the business we have built. We delivered another quarter of broad-based execution in a volatile environment with strong inflows, with resilient assets and continued traction across the platforms.

I think the most important takeaway is that this was not driven by any 1 product or 1 strategy or 1 market backdrop. It reflects a business that is becoming more diversified, more durable and increasingly more capable of compounding growth over time. That is exactly the foundation we want in place as we continue to build WisdomTree.

That brings me to the 2 transactions we have recently closed; Seres and Atlantic House. We are not pursuing acquisitions for the sake of being acquisitive. M&A for us is a complement to organic growth, not the core strategy. The bar is high, the fit has to be clear and the transaction has to strengthen the business in tangible ways. At a high level, the logic is simple - we want companies that help us diversify the business by adding differentiated products and capabilities we do not have today. We want them to enhance the economics of the firm by bringing higher revenue yields and stronger margin characteristics. We want them to accelerate growth, by giving us more ways to win flows, deepen client relationships and extend those offerings more broadly across WisdomTree. Ceres is a very good example of that approach. It brought us into private assets to an uncorrelated asset class, and it did so in a way that adds attractive economics to the business.

It expands our capabilities in an area where we see real client demand while also improving the earnings profile of the firm. Atlantic House fits the same logic. It adds differentiated derivatives capability expands our reach, particularly in the U.K. wealth channel and strengthens our ability to deliver more outcome-oriented solutions for clients. It also helps globalize our portfolio solutions business by extending that footprint into the U.K. and accelerating the international expansion of that offering.

From an economic standpoint, Atlantic House brings a revenue yield of approximately 95 basis points which lifts our overall firm-wide revenue yield by about 2 basis points to roughly 43.5 basis points. Just as importantly, it brings expertise and solutions that we believe can be scaled through the broader global WisdomTree platform. So again, this is not simply about adding assets, it's about adding enhanced expertise and differentiated offerings with better economics and greater growth potential.

Stepping back, what these deals really show is how we are continuing to strengthen the business. We are broadening the platform, improving the quality of our revenue and adding areas of expertise that we believe can help accelerate firm-wide organic growth over time. That is why both Ceres and Atlantic House fit so well with where we are taking wisdom trade. We are still in the early stages of integrating and scaling these capabilities, but the fit is clear, the rationale is clear and the opportunity is clear. We are building a business with more ways to win better economics and greater earnings power. That is how we will continue to deliver strong top line growth, continued margin expansion and even faster earnings per share growth over time.

Thank you. Now let's open up the call to questions.

[Operator Instructions]

Our first questions come from the line of Wilma Burdis with Raymond James.

Could you talk about the advantages of WisdomTree's tokenized money market fund compared to other non-tokenized yield-generating options with respect to your new partnership with stable fix?

Absolutely. Thank you for the question. Will, you pick that up?

Yes, absolutely. So Page 11 of the deck talks about our -- we're positioned to win business through a combination of the functionality that we've got and our strong U.S. regulatory positioning. So unlike a lot of the tokenized money market funds that are out there, WTGXXRs is a 1940 Act fund sold by prospectus in the U.S. It's available to U.S. retail, U.S. businesses and global businesses as well. So just by virtue of doing that and also having kind of strong functionality around that.

Also this quarter, we announced that we got an exemptive relief from the SEC to have the money market fund trade view of broker-dealer in the secondary market on an intraday 24/7 basis, which is like truly unique functionality, especially in the 4 here in the U.S. So we feel really strong about our positioning of our tokenized money market fund, and we're establishing a lot of partnerships and relationships.

Stable C is a great example. Stable C as a start-up run by some former blocked employees, that's focused and their payments experts, they're focused on bringing payments use cases to small- and medium-sized businesses throughout the United States.

And like I would not have thought about a small business in the U.S. as being kind of underbanked but kind of through these conversations, we've been learning a lot about how, hey, getting access to a tokenized money market fund yielding 3.5% today is much, much better than what they were getting through maybe nonexistent savings accounts paying essentially nothing, right?

So it's just showing kind of new use cases in us kind of building distribution relationships, both in TradFi in addition to kind of like D5 channels where we've been focusing today. So that's some of the ways that we're differentiated and why we feel really good about our positioning right now.

Great. And then are there opportunities to generate higher fees on model portfolios as WisdomTree gain scale and the adviser relationships? And could you provide some detail on the overall relationship dynamics there, especially given the additional model AUM from Atlantic House?

Jerrett, I think that starts with you and maybe Jeremy.

Sure. I think in general, yes, the model opportunity for us globally does a number of things. First of all, though, it brings stickier assets. deepens the relationship with our partners, and it does lead us to a nice stable mix of WisdomTree funds that are in those portfolios. In addition to that, as you add sort of horsepower from Atlantic House, you add even further sort of value add that as Jono sort of covered in prepared remarks, comes at a higher revenue capture. .

So overall, these things, including SMAs, by the way, which is another area where we're pushing forward quite nicely. All of these things just lead to higher quality flows I think, with a tilt towards higher revenue capture and just better quality of earnings.

If I have time for 1 more. We saw other revenues were strong in the quarter. Could you talk about what contributed to that? And if there's going to be additional growth there?

Yes. So this is Bryan and thank you for the question. You're right. Our Other revenues were $16 million this quarter versus $13 million last quarter. And again, that was driven by higher AUM and transaction fees, largely tied to our European commodity products. And if volatility persists, we could see similar levels of that revenue growth going forward. About 40% of that line item is the transaction fee element, 60% is AUM base. So there is some variability and volatility there as well.

The other thing we don't want you to overlook is Atlantic House and that acquisition -- in 2025, Atlantic House generated about $16 million of revenue between its models and product structuring business. That revenue is also going to run through this line item going forward. So if you were to prorate that as of today, it would be about $11 million of incremental revenue.

Let me just add on the Atlantic House, there sort of derivative solutions that they've been doing just in the U.K. They have really established a business that has scaled. So they've done over $20 billion of structured solutions delivered across more than 120 clients. And we do believe that, that solution clients that want to want these sort of bespoke defined outcome for themselves. It's sort of like in almost like an SMA, but not the SMA structure, but very tailored to the clients' needs has both broad European and U.S. appeal. And so that other revenue line, we really do think should grow not just for the rest of this year, but significantly in 2027.

Anything else, Wilma?

Our next questions come from the line of Chris Kotowski with Oppenheimer.

This is actually John Coffey on for Chris. I just had a couple of questions. One is on Page 4. I think when you mentioned your 95 basis point yield for Atlantic House. Is that the right way to look at revenues going forward? Or do you think it should be -- or should I really look at some of the constituent parts like the models under advisement, yield and restructuring fees, like should this be really modeled out on sort of a more granular level? Or is that 95% a pretty good way to think about it going forward?

I'll start but maybe -- so I think about the business in revenue yield terms. It's very, very important to me that we grow our revenue yield. I think it's really one of the -- and it ties to even product consideration. So you think that we're 43.5 basis points on $165 billion today. Atlantic House was 95 basis points of revenue yield, Ceres 200 plus and just know that we are focused on it as part of our strategic initiatives. So now there is some volatility that is outside of our control, meaning asset mix, where the market goes. But from what we can control, that is a metric that we are laser-focused on. But Bryan I'll turn it to you...

Yes. So -- from a modeling standpoint, I would suggest, though, just not looking at it as 1 overall revenue yield, but looking at the component part. So that advisory fee line is going to grow based upon the AUM on our platform, excluding Ceres AUM at whatever our revenue capture is in that particular line item. And again, that revenue capture ticked up 1 basis point this quarter.

I would think about Ceres separately, modeling those management fees at 1% of AUM. And then the performance fee is another variable element to be taken into consideration as well. And then when it comes down to the last line item, our other revenue line, again, a lot of that has been driven by the activity that we're seeing out in Europe in our commodity products. You have a trend over the last few quarters in that particular line item. And as I just mentioned in the prior response, Atlantic House is also going to factor into that line item going forward, too.

All right. Great. Very helpful. And just 1 last question. When we think about Atlantic House, will that show up on your IR page, you have your daily AUMs? Is that something that at some point in the future, we'll start to see AUM from Atlantic House contributing to those? Or is this something like Ceres where it's sort of treated a little bit differently than your other ETPs?

We should be having that AUM as part of what we're reporting over -- in the not-too-distant future. We need a little bit of time to just get integrated.

Jeremy Schwartz, could you just add a little bit on a future product around Atlantic House, which will also obviously contribute to the AUM on the IR side. But just from a strategy and even how it ties into revenue yields?

Yes. They currently have a bunch of use funds in addition to that derivative solutions business that Jono talked about, we definitely plan to be part of the global synergies is extending that franchise both to the market as well as the U.S. market. We definitely have plans to be aggressive with the product road map. And when you look at where has there been big growth in ETFs, the fun you let from income over or protection type strategy we're calling it defined outcome and sort of target type return we can do in many different asset classes.

So we have targets to launch both in the U.S. and Europe as many as 15 to 20 funds over the next 24 months. And so we're going to have a big family. We're excited to be working with their team. It's a very strong, actively managed within them, and we think we can really position ourselves well versus the market in that space. So you'll definitely see a big product road map coming from us in both markets.

Our next questions come from the line of Michael Grondahl with Northland Securities.

First question is with your not brand new, but newer digital money market fund, WTG XX, that is growing like a weed, but it seems like there's a lot of demand for that product. I wanted to understand a little bit better how you're marketing that? What's kind of that communication strategy just to get the word out?

Well, that's you, obviously, but touch on its use cases as well because it's being used differently in the world of on chain than just how it's being used in the mutual fund format.

Yes, absolutely. Thanks for the question. Yes, it's continuing to grow strongly. Even since this deck was dated as of March 31, at least the AUM. We're up another $50 million in April, and assets primarily into that fund. So it's continuing to grow. WisdomTree Connect users, we had 29 at year-end. There's 41 on the page as of March 31. That number is higher today as well. .

So we are seeing kind of continued strong growth in that. Like I said, we distribute both to U.S. retail through WisdomTree Prime, also to global businesses and global platforms really through WisdomTree Connect. Today, 90%, 95% of the AUM is through the WisdomTree Connect platform. Really, that's focused on serving kind of different use cases that we've spoken about. It could be a stablecoin issuer. We've seen a lot of them post Genoa being implemented, looking to hold WTGXX's reserved asset for stable coins that they issued. WTG XX is clearly within the Genius Act, sorry, the Genius Act is a compliant reserve asset. It's treasury management for stablecoin native businesses. So this is exactly what Stable C is helping to serve.

And the last piece is really around collateral mobility, right? The ability to use WTGXX in the yield bearing form of collateral rather than just sitting in stable coins, if you're doing a crypto transaction, also increasingly playing in other kind of non-crypto related transactions. WTX being a yield burn form of collateral that's able to be moved instantly, right, which gives people participating in that transaction kind of makes it much more capital efficient for them. So we're seeing actually considerable growth in that use case as well, onboarding new clients focused on that.

So it's really those use cases where the tokenized Money Market Fund is adding a lot of value for people. It's not just a buy and hold sort of thing. It's about making it more useful serving different clients, really the Onchain community growing into more of the traditional finance community as well, that is aren't able to be served well from a kind of traditional money market fund.

Got it. And then, John, when talking about Atlantic House in those funds, you had mentioned the broad European appeal, U.S. appeal -- how should we think about you rolling out to those 2 additional markets? .

So we obviously launched 20, 30 funds a year every year. There will be a significant number of new fund launches in the next 18 to 24 months dedicated to the capabilities that we have just acquired around active derivative solutions, options-based strategies sometimes called buffer funds or to find outcome funds. It's a broad, broad category, more than $100 billion globally in ETFs.

We think that sort of what's in the market today for the most part is like a 1.0. There's real room for differentiation. It's a little more developed here in the U.S., but still tremendous room for differentiation and growth almost open fields for the European team. The team that we acquired will play not just the portfolio management role, but they'll be part of the sales process really showing global clients, the -- they're very strong communicators. They really will give us, I think, an ability to we really raised assets against the funds that we're launching.

I think that if I had a range of expense ratio. It's probably between 55 and 85 basis points for the types of products that we'll be launching, which is above our expense ratio average now. So very, very excited about putting the Atlantic has team to work. I hope that answers the question.

Yes. No, that's helpful.

Our next questions come from the line of George Sutton with Craig-Hallum.

It is Logan on for George. Can you hear me all right?

Yes. .

Yes. Awesome. I want to follow up there on the digital asset side. Well, I wondered if you could just kind of walk through the priorities there. I mean, I think for a long time, it was a bit more of a consumer-focused effort, -- it seems like a lot of the momentum now is on the institutional side. And then there's also been talk about times about white labeling. So I wondered if you could just kind of rank those for us. And then also the stable seed partnership is nice to see. Do you see kind of more opportunity for sort of distribution partnerships out there similar to that?

Yes. Happy to take that. So I wouldn't really rank them. I mean for us, it's about growing AUM and growing the number of people that are using the platform. So that's tied directly to the metrics that we have on the page for you guys. That's what I look at every day to see if we're being successful. Are we driving AUM growth are we driving the number of people using the platform. In the future, and you started to see this with the WTGXX announcement, there's going to be other types of transactions, other types of revenue streams, that we're going to see continue to grow over time as well. And that will be really like a third metric that I look at. So we don't kind of stack rank is 1 more important than the other. They all kind of are servicing as part of that. What I would say is unique about like digital asset and blockchain as we're seeing -- we're going to be servicing retail beyond just WisdomTree Prime. WisdomTree Prime is a key priority for us. We want to continue to drive people and use that platform, that app we're able to serve metamaskwalet holders, other self-custody wallet holders. And we want to meet people where they are. And economically, WisdomTree is indifferent. It's really about getting people to use our products and services. So again, not really stack ranking kind of different things. It's really an all of the above driving people to invest in our funds, use our products and services.

Will, could you just touch on because I think it's sometimes overlooked, the vertical integration of your offering, sort of your -- you've put in a lot of effort over the last 7 years. Can you just touch on the vertical integration?

Yes, absolutely. So touch on this on Page 11 as well. But I think if you look at some kind of competitive products out there, you find that there's probably like 3 or 4 different firms that kind of comprise that stack, right? There might be a separate tokenization provider and transfer agent and then there's a separate asset manager and there might be a separate kind of stable coin conversion service or a stable point orchestrator provider -- and then WisdomTree's case, since we've invested early, we've kind of built that all kind of we have built that all ourselves, right?

So when you're buying the WisdomTree tokenized money market fund using USBC, for example, the other counterparty you're facing in that transaction is WisdomTree, right? We're able to convert the stable coin. If you wanted to trade it instantly, you can do it against our broker-dealer then you're investing in a WisdomTree managed fund. So we've built all of these capabilities ourselves, which has allowed us to win business in the areas we're competing today. It also opens up good optionality for us, and we're having active conversations around this to license elements of this technology stack to other asset managers or other people in the space.

So we feel really good about the investments we've made to kind of be in this position. I mean this is such a hot topic on Wall Street. And I speak to a lot of people. And every time I do, I just feel great about the decisions we've made and the position that we occupy in the market. And I think we're going to be continuing to kind of grow market share as more and more people are adopting this technology. More and more wallets come online, stablecoin AUM continues to grow. We're going to continue to win share in that environment.

Thanks, Will. Anything else, Logan? .

Yes. One other. That was very helpful. You mentioned kind of the lower seasonal performance fees with Ceres but it looked like the inflows were pretty strong this quarter. Just curious if you could unpack that a little bit. I mean is that just blocking and tackling by the Ceres team? Or how much of that is maybe your distribution capability starting to have an impact there?

So I think this is a combination, probably you, Bryan and maybe Jeremy.

Yes, sure. So on the flow side, it was -- I can respond to the flow side. Let me take it and Jeremy, if there's anything else to feel free to elaborate. But -- it was a strong first quarter, $75 million in the quarter. Our first fund was closing. So the closure of that fund did accelerate flow into this particular quarter to get where investors wanted to get some money in before that fund closed, and we're focused on getting our second fund launched in the not-too-distant future.

So from a flow perspective, look, we can expect variability quarter-to-quarter. We generally don't provide guidance on flows. But that said, I would say our long-term target remains unchanged. We're targeting $750 million over 5 years, and we'll see if that ultimately proves to be conservative. On the performance fee, -- there was some seasonality there. The fee was a bit lower than it was in the fourth quarter of last year.

There was some seasonality. There wasn't much solar activity this quarter. But again, we'll see some ebbs and flows in the mark, but we don't foresee any changes in the earnings power of our prior guidance. Our framework remains consistent as it relates to what we've communicated in the past. Think about it as take your AUM, take a flow assumption, multiply it by, call it, a 7% return on average and then factor in our 15% participation rate to arrive at a performance fee and we'd say that's our baseline working assumption and then there's upside for solar and data center opportunities as well.

So again, really no change versus what we had previously communicated.

Yes, this is Jeremy Schwartz, our CIO. The only thing I would say on the seasonality is that the way the appraisals work is the same farms are appraised in Q1 of each Q1. And that Q1 has happened to be a little bit below performance on a regular basis, the last 4, 5 years. So I think we'd expect to sort of as the other farms continue to get appraised from Q2, Q3, Q4, they tend to be a bit higher in terms of where they have been. And so that's just for now, that what we've been seeing on the performance trend. But we remain optimistic on where things are going. .

Yes. And this is Jarrett. Let me just hop into Bryan mentioned how we closed Fund I and Fund II is on its way. Fund II is on its way, and that will be launched in the next couple of months. That is when the WisdomTree distribution team gets involved already without having the fund to market. We've got strong interest, a strong pipeline of live leads -- so we're pretty optimistic on that good track record of flows continuing.

And let me just add an all foreshadow something that become increasingly important to WisdomTree in the second half of this year and in 2027, you will see, I believe, in very farmland in ETFs. As you probably know, the 40 Act does allow for up to 15% of assets in illiquid assets, and we do see appropriate in some broad commodity and real estate ETFs and opportunity to put in farmland.

And so that battle of privates and ETFs is something that WisdomTree is very focused on in the -- or really the second half of this year and the coming years.

Understood. Congrats on the continued strength, I will leave it there.

Thank you. We have reached the end of our question-and-answer session. And I would like to turn the floor back over to Jonathan Steinberg for any closing comments.

Thank you. Yes, let me say something. As we approach the 20th anniversary of launching our first 20 ETFs this June, it's worth pausing to recognize just how far we've come and how well positioned we are for what comes next. Today, with $165 billion in assets under management and a global team of 400 employees, WisdomTree stands stronger than at any point in our history, the efficiency of our business model, the breadth and diversity of our product set and the distinctly entrepreneurial culture continues to differentiate us in a crowded and evolving industry.

Our first quarter momentum is not an outlier. It's the continuation of years of consistent high-quality organic growth, delivering 17% annualized organic growth across a diversified asset base in a volatile market underscores both the resilience of our platform and the strength of client demand. At the same time, expanding margins or translating that growth into meaningful earnings per share acceleration. Importantly, we are not standing still.

Our investments in tokenization and private assets or opening new avenues for growth and positioning WisdomTree at the forefront of where the industry is heading. Our commitment to shareholders is clear in the numbers. we've compounded earnings per share at 30% over the past 5 years and more than 50% over multiple 3-year periods. This isn't just strong growth. It's growth that is accelerating, driven by increasing scale and efficiency. With the impact of recent acquisitions of Ceres and Atlantic House coming online in the second quarter, we expect that acceleration to continue over the next several quarters, the trajectory is unmistakable.

We are entering our next chapter from a position of strength with momentum with innovation and with discipline, all working in our favor.

If the first 20 years were about building the foundation, the next 20 years will be about scaling it in ways that create even greater value for our clients and our shareholders. So I want to thank all of you for participating in today's call, and we'll speak to you next quarter. Thank you.

Thank you, ladies and gentlemen. This does now conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time, and enjoy the rest of your day.

Greetings, and welcome to the WisdomTree Q4 2025 Earnings Call. [Operator Instructions] 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 morning. Before we begin, I would like to reference our legal disclaimer available in today's presentation.

This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, statements about our ability to achieve our financial and business plans, goals and objectives and drive stockholder value. A number of factors could cause actual results to differ materially from the results discussed in forward-looking statements, including, but not limited to, the risks set forth in this presentation and the Risk Factors section of the WisdomTree annual report on Form 10-K for the year ended December 31, 2024, and in subsequent reports filed with our furnished to the Securities and Exchange Commission. WisdomTree assumes no duty and does not undertake to update any forward-looking statements.

Now it is my pleasure to turn the call over to WisdomTree CFO, Bryan Edmiston.

Thank you, Jessica, and good morning, everyone. I'll begin by covering our fourth quarter results along with updates to our forward-looking guidance for 2026, before turning the call over to Jarrett and Jono for additional updates on our business.

Our assets under management ended the year at $144.5 billion, a record, up 5% from the third quarter and over 30% year-over-year. While we experienced modest outflows in the fourth quarter, we generated $8.5 billion of inflows for the year, representing an 8% organic growth rate. Our AUM also benefited from positive market movement and the Ceres acquisition, which closed on October 1. This acquisition marked an important step in our expansion into private assets and further diversified our AUM mix through exposure to U.S. farmland, one of the largest and least penetrated real asset classes. We are now managing almost $2 billion in farmland based strategies and the transaction has expanded both our annual revenue capture and operating margins by more than 200 basis points.

Looking more broadly at our AUM performance. Growth was broad-based and well diversified across regions and asset classes. Our European listed products delivered a very strong year with AUM increasing from $30.7 billion to a record $53.3 billion supported by more than $6 billion of net inflows and a favorable market environment. European inflows were led by $4.3 billion into our UCITS franchise, spearheaded by the successful launch of our European defense ETF earlier this year, while our commodity products generated approximately $1 billion of inflows.

In the U.S., AUM increased to a record $88.5 billion, with $1.4 billion of net inflows for the year, driven primarily by our U.S. equity offerings alongside favorable market conditions. Our digital assets platform continued to gain traction, with AUM reaching approximately $770 million at year-end. Growth was led by strong inflows into our digital money market fund largely through WisdomTree Connect, reflecting continued progress across our digital platform.

Overall, record AUM, strong organic growth Disciplined execution and thoughtful capital deployment drove approximately 300 basis points of operating margin expansion during the year. Taken together, we believe these results position us well to build on our momentum and continue delivering sustainable growth and long-term shareholder value. Global AUM today stands at $160.8 billion, up $16 billion or 11% from year-end driven by favorable market conditions and almost $2 billion of net inflows, a very strong start to the year.

Next slide. Adjusted revenues were $147.4 million during the quarter, an increase of 17% from the third quarter and up approximately 33% versus the prior year quarter, driven by higher average AUM. Ceres contributed $12 million of revenues this quarter, of which $7.1 million was derived from performance fees. These performance fees were driven by price appreciation on farmland under management along with favorable developments related to the solar portfolio. Our other revenue continues to grow, recognizing $12.7 million this quarter as compared to $11 million in the prior quarter. This increase was largely driven by higher European listed AUM as approximately 70% of these revenues are asset based. While difficult to forecast, we would suggest the magnitude of other revenue generated in this most recent quarter serves as a fair approximation of what we could expect going forward, assuming current European AUM levels. Further increases in our European listed AUM should drive this revenue higher.

On a year-over-year basis, our adjusted revenues have grown 15.4% while our adjusted operating margin has expanded almost 300 basis points, finishing the year at 36.5%. Adjusted net income for the quarter was $41.2 million or $0.29 per share. Adjusted net income excludes amortization of intangible assets related to the Ceres acquisition, the remeasurement of the Ceres earn-out and other items.

Next slide. Now a few comments on our 2026 guidance. We are forecasting our compensation to revenue ratio to range from 26% to 28%, representing a 2 percentage point downward shift from our prior year guidance. This update takes into consideration planned hires as well as compensation adjustments and the annualization of hires made during 2025 and further demonstrates the operating leverage in our business model as we continue to scale. The range reflects variability in incentive compensation, driven by factors including the magnitude of our flows, revenue, operating income and margin targets and our share price performance in relation to our peers.

As a reminder, compensation expense is seasonally higher in the first quarter as we recognized payroll taxes, benefits and other items related to year-end bonuses. As a result, we estimate our first quarter comp to revenue ratio to be approximately 30% before stepping down over the course of the year and landing within the 26% to 28% overall guidance range. Our discretionary spending guidance is forecasted to range from $80 million to $86 million compared to $71 million this past year. Primary drivers of the increase include incremental marketing spend, higher sales and distribution-related expenses as well as the impact of the Ceres acquisition and additional factors.

Our gross margin guidance is estimated to range from 82% to 83% compared to 81.9% this past year. This range reflects revenue based on current AUM levels and the positive impact of Ceres on our gross margin, partially offset by incremental costs associated with the anticipated product launches. As AUM continues to grow, we would expect gross margins to trend higher.

Third-party distribution expense is anticipated to range from $17 million to $19 million compared to $16 million this past year, driven by higher AUM on these platforms. Interest expense is forecasted to be approximately $40 million this year, taking into consideration the retirement of a substantial portion and potentially all of our convertible notes maturing in June of 2026. Interest expense should be approximately $10.5 million for each of the first and second quarter, declining to roughly $9.5 million per quarter in the second half of the year. Interest income is estimated to be approximately $8 million in 2026 driven by the magnitude of our interest-earning assets and forecasted interest rates. We expect those assets to decline in the second half of the year following the retirement of our 2026 notes.

Our estimated adjusted tax rate is anticipated to be approximately 24% aligned with our tax rate this past year. And we anticipate our weighted average diluted shares to range from $152 million to $157 million as compared to $145 million this past year. This guidance contemplates approximately $7 million to $12 million of incremental shares associated with our convertible notes, assuming a stock price approximating recent levels. As a reminder, an illustration is included within our earnings presentation to assist and quantifying the incremental shares associated with our convertible notes going forward.

That's all I have. I will now turn the call over to Jarrett.

All right. Thanks, Bryan, and good morning, everyone. 2025 was another strong year for WisdomTree and more importantly, a year that reinforced the core premise we've been building for several years that consistent organic growth paired with disciplined execution drives margin expansion and meaningful earnings growth.

As Bryan mentioned, we delivered $8.5 billion in net flows, translating to an organic growth rate of approximately 8% for the year. And that puts us ahead of many of our public peers but just as importantly, it came through volatile markets and shifting macro conditions. Our growth held across risk on rallies, interest rate uncertainty and equity rotations and Q4 reinforce that momentum.

From a profitability standpoint, we expanded operating margins by nearly 300 basis points. We've maintained tight expense discipline while continuing to invest in growth, demonstrating that margin expansion and investment are not mutually exclusive and that balance remains a defining strength of our model.

We saw especially strong momentum in our metal strategies, including both physical and overlay products with AUM up 83% and more than $1 billion in net inflows across the suite. Importantly, this traction showed up in both Europe and the U.S., reflecting a global reallocation towards real assets and we believe there is a multiyear growth story unfolding in metals, which currently represents 28.5% of our global AUM as investors continue to seek inflation-sensitive and alternative exposures and our lineup is well positioned to capture that demand.

In Europe, we're now seeing the results of years of investment coming fully into view. What began as a diversification effort has become a true growth engine. Our European Defense Fund was one of the most successful launches in firm history and among the top-performing launches industry-wide in 2025, but the story is broader than any single product. Product development remains a core strength of the firm. We launched more than 30 new strategies last year across commodities, thematics and tactical exposures with successful launches in areas such as rare earths, quantum computing and nuclear energy. These are not one-off outcomes, they reflect our ability to identify themes early, execute across the platform and sustain momentum across market cycles. As we look to 2026, our focus remains on delivering differentiated products that perform and persist.

Our portfolio solutions business, models and SMAs continues to be another major growth engine. Model AUA grew to over $6 billion, up from $3.8 billion at the end of '24, driven by both new users and deeper adoption. We're also seeing strong growth in custom model mandates, which enhance stickiness and deepen client relationships. The expansion of our SMA capabilities through Quorus is unlocking a larger and more complex adviser opportunity set. These solutions are helping to stabilize flows in volatile markets and embed us more deeply into adviser workflows. It's no longer about selling a single ticker, it's about portfolio construction, and we're winning in that space.

In digital assets, we moved from infrastructure build-out to early monetization. Tokenized AUM reached $770 million by year-end, up from essentially zero just 12 months ago and that reflects real adoption and growing client trust. Our institutional platform, WisdomTree Connect scaled from 4 onboarded institutions to 29 and the number of wallets holding WisdomTree assets now totals more than 3,500 with engagement steadily improving. The infrastructure is built. The products are live and the focus is now on scaling.

Finally, in private markets, our acquisition of Ceres Partners added a long duration diversifying revenue stream to the firm. And since closing in early October, AUM has grown to about $1.9 billion including 8% annualized organic growth in the fourth quarter. It's a strong early outcome and one that's already expanding the types of conversations and clients that we're engaging with.

So stepping back across public markets, digital assets and private markets, we're building a broader and more powerful business. As we enter 2026, several growth engines are already in motion. Our ETF platform continues to deliver consistent organic growth. Europe has scaled into a meaningful contributor, models and SMAs are embedded deeper into adviser workflows, tokenization is generating real flows and private markets are expanding our reach and revenue mix. We're seeing broad-based traction across asset classes, delivery channels and client segments, and that balance creates durability and durability is what compounds over time. we are clearly executing against the strategy that is working.

And with that, I'll turn it over to Jono.

Thank you, Jarrett. Hello, everyone. I'll be brief today. You've heard the story today from both Bryan and Jarrett: strong results, improving guidance, clear vision and disciplined execution. What you're seeing is our strategy playing out as intended. Organic growth and operating discipline working in tandem having delivered margin expansion, higher earnings per share and sustained momentum across market regimes.

WisdomTree is the strongest it's ever been. We've reached new levels of scale, not just in AUM, but in capabilities, in client reach and in delivery. We're diversified across asset classes, geographies and channels, and that diversification is powering resilience and growth at the same time. Europe, models, tokenized assets and private markets, these aren't experiment anymore. They are real businesses contributing real flows and creating real value for shareholders.

With strong and improving guidance from Bryan, it's clear that we're entering 2026, not just with confidence, but with conviction and momentum. We are building something durable and something compoundable. Today's results speak for themselves, but still, I'd characterize it anyway as the beginning of the next chapter at WisdomTree.

With that, I want to thank you for your attention today. Operator, let's open up the call for questions.

[Operator Instructions] And our first question comes from the line of Mike Grondahl with Northland Securities.

Congratulations on the December quarter and January so far, too. One question. When you look at Slide 5, what do you see as the biggest maybe one or two opportunities for WisdomTree in '26 and '27? Like what's the low-hanging fruit for some market share you should be taking on that slide?

Thanks, Mike. Market share, I guess I'll turn it over to Jarrett or to Jeremy to make initial comments.

From one of the places we are seeing incredible success. I'm sitting in Milan right now and Team Europe has taken leadership in a number of different areas from commodities as the franchise, but thematics generally, when you look at where we've done the sort of blockbuster European Defense Fund raised where one of the most successful funds is bleeding into other thematics. You see the interest in industrial metals and rare earths as a key geopolitical spot. We have a rare earth fund rare that was $100 million in November. Today, it's at $700 million and 3 of our rare earth and strategic metals funds, about $1.4 billion. They've had market-leading performance and like the most important themes for the market of the geopolitical tension and to rare earth supply chains. And so we're incredibly bullish on the leadership position in thematics. The thematic lineup within Europe is growing. And we have -- in just January alone, we've taken 25% of all the flows to thematics, and we see that continue to be a very ripe place for market share gains out of Europe.

And back in the U.S. on the commodity run that we've seen, our capital fishing family is a very efficient family for unique exposures. You've seen this big move in gold and silver over the last months and people have been under allocated to gold. We see finding ways to help people add more of these precious metals portfolio as very useful. And Jarrett referred to the $1 billion that's been in our capital fishing gold portfolios in the U.S. Those are big market share, very innovative new strategies when the typical U.S. investor has 2% in commodities when being neutral to commodities is, in gold in particular, will be a 12% allocation. So the U.S. investors have been very under-allocated there. We think there's more to come, and we've got a lot of creative solutions there.

And I'd just jump in, this is Jarrett, just adding additional thoughts. I mean, really, look back, we continue to successfully execute against what's been a multiyear strategy that's working. We've got a differentiated asset mix. But in that, we've got an ETF product suite that is really broad. It's very deep, and we think has the ability to win share and win business in any market environment. We've got the models business, SMAs, direct indexing, we're gaining share there. We look to gain share in tokenization in private markets. And as we said in the prepared remarks, we've got a growth engine that's firing on many different cylinders, and really gaining share across the board, but this isn't a one-quarter event. This has been a multiyear event, and we just keep doing it quarter after quarter.

Yes, you're definitely on a roll. I mean, just look at the AUM. Second question is just, hey, that discretionary spending $80 million to $86 million, what are the major categories that's going to? Can you kind of help us think about those investments?

Yes. So it's Bryan. I would say it's largely driven by marketing and sales-related expenses. It's really tied into our growth initiatives. We're looking to accelerate momentum on the back of our record AUM, our 8% organic growth and a strong start to 2026. The number is up versus last year, but we continue to manage our expenses with an eye towards maintaining incremental margins north of 50%. So notwithstanding the increase in guidance, we should see further margin expansion versus 2025.

The next question comes from the line of George Sutton with Craig-Hallum.

Great job on the margins. So I wanted to ask you, Bryan, when we look at the $0.29 for the quarter, and we obviously look out to Q1 where the comp ratio may be a little higher. But truth be told, we did not have $0.29 quarter on our bingo card for the next two years. So can you just give us a sense, are we talking about a higher start base pretty consistently going forward?

Yes, I would say so, absolutely. What drove, I think, our beat versus where the analysts were the comp ratio was one main component there. Our comp ratio came in at 28% this past quarter. And again, our range is 26% to 28% going into next year. So that's a 1 to 2 percentage point downward shift versus where maybe the Street was and versus where our comp guide was -- where our comp was in the fourth quarter.

Other revenue is another one. I think last quarter, we were at about $11 million per quarter. We're doing $13 million now, and that's on the back of higher AUM in Europe, but also there's higher turnover that we're seeing as well generates more transaction fees. And so that's helpful to the revenue base.

I think some of the beat this quarter may have been Ceres' performance fee, that's a wildcard. I think as it relates to our internal expectations, the number was maybe $2 million higher than kind of what our baseline was. But all in, I would say that our guidance and where we sit today with our AUM at about $160 billion positions us for more quarters to come like the ones that we just experienced.

It's Jarrett, just jumping in one more time. When I look at consensus estimates over the last number of years, we leave it up to the Street, to the analysts to come up with their own growth forecast, but we always seem to be underestimated on our flow growth and once again, looking back at last consensus, I think there was sort of $5 billion of net inflow growth where we've already gotten $2 billion this year. So just another area where we're consistently underestimated.

Jarrett, one question for you specifically. So the tokenization trend is becoming massive and you've been way in front of that. You mentioned it is now time for us to scale. Just curious how you do plan to scale, particularly in the light of many other folks sort of joining the party? Are some of them going to join you from a partner/customer perspective? Or how do we think forward there?

Well, let's let Will have a shot at that one first. Will, do you want to take it?

Yes, sure. It's Will here. So yes, we absolutely do expect to scale going forward. I'd say to your questions, we see distribution through really three channels: one is direct to retail, which for us would be WisdomTree Prime; the second would be WisdomTree Connect direct to business; and the third, which is really evolving is more of a platform sale, also a sale to self-hosted wallets.

So as a lot of people are entering the space, we're in a lot of active conversations with whether it's other fintech apps, whether it's kind of software service providers, broker-dealers around making our products and services available through their platforms as well. And that's some of the beauty of how we've built this, right? We actually have the capacity to serve retail, which a lot of the other firms in the tokenization space just do not have that capacity. They've been focused on offshore exempt products that have like really high minimums, some north of $1 million. The minimum R&R in money market funds the dollar. So we're really well served to serve retail especially, including through these platform relationships.

And that's part of why we've kind of shifted how we're disclosing funded account metrics. So we're talking about funded wallets now. I mean the vast majority of that is WisdomTree Prime-funded wallets. But especially in 2026 and going forward, we expect that mix to evolve where a lot of the wallets are going to be holding our products are going to come through other channels and other platforms. So all told, we think that gives us an opportunity to scale really quickly going forward. It is just kind of a nice reflection of the way we've built our infrastructure.

Let me just -- one thing. In the old days, sometimes going back 10 or 15 years, the analysts would ask me like what's the next top fund? And if I were to go out on a limb and make a prediction, I wouldn't be surprised if over the next 3 years, our tokenized money market fund isn't the largest fund within WisdomTree's Empire. But I'm sorry to interrupt you, George, you keep coming.

Well, actually, I do have a specific last question for you. I was a little stunned at the price paid for Innovator Capital. They had $30 billion in assets and got paid $2 billion for them, not terribly distant from where you trade on a substantially larger asset base. And I'm just wondering if part of the growth strategy for you may look into this outcome-based ETF/Modern Alpha, I know you've got a couple of funds there, but what is the plan in that market specifically?

So the -- as Jarrett said, we have a very ambitious fund launch strategy in the year ahead. We do have a number of option-based strategies that are performing very well. We should be able to drive significant more adoption through those already. But we definitely have an eye towards building out more within that space for sure. We see it as a big opportunity as well as do others. Jeremy, is there anything you'd want to add to that?

Yes. I mean the WTPI is our equity premium income fund in the U.S. a $400 million fund. We've taken steps to improve performance and distribution and characteristics. We think that fund does have a lot of potential. But I would say, like Jono said, very aggressive plan for that space, and we're going to do a lot more.

The next question comes from the line of [indiscernible] with Raymond James.

Does the macroeconomic volatility generally benefit WisdomTree's business as most products are diversified across asset classes? Or is it more dependent on specific themes that are present, such as gold and commodity prices, which we've seen this year?

Jeremy, do you want to start there?

Yes. I think a large theme you've heard is just the breadth of funded exposures and how well diversified we've become. If you go back 10 years ago, currency hedged Europe and Japan, where 80% of the business. I know it was a very concentrated world where only a strong dollar in Europe and Japan in favor were your key drivers. Now you have a very, very broad cross-section. You had growth in value. I talked about the thematics that are a growing range for us that are really some of the biggest growth companies out there. We launched a Quantum computing fund, and it's raised $150 million in a short amount of time, but also things like AI, we have big expansion plans for more thematic, but also our traditional value fund from small cast to quality and a lot of -- really all marketing environment type funds. So I think we're as well positioned for a strong dollar and weak dollar environment as you can get. And the commodity -- the macro uncertainty, which has led to the big moving commodities, there's really no firm better position for that environment. So I think we are proud of the diversification that we've achieved.

And I think that's another point that gets missed a lot is just how well diversified we are and how well suited we are for almost any market environment and again, we haven't just proven that in one quarter, that's been something you've been able to look at and witnessed over the last 5 to 10 years.

Is WisdomTree's approach to growing digital asset base, is it more about educating people about digital assets into accreditation? Is that a big part of the strategy? Or are you more focused on capturing clients that are already familiar with these types of assets and services?

Will?

Yes, it's really the latter right now. I mean I'd say we are serving people who have decided that they want to be operating on chain. So that would be retailer institutional people. And the universe of people who have made that decision is growing very rapidly. So you look GENIUS Act, I'd say, a real milestone in the U.S. for more and more people just having the regulatory clarity around stablecoins and the ability to use stablecoins and wallets going forward. So I'd say, to use our products well, you need a wallet. And as more and more people are starting to adopt wallet-based infrastructure for financial services to use stablecoins to access these tokenized funds, other real-world assets, that just grows the applicable universe of who we can serve. So WisdomTree Prime has got a great experience for allowing retail to kind of -- they can also fund with Fiat, but fund with stablecoins as well. We just pushed some new updates there where New York users, for the first time, can fund with stable coins. And that just allows more and more people to kind of access the products that we're bringing forward.

Okay. And if I could squeeze one more in. When building out new products, do you generally utilize existing expertise and staff members? Or do you tend to seek out more outside talent when looking to build on your strategies?

I'll take this. For the most part, there's tremendous leverage to the business. For the most part, it's all off of existing talent and we have a very strong research and product development team that spans truly every asset class. So I think it's the -- that we're really building off of the core strengths of the firm today.

Actually, as you say that, I am reminded though, we do we are always investing in our capabilities. So Quorus was one of the investments that we made towards the end of last year, but one that seems to not get that much attention. We made an investment in the firm AlphaBeta, an Israeli AI firm that's helping us with product development and we have recently launched a fund based off of that. So it is a mix. There's no question. It is a mix, but it's very, very scalable. Our head count has remained very, very disciplined type.

The next question comes from the line of Keith Housum with Northcoast Research.

It's been a quarter now with Ceres under your belt a little bit more on that. I guess perhaps you could talk a little bit about lessons learned so far through the acquisition and opportunities going forward to expand their distribution to help grow their AUM even further?

I'll start but Jarrett, please jump in. I mean we're -- this was one, we've proven over the last -- in our history that M&A has been very successful for us. This was a very specific acquisition, very determined in our desire for this particular asset class. The integration could not have gotten more smoothly, the employee base and the way we structured the transaction really seems to have made a lot of sense to both the seller and to WisdomTree. And so we're really -- it's been very, very easy integration. So I wouldn't say that's lessons learned, I would say that's added confidence in our ability to do strategic M&A.

But Jarrett, is there something you would want to add or Jeremy?

Yes. I guess I'd add, it's not so much lessons learned. So far, it's confirmation of what we thought. What a great business, what a great fit with us, what a great team. They've averaged 6% to 7% net inflows over the past 10 years. They've had zero years of net outflows in almost 20 years where they've been operating. We see definite synergies both with distribution and product. We don't give out growth forecast, but we believe that we should be able to do better than the historical averages because of that confirmation of just what a great business and what a great fit this is for us.

Great. And a second question for you. In terms of the digital asset strategy, nice growth in the third-party WisdomTree Connect users from the beginning of year to the end of the year. Can you just give us an example of perhaps who some of those users would be just in terms of the type of businesses? So that we can better kind of visualize who the end customer is here.

Will?

Yes, absolutely. So really seeing kind of four main types of use cases right now. Specific to the money market fund, that's a eligible reserve asset under the GENIUS Act for stablecoin reserves. So we do have stablecoin issuer clients, and we think that's going to be one that continues to grow. We're using WTGXX as part of the reserves.

The second and kind of related is really around businesses that are using stablecoins as part of their treasury management workflows. And then they can invest in WTGXX as kind of a yield-bearing asset within treasury management.

The third is really as a collateral instrument. So people talk a lot about collateral mobility in tokenization, the ability to move collateral around much more quickly. So we are seeing use cases of investors holding WTGXX as a collateral instrument.

And I'd say the fourth is really just around broadly on chain investing, right? So there are lots of investors in the crypto DeFi space who are looking for access to real-world assets, looking to use those as part of their investing strategy, use them in DeFi. And that's where we're actually very well served to service them. we've got a wide range of exposures beyond just the money market funds. So if they want equity exposure, they can -- their private credit exposure, they can do that through our platform.

So it's really those four use cases that we're seeing to date.

This will conclude the question-and-answer session. I'd like to -- and I would like to turn the call back over to Mr. Steinberg for closing remarks.

Thank you. as I said earlier, it does feel that WisdomTree is entering a new chapter in our history, new scale and new capabilities that are investments that we've been making over the last to 7 years are really starting to drive shareholder momentum. I'd also like to turn that more into a conversation about valuation. It does feel that WisdomTree is underappreciated in the market. We have certain elements that I'd really like to bring your attention to.

The first is the diverse AUM mix, which -- the mix of our assets makes WisdomTree more resilient than other asset managers, we're showing the upside in a market in the recent -- in January or year-to-date. But we're also -- it really gives us downside protection, the breadth of the commodities, the short duration fixed income with the upside of digital assets as well as just sheer equities and the thematics that Jarrett spoke about earlier.

And our record of strong organic growth and margin expansion, it really should start showing up, I think, in multiple expansion, WisdomTree trading at, if you would update your numbers, if the analysts will update their numbers for AUM with today's guidance, it looks like we're trading at 7 or 8 terms below the S&P 500. And it just doesn't feel like with the outlook that we have with the footprint that we have that we should be trading as -- at a lower multiple to the market, WisdomTree's footprint in global ETFs, a leader in tokenization, an emerging player in differentiated private assets, it really feels that we have barely tapped into what we're capable of doing. And I think going forward, we expect to be able to drive significant valuation.

Over the last 5 years, we've been a leader, if not the leader, in stockholder total return within our base of -- our category of traditional assets. So for the last 5 years, really driving substantial improvement over relative to the other asset managers. And as we start to scale our market cap to $2.5 million and beyond, I hope we'll be able to pick up more analysts.

To help us tell the story, it does feel that we are an underappreciated story within the marketplace. Within digital assets, there are a number of firms that are sort of pure plays that have come to market with extraordinary valuations. And I'm not saying their valuations are right. But as someone who has a vertically integrated digital asset business, not just the funds, but our tokenization platform, our digital TA, we really have this fully integrated platform, which I believe is being fully underappreciated by the market today. And as I did say earlier, I wouldn't be surprised if our tokenized money market fund doesn't emerge as the largest fund within WisdomTree if that growth, which started in 2025 where we went from almost nothing to $700 million of AUM. If it continues, I hope that we'll be able to really drive investor attention into how successful and well positioned we are within the digital asset story.

So with all that, I just would say, I hope that our shareholders fully appreciate what we're doing. And to the analysts, I think you should focus even more closely on the WisdomTree story. It feels like the best is yet to come. So thank you, everybody.

Thank you. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

"

"

"

"

"

" Craig-Hallum Capital Group LLC, Research Division

" Northland Capital Markets, Research Division

" Morgan Stanley, Research Division

" Northcoast Research Partners, LLC

" Oppenheimer & Co. Inc., Research Division[ id="-1" name="Operator" /> Greetings, and welcome to the WisdomTree Third Quarter 2025 Earnings Results Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Jessica Zaloom, Head of Corporate Communications. Thank you. You may begin.

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 plans, goals and objectives and drive stockholder value. 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 Factors section of the WisdomTree annual report 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. WisdomTree assumes no duty and does not undertake to update any forward-looking statements.

Now it is my pleasure to turn the call over to WisdomTree's CFO, Bryan Edmon.

Thank you, Jessica, and good morning, everyone. I'll begin by covering our third quarter results, along with updates to our forward-looking guidance before turning the call over to Jarrett and Jono for additional updates on our business.

We ended the third quarter with record global AUM of $137.2 billion, driven by strong organic growth and favorable market conditions. This includes record U.S. AUM of $88.3 billion, record European AUM of $48.3 billion and digital AUM of almost $600 million. In the third quarter, we generated $2.2 billion of global net inflows, bringing year-to-date inflows through September 30 to $8.8 billion, and annualized organic growth pace of 11%. These flows have been broad and diverse across our global product suite with contributions from every region.

Year-to-date inflows include $2.5 billion in the U.S., $5.8 billion in Europe and roughly $550 million in digital assets. Significant contributors during the third quarter included meaningful flows into our European gold and cryptocurrency products as well as our European defense fund and our digital money market fund.

We also reached a major milestone in early October with the closing of the Ceres acquisition. This transaction immediately increases our revenue capture and operating margins by more than 200 basis points while further diversifying our AUM mix by introducing farmland as a negatively correlated asset class. Ceres also opens the door to incremental revenue opportunities stemming from alternative uses of farmland, including solar projects and AI data centers.

Backed by strong organic growth, disciplined execution and strategic capital deployment, we are operating from a position of strength, well positioned to deliver sustainable growth and long-term shareholder value.

Next slide. Adjusted revenues were $125.6 million during the quarter, an increase of 11.5% from the second quarter and up approximately 14.7% versus the prior year quarter, driven by higher average AUM. Our other revenues increased to $11 million this quarter versus $8 million to $9 million in previous quarters. As a reminder, other revenues comprise both asset-based and transaction-based fees on our European listed products, of which approximately 70% of these revenues are asset-based.

While difficult to forecast, we would suggest the magnitude of other revenue generated in this most recent quarter serves as a fair approximation of what we could expect going forward, assuming current European AUM levels. On a year-to-date basis, our adjusted revenues have grown 10.7%, 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 $34.5 million or $0.23 per share. Our adjusted net income excludes the loss on extinguishment of convertible notes of $13 million, acquisition-related costs of $2.4 million and other miscellaneous items.

Next slide. Now a few comments on our forecasted guidance. We have no changes to our previously reported compensation and discretionary expense guidance. We reported a gross margin of 82.2% in the third quarter, an increase of over 100 basis points versus the second quarter due to higher AUM levels. We anticipate our gross margin increasing to 83% in the fourth quarter when factoring in the incremental revenue arising from the Ceres acquisition, resulting in an overall gross margin of about 82% for the full year.

We reported $8 million of adjusted interest expense in the third quarter, an increase from $5 million in previous quarters due to convertible notes we issued in mid-August to facilitate the Ceres acquisition. We anticipate our adjusted interest expense to be approximately $11 million in the fourth quarter, taking into consideration the full quarter impact of this recently completed financing.

During the third quarter, we reported $4 million of interest income, higher than our previous run rate of approximately $2 million per quarter due to temporarily investing the capital raised from our convertible note issuance to facilitate the Ceres acquisition. We anticipate interest income in the fourth quarter reverting back to earlier levels of approximately $2 million to $3 million.

And our weighted average diluted shares were 150.7 million during the third quarter, which included 5.8 million of incremental shares related to our convertible notes partly offset by the weighted average effect of repurchasing 6.8 million shares of common stock in connection with our recently completed convertible note issuance. We anticipate our weighted average diluted shares to be 146 million to 149 million in the fourth quarter, taking into consideration the full quarter impact of the 6.8 million shares we repurchased in August. This also contemplates approximately 5 million to 7 million incremental shares associated with our convertible notes, assuming a stock price approximating recent levels. As a reminder, an illustration is included within our earnings presentation to assist in quantifying the incremental shares associated with our convertible notes going forward.

With respect to the Ceres acquisition, our overall expense guidance for the year remains largely unchanged. Ceres' estimated annualized operating expenses are approximately $15 million, of which roughly 80% is related to compensation. Approximately 1/4 of this expense should impact us in the fourth quarter. While we generally don't provide revenue guidance, Ceres' trailing 12-month historical revenues were approximately $40 million, which should be informative for establishing a baseline revenue expectation for your models.

Revenue is comprised of both a base fee of approximately 1% on AUM and a 20% performance fee. Performance fees generated will ultimately be driven by the underlying returns of the farmland managed by Ceres, and therefore, recent historical actual revenues earned is not indicative of revenue that may be earned in the future.

That's all I have. I will now turn the call over to Jarrett.

Thanks, Bryan. This was another solid quarter for WisdomTree, highlighted by record firm-wide AUM, strong net inflows and continued execution across all areas of our business. We ended the quarter with over $137 billion in AUM, setting a new high watermark, not just for the firm overall, but for every one of our business lines individually.

Net inflows exceeded $2.2 billion for the quarter, driven by broad-based strength across our product lineup with nearly twice as many funds seeing inflows versus outflows and that breadth of performance underscores the depth and resilience of our platform and the consistent execution of our strategies across regions, products and channels. Since quarter end, we closed on our acquisition of Ceres Partners, bringing our total AUM to over $140 billion for the first time in our history, an important milestone that also marks our entry into private assets, an exciting new growth vector for WisdomTree.

Gold also continues to be a standout. Our physical gold and gold overlay strategies now exceed $22 billion in AUM, reflecting 57% growth year-to-date. These strategies brought in over $1 billion of net inflows in the quarter alone, highlighting both the strength of our offering and the trust we've earned from clients seeking real asset exposure in today's environment.

And importantly, we're not just growing AUM, we're also deepening client relationships. The number of clients using WisdomTree products grew meaningfully during the quarter and the average number of WisdomTree solutions used per client also increased. And that combination, wider reach and deeper wallet share, that's the foundation of sustainable organic growth, and we're seeing it at work.

Turning to models. This continues to be one of our fastest-growing areas. Model AUM grew to approximately $5.85 billion, up more than 50% year-to-date. Adviser adoption remains strong with the number of advisers using our models now up sharply from the start of the year. Custom models were again a key driver in the quarter. We onboarded 13 new custom model clients, reinforcing our ability to meet advisers where they are. With an $18 trillion opportunity across 85,000 advisers, we're still in the early innings, but our traction is real and growing.

In digital assets, we continue to also see meaningful progress, particularly within our WisdomTree Connect platform, while WisdomTree Prime is now live with on-chain transfer capabilities. We exited the quarter with around $600 million in AUM with peak levels near $900 million, driven largely by flows into our blockchain-enabled money market fund.

Two core client segments are leading adoption, stablecoin issuers using the fund for reserves and on-chain native businesses using it for corporate treasury. Our ability to make redemption as seamless as funding has proven to be a real differentiator. And based on client feedback that ease of use is not a given with competing products. It's exactly the kind of frictionless experience that builds trust and wallet share over time. While digital asset flows can fluctuate week-to-week, the trend is clear. We have strong traction year-to-date and an even stronger pipeline ahead.

Operationally, we remain focused on what we can control, managing expenses with discipline, maintaining efficiency and leveraging the scale of our platform. Our business model continues to demonstrate tremendous operating leverage. And as we grow, we see substantial margin expansion ahead. Back in February, we laid out our 2025 strategic priorities, and we're executing on all facets of this plan. We're doing what we said we would do, and we're doing it with consistency, focus and discipline.

In summary, we have strong momentum. And as we look ahead, our foundation has never been stronger, a diversified, scalable platform that continues to perform across market cycles and positions WisdomTree for long-term success.

And with that, let me now turn it over to Jono.

Thank you, Jarrett. Hello, everyone. Today, I'll be brief. It was a strong and straightforward quarter. Everything Bryian and Jarrett shared today reinforces that when sound strategy meets disciplined execution, strong results follow. WisdomTree is the strongest we've ever been. We've achieved a new level of scale. We've achieved a new level of diversification, diversification of asset class, client type and geography. Our scale, stability and growth initiatives have positioned WisdomTree to thrive in the years ahead.

Now I'd like to turn the call back to the operator for questions.[ id="-1" name="Operator" /> [Operator Instructions] Your first question comes from George Sutton with Craig-Hallum.

Nice results. So Europe has obviously been the star with 2x the amount of flows that the U.S. has seen. Can you just give us a kind of a 3- to 5-year vision of what you would expect to see there in terms of flows, U.S. versus rest of world?

George, thanks for the question. Europe is a few years behind the U.S. in terms of ETF adoption. I think -- so we feel that there's very strong fundamental underlying growth for Europe. And we really have achieved with nearly $50 billion of AUM and a very strong revenue capture, just a very strong footprint within that space. So I'm expecting that we'll continue to see very strong growth. It's hard to put a number on the 5 years, but the fundamentals of our European business is very strong. And we're seeing a synergy between the U.S. and the European business, a lot of cross-pollination of ideas and also Europe is the gateway to the global investor. And so it's a very positive for WisdomTree. Jarrett, is there anything you'd like to add?

Yes. The only thing I'd add is really what is, I think, exciting for us is our global product suite. We now really have such breadth and depth that no matter what the markets are doing, we have a set of our products that are going to play well in that market. And you're seeing that on display, I think, this year. We've had still nice positive flows in the U.S. But as you pointed out, Europe has been great. But then as Jono also pointed out, some of the global launches now are also paying dividends. So I think it's really the global product suite that is on display here.

Got you. So I wanted to just spend a little bit more of a focus on the digital asset side. You have a tech stack that really created this and you've been working on it for years. Now this -- the market is viewing these kinds of tech stacks as extremely valuable. I don't know if you saw securitized going public via SPAC for $1 billion. My sense is that's the least valuable part of your tech stack. So I'm just curious, when do you think the market will begin to appreciate this? Have you contemplated a tokenization as a service? Just wondered if we could move in that direction.

Will, why don't you start?

Yes. Thanks for the question. So yes, I did see the news, I did read their deck. I mean the short answer is yes, and we're in active conversations around tokenization as a business concept. But just taking a step back in terms of what's that technology stack that you're referring to. So we compete with securitized products today like [ BIL ], other products in the market. [Technical Difficulty] Think of us as compared to our competitors and how we're winning this business. At a big picture, it's the most regulated structures with the highest functionality.

And in terms of the tech stack that we've got, it's an asset management platform. So that's what WisdomTree does today, right? We're the asset manager. It's a tokenization platform. So we refer to it as our token issuance platform, TIP. And it's also stablecoin orchestration. So an example of a stablecoin orchestrator would be like a zero hash that's been in the news recently. So we do all 3 of those things in our stack. And the synergies that come with that have allowed us to kind of customize things for clients and kind of meet them where they are and win business that way.

I think going forward, we're going to be adding things like trading and 24/7 T instant liquidity to these exposures as well, making them feel more and more like a crypto-native business -- crypto native exposure, sorry, improving upon what exists today. We're very excited about that. I think you'll be seeing more coming there in the near future. So all told, I mean, we feel great about our position in the market with this. Hopefully, the market continues to value and appreciate that, and we're going to keep winning business going forward.

George, let me just throw one thing in. I don't know whether securitized actually goes public with a valuation of $1 billion. But if it does, you would literally have a public direct value comparison to a part of our digital asset business to put in your sort of sum of the parts analysis of WisdomTree. And I would expect that if such a thing were to take place, WisdomTree would trade higher.

Great. One other question, if I could. You mentioned relative to Ceres and the fact that you now have entered the private asset market. When you say we have just now entered the private asset market, are you contemplating other moves there? And I'm just curious how that would be done.

So without -- first, we're very, very disciplined in our acquisition, a highly accretive transaction, one that really gave us leadership in a very exciting uncorrelated asset. But this is definitely just the beginning. For those that have been following WisdomTree for a number of years, if you remember, our first investment in Europe was now almost 11 years ago with an investment in something called Boost, and you could see how over a 10-, 11-year journey, how we grew that. We're definitely focused on privates. We see opportunities. I can't flag for you how we will execute against it, but only know that we're focused on it, and I expect that you'll see more to come.

[ id="-1" name="Operator" /> Your next question comes from Mike Grondahl with Northland Securities.

Two questions. One, looking at Slide 13, the digital asset metrics, the $592 million that's just grown like a weed. Can you talk in a little bit more detail the underlying drivers of that? You mentioned stablecoin issuers. And what customers, whether it's institutional or retail, are buying those funds? I think if you break that down, it would be helpful.

Will, I think that's you.

Yes, happy to take the question. So in the deck, $590 million. I think as of today's close, it should be about $680 million. So yes, it's grown very quickly quarter-over-quarter, I mean, up from $30 million at the start of the year. So that's exactly right. I mean we see a lot of success with stablecoin issuers. So these are businesses that are whether in a regulated construct or kind of in other constructs issuing stablecoins and they invest in WTGXX as a reserve asset that backs their stablecoin. So that's kind of one primary market segment.

We also see, as Jarrett referenced, so businesses that are crypto native or blockchain native that use stablecoin as part of their treasury management. They're looking for a kind of a treasury asset that's yield bearing that kind of fits within their workflows. And that's where the WTGXX, the money market fund has great kind of product market fit as well. I expect as more and more businesses in the U.S. adopt stablecoins, the addressable market for that is going to grow even more.

And then beyond that, there's kind of different collateral management use cases that we're seeing as well, both in the kind of a crypto-native construct, but also with traditional businesses as well. So those are the 3 types of businesses that we're seeing success on the institutional side.

On retail, where we see the most applicability going forward is with kind of on-chain native customers. We call them on-chain experts. So these are people that participate in DeFi, invest in DeFi, do things like yield farming. They're looking for traditional exposures that they can use as part of their strategies. So like just by way of example, we launched yesterday all 14 of our products on the Ploom blockchain.

Maybe it sounds in the weeds, but it's a blockchain that's focused on real-world asset exposures, got a $10 million seed investment as part of that. And you can just see in the community after that announcement, the excitement around having assets that yield something like north of 10% that they can use as part of their exposures. So those are the types of customers that we're seeing that's driving that AUM higher.

Will, could you also talk about our public filing for the money market fund that's in -- we're waiting for the SEC to reopen?

Yes. And I alluded to this, but I think critically for these exposures, we want them to trade in the secondary market at instant liquidity, 24/7 liquidity. That's really the power of blockchain that you've seen with tokens, Bitcoin even itself, right? Native 24/7 peer-to-peer transferability and kind of active markets, right?

So we are actively working on bringing that forward for the WisdomTree money market fund, WTGXX. That kind of adds functionality above and beyond what exists today in the traditional space and really meets a lot of the clients that I named where they are, where in addition to kind of some of the on-chain functionality, on-chain orders that we have today, the ability to sell instantly for stablecoins just adds a whole new layer that they can't do today. So that's -- we are working on that. There's a public filing around it that you can read more on at the SEC. And hopefully, we can bring that forward soon.

Jono, what would you say are the top 2 priorities for 2026 as you're sitting here today?

I would say faster revenue growth and higher revenue capture. Can you scale?

[ id="-1" name="Operator" /> Your next question comes from Michael Cyprys with Morgan Stanley.

Maybe just sticking with the digital assets topic. Can you just talk a little bit about some of the steps you're looking to take over the next 12, 24 months to expand distribution access to build more customers, more assets in these funds. I think most of the traction has been on the money market fund, but you have a whole host of them. I think you mentioned 13. You have the treasury one. You have a gold one that's been out there for a bit. Remind us which blockchain they're on? How are you thinking about expanding access? What's the scope of partnering with some folks out there like Coinbase, Gemini and others?

Will?

Happy to take this. So yes, so in terms of -- specifically on the blockchain question, so we're now on 7 public blockchains, Ethereum, Arbitrum, Avalanche, Base, Optimism, Stellar and now Ploom, I think I named all 7. So I mean, it kind of gets into the weeds, but really, we want to just meet clients where they are. So when we see commercial opportunities that there's a kind of organic adoption happening on a certain blockchain for a certain use case, we like to bring our products there and certain technical kind of considerations and risk considerations that go into that as well.

So I mean, in terms of expanding the reach, so right now, we've got kind of 2 platforms that we're onboarding people to, right? There's U.S. retail that can onboard to WisdomTree Prime, which feels a lot like a kind of traditional neobank, neobroker experience. We think we've done that as well as it can be, but that requires downloading an app, signing up, kind of going through that process. We've also got WisdomTree Connect, where there's businesses that onboard with us, and that's kind of a traditional business KYB onboarding process as well.

And then once we onboard them, we essentially tag the wallets that they wit list with us, and they're allowed to enable to engage with our products and services from there. So that's kind of where we're starting at today. I think there's a lot of opportunity to just expand onboarding beyond what we can do just directly through those 2 channels. I mean one that we've talked about in the past would be the right sorts of fintech relationships, other fintechs where we can do a B2B2C model where WisdomTree's products, the transactions that we support could be available through other apps as well.

And I think what's actually quite interesting about doing this in kind of a DeFi native way is there could be other ways that -- and this is all kind of whiteboarding hypotheticals at this point, but the industry is working on this is onboarding based on active stations or onboarding people in a more decentralized construct where they can just onboard their wallet directly with us by filling out a web form.

So I mean, that's early innings on those things, but a key focus for digital assets over the next 12 months is in addition to how do we get these things trading within crypto-native workflow, but how do we just onboard more and more people just to sell our products and services to them while still doing it in like a very trusted regulatory compliant way. So that's how I think about it. I hope that answers your question.

Great. And then more broadly on tokenization with the Ceres acquisition that brings you into private space. I guess, how do you think about the opportunity for tokenizing real-world assets, including farmland? Where is that on the priority stack? How might you go about that? And what might the steps you need to take in order to bring that to fruition?

Jarrett, do you want to start?

Well, sure. I think there are certain things that are certainly on the roadmap for tokenization that make all the sense in the world. Farmland is actually not one of those. It's not really the most suitable solution for it. So for us, the -- going on farmland, we've got a great model there, great returns, uncorrelated asset, but also some nice synergies with our own distribution team. And so we look to run that business, run it well with the existing team, but then look at how we better leverage our own infrastructure to enhance the returns there.

Mike, so I would also just add that you are seeing -- we're in the early days, the '40 Act ETFs do allow for up to 15% of the portfolio to be in privates. And so I would expect that you will see that evolve for the industry, but for WisdomTree specifically, we think it's a very big opportunity for us to blend privates and publics in the most seamless way. And so there'll be more to come on that in the coming quarters.

[ id="-1" name="Operator" /> Your next question comes from Keith Housum with Northcoast Research.

Guys, just a basic question as we think about modeling the business, the Ceres business you guys acquired here. And I understand these are private assets and they're not priced every day like ETFs. But how would we expect to find like the AUM for this on a regular basis? Or would we? We'll just get it at the beginning of the quarter or the end of the quarter?

Bryan?

Yes, it's going to be the latter. The AUM for Ceres will be reported at the end of the quarter.

Okay. And then the performance-based fees, is there any indicators that we can look at that we might be able to try to estimate what the performance-based fees might be?

Yes, sure. So let's think through the AUM walk. So we are starting with AUM of roughly $1.7 billion to $1.8 billion today. Make your own flow assumption. But as a reminder, we had stated a target of roughly $750 million of AUM into farmland-based strategies over the next 5 years. It would be lower in the initial year as we integrate the business, and it would ramp up over that time horizon. And then we need to think about what mark do we apply to our AUM.

I'm going to assume roughly a 7% to 8% mark on Ceres' AUM plus the flow -- whatever flow assumption we're making. That mark seems to be a reasonable one, taking into consideration rental yields, long-term historical farmland returns, offset by fund expenses and fees. That mark assumption is a baseline solar and data center opportunities could drive this higher. That said, an adverse market environment could drive it lower as well.

The performance fee, it's roughly 15% of the mark on a net basis. So the formula, if I were thinking about this, Ceres' beginning AUM plus your flow assumption times your mark assumption times 15%, and that should get you into the neighborhood of what our performance fee would be. On the management fees, it's 1% of average AUM, and then we provided some indication with respect to expenses on our prepared remarks.

Great. I appreciate that. In terms of the digital strategy, I know there's a lot going on there. I can appreciate it, but I may not be able to understand all the complexities there. But if I think about what the impact is today to the income statement, I guess, what kind of impact are we talking about today? I'm sure it's not that great, but maybe you can verify for me. And then does today's performance justify increased investment or maintaining where you're at and just continuing down that path?

Bryan?

So I'm sorry, just you want confirmation on what our current spend is in 2025?

Well, not only the spend, but also the revenue. I know a lot's going on here, and I understand the fact you've got the...

Yes. Got it. So on the revenue side, right now, we have, as Will had indicated earlier, $650 million of AUM. That's roughly at a, call it, 25 basis point fee capture. And that's our primary driver with respect to revenue today on the digital platform. And the expenses and our net operating loss is in the neighborhood of what we've communicated previously. It's mid-20s is kind of where we're at, at this point in time.

Let me also just add. We believe strongly that there is a structural shift going on. We're ready for it, and the trend is much higher. In fact, I would say we believe eventually, everything -- nearly everything will go on chain. So tokenization of real-world assets over time will change the face of financial services. And with what we've accomplished year-to-date, I mean, we've gone from almost 0 to over $600 million, and we're on the functional cutting edge of what is happening in real-world assets. So we're very, very bullish on it.

[ id="-1" name="Operator" /> And your next question comes from Chris Kotowski with Oppenheimer & Company.

Yes, most of mine have been answered. But I was just wondering the $2.4 billion in outflows post the quarter, it seems like it was like in commodities and USFR on like 2 or 3 days that just look kind of like not your normal flows. I was wondering if there's any explanation you have for that?

Jeremy, do you want to start there?

Sure. Great to talk to you. Jeremy Schwartz, Global CIO. Our commodities AUM, when you look at the start of the year, it started at $22 billion. Today, it's $32 billion. So you've had a 50% to 60% increase in some of these prices like gold moving higher. So I think after the big, big move higher, there was some profit taking, but most people's positions are up 50% down the year. So that was a natural source. And we did see some allocations.

You had the Fed meeting and there's some discussion of interest rates. You saw some people with the robust market put more of that cash to work in other things. In the same time, as USFR redeemed, we saw Japan, which had been in outflow mode, but has reduced -- had $300 million or $400 million, some of that might have been a reallocation putting cash to work. And I think we continue to see from the big flows at the start of the year, just actually a lot of energy below the surface in a bunch of the new thematics having this halo effect where you're getting new funds to scale in $100 million much quicker.

So even beyond those few big ones, you're seeing things like nuclear, rare earth, quantum computing, which are all recent launches get to $100 million in our European business very quickly. So there's a lot of good breadth, as Jarrett talked about earlier, that's building under that surface there.

Yes. Just I want to jump in there, too, and underlying some of the things that Jerry said. I mean some of these you never like to see outflows, but some profit taking in gold when you've seen the move that gold has had is pretty reasonable. With USFR, really, that was down to 1 or 2 clients that were rotating into other names, as Jerry also mentioned. And actually, in one case, and the largest piece of that rotated into something with actually a higher fee. So while AUM was down, the net revenue of that rotation was up.

But the biggest point I'd make is you can get caught up in some of the noise of some short-term moves. But what I'm always looking at are more of the fundamentals. And we continue to do the things that are precursors for continued growth, and that is growing the number of our clients, but also growing the numbers of products per client, and that continues, and that is the recipe for growth. And really, the rest of it in my book is short-term noise, but the long-term fundamentals for growth continue to be with us in a strong way.

[ id="-1" name="Operator" /> And that's all the questions we have today. I'll hand the floor back to Jonathan Steinberg, CEO, for closing remarks. Thank you.

I just want to thank all of you for your time and attention, and we'll speak to you next quarter. Thank you, everybody. Have a good day.

[ id="-1" name="Operator" /> Thank you. This concludes today's call. All parties may disconnect. Have a good day.