WisdomTree, Inc. 2026 Q2 Earnings Call

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, in the Risk Factors section of WisdomTree's annual report on Form 10-K for the year ended December 31st, 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. It is my pleasure to turn the call over to WisdomTree CFO, Bryan Edmiston.

Thank you, Jessica, and good morning, everyone. I'll begin with the review of our second quarter results, followed by updates to our forward-looking guidance before turning the call over to Jaret 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 31st, driven by favorable market conditions, positive net inflows, and the addition of Atlantic House, which closed on May 1st. 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%.

Flow is regenerated 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 movement 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. 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-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 a 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. 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. 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.

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. 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 advisors through models and SMAs, and that business continues to grow faster than the firm overall. 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. Each reflects the disciplined way we're building the firm while thoughtfully allocating capital. 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. 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 two 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 five years and more than 50% over the past three years. 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, an 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.