WisdomTree, Inc. 2026 Q3 Earnings Call

Greetings, and welcome to the WisdomTree Q3 2026 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jessica Zaloom, Head of Corporate Communications. Thank you. 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 Factor 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 CFO, Bryan Edmiston.

Thank you, Jessica, and good morning, everyone. I will begin with a review of our third quarter results, followed by updates to our forward-looking guidance, before turning the call over to Jarrett, Will, and Jono for additional business updates. Our assets under management reached a record $171 billion at quarter end, marking our seventh consecutive quarter of record AUM. Assets increased 5% from June 30, driven by strong net inflows and favorable market conditions. All-time highs were achieved across our U.S., European, and on-chain businesses, reflecting continued growth across our global platform. During the quarter, we generated $4.6 billion of net inflows, with positive contributions across the firm, including $2.4 billion in the U.S., $1.7 billion in Europe, and $500 million from on-chain. Year-to-date net inflows totaled $13.6 billion, representing an annualized organic growth rate of approximately 13%.

Flows remain broad-based across strategies and geographies, with meaningful contributions from international equities, fixed income, commodities, and U.S. equities. The operating leverage inherent in our business model continues to translate into margin expansion, both sequentially and year-over-year, as record AUM and continued strong organic growth demonstrate the increasing earnings power of our business. We also remained active on capital management, retiring the remaining $18 million principal amount of our 2029 convertible notes using cash, while repurchasing approximately $11 million of common stock during the quarter, representing roughly 500,000 shares. These actions further simplify our capital structure while also returning capital to shareholders. Overall, our strong organic growth and record AUM continue to drive greater scale and higher earnings, strengthening our ability to create long-term value for shareholders. Next slide. Revenues were $179.4 million during the quarter, an increase of 1% from the second quarter, driven by higher AUM, partly offset by lower transaction fees from our European ETPs and lower performance fees.

Revenues increased 43% from the prior year quarter and 49% year to date, driven by higher AUM, elevated trading activity relative to the prior periods, and contributions from the Ceres and Atlantic House acquisitions. Adjusted operating margins were 43.1% for the quarter and 41.8% year to date, representing 750 basis points of expansion from the comparable prior year period. This improvement underscores the operating leverage in our business model generated by strong revenue growth, including contributions from our recent acquisitions. Adjusted net income for the quarter was $49.5 million, or $0.32 per share. Next slide. Now, a few comments on our forward-looking guidance. Discretionary spending totaled $62.2 million year to date.

We are updating our full-year guidance to range from $83 million to $87 million, reflecting a modest $2 million reduction to the high end of our previous range. We are also narrowing our third-party distribution guidance to $21 million to $23 million, having recognized $16.5 million year to date. Our interest income guidance is increased by $1 million to $9 million, reflecting our current expectations for interest-earning assets. Finally, we expect fourth quarter diluted shares to range from 154 million to 160 million shares, including incremental shares associated with our convertible notes, assuming an average stock price of $21 to $24 per share. Actual diluted shares may fall outside this range, depending on our average share price during the quarter. As a reminder, our earnings presentation includes an illustration to help quantify the potential dilution associated with our convertible notes going forward.

All other elements of our forward-looking guidance remain unchanged from last quarter. This concludes my remarks. I will now turn the call over to Jarrett.

All right. Thanks, Bryan, and good morning, everyone. As Bryan highlighted, this was another strong quarter for WisdomTree, with $4.6 billion of net inflows and continued broad-based strength across our global product suite. What continues to stand out is not just the magnitude of those flows, but the breadth and depth of where they are coming from and how consistently we are generating growth, even as the funds driving it change with the market environment. Over the last several years, an average of nine of our top 15 flow-generating funds each quarter were not in the top 15 the quarter before. That is the broad-based growth Bryan describes in action, where a wide range of products are contributing at different times, giving us multiple ways to win business as investors' needs change. Our portfolio solutions business also continues to grow well, with model AUA now approaching $10 billion.

We're adding new advisors while deepening relationships with existing users, driving stickier assets and more sustainable organic flows. We're also beginning to see the benefits of our Atlantic House acquisition. We've launched our first two products in Europe, leveraging the team's capabilities, with plans to launch 15 to 20 products over the next 18 to 24 months. We see real opportunity to drive strong organic growth in liquid alternatives across both Europe and the U.S., combining differentiated investment expertise with our global distribution platform. At Ceres, we launched Fund II in mid-June and already have a strong pipeline with more than $100 million of potential demand from over 100 investors in the mid to late stages. We remain very bullish on the combination of Ceres' differentiated farmland strategy and WisdomTree's distribution capabilities to drive attractive returns and strong organic growth.

Jono will talk more about how Atlantic House and Ceres fit into our broader evolution across public markets, private markets, and digital assets. Turning to efficiency, we're continuing to focus on scaling the business while finding ways to make our existing team even more productive. AI is an important part of that effort. We've been embedding AI into workflows across the firm for several years now, not as a headcount reduction initiative, but as a way to free up our employees to focus on higher-impact activities. We're seeing tangible results. In 2026, we've tracked more than 1,500 hours saved per month through AI, the equivalent of at least 10 full-time employees. That's only from the initiatives we've been able to fully measure, so the actual impact is likely meaningfully higher. Jono will also touch on how we're using AI in the investment process itself.

That focus on growth and efficiency is what's driving the margin expansion Bryan walked through, with 750 basis points of improvement year-to-date. Importantly, we're achieving that while continuing to invest in growth, maintaining expense discipline, and leveraging incremental margins north of 50%. You've all heard me say this before, but we have an effective playbook that's been working for several years now, which is drive high-quality organic growth, find ways to become more efficient as we scale, and translate that into even greater earnings power. We're continuing to execute on all three fronts. That playbook is also extending into new areas of growth, and tokenization is a prime example. Onchain contributed $500 million of net inflows this quarter. With so much going on in this space, we've invited Will Peck, our Head of WisdomTree Onchain, to join the call.

He'll share more about the progress we're making, from growing demand for our tokenized product to the partnerships expanding our distribution. With that, Will, over to you.

Thanks, Jarrett, and good morning, everyone. I am excited to spend a few minutes talking about where we stand with our onchain business and where we are focused going forward. Let me start with something we announced recently, bringing our digital asset initiatives together under one name, WisdomTree Onchain. Historically, with WisdomTree Prime, WisdomTree Connect, and the different pieces of our infrastructure, it has not always been easy to understand how everything fits together. These have always been part of building one integrated platform, and WisdomTree Onchain better reflects what that business has become. That includes our retail app, WisdomTree Prime, our institutional and third-party distribution API and portal through WisdomTree Connect, and Onchain Markets, which we are developing to expand secondary market trading. Importantly, we have built the underlying infrastructure ourselves. We have invested in our tokenization platform, onchain transfer agent, broker-dealer, and regulated trust company.

We are not just an asset manager putting funds on a blockchain. We have built an integrated financial services platform that we can use for our own products and potentially offer to others as a service. We are already seeing the benefits of that investment. A great example is WTGXX, our tokenized money market fund. While we have had some recent seasonal inflows and outflows, the trend line remains consistent. We are seeing continued growth across use cases. We have introduced the ability to trade the fund around the clock 7 days a week, along with continuous interest accrual. This functionality is leading to greater demand. Stablecoin reserves, cash management, and increasingly, collateral mobility remain the major use cases we see for WTGXX and tokenized treasury funds. I like to think about stablecoins as money in motion and tokenized money market funds as money at rest.