Greetings, and welcome to the WisdomTree Q4 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jessica Zaloom, Head of Investor Relations. 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 Factors section of WisdomTree's annual report on Form 10-K for the year ended December 31, 2023 and in subsequent reports filed with or furnished to the Securities and Exchange Commission. 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 my remarks with a recap of 2024 and our fourth quarter results, followed by our 2025 expense guidance before turning the call over to Jarrett and Jono for additional updates on our business. The year 2024 was marked by numerous accomplishments. We closed the year with AUM of $109.8 billion, up almost 10% from the prior year. This growth further showcased the operating leverage in our business model, highlighted by year-over-year adjusted operating margin expansion of 680 basis points. These results, combined with the execution of strategic capital management initiatives, including the highly accretive repurchase of ETFS Capital's preferred stock earlier this year as well as last year's retirement of our gold royalty obligation have driven an increase of over 70% in our adjusted EPS and a 50% increase in our stock price year-over-year. Next slide. Adjusted revenues were $110.5 million during the quarter, up 1% sequentially and approximately 22% higher than the same period last year, driven by higher average AUM. The year-over-year improvement also reflects higher other revenues attributable to our European listed products, representing sustainable revenue capture and providing further revenue diversification away from the expense ratio. On a year-to-date basis, our adjusted revenues have grown over 21% and our adjusted operating margin was 33.6%, representing expansion of over 680 basis points versus the prior year. Our adjusted net income for the quarter was $25.3 million or $0.17 a share. These results reflect higher fund management expenses arising from non-recurring costs related to our custody migration and higher professional fees as we recognize the remaining contractual costs from the WisdomTree Prime service provider as we continue expanding our capabilities to further enhance the platform with internal resources. The net impact of these non-recurring items was about $0.01 a…

Thank you, Bryan. And good morning, everyone. As we close out 2024, I'm proud to reflect on a year that has positioned us for sustained earnings growth and margin expansion. Today, I'll share highlights of the past year and then some thoughts on the rest of this year, focusing on flows, models, operational efficiencies and progress in digital assets and tokenization. Beginning with flows, 2024 started strong but wasn't without its challenges. Institutional clients utilized USFR for cash re-risking strategies leading to outflows. The Japan carry trade faced disruptions impacting DXJ, our currency hedge Japan fund, and commodity markets experienced significant volatility. Despite these challenges, we delivered meaningful outcomes. The number of clients using WisdomTree products grew by 5% with the average number of products held per client rising by 4% signaling deeper client engagement. Meanwhile, our Models business continued to stand out as a core growth engine leveraging differentiated products such as our Siegel-WisdomTree Models. We ended the year with over 2,500 Model users and $3.83 billion in Model assets, reflecting 29% user growth and 28% Model assets growth year-over-year. With an accessible market of over 85,000 advisors and $18 trillion in assets, we've made significant inroads and our focus has now fully shifted to growing Model users and Model assets. For 2025, we're projecting 25% to 30% annual growth in Model users and 35% to 40% annual growth in Model assets. Overall, we continue to see Models as an important driver of sustainable organic growth in years ahead. Switching to operational efficiency, disciplined expense management and operational focus have delivered strong results. In 2024, revenue grew 21% year-over-year while adjusted operating income grew by more than 52%. Strategic balance sheet improvements, including preferred stock repurchases, further boosted earnings growth. Looking forward, our operating and capital deployment strategies remain…

Good morning, everyone. And thank you, Jarrett. As we reflect on 2024, I want to build on Jarrett's points by highlighting three themes: one, growth and revenue diversification; two, disciplined execution; and three, strategic innovation. Growth and revenue diversification remains a priority in 2025 and builds on 2024, which is a breakout year in this regard. We are committed to continuing to diversify revenue streams and grow revenue beyond the expense ratio. Our firm-wide total revenue yield, which includes the $28 million of other revenue booked in 2024, is both more resilient and expanded faster than our expense ratio revenue. Also as Jarrett outlined, we will continue to increase both the number of clients and deepen our engagement with those clients, which drives organic AUM growth. Specifically, we will further increase both Model users and Model AUM per user. Models have become an essential tool for advisors and our solutions are extremely well positioned to meet the demand arising from this growing macro wealth management trend. Switching to disciplined execution, the results are clear in the 2024 numbers. Earnings per share was up 73% year-over-year, driven by 21% revenue growth, expanded operating margins that drove a 52% growth in adjusted operating income. And in 2024, we bought back over 19 million shares or roughly 12% of the shares outstanding. These are the results of a disciplined approach and that will continue in 2025. Looking ahead, we are employing this disciplined approach to how we deploy AI. We are more fully embedding AI into our daily workflows, which is enhancing our scalability and will drive additional value creation through better and quicker decisions. I expect you'll hear more from us regarding AI in the coming quarters. Additionally, WisdomTree has been opportunistic around accretive capital deployment in years past. So we've been…

All right. Thanks, Jono. This is Jeremy Campbell, Head of Investor Relations. Similar to prior quarters, we're going to take a quick question from our shareholder base and then open it up to the analyst community. I'm going to direct this question to Will Peck, Head of Digital Assets. And Will the question is, it seems like the new administration is a bit more friendly to crypto and blockchain. What does WisdomTree's competitive landscape look like in a more open environment?

So first of all, I think it's more than just a bit more friendly. I think we're seeing a real step function change in this pro-innovation stance versus where things were just a couple months ago coming out of DC. So over the next coming years, I think there's going to be some legislation from Congress. I think there's also going to be importantly more regulatory clarity, both from securities regulators and federal banking regulators. And I think that's just going to be an overall catalyst for WisdomTree's efforts. So speaking specifically about these efforts, I mean, one space is obviously a crypto exchange rate of funds, exchange rate of products. It's been extremely competitive in that market, it's been competitive in Europe for a long time. But we were actually the leading flow gatherer in 2024 in Europe that suite of products is incredibly well positioned going forward. And I expect we're going to continue to have a good year, particularly as more and more money comes into this space. The second part I'd answer is around tokenization. So I think tokenization, particularly tokenized money market funds and treasuries, has gotten very competitive very quickly and I expect more competition going forward. We feel like we're in a great spot though and the investments we've been making over the past three years has really built a real competitive moat for us. I'd highlight three things in that competitive moat. The first is our technical platform. So we've invested in building our tokenization platform. This is much more than just creating a token. It's data structures, it's smart contracts, it's public private key management in order to bring like all these filings and ideas actually into reality. The second point I'd make is the 40 Act. So that's WisdomTree US'…

Great. Thanks, Will. Operator, you can go ahead and open up the lines for questions from the analysts.

[Operator Instructions] Our first questions come from the line of Brennan Hawken with UBS.

Jono, I'd like to start, you said something that caught my attention in your prepared remarks on M&A and partnerships. I know that you don't want to tip your hand. So please understand the spirit of the question. But are there any areas or capabilities that are particular interest as you explore this?

Well, first, we've acquired, so it could be ETF sponsors. We've acquired two already. It could also include product lines of other asset managers. We've done this before or other asset classes. It could also be in the area of technology. Now that's very broad but we see in technology the potential for transformative strategic partnerships. But I guess the bottom line for us is we're on our front foot. We're leaning into this, we're seeing a lot of conversations and opportunities.

And I'd love to follow-up on that question on the new administration in crypto, because we've seen -- we've actually seen some action already with the SEC rescinding the rule around banking entities. We have seen more recently the SEC approving some spot Bitcoin ETFs. So when you look at the early actions of the regulators and the administrations, what's been most interesting? And what are you watching for to really fire up the excitement around potential change here?

So the low hanging fruit had been the SEC and just the launching of crypto ETPs, that was sort of the easy momentum. Where the regulators on the past four years, the prior administration, were most aggressive, it was by discouraging the banking industry from touching the asset class in any way. And when you think about what we're trying to do with WisdomTree Prime and WisdomTree Connect, in many ways, we're trying to mainstream the asset class where it can sit next to other assets but also other banking services. And so I sense that that's changing from the banks very, very quickly. We shared these new metrics with you. And to put it all into perspective, we're not even at the starting line. As Jarrett said, we're probably two years behind because of the regulatory environment of the last four years. Not all states have given us -- approved our licenses for money transfer. We haven't been able to get the on and off ramps to payments and to the on chain community, because the banks have been so afraid to let anything from the on chain community to touch their rails. So it's been -- you sense that there really is a change coming. And in our conversations, it is coming. So we sense it. To build on the -- to add a little bit more perspective on the metrics that we showed though, I do want to say that we've been just incredibly prudent in our spending to date. And I just want to mention that all of our spending has been in our guidance for the last four years, including this year that digital assets, tokenization, crypto, the on chain community today is a multi-trillion opportunity and we expect it to grow significantly from here.…

I hear your point about over indexing. I'm trying to stay mentally flexible too. It's a little hard. But I hear you and thanks for the color.

Our next question comes from the line of Mike Grondahl with Northland Securities.

With all the momentum in those crypto funds in Europe, could you remind us of the individual offerings you have over there and how that might look in six months to 12 months just as you expand and grow that in Europe and maybe in other geographies?

Jeremy Schwartz, our CIO, do you want to start here or is it Will?

So Will mentioned we were a leader in cryptocurrencies for Europe last year. What we have a broad suite, we started with Bitcoin but we now have from Bitcoin and Ethereum obviously the top two, but we have Solana, we have Cardano, Polkadot, we have a basket that's equal weighted between Bitcoin and Ethereum. We have a broader market portfolio. We have an Altcoin. So it shows you that Europe has been -- we talked a lot about the innovation in the US coming in the new administration. Europe was sort of ahead of the US, which is not often the case but they have been in these product offerings. And I think you're seeing more filings in the US but we're also in the market -- we've been in the market established in Europe. We expect good things. We also have Ripple. Ripple was one of our faster growing cryptos last year up to around $250 million to $300 million based on the market price on the day. But it's been a good robust offering and we plan to do more.

And let me just add to that, under this new administration in the US, you would expect to see the industry to roll out in the US in a similar fashion, I would expect, to what you saw in Europe. So if the administration hadn't changed, it wouldn't have been easy to get past just Bitcoin. But I do believe you'll see a lot of innovation and product to come to market this year and in the coming years in crypto in the US.

You do think that's possible in '25?

Yes, I do.

And can I ask, on those funds you mentioned in Europe, how are staking fees treated?

So I mean, your question is around proof of stake coins that might be held physically in these products. And when the coins are staked right it generates a staking yield, staking reward. Some of that is shared with the investors, some of it's shared by WisdomTree and it's all kind of a function of how much is staked in those products as well. So I think it's a good investor experience and it's something that us and other issuers have been offering.

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

This is Logan on for George. I appreciate the color on some of the Prime and giving the metrics. Kind of on that topic, I was wondering if you could give us just a little bit more -- I mean, understanding that it's very early days and there's still some regulatory stuff to work through. Anything you can give us on kind of what are the use cases that seem to be hitting home so far? I mean, whether it'd be funds that people are gravitating towards? I mean, you guys came out with the ability to spend other certain funds a few months back. Just kind of the use cases that seem to be working in the early days.

So I think the biggest thing is tokenized money market funds, both WisdomTree Prime and WisdomTree Connect and the functionality that that unlocks. For us, the ticker is WTGXX, the WisdomTree Government Money Market Digital Fund. And I'll cover your WisdomTree Prime. One of the great use cases that we've highlighted is that you can fund with fiat in the near future will support stablecoin funding, immediately invest into the money market fund that's earning a great yield right now, right at the risk free rate for our short term rates. And we also support spending on top of that through the WisdomTree Prime Visa debit card, which just anecdotally is something that people love and love to use. The other point I'd highlight is around WisdomTree Connect where we only launched this platform in September. We're just really going to market now. We've already got clients onboarded. I think we've got an exciting pipeline that we'll be able to update you guys on over the coming weeks months. But that use case is very clear in terms of on chain firms wanting yield and diversification, right? So think of a pool of capital that's held on chain by some sort of DAO or other institution that's wanting to invest in things other than just crypto tokens or stable coins that have no yield, right? And so for them being able to seamlessly access tokenized money market fund, immediately earn that yield, it's just a better experience, not to mention the kind of additional regulatory and security comfort that [Indiscernible] money market fund provides. So we're really off to the races with WisdomTree Connect and I'm excited for what we're going to be doing with that over the course of 2025.

And then maybe shifting to the advisor strategy. I mean, you guys have talked about expanding the portfolio consultation services recently. And then my understanding is that when you guys do a consultation, you have a better win rate, better ability to grab AUM. Just maybe any color you can give us on kind of what the expansion really looks like and how big -- how significant is that to the overall strategy going forward as we think about -- I mean, I think you guys talked about 25% to 30% growth this year. I mean, is that something you're going to look to expand over the next few years or how significant is that?

Look, I think that's really the right question. The last couple of years with our whole Models business, we've been looking to establish ourselves and that meant getting through gatekeepers and we kept talking about what's our addressable or accessible market, how many advisors have access, what kind of advisor assets have access to our Models. I think we've checked that box. We've now got, as we've said, more than 85,000 advisors have access and over $18 trillion of assets, which is in about two-thirds of the advised assets. So now our focus is turn to penetrating that market and that's where we talked about we want to grow our Model users by 25% to 30%. We're going to grow our Model assets by 35% to 40% because what we're doing while we're also growing the users, we're going deeper with the existing users and that will get a multiplier effect in growing the Model assets. So portfolio reviews or consultations is another major tool in penetrating that market. And we do find that when we offer that service it's a really good advisor friendly service, which is really our goal is to just help our advisors be better. So it's a tool that's very popular. But then on our side, it draws us closer to the advisor. We now have a better idea of what they're working with, of what their portfolios look like and it allows us to help them in a deeper way. So that's part of -- it's a major part of the strategy that's going to help us drive engagement in the overall models business this year and beyond.

The only thing I'll say is that it's just turned on in a more dynamic way just now. So that one particular portfolio consultation just turned on.

Our next question comes from the line of Chris Kotowski with Oppenheimer.

I was just going to say thank you for Slide 13, it gives us a baseline. I'm just curious about the statistic though of 26,000 accounts and only 2,300 of them funded. Who's opening all those accounts and why would one open the account if one wasn't intending on using it, or do you expect those people to start funding it or just struck me as odd?

So I think I'd make an overall comment that I think for fintech apps generally, I think the baseline ratio of funded accounts to open accounts is probably lower than you might intuitively expect, right? You're like why would this person give me their social security number if they're not planning on funding. And in all the conversations we've had, all the data we've seen, that's just a consistent thing in retail fintech fab generally, right? So I think just lower your baseline rate for what that should be but we definitely want to drive this number higher. What we're seeing today is we want to continue to drive this number higher and I'm in these numbers every day and I can tell you over the past couple of weeks months that number is increasing. As you know doing things like improving the onboarding process or improving funding methods, targeting better in our digital marketing. So I expect that number to go up. We will definitely be remarketing to people who've opened an accounts, right? These are people that we can easily remarket to, they can easily fund from there. So I expect to convert some percentage of them and then just of new accounts coming through we expect them to convert to funded users more quickly.

Just touch on on-chain community and the on ramps for a second though. Just reiterate that.

And this is a point that Jarrett made in the script and Jono touched on earlier is, we view our primary target market being the on chain community, which we just can't well support yet without stablecoin on and off ramps. So this goes back to kind of uncertainty from the federal banking regulators that this is just something that we've not been able to bring forward yet but we've got a good plan in place over the course of the first half of this year to add that product feature, which will really allow this community to fund more easily and get the benefits of diversifying and yield in this way. So when that happens I think you'll better be able to judge that ratio.

There are no further questions at this time. I'd now like to hand the floor back over to Jonathan Steinberg for any closing remarks.

Thank you. Yes, I would like to make a final point. To the analysts, I would say, humbly, we deserve a significant expansion of multiple. Our growth rates, both historical and going forward, including year-to-date momentum with over $1 billion in inflows year-to-date justifies it. Our business model, AUM of $115 billion, are an absolute record this morning and only 300 employees. It's the envy of the industry. Our areas of focus, WisdomTree is levered to three of the biggest trends in asset management, global ETFs, models and solutions and tokenization. The only thing that we don't have is private assets. My point is, the value of the franchise is not reflected in our $1.5 billion market cap, it's very frustrating. And I guarantee you, outsiders looking in see a lot of value that's not reflected in our stock today. So again, I feel strongly that it's really justifies that our multiple expands. I'll just leave you with that thought. So thank you all for your interest and we'll talk to you next quarter. Have a great day.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Have a great weekend.