WisdomTree, Inc. Q2 FY2025 earnings call

• Announced acquisition of Ceres Partners, a leading U.S. farmland investment manager. This adds real strength to the business, with farmland as an asset class offering equity-like total returns, low volatility, and diversification benefits. Ceres has delivered 10.3% net returns since inception and has strategic overlays like solar and AI data centers.
• Second quarter results: Generated $6.6 billion of inflows year-to-date through June, with broad and diverse flows across regions, asset classes, and strategies. AUM hit a record $126 billion, with digital assets AUM over $500 million.
• Digital assets: AUM grew to over $500 million, driven by institutional flows through Connect platform. Stablecoin strategy with USDW and WTGXX, and on-chain transfer capabilities launched.
• Strategic investments: Invested in Quorus for direct indexing, models AUA exceeded $5.2 billion with over 2,800 advisers using models.

Revenues for the quarter were $112.6 million, a 4.2% increase from the first quarter and 5.2% higher than the prior year quarter, driven by higher average AUM. Year-to-date revenues grew 8.3%. AUM reached a record high of $126 billion at June 30, with U.S.-listed AUM at $85.2 billion and Europe at $40.5 billion both all-time highs. Digital assets AUM more than doubled since last quarter, reaching $350 million at June 30 and approximately $500 million currently.

• Third-party distribution guidance ranges from $14 million to $15 million.
• Anticipate Ceres acquisition closing in the fourth quarter. Target to raise at least $750 million into farmland-focused strategies by 2030, aiming to manage $10 billion in farmland assets 10 years from now.
• AUM at record high, expecting continued organic growth at an annualized rate of 12%.

Factors causing actual results to differ from forward-looking statements, including risks set forth in the Risk Factors section of WisdomTree's annual report on Form 10-K for the year ended December 31, 2024, and subsequent SEC filings.

Q: About Ceres, where they raise funds from and fund structure?

A: Ceres has an evergreen fund structure, client base includes institutions, RIAs, advisers. Synergy with WisdomTree's distribution team to help raise capital.

Q: On Ceres' performance fees, durability and predictability?

A: Performance fees driven by farmland portfolio mark, fund owns properties generating rental income, with embedded upside from solar and AI data centers. Asset class has 6% average price returns and few down years since WWII.

Q: On adding farmland to models portfolios?

A: Will look for opportunities to add farmland allocation to model portfolios or ETFs as it's an attractive underappreciated asset class.

Q: On digital asset growth and stablecoin market?

A: Stablecoin market projected to grow to $3.7 trillion by 2030, WisdomTree's stablecoin strategy with USDW and WTGXX, focusing on on-chain transfers and stablecoin ecosystem growth.

Q: On acquisition regulations and mark-to-market of Ceres' farms?

A: No regulatory changes needed, Ceres marks farms annually, using appraisers with rotation, process won't change under WisdomTree ownership.

Q: On private equity investments in Ceres?

A: Ceres' 2 PE funds with $20M to $40M AUM not acquired, but water strategy under WisdomTree's roof with retained economics.