WisdomTree Q4 Revenue Surges

by on February 4, 2011 | ETFs Mentioned:

WisdomTree, the ETF issuer behind many of the popular dividend-weighted equity ETFs and currency ETFs, reported its fourth quarter results after the bell on Thursday. As the only publicly-traded “pure play” ETF issuer, WisdomTree offers insights into the financials of ETF issuers and the potential profitability of what has become a huge business.

Not surprisingly, fourth quarter revenues surged, jumping 32% from the third quarter thanks to strong cash inflows and performance of global equity markets. WisdomTree saw ETF inflows of $1.3 billion in the fourth quarter, and finished 2010 with just under $10 billion in assets. The company’s average ETF advisory fee inched higher to 57 basis points, up from 56 bps in the third quarter and 54 bps in the fourth quarter of 2009.

Metric Q4 ’10 Q3 ’10 Q4 ’09
AUM $10,642 $8,958 $6,668
ETF Inflows $1,271 $1,161 $911
Average ETF Advisory Fee 0.57% 0.56% 0.54%
Revenue $13,413 $10,130 $7,731
Operating Income (Loss) $1,725 $531 ($1,425)
Net Loss ($580) ($1,517) ($5,032)
$ in thousands. Source: WisdomTree

WisdomTree’s pro-forma operating income jumped to $1.7 million, up from $531,000 in the third quarter and a loss of $1.4 million in the fourth quarter of the previous year. Net loss for the quarter was $580,000, an improvement from the loss of $1.5 million in the fourth quarter and more than $5 million in Q4 of 2009. For the full year, WisdomTree reported total revenues of $41.6 million and a net loss of $7.5 million. The company was cash flow positive on the year; stock-based compensation accounted for a material portion of total overall compensation expense in 2010.

“2010 was a very successful year for WisdomTree,” said CEO Jonathan Steinberg. “We had very strong operating performance and reached significant milestones in our growth initiatives. We continued our product diversification efforts by launching our first international fixed income ETF and we now have offerings in equities, currencies, fixed income and alternatives.”

The company finished the year with 44 ETFs, after starting the year with 52 and shuttering ten that had struggled to gain traction in the first quarter. The two new additions to the WisdomTree lineup in 2010 were the Emerging Markets Local Debt Fund (ELD) and the Dreyfus Commodity Currency Fund (CCX). ELD finished the year with more than $560 million while CCX, launched in September, had $26 million at year end and raked in more than $90 million in January [see January ETF Roundup: Strong Start To 2011].

WisdomTree representatives indicated that the firm planned to launch between four and eight new ETFs in 2011 though they were tight-lipped on the details, citing competitive and regulatory considerations. The company also said it has begun the process of being listed on a major exchange, and expects the process to be complete by the late second quarter or early third quarter. WisdomTree (WSDT) is currently traded on the “pink sheets.”

Disclosure: No positions at time of writing.