WisdomTree Announces Third Quarter 2020 Results – Diluted Loss Per Share of ($0.01), or Earnings Per Share of $0.07, as adjusted

October 30, 2020 7:00 AM

NEW YORK, Oct. 30, 2020 (GLOBE NEWSWIRE) -- WisdomTree Investments, Inc. (NASDAQ: WETF) today reported financial results for the third quarter of 2020.

$12.0 million of non-cash charges, including (i) a loss on revaluation of deferred consideration of $8.9 million and (ii) a $3.1 million impairment charge related to our investment in Thesys Group, Inc.

($0.3) million net loss ($11.01 million net income, as adjusted), see “Non-GAAP Financial Measurements” for additional information.

$60.7 billion of ending AUM, an increase of 5.3% arising primarily from market appreciation, partly offset by net outflows.

$468 million of net outflows, driven by outflows from our commodity and international developed market equity products, partly offset by inflows into our U.S. equity and emerging market equity products.

0.42% average global advisory fee, an increase of 1 basis point due to AUM mix shift.

$64.6 million of operating revenues, an increase of 11.2% primarily due to higher average AUM and a higher average global advisory fee.

76.5% gross margin1, a 1.4 point increase primarily due to higher revenues.

22.8% operating income margin, a 2.5 point increase primarily due to higher revenues, partly offset by higher operating expenses.

$25.0 million issuance of convertible senior notes due 2023, which were issued on the same terms as the notes previously issued.

$4.5 million repurchase of 1.1 million shares of our common stock, principally in connection with the issuance of the convertible notes.

$0.03 quarterly dividend declared, payable on November 25, 2020 to stockholders of record as of the close of business on November 11, 2020.

Update from Jonathan Steinberg, WisdomTree CEO

“We have restored the momentum built prior to the pandemic through steadfast focus on what we can control and strong execution amid a highly volatile and unusual year. Important elements across our global franchise are starting to align and I’m excited about our growth outlook for the remainder of the year and into 2021.”

“Given the strength and sustainability of our execution over the past eight months, we have decided to pursue a ‘remote first’ philosophy and plan to reduce our office space globally. Technology has brought our team closer together and driven productivity gains while our funds continue to operate flawlessly with coordination from our third-party service providers. We are taking this action because we believe it is the right strategy to drive sustained momentum and future growth of the business and the cost savings could be meaningful.”

OPERATING AND FINANCIAL HIGHLIGHTS

Three Months Ended
Sept. 30,
2020
June 30,
2020
Mar. 31,
2020
Dec. 31,
2019
Sept. 30,
2019
Consolidated Operating Highlights ($, in billions):
AUM$60.7 $57.6 $50.3 $63.6 $60.0
Net inflows/(outflows)$(0.5)$0.1 $(0.5)$0.4 $(0.7)
Average AUM$61.2 $55.7 $59.8 $61.9 $60.3
Average advisory fee 0.42% 0.41% 0.42% 0.44% 0.44%
Consolidated Financial Highlights ($, in millions, except per share amounts):
Operating revenues$64.6 $58.1 $63.9 $68.9 $67.7
Net (loss)/income$(0.3)$(13.3)$(8.6)$(25.9)$4.2
Diluted (loss)/earnings per share$(0.01)$(0.09)$(0.06)$(0.17)$0.02
Operating income margin 22.8% 20.3% 24.5% 21.5% 23.8%
As Adjusted (Non-GAAP1):
Gross margin 76.5% 75.1% 77.3% 77.3% 77.7%
Net income, as adjusted$11.0 $8.5 $11.2 $10.1 $10.6
Diluted earnings per share, as adjusted$0.07 $0.05 $0.07 $0.06 $0.06
Operating income margin, as adjusted 22.8% 20.4% 25.1% 22.0% 24.1%

RECENT BUSINESS DEVELOPMENTS

Company News
  • In August 2020, we issued and sold an additional $25.0 million in aggregate principal amount of convertible senior notes due 2023 following our issuance in June 2020 of $150.0 million in aggregate principal amount of such notes.
  • In September 2020, we won two awards at the AJ Bell Fund & Investment Trust Awards 2020 for WisdomTree Physical Gold (PHAU) and WisdomTree Cloud Computing UCITS ETF (WCLD).
  • In October 2020, we were named “Best International Equity ETF Issuer ($1BN+)” by the ETF Express U.S. Awards 2020, which recognizes excellence among ETF issuers and service providers across a wide range of categories.
Product News
  • In August 2020, we announced an index change for WTI Crude Oil ETC (CRUD) following a vote by security holders; we announced that enhancements were made to the WisdomTree Growth Leaders Fund (PLAT) – previously the WisdomTree Modern Tech Platforms Fund – focusing on growth exposure of platform businesses with the addition of growth screen criteria and a fee reduction; and we cross-listed five funds in Mexico – four European products: SGBS, WCLD1, VOLT, WTAI and one U.S. ETF: WCLD.
  • In October 2020, we implemented a number of volatility proofing measures for three currency-hedged and six short-and-leveraged ETPs in Europe; we announced a forward share split of 2:1 on the WisdomTree China ex-State-Owned Enterprises Fund (CXSE); we applied an ESG screen and introduced the WisdomTree Composite Risk Score to the WisdomTree Global Quality Dividend Growth UCITS ETF (GGRA), the WisdomTree SmallCap Dividend UCITS ETF (DGSE) and the WisdomTree Emerging Markets Equity Income UCITS ETF (DEM); and we announced a collaboration with 55ip, a financial technology company, to deliver WisdomTree model portfolios utilizing 55ip’s automated tax-smart technology.


WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)

Three Months Ended
Nine Months Ended
Sept. 30,
2020
June 30,
2020
Mar. 31,
2020
Dec. 31,
2019
Sept. 30,
2019

Sept. 30,
2020
Sept. 30,
2019
Operating Revenues:
Advisory fees$63,919 $57,208 $62,950 $68,179 $67,006 $184,077 $197,473
Other income 721 918 924 728 712 2,563 2,023
Total revenues 64,640 58,126 63,874 68,907 67,718 186,640 199,496
Operating Expenses:
Compensation and benefits 19,098 17,455 17,295 19,280 18,880 53,848 61,481
Fund management and administration 15,219 14,461 14,485 15,650 15,110 44,165 45,852
Marketing and advertising 2,996 1,949 2,468 3,551 3,022 7,413 8,612
Sales and business development 2,386 2,181 3,417 5,329 4,354 7,984 12,947
Contractual gold payments 4,539 4,063 3,760 3,516 3,502 12,362 9,710
Professional and consulting fees 950 1,357 1,273 1,604 1,259 3,580 4,037
Occupancy, communications and equipment 1,611 1,643 1,551 1,587 1,549 4,805 4,715
Depreciation and amortization 253 251 256 253 259 760 792
Third-party distribution fees 1,233 1,340 1,355 1,146 1,503 3,928 5,822
Acquisition and disposition- related costs 33 383 366 190 416 536
Other 1,611 1,596 1,997 1,816 1,959 5,204 6,267
Total operating expenses 49,896 46,329 48,240 54,098 51,587 144,465 160,771
Operating income 14,744 11,797 15,634 14,809 16,131 42,175 38,725
Other Income/(Expenses):
Interest expense (2,511) (2,044) (2,419) (2,606) (2,832) (6,974) (8,634)
Loss on revaluation of deferred consideration – gold payments (8,870) (23,358) (2,208) (5,354) (6,306) (34,436) (5,939)
Interest income 111 119 163 936 799 393 2,396
Impairments (3,080) (19,672) (30,138) (22,752) (572)
Loss on extinguishment of debt (2,387) (2,387)
Other gains and losses, net 744 1,819 (2,507) (2) 843 56 (3,500)
Income/(loss) before income taxes 1,138 (14,054) (11,009) (22,355) 8,635 (23,925) 22,476
Income tax expense/(benefit) 1,408 (804) (2,371) 3,525 4,483 (1,767) 7,021
Net (loss)/income$(270) $(13,250) $(8,638) $(25,880) $4,152 $(22,158) $15,455
(Loss)/earnings per share – basic ($0.01)2 ($0.09) ($0.06) ($0.17) $0.022 ($0.16)2 $0.09
(Loss)/earnings per share – diluted ($0.01)2 ($0.09) ($0.06) ($0.17) $0.02 ($0.16)2 $0.09
Weighted average common shares – basic 145,564 151,623 152,519 151,948 151,897 149,886 151,782
Weighted average common shares – diluted 145,564 151,623 152,519 151,948 167,163 149,886 166,944
As Adjusted (Non-GAAP1)
Total operating expenses$49,896 $46,296 $47,857 $53,732 $51,397
Operating income$14,744 $11,830 $16,017 $15,175 $16,321
Income before income taxes$13,242 $10,911 $14,358 $13,503 $15,131
Income tax expense$2,205 $2,417 $3,134 $3,396 $4,489
Net income$11,037 $8,494 $11,224 $10,107 $10,642
Earnings per share – diluted$0.07 $0.05 $0.07 $0.06 $0.06

QUARTERLY HIGHLIGHTS

Operating Revenues

Operating Expenses

Other Income/(Expenses)

Income Taxes

NINE MONTH HIGHLIGHTS

CONFERENCE CALL

WisdomTree will discuss its results and operational highlights during a conference call on Friday, October 30, 2020 at 9:00 a.m. ET. The call-in number will be (877) 303-7209. Anyone outside the U.S. or Canada should call (970) 315-0420. The slides used during the presentation will be available at http://ir.wisdomtree.com. For those unable to join the conference call at the scheduled time, an audio replay will be available on http://ir.wisdomtree.com.

ABOUT WISDOMTREE

WisdomTree Investments, Inc., through its subsidiaries in the U.S. and Europe (collectively, “WisdomTree”), is an ETF and ETP sponsor and asset manager headquartered in New York. WisdomTree offers products covering equity, commodity, fixed income, leveraged and inverse, currency and alternative strategies. WisdomTree currently has approximately $62.5 billion in assets under management globally.

WisdomTree® is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.

_____________

1 See “Non-GAAP Financial Measurements.”
2 Earnings/(loss) per share (“EPS”) is calculated pursuant to the two-class method as it results in a lower EPS amount as compared to the treasury stock method.

Contact Information:
Investor RelationsMedia Relations
Jason Weyeneth, CFAJessica Zaloom
+1.917.267.3858+1.917.267.3735
jweyeneth@wisdomtree.com jzaloom@wisdomtree.com


WisdomTree Investments, Inc.
Key Operating Statistics (Unaudited)
Three Months Ended
Sept. 30,
2020
June 30,
2020
Mar. 31,
2020
Dec. 31,
2019
Sept. 30,
2019
GLOBAL ETPs ($ in millions)
Beginning of period assets$57,647 $50,323 $63,615 $59,981 $60,389
Assets sold (778)
Inflows/(outflows) (468) 126 (536) 390 (698)
Market appreciation/(depreciation) 3,560 7,494 (11,958) 3,247 471
Fund closures (46) (296) (20) (3) (181)
End of period assets$60,693 $57,647 $50,323 $63,615 $59,981
Average assets during the period$61,194 $55,689 $59,819 $61,858 $60,306
Average advisory fee during the period 0.42% 0.41% 0.42% 0.44% 0.44%
Revenue days 92 91 91 92 92
Number of ETFs – end of the period 305 311 331 349 348
U.S. LISTED ETFs ($ in millions)
Beginning of period assets$31,344 $28,893 $40,600 $37,592 $39,220
Inflows/(outflows) 575 (1,474) (1,273) 563 (1,198)
Market appreciation/(depreciation) 1,373 4,039 (10,424) 2,448 (430)
Fund closures (114) (10) (3)
End of period assets$33,292 $31,344 $28,893 $40,600 $37,592
Average assets during the period$32,962 $30,607 $36,936 $39,094 $37,857
Average advisory fee during the period 0.41% 0.41% 0.43% 0.44% 0.44%
Number of ETFs – end of the period 67 67 77 80 80
INTERNATIONAL LISTED ETPs ($ in millions)
Beginning of period assets$26,303 $21,430 $23,015 $22,389 $21,169
Assets sold (778)
Inflows/(outflows) (1,043) 1,600 737 (173) 500
Market appreciation/(depreciation) 2,187 3,455 (1,534) 799 901
Fund closures (46) (182) (10) (181)
End of period assets$27,401 $26,303 $21,430 $23,015 $22,389
Average assets during the period$28,232 $25,082 $22,883 $22,764 $22,449
Average advisory fee during the period 0.42% 0.41% 0.41% 0.44% 0.44%
Number of ETPs – end of the period 238 244 254 269 268
PRODUCT CATEGORIES ($ in millions)
Commodity & Currency
Beginning of period assets$24,260 $19,823 $20,074 $19,713 $18,204
Inflows/(outflows) (1,087) 1,316 592 (244) 511
Market appreciation/(depreciation) 2,036 3,121 (843) 605 998
End of period assets$25,209 $24,260 $19,823 $20,074 $19,713
Average assets during the period$25,959 $23,037 $20,407 $19,892 $19,558
U.S. Equity
Beginning of period assets$13,997 $12,151 $17,732 $16,281 $15,889
Inflows/(outflows) 897 (241) (285) 460 239
Market appreciation/(depreciation) 718 2,087 (5,296) 991 153
End of period assets$15,612 $13,997 $12,151 $17,732 $16,281
Average assets during the period$15,139 $13,302 $16,011 $16,969 $15,872
International Developed Market Equity
Beginning of period assets$8,821 $8,632 $13,011 $12,169 $13,313
Inflows/(outflows) (587) (965) (1,097) (135) (1,009)
Market appreciation/(depreciation) 369 1,154 (3,282) 977 (135)
End of period assets$8,603 $8,821 $8,632 $13,011 $12,169
Average assets during the period$8,819 $8,760 $11,447 $12,607 $12,379


Three Months Ended
Sept. 30,
2020
June 30,
2020
Mar. 31,
2020
Dec. 31,
2019
Sept. 30,
2019
Emerging Market Equity
Beginning of period assets$5,413 $4,600 $6,400 $5,699 $5,966
Inflows/(outflows) 257 (25) 69 195 176
Market appreciation/(depreciation) 309 838 (1,869) 506 (443)
End of period assets$5,979 $5,413 $4,600 $6,400 $5,699
Average assets during the period$5,913 $5,129 $5,918 $5,991 $5,729
Fixed Income
Beginning of period assets$3,530 $3,527 $3,585 $3,337 $3,946
Inflows/(outflows) 76 (53) 21 218 (594)
Market appreciation/(depreciation) 24 56 (79) 30 (15)
End of period assets$3,630 $3,530 $3,527 $3,585 $3,337
Average assets during the period$3,605 $3,523 $3,653 $3,540 $3,731
Leveraged & Inverse
Beginning of period assets$1,349 $882 $995 $1,002 $989
Inflows/(outflows) (10) 312 12 (22) 12
Market appreciation/(depreciation) 92 155 (125) 15 1
End of period assets$1,431 $1,349 $882 $995 $1,002
Average assets during the period$1,481 $1,163 $1,008 $1,033 $1,019
Alternatives
Beginning of period assets$225 $244 $358 $418 $434
Inflows/(outflows) (4) (29) (66) (61) (17)
Market appreciation/(depreciation) 8 10 (48) 1 1
End of period assets$229 $225 $244 $358 $418
Average assets during the period$226 $226 $328 $398 $428
Closed ETPs
Beginning of period assets$52 $464 $1,460 $1,362 $1,648
Assets sold (778)
Inflows/(outflows) (10) (189) 218 (21) (16)
Market appreciation/(depreciation) 4 73 (416) 122 (89)
Fund closures (46) (296) (20) (3) (181)
End of period assets$ $52 $464 $1,460 $1,362
Average assets during the period$52 $549 $1,047 $1,428 $1,590
Headcount 211 214 210 208 212

Note: Previously issued statistics may be restated due to fund closures and trade adjustments
Source: WisdomTree


WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)

Sept. 30,
2020

Dec. 31,
2019
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$63,561 $74,972
Securities owned, at fair value 32,574 17,319
Accounts receivable 26,163 26,838
Income taxes receivable 38
Prepaid expenses 4,971 3,724
Other current assets 704 207
Total current assets 128,011 123,060
Fixed assets, net 7,654 8,127
Notes receivable 28,172
Securities held-to-maturity 501 16,863
Deferred tax assets, net 7,115 7,398
Investments 8,112 11,192
Right of use assets – operating leases 16,788 18,161
Goodwill 85,856 85,856
Intangible assets 601,247 603,294
Other noncurrent assets 185 983
Total assets$855,469 $903,106
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Current liabilities:
Fund management and administration payable$22,427 $22,021
Compensation and benefits payable 13,881 26,501
Deferred consideration – gold payments 17,202 13,953
Securities sold, but not yet purchased, at fair value 582
Operating lease liabilities 3,124 3,682
Income taxes payable 3,372
Accounts payable and other liabilities 10,383 8,930
Total current liabilities 67,017 79,041
Convertible notes 165,819
Debt 175,956
Deferred consideration – gold payments 190,546 159,071
Operating lease liabilities 17,849 19,057
Total liabilities 441,231 433,125
Preferred stock – Series A Non-Voting Convertible, par value $0.01; 14.750 shares authorized, issued and outstanding 132,569 132,569
STOCKHOLDERS’ EQUITY
Common stock, par value $0.01; 250,000 shares authorized:
Issued and outstanding: 148,782 and 155,264 at September 30, 2020 and December 31, 2019, respectively 1,488 1,553
Additional paid-in capital 319,443 352,658
Accumulated other comprehensive income 640 945
Accumulated deficit (39,902) (17,744)
Total stockholders’ equity 281,669 337,412
Total liabilities and stockholders’ equity$855,469 $903,106


WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

Nine Months Ended
Sept. 30,
2020

Sept. 30,
2019

Cash flows from operating activities:
Net (loss)/income$(22,158) $15,455
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Advisory fees received in gold and other precious metals (46,077) (36,306)
Loss on revaluation of deferred consideration – gold payments 34,436 5,939
Impairments 22,752 572
Contractual gold payments 12,362 9,710
Stock-based compensation 9,003 8,581
Gain on sale –Canadian ETF business (2,877)
Loss on extinguishment of debt 2,387
Amortization of right of use asset 2,384 2,379
Amortization of issuance costs - former credit facility 1,328 2,159
Deferred income taxes (961) 1,383
Amortization of issuance costs - convertible notes 882
Depreciation and amortization 760 792
Paid-in-kind interest income (1,856)
Other (1,173) (330)
Changes in operating assets and liabilities:
Securities owned, at fair value (15,255) 5,497
Accounts receivable 3,166 2,358
Income taxes receivable/payable (3,399) 4,350
Prepaid expenses (1,325) (888)
Gold and other precious metals 32,969 25,751
Other assets (341) (571)
Fund management and administration payable 735 (366)
Compensation and benefits payable (12,349) 1,476
Securities sold, but not yet purchased, at fair value (582) (1,130)
Operating lease liabilities (2,778) (2,662)
Accounts payable and other liabilities 1,679 788
Net cash provided by operating activities 15,568 43,081
Cash flows from investing activities:
Purchase of fixed assets (292) (25)
Funding of notes receivable (1,790)
Proceeds from held-to-maturity securities maturing or called prior to maturity 16,441 2,313
Proceeds from the sale of our financial interests in AdvisorEngine 9,592
Proceeds from sale of Canadian ETF business, net 2,774
Net cash provided by investing activities 28,515 498
Cash flows from financing activities:
Repayment of debt (179,000) (15,000)
Shares repurchased (30,979) (2,187)
Dividends paid (15,207) (15,286)
Convertible notes issuance costs (5,411)
Proceeds from the issuance of convertible notes 175,250
Proceeds from exercise of stock options 240 70
Net cash used in financing activities (55,107) (32,403)
Decrease in cash flows due to changes in foreign exchange rate (387) (385)
(Decrease)/increase in cash and cash equivalents (11,411) 10,791
Cash and cash equivalents – beginning of year 74,972 77,784
Cash and cash equivalents – end of period$63,561 $88,575
Supplemental disclosure of cash flow information:
Cash paid for taxes$7,650 $5,439
Cash paid for interest$3,390 $6,997

Non-GAAP Financial Measurements

In an effort to provide additional information regarding our results as determined by GAAP, we also disclose certain non-GAAP information which we believe provides useful and meaningful information. Our management reviews these non-GAAP financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-GAAP measurements so as to share this perspective of management. Non-GAAP measurements do not have any standardized meaning, do not replace nor are superior to GAAP financial measurements and are unlikely to be comparable to similar measures presented by other companies. These non-GAAP financial measurements should be considered in the context with our GAAP results. The non-GAAP financial measurements contained in this press release include:


WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES
GAAP to NON-GAAP RECONCILIATION (CONSOLIDATED)
(in thousands)
(Unaudited)

Three Months Ended
Adjusted Net Income and Diluted Earnings per Share:
Sept. 30,
2020
June 30,
2020
Mar. 31,
2020
Dec. 31,
2019
Sept. 30,
2019
Net (loss)/income, as reported$(270) $(13,250) $(8,638) $(25,880) $4,152
Add back: Loss on revaluation of deferred consideration 8,870 23,358 2,208 5,354 6,306
Add back: Impairments, net of income taxes 2,326 19,672 30,138
Add back: Interest expense from the amortization of discount arising from the bifurcation of the conversion option embedded in the convertible notes, net of income taxes 286 42
Deduct: Gain arising from an adjustment to the estimated fair value of consideration received from the exit of investment in AdvisorEngine (225) (868)
Add back: Tax shortfalls upon vesting and exercise of stock-based compensation awards 50 119 501 142 30
Add back: Loss on extinguishment of debt, net of income taxes 1,910
Deduct: Release of a deferred tax asset valuation allowance recognized on interest carryforwards arising from debt previously outstanding in the United Kingdom (2,842)
Deduct: Gain recognized upon sale of Canadian ETF business (2,877)
Add back: Acquisition and disposition-related costs, net of income taxes 25 358 353 154
Adjusted net income$11,037 $8,494 $11,224 $10,107 $10,642
Weighted average common shares - diluted 160,876 166,634 167,561 167,203 167,163
Adjusted earnings per share - diluted$0.07 $0.05 $0.07 $0.06 $0.06
Three Months Ended
Gross Margin and Gross Margin Percentage:Sept. 30,
2020
June 30,
2020
Mar. 31,
2020
Dec. 31,
2019
Sept. 30,
2019
Operating revenues$64,640 $58,126 $63,874 $68,907 $67,718
Less: Fund management and administration (15,219) (14,461) (14,485) (15,650) (15,110)
Gross margin$49,421 $43,665 $49,389 $53,257 $52,608
Gross margin percentage 76.5% 75.1% 77.3% 77.3% 77.7%


Three Months Ended
Adjusted Operating Income and Adjusted Operating Income Margin:Sept. 30,
2020
June 30,
2020
Mar. 31,
2020
Dec. 31,
2019
Sept. 30,
2019

Operating revenues
$64,640 $58,126 $63,874 $68,907 $67,718
Operating income$14,744 $11,797 $15,634 $14,809 $16,131
Add back: Acquisition and disposition-related costs, before income taxes 33 383 366 190
Adjusted operating income$14,744 $11,830 $16,017 $15,175 $16,321
Adjusted operating income margin 22.8% 20.4% 25.1% 22.0% 24.1%


Three Months Ended
Adjusted Total Operating Expenses:Sept. 30,
2020
June 30,
2020
Mar. 31,
2020
Dec. 31,
2019
Sept. 30,
2019
Total operating expenses$49,896 $46,329 $48,240 $54,098 $51,587
Deduct: Acquisition and disposition-related costs, before income taxes (33) (383) (366) (190)
Adjusted total operating expenses$49,896 $46,296 $47,857 $53,732 $51,397


Three Months Ended
Adjusted Income Before Income Taxes:
Sept. 30,
2020
June 30,
2020
Mar. 31,
2020
Dec. 31,
2019
Sept. 30,
2019

Income/(loss) before income taxes
$1,138 $(14,054) $(11,009) $(22,355) $8,635
Add back: Loss on revaluation of deferred consideration 8,870 23,358 2,208 5,354 6,306
Add back: Impairments, before income taxes 3,080 19,672 30,138
Add back: Interest expense from the amortization of discount arising from the bifurcation of the conversion option embedded in the convertible notes, before income taxes 379 55
Deduct: Gain arising from an adjustment to the estimated fair value of consideration received from the exit of investment in AdvisorEngine (225) (868)
Add back: Loss on extinguishment of debt 2,387
Add back: Loss recognized upon reduction of a tax-related indemnification asset 5,981
Deduct: Gain recognized upon sale of Canadian ETF business (2,877)
Add back: Acquisition and disposition-related costs, before income taxes 33 383 366 190
Adjusted income before income taxes$13,242 $10,911 $14,358 $13,503 $15,131


Three Months Ended
Adjusted Income Tax Expense and Adjusted Effective Income Tax Rate:Sept. 30,
2020
June 30,
2020
Mar. 31,
2020
Dec. 31,
2019
Sept. 30,
2019

Adjusted income before income taxes (above)
$13,242 $10,911 $14,358 $13,503 $15,131
Income tax expense/(benefit)$1,408 $(804) $(2,371) $3,525 $4,483
Add back: Tax benefit arising from impairments 754
Add back: Tax benefit arising from the amortization of discount associated with the bifurcation of the conversion option embedded in the convertible notes 93 13
Deduct: Tax shortfalls upon vesting and exercise of stock-based compensation awards (50) (119) (501) (142) (30)
Add back: Tax benefit arising from loss on extinguishment of debt 477
Add back: Release of a deferred tax asset valuation allowance recognized on interest carryforwards arising from debt previously outstanding in the United Kingdom 2,842
Add back: Tax benefit arising from reduction of a tax-related indemnification asset 5,981
Add back: Tax benefit arising from acquisition and disposition-related costs 8 25 13 36
Adjusted income tax expense$2,205 $2,417 $3,134 $3,396 $4,489
Adjusted effective income tax rate 16.7% 22.2% 21.8% 25.1% 29.7%


Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, the risks described below. If one or more of these or other risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this press release completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.

In particular, forward-looking statements in this press release may include statements about

Our business is subject to many risks and uncertainties, including without limitation:

Other factors, such as general economic conditions, including currency exchange rate fluctuations, also may have an effect on the results of our operations. For a more complete description of the risks noted above and other risks that could cause our actual results to differ from our current expectations, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.

The forward-looking statements in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. Therefore, these forward-looking statements do not represent our views as of any date other than the date of this press release.

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