WisdomTree, a leading asset management firm, has reported strong financial results for the first quarter of 2024, with significant growth in net inflows and assets under management (AUM). The company's net inflows reached $2 billion, contributing to a record AUM of $107.2 billion. Revenue saw an increase of 6.6% from the previous quarter and 18% from the same period last year. The company's adjusted operating margins expanded notably, driven by both growth and improved operational efficiency. WisdomTree's ticker symbol is WETF.
Key Takeaways
- WisdomTree's net inflows amounted to $2 billion, with AUM reaching a record $107.2 billion.
- Revenue increased by 6.6% quarter-over-quarter and 18% year-over-year.
- Adjusted operating margins expanded by 820 basis points due to growth and operational efficiency.
- The company expects further margin expansion and accelerated EPS growth, supported by organic growth, disciplined expense management, and favorable market conditions.
- WisdomTree received a trust charter from the New York State Department of Financial Services to onboard customers to WisdomTree Prime.
- The launch of a debit card for WisdomTree Prime users is expected to enhance growth through increased marketing efforts.
Company Outlook
- WisdomTree anticipates continued margin expansion and accelerated earnings per share (EPS) growth.
- Positive market conditions, organic growth, and disciplined expense management are seen as key drivers for future performance.
- The company's investment in tokenized assets and blockchain-enabled finance is seen as a strategic growth opportunity.
Bearish Highlights
- Challenges in the European business were noted, with headwinds attributed to repositioning and money in motion.
Bullish Highlights
- WisdomTree's successful penetration into major financial advisory platforms like Merrill, Morgan Stanley (NYSE:MS), and LPL is expanding their accessible market.
- The company is on track to add approximately 250 new financial advisors per quarter in the current year.
- Significant flows into higher fee products in the US have been driving revenue growth.
Misses
- Despite the overall positive results, the penetration of financial advisors remains under 3%, indicating room for growth in advisor adoption.
Q&A Highlights
- WisdomTree emphasized their strategic focus on direct-to-consumer offerings and their established retail presence as differentiators in the market.
- The company highlighted the positive response to the debit card offering from existing users and plans to expand its functionality to other asset classes.
- Management expressed confidence in the growth of their UCITS business and the overall flows in both Europe and the US.
In summary, WisdomTree's first quarter of 2024 sets a strong precedent for the year, with substantial net inflows and a record level of AUM. The company's strategic focus on emerging technologies like blockchain and their proactive approach to marketing and product development, such as the launch of the debit card for WisdomTree Prime, position them favorably for continued growth. Despite some challenges in the European market, the company's outlook remains positive with a clear strategy to expand their advisor network and enhance their product offerings.
InvestingPro Insights
WisdomTree's financial robustness is reflected in the InvestingPro data, showcasing a company that's performing well in the market. With a market capitalization of $1.3 billion and a P/E ratio standing at 12.74, the firm is trading at a valuation that suggests a balance between growth potential and current earnings strength. This is further supported by a PEG ratio of 0.31 for the last twelve months as of Q1 2024, indicating that the company's earnings growth rate is robust relative to its P/E ratio.
InvestingPro Tips reveal that analysts are optimistic about WisdomTree's future performance. Six analysts have revised their earnings upwards for the upcoming period, reflecting confidence in the company's growth trajectory. Furthermore, WisdomTree has shown a strong return over the last three months, with a price total return of 21.82%, and a remarkable six-month price total return of 40.53%. This performance is a testament to the company's market resilience and strategic initiatives, such as the expansion of their product offerings and penetration into major financial advisory platforms.
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Full transcript - WisdomTree Invest (WT) Q1 2024:
Operator: Greetings. Welcome to the WisdomTree First Quarter 2024 Earnings Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference today is being recorded. At this time, I will turn the conference over to Jessica Zaloom, Head of Corporate Communications. Jessica, you may begin.
Jessica Zaloom: 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 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 and in the Risk Factors section of WisdomTree's annual report on Form 10-K for the year ended December 31, 2023. 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.
Bryan Edmiston: Thank you, Jessica, and good morning, everyone. Let me begin by sharing our results for the first quarter along with commentary on our expense guidance before turning the call over to Jarrett and Jono for additional updates on our business. We continue to demonstrate our ability to grow organically, having generated $2 billion of net inflows during the quarter. Sustainable flows have been a continuing theme with over 3 years of positive momentum and our results this quarter illustrate the breadth and depth of our product lineup and serve as a proof point in our ability to put points on the board away from USFR. Our $2 billion of inflows were broad and diverse and generally into products with higher fees, which has remixed our blended fee rate higher, setting the table for higher revenue capture for the second quarter. Our inflows, coupled with positive movement resulted in us ending the quarter with record AUM of $107.2 billion. This is driving revenue growth and expanding margins, demonstrating the scalability of our business model. Continuing organic growth coupled with disciplined expense and capital management, alongside positive market conditions, is the formula for further margin expansion and accelerated EPS growth. Next slide. Revenues were $96.8 million, an increase of 6.6% in the fourth quarter and up 18% from the prior year quarter, driven by higher average AUM. We have also observed adjusted operating margins expanding over 820 basis points versus the first quarter of last year or 280 basis points organically when adjusting for the impact of our gold royalty buyout, which we accomplished in the second quarter of last year. Our adjusted net income for the quarter was $20.3 million or $0.12 a share. Next slide. Our adjusted operating expenses were up 5% for the quarter. The largest contributor was compensation as we experienced elevated seasonality in the amount of compensation we report in the first quarter due to payroll taxes, benefits, and other items in connection with the payment of year-end bonuses. Fund management expenses were also higher, driven by higher average AUM. Next slide. Now, a few comments on our forecasted expense guidance. Our forecasted compensation expense remains unchanged ranging from $108 million to $118 million. This guidance considers variability in incentive compensation with drivers including the magnitude of our flows, revenue and operating income growth, margin expansion, and our share price performance in relation to our peers. Where we sit today, the quarter into the year, and given a strong start, we would anticipate trending towards the upper half of this range. Our discretionary spending was $14.9 million in the first quarter. We are reiterating our full year discretionary spending guidance of $64 million to $68 million as we anticipate an uptick in marketing spend in connection with our national rollout WisdomTree Prime. We reported a gross margin of 79.4% in the first quarter. We are maintaining our gross margin guidance of 79% to 80%, considering current AUM levels and fund launches anticipated during the course of the year. If AUM scales higher from continued organic growth or favorable market conditions, we would anticipate further gross margin expansion. Our third-party distribution expense was $2.3 million in the first quarter. We are maintaining our guidance of $10 million to $11 million for the year. We are also maintaining our annual adjusted interest expense guidance of $14 million. As a reminder, our adjusted interest expense guidance is exclusive of any interest cost we are required to impute under GAAP related to our interest free financing of the shares we repurchased from the World Gold Council last November. Our interest income during the first quarter was $1.4 million. We are increasing our interest income guidance for the year by $1 million to $5 million based upon the magnitude of our forecasted interest earning assets. Our adjusted tax rate was 24.9% in the first quarter and our guidance of 24% to 25% remains unchanged. And our weighted average diluted shares were $165.3 million during the first quarter and our guidance of $166 million to $168 million for the year remains unchanged as well. That said, this guidance does not take into consideration any incremental shares associated with our convertible notes. Our current stock price of roughly $9 per share is up over 30% year-to-date and is approaching the $9.54 conversion price related to our convertible notes scheduled to mature in 2028. While the notes require principal to be paid in cash, our diluted shares would need to be increased for any incremental shares associated with the conversion option once our stock price exceeds $9.54 per share. An illustration is included within our earnings presentation to assist in quantifying the incremental shares associated with the conversion option going forward. That's all I have. I will now turn the call over to Jarrett.
Jarrett Lilien: All right. Thanks, Bryan, and good morning, everyone. We are excited to report another strong quarter with robust net inflows, record AUM, and expanding operating margins which all reflect our continued leadership in delivering innovative and solutions for every market environment in every part of the cycle. We're also excited about our progress in tokenized assets and block chain enabled finance which are reshaping the future of our industry and creating new opportunities for growth and value creation. As Bryan mentioned, Q1 started with nearly $2 billion of net inflows driven by the breadth and depth of our product lineup, especially in higher fee funds. Our India earnings fund and our currency hedge strategies attracted strong demand as did commodity funds such as silver and copper. In total, the fee rate on our gross inflows was 49 basis points, which helped drive our overall blended fees higher. Combined with the supportive market, we ended Q1 with record AUM of $107.2 billion, up 18.2% year-over-year and 7.1% sequentially. We are proud of these results which reflect our ability to deliver consistent and diversified growth across our product suite. Models also continue to be a steady growth driver. As a reminder, our approach is to grow the number of advisors who have access to our models, while also further penetrating that market and growing the number of advisors actively using WisdomTree models. Based on our current pipeline, we expect our accessible market to grow to about 80,000 advisors by year end, that's up from 70,000 at the end of last year. Additionally, after adding a thousand new advisor model users in 2023, we're on track to maintain that cadence of new advisor growth in 2024. The ongoing traction in models has driven growth in model AUM to about $3.5 billion at the end of March, outpacing the growth of our firm wide AUM. Overall, we remain very bullish on the long runway for model assets growth in the quarters and years ahead. We're also pleased to report that we delivered another strong quarter in margin expansion and earnings growth demonstrating our scalable operating model and our ability to leverage our AUM growth, our total operating margin increased by 820 basis points year-over-year to 30%, of which 540 basis points was from smart deal making and opportunistically buying out the gold royalty payment last spring and 280 basis points was organically driven by growth and operational efficiency. Our adjusted earnings per share increased by 71% year-over-year to $0.12 reflecting top-line growth and margin expansion dropping to the bottom-line. We remain focused on driving expanded operating margins and earnings growth in 2024 and beyond. And we continue to believe that tokenized assets and blockchain enabled finance represent a huge growth opportunity for WisdomTree as they open new markets, attract new customers and create new revenue streams. Back in 2020, we talked about our AUM growth opportunity driven by our diversified product suite models. We talked about our scalable operating model and how growth and operational efficiency would drive margin expansion. And we talked about the potential of tokenized assets and blockchain enabled finance. Each quarter since we have delivered on those opportunities and each quarter our growth momentum shines brighter, our margins have been expanding and we further solidify our position in tokenized assets. We used to be alone in talking about many of these themes, but now we have some company. We like to say that if you want to know what the industry is going to do tomorrow, look at what WisdomTree is doing today. In conclusion, we are confident that we have the right strategy, the right products, the right team, and the right culture to continue to create value for our clients and shareholders in the long-term. We remain extremely bullish about 2024 and beyond and we continue to drive organic growth, expand our margins and lead the industry's evolution in tokenized assets and blockchain enabled finance. And with that, let me now turn it over to Jono.
Jono Steinberg: Thank you, Jarrett, and good morning, everyone. It's been a great start to the year. Record AUM, strong flows, higher fees, 820 basis points of margin expansion, driving a 71% increase in earnings per share versus the first quarter of last year. We are executing on the key drivers that will propel the next $100 billion of AUM growth. Those drivers being ETFs, model portfolios, tokenization and WisdomTree Prime. Importantly, I want to remind everyone that all of the digital spend, including marketing, is fully baked into our guidance for 2024. It's important to remember as marketing really begins in early May. Now, the most important milestone in the quarter was the receipt of WisdomTree's trust charter from the New York State Department of Financial Services. DFS is the premier regulator for digital asset businesses in the U.S. and the operation of a trust company in this space has been a core component of our strategy. Simply put, we think that the trust company is a strong counterparty for our retail and institutional customers, and we think it will open up a number of business opportunities for us going forward. More specifically, the trust charter does 2 things for us. First, it allows us to onboard New York customers to WisdomTree Prime. Second, the trust company gives us the ability to offer products and perform services under DFS supervision with associated legal protections. Specifically, the trust company can perform fiduciary custody of digital assets, issue DFS approved stablecoins, and manage stablecoins reserves. Now, from an availability perspective and including the upcoming launch in New York, 75% of the U.S. population across 41 states have access to WisdomTree Prime. On the product and feature front, we also hit another key milestone in the first quarter with the launch of our debit card to Prime users. The card is available both physically and digitally through Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOGL) Pay platforms and ties a WisdomTree Prime customer's asset balance to the payments ecosystem. Initially, customers will be able to auto debit from the dollar token balances, but we will expand that functionality to other asset classes, like our money market fund, gold and crypto in the coming quarters. With the Trust Charter and the launch of the debit card, as I already mentioned, in early May, we will be increasing our marketing efforts going forward. It's too early to share any takeaways, but this is the effort that will generate further downloads, funded accounts, and activity. This is the beginning. We are seeing increasing interest in tokenization in the asset management space, as many of you may have noted. Our combination of retail and institutional distribution, our regulatory licenses and our broad suite of tokenized assets and funds across asset classes positions us as the early leader in this space. We are looking to press this advantage in the coming months. This is only the beginning. As I continue to mention in recent calls, it's a very exciting time for WisdomTree. We have best in class organic growth, a meaningful margin expansion opportunity and leverage to the secular shift towards tokenization. Now, let's turn the call over to Jeremy Campbell, WisdomTree's Head of Investor Relations.
Jeremy Campbell: All right. Thank you, Jono, and good morning, everybody. Operator, let's open up the lines and go directly to some questions from our analyst.
Operator: [Operator Instructions] And our first question is coming from the line of Adam Beatty with UBS.
Adam Beatty: I wanted to ask as you roll out prime and some of the retail initiatives, there have been some kind of prominent examples in recent years of other firms trying to go from an institutional kind of set up to a more retail approach and then backing away from that strategy. So just wanted to get your thoughts on, obviously, you've seen that, studied it, how WisdomTree's offering is differentiated and how you'll succeed there?
Jono Steinberg: Adam, let me start and then maybe Will, you'll jump in. First, I'd say that WisdomTree is already and has, from the very beginning, been a direct-to-consumer brand within investments. So online brokerage accounts had seen our TV ads starting 17 years ago and have been interacting with us on a direct to retail basis from the very beginning. This is fully integrated into what we're doing with Prime, further delves into the consumer space for sure. It isn't a new business line though. It really is built on the infrastructure of the core business and we're starting with the sort of the low hanging fruit of investors, people most interested in money, people that we've known or gotten to know over the course of the past 20 years, and it'll build incrementally over time. But by keeping our costs extremely low, as we do this, I think that we'll be able to find a cost effective marketing message, and that's the reason for the early testing in small incremental bites, which is what we said from the very beginning. And so what we're talking about in May is just an increase in marketing spend and it will just continue to be increased in incremental ways through the for the rest of the year. But Will, what would you add to that?
Will Peck: No, I think a lot of that was covered well, Jono. I'd just add, we're doing both, and I think they're mutually kind of beneficial and self-reinforcing. I mean, one of the cool parts about our tokenization platform is it's the same platform being applied both to retail and institutional. We've spoken a lot about Prime, but we're going to be have more announcements coming up for that institutional portal that we've alluded to in the past. So it's both and they're both mutually self-reinforcing and there's a good flywheel effect from both of them.
Adam Beatty: Yes, I appreciate the context around direct to retail. And I want to follow-up on kind of the flywheel effect on the synergies. One of the things that we sometimes hear from investors is there tends to be a mentality and we'll just sort of address the point a little bit, but there tends to be a mentality of Prime and tokenization being separate from the core business of WisdomTree. So maybe if you could talk a little bit about the synergies and how some of the marketing spend might help your legacy business as well.
Jono Steinberg: Will, should I take that?
Will Peck: I'll start, Jono. I'm happy to start. I mean, I think that it's completely leveraging the core competencies of WisdomTree, right? A tokenized fund or a tokenized asset looks very similar in a lot of ways, right, to like an exchange traded product. It's a instead of being listed on the New York Stock Exchange or fixed in Switzerland, it could be listed on a kind of available on blockchain. So it's very similar core competencies to what we have. I think maybe a different distribution set right now, but it's definitely leveraging kind of what WisdomTree does today.
Jono Steinberg: We're just tapping into regulatory prowess, product development prowess, marketing prowess, even our engineering team, which have been building the solutions business of the core business has been tapped and expanded to help with the user interface and other elements of the technology builds of our digital assets. And so synergy all along as well as overlapping vendor relationship management. So those are some of the elements that just come to mind in terms of how well the WisdomTree footprint was or is for trying to tackle the digital asset opportunity.
Operator: Our next question is from the line of Keith Housum with Northcoast Research.
Keith Housum: I appreciate the commentary on WisdomTree. But if we come back to the ETF part of the business. Perhaps, Jono, you can give a little summary about the new product creation over the past, say, 4 or 5 quarters and then what the vision is for new product creation going forward.
Jono Steinberg: Well, I'll very, very quickly touch on it, but Jeremy Schwartz, I'll turn it over to you. One of the things that we've done is expanded one of our internal brands quality as a family and as a foundational factor that we build a lot of our funds on. We started by, not only did the original factor funds overweight to quality, but then we built a more specific quality family. We started with quality dividend growth, our largest equity fund. We've taken that internationally in recent years into the UCITS format and we recently, over the last year, launched Quality Growth, which has had just an extraordinary performance in this past quarter, first quarter or maybe it's actually even more recently than that, it could have been in the second quarter that we launched the UCITS version of Quality Growth. But Jeremy, why don't you talk a little bit more about some of the product strategies that we've launched recently?
Jeremy Schwartz: Yes. We've been continually trying to diversify the product set for market environments where you have something in all market environments. And I think what you've seen with quality growth and our investment in thematics is that exact playing out. In our UCITS family, we have about $1.5 billion in thematics across over 10 different, you say more sector specific versions of not just the tech sector, but cloud and cyber and AI. And so now you have a real growth led type of fund family you can compete in and in the U.S. We have almost a $1 billion in that thematics range, so $2.5 billion in these sort of sector specific growth areas. The quality dividend growth family in the firm is up to almost $15 billion across the U.S. and Europe or maybe even more than $15 billion across that family and is taking a lot of those inflows. And we're going to continue to broaden out how do we go beyond USFR fixed income. We've been investing in broader enhanced yield indexes for bringing a longer duration exposures and our efficient core family for equities, which combines stocks with bond futures is another way people can add duration to portfolios and we're seeing that both in the U.S. and recently launched that in Europe. So we continue to try to be innovative in the funds that we launch and try to help diversify the overall business with that approach.
Keith Housum: If I can follow-up there. And I'm sure AUM is the easiest way to measure success in some of these new funds. But how do you guys evaluate the success of these funds outside of just AUM growth?
Jarrett Lilien: This is Jarrett jumping in for just a quick one. I think, and Jeremy, you can talk about measuring the new launches. But our overall strategy is about growth. And so growth is about having that diversified product suite and then enhancing it with innovative launches and that's been a strategy that's been working for us very well over the last several years. We're looking to generally launch about 20 new funds a year and we're not changing that, that's sort of the pace we're looking at this year as well. And again, it's a strategy that's working well for us as evidenced by more than 3 years of consistent organic growth that really is leading the industry in terms of organic growth. So it's a very sound strategy and we're continuing with it.
Jono Steinberg: Jeremy, do you want to add any?
Jeremy Schwartz: The only thing I would say is in addition to the individual products, we continue to launch more models and you'll hear us we talk about how to get diversified flow. It's going beyond the single ticker sale in the model portfolio business is really the best way and we continue to launch innovative models as well. Certainly, we've had a lot of success with the Siegel branded models for the big platforms and that's also part of our Prime offering is Siegel Token Fund, which is the overlap between sort of the prime business and the traditional business and how they there is synergies there. But we continue to launch very interesting new models that leverage our new funds. So I think you'll see -- you can see that as another source of growth for us.
Operator: Our next question is from the line of Michael Cyprys with Morgan Stanley.
Michael Cyprys: I wanted to dig in a bit on the models if we could. I was hoping you could maybe talk to some of the steps you're taking to drive greater adoption with new advisors using your models? I think you mentioned that 70,000 advisors right now is sort of the accessible market. I understand that's likely to expand this year. Just curious how penetrated you are within that 70,000 in terms of the number that are actually using your models and some of the talk about some of the steps that you're taking to improve that penetration?
Jono Steinberg: Jarrett?
Jarrett Lilien: Yes. That's one of our major focuses and we talked about it last quarter that there's a formula there. We want to expand the accessible market, so those are the number of financial advisors that can access our models. And at the end of the year, that was at 70,000. And then, of course, you want to penetrate that accessible market. And as of the end of last year, we had taken a number to 2,000 advisors. So our penetration was under 3%, and that's one of the exciting things is that, we still have a lot more of that addressable market to penetrate. Now, so far this year, we've already seen growth on both. We're growing the accessible market. And today, the accessible market, we've been really successful on getting on to some of the best platforms, with the firms that are most focused on this trend. So we're on Merrill's platform, Morgan Stanley's platform, LPL's platform, and that's a big part of the effort. How do we get on more platforms and grow our accessible market. But then the game is on and now the door is open and you have to walk through it and start convincing the individual advisors of how good our product is. And that's done with very good sales, a lot of great research, a lot of great models as Jeremy mentioned earlier. We've got a not so secret weapon with Jeremy Siegel, and we go in and we try to win the hearts and minds. And last year, we took our the number of advisors using our models. We doubled the number from 1,000 to 2,000. We were adding roughly 250 new advisors per quarter. We're on that same pace this year. So another great thing about this business is you have real visibility into the pipeline. So already out there, as we said in the prepared remarks, we have great visibility that that accessible market, we expect it to be 80,000 and possibly more by the end of the year by just what we know is in the pipeline. And then we also can see that we're growing our penetration. And another thing is just sort of the seasoning. We know when someone starts on their first day with one of our models, it might be for one of their clients and they're testing it out, and we know as they get more comfortable, they start using the models for a bigger portion of that client's portfolio and then start adding more clients. And so we're at the very early stages, because a lot of the advisors that have started with us are early in the seasoning process. So I've given you a lot there, but we're growing the addressable market, we're growing our penetration, and we're also beginning to season those advisors that we've onboarded.
Michael Cyprys: And just a follow-up question on WisdomTree Prime. I was hoping you could maybe talk about your go-to-market strategy, talk about some of the steps that you're going to be taking to bring awareness to the offering and bring customers directly to WisdomTree. And what is sort of success look like to you as you look out over the next couple of years and understand to your earlier comment that you've been a DTDC business for a bit. Maybe you could just remind us on what portion of the ETFs today are held in self-directed brokerage accounts.
Jono Steinberg: Will, do you want to start?
Will Peck: Yes. I'm happy to start and then if you have anything else you can just add, Jono. I think it was just that, it's like you've been talking about in the past. Lean marketing focusing on digital and organic first. So that could be targeting app store, search ads, things like that for people who are looking at some of the themes that we've got. A very clear example of that would be digital gold. There is a large universe of people out there who are find gold very appealing, a digital gold product with instant settlement is appealing to them. We want to target that user and continue to monetize that user. So that's the type of people that we're going to be targeting in addition to the organic and press strategy that we've got going on as well. And a big piece of that has been adding features and also adding states and being available to additional people in the U.S. So the New York TrustCo announcement was a big part of that. Being open to New York customers in the coming weeks will be a big part of that. So that's the type of marketing strategy that we're going to be leaning into.
Jono Steinberg: And I would say from a penetration on the core business to retail just AUM, it's something, I don't have it exact, but it's sort of a $9 billion to $10 billion number. Yes, $9 billion number out of the total with the U.S. being more retail oriented than Europe.
Michael Cyprys: And that $9 billion in brokerage self-directed?
Jono Steinberg: Yes.
Operator: [Operator Instructions] Our next question comes from the line of George Sutton with Craig-Hallum.
Unidentified Analyst: This is Adam on for George. With respect to WisdomTree Prime and receive of the NYDFS approval. I was curious, has this helped push forward any of the conversations with respect to third-party white labeling?
Jono Steinberg: Will, do you want to start?
Will Peck: Yes, it would. Now I think the like Jono has said earlier in the call, the trust charter opens up New York customers to us, but it's also a really strong regulated counterparty for people to be dealing business with. So on lots of B2B and B2B2C opportunities, the trust charter is a great kind of way to do that. And you actually see other businesses in the market today who have that trust charter, who have lots of white labeling style strategies around that. So that very much is a good step along that kind of just white labeling, but B2B and B2B2C more broadly.
Unidentified Analyst: And then I know it's early days with respect to the debit card offering, but I was curious if there's any insights you could share about the initial response from existing users?
Will Peck: Initial response has been great. It's actually been very helpful in terms of our marketing strategy. We've seen an uptick with debit card messaging. We're seeing people open the cards, beginning to spend on it. So the debit card has been, it's always been a key component of it and that's being borne out in the marketing so far.
Unidentified Analyst: And then just with respect to the flow so far through Q2, obviously there's a little bit of a headwind in the European business. Just curious if you had any additional color on what's driving that?
Jono Steinberg: Jeremy or Jarrett, do you want to start? One of you?
Jarrett Lilien: Sure. I can give a start and Jarrett, you jump in. What we've seen is some money in motion. You've seen some repositioning especially in commodities, so you've seen some big moves. And in Europe, you tend to see that. It's chunky business. It tends to move in big blocks at one time and then comes back into the market. So in terms of customer distribution though, still growing number of customers, still feel very positive. And one area where you can really see it is in our UCITS business, which is now over $6 billion and that is an important part of the European growth strategy is and again the product development strategy is to continue to launch UCITS. We launched QGRW UCITS yesterday, I believe, in Europe, and we've seen inflows into UCITS every year since 2014. So still feeling very good about what's going on in Europe, but the nature of the business is pretty chunky when money moves around and people change their allocations. Also though, it's great to talk about the U.S. for, I know a lot last year and the year before, a lot of people were asking, okay, are you worried about USFR because we've seen some great flows there. And our point always was no, this is a core holding number 1. So, we're not even when interest rates change direction, we're not expecting large outflows, you might see some. But more importantly as a core holding and for many a cash substitute, it puts us in the position to be in the conversation of where that money goes and you saw that first quarter in spades where you saw some money moving out of USFR, but moving into things like QGRW into India, into the currency hedge strategies, into models, and really helping drive something really significant in the first quarter was the quality of the overall flows into basically higher fee products, but driving real revenue growth. So, a lot of great things going on with the flows both in Europe and the U.S.
Operator: At this time, we've reached the end of our question-and-answer session. I'll turn the floor back to management for closing remarks.
Jono Steinberg: This is me, Jono Steinberg. I don't think we have any closing remarks. We want to thank you all for your time and attention and support, and we'll speak to you next quarter. Thanks, everybody. Have a great day.
Operator: This will conclude today's conference. You may disconnect your lines at this time, and have a wonderful day.
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