Comparing the nine months ended June 30, 2018, to the nine months ended June 30,
2019, total operating expenses decreased by 11.2%, from $22.6 million to $20.0 million. Although the dollar value of operating expense decreased, as a percentage of total revenue, operating expense increased 7.1 percentage points to
61.6%.
In both periods, the dollar value decrease was due mainly to decreases in all expense categories other than general and
administrative expense, which remained the same in the three months ending June 30, 2019, compared to the three months ending June 30, 2018.
Compensation and Benefits Expense
: Comparing the three months ended June 30, 2018, to the three months ended June 30, 2019,
compensation and benefits expense decreased by 16.9%, from $3.2 million to $2.7 million. Although the dollar value of compensation expense decreased, as a percentage of total revenue, compensation and benefits expense increased
1.9 percentage points to 25.6%.
Comparing the nine months ended June 30, 2019, to the nine months ended June 30, 2018,
compensation and benefits expense decreased by 15.6%, from $9.9 million to $8.3 million. Although the dollar value of compensation and benefits expense decreased, as a percentage of total revenue, compensation and benefits expense
increased 1.7 percentage points to 25.6%.
In both periods, the dollar value decrease was due primarily to a decrease in
incentive-based compensation.
General and Administrative Expense
: Comparing the three months ended June 30, 2018, to the
three months ended June 30, 2019, general and administrative expense remained the same at $1.4 million. Although the dollar value of general and administrative expense remained the same, as a percentage of total revenue, general and
administrative expense increased 3.0 percentage points to 13.0%.
Comparing the nine months ended June 30, 2018, to the nine
months ended June 30, 2019, general and administrative expense decreased by 2.1%, from $4.3 million to $4.2 million. Although the dollar value of general and administrative expense decreased, as a percentage of total revenue, general
and administrative expense increased 2.5 percentage points to 12.9%. The dollar value decrease resulted primarily from decreased professional service fees, variable sales-related costs, and business
development-related
expenses.
Mutual Fund Distribution Expense
: Mutual fund distribution
expense consists of fees paid to various financial institutions that offer the Hennessy Funds as potential investments to their clients. When the Hennessy Funds are purchased through one of these financial institutions, the institution typically
charges an
asset-based
fee, which is recorded in mutual fund distribution expense in our statement of operations to the extent paid by us. When the Hennessy Funds are purchased directly, we do not
incur any such expense. These fees generally increase or decrease in line with the net assets of the Hennessy Funds held through these financial institutions, which are affected by inflows, outflows, and fund performance.
Comparing the three months ended June 30, 2018, to the three months ended June 30, 2019, mutual fund distribution expense decreased
by 10.0%, from $0.14 million to $0.13 million. Although the dollar value of mutual fund distribution expense decreased, as a percentage of total revenue, mutual fund distribution expense increased 0.2 percentage points to 1.2%.
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