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What changed in WisdomTree, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of WisdomTree, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+444 added−489 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-23)

Top changes in WisdomTree, Inc.'s 2024 10-K

444 paragraphs added · 489 removed · 316 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

114 edited+48 added−98 removed110 unchanged
Biggest changeConsolidated Operating Results The following table sets forth our revenues and net income for the last three years. • Revenues – We recorded operating revenues of $349.0 million during the year ended December 31, 2023, up 15.8% from the year ended December 31, 2022 due to higher average AUM and higher other income from large flows from some of our European products, partly offset by a lower average advisory fee. • Expenses – Total operating expenses increased 8.4% from the year ended December 31, 2022 to $261.5 million primarily due to higher stock -based compensation and headcount, fund management and administration costs, professional fees, marketing expenses, third -party distribution fees, sales and business development expenses and other expenses.
Biggest changeEuropean Listed ETPs The AUM of our European listed (including internationally cross-listed) ETPs, or European listed ETPs, increased from $27.6 billion at December 31, 2023 to $30.7 billion at December 31, 2024, due to market appreciation, partly offset by net outflows. 3 Table of Contents Consolidated Operating Results The following table sets forth our revenues and net income for the last three years. ● Revenues – We recorded operating revenues of $427.7 million during the year ended December 31, 2024, up 22.5% from the year ended December 31, 2023 due to higher average AUM and higher other revenues attributable to our European listed ETPs.
For example, our television advertising to promote our ETPs runs exclusively on the cable networks CNBC, Fox Business and Bloomberg. It is anticipated that television advertising also will be utilized to promote WisdomTree Prime. Also, our digital advertising runs on many investing and ETF -specific web -sites , such as www.etftrends.com and www.etfdb.com, using targeted dynamic and personalized ad messaging.
For example, our television advertising to promote our ETPs runs exclusively on the cable networks CNBC and Fox Business. It is anticipated that television advertising also will be utilized to promote WisdomTree Prime. Also, our digital advertising runs on many investing and ETF-specific web-sites, such as www.etftrends.com and www.etfdb.com, using targeted dynamic and personalized ad messaging.
We also anticipate launching marketing campaigns to drive awareness and user adoption for WisdomTree Prime and to position ourselves to become a leader in asset tokenization and blockchain -enabled funds. We pursue these objectives utilizing the following strategies: • Targeted advertising. We create highly targeted multi -media advertising campaigns limited to established core financial media.
We also anticipate launching marketing campaigns to drive awareness and user adoption for WisdomTree Prime and WisdomTree Connect and to position ourselves to become a leader in asset tokenization and blockchain-enabled funds. We pursue these objectives utilizing the following strategies: ● Targeted advertising. We create highly targeted multi-media advertising campaigns limited to established core financial media.
Although we currently do not offer so -called leveraged ETFs in the U.S., which may include within their holdings derivative instruments such as options, futures or swaps to obtain leveraged exposures.
We currently do not offer so-called leveraged ETFs in the U.S., which may include within their holdings derivative instruments such as options, futures or swaps to obtain leveraged exposures.
WisdomTree Asset Management, Inc., or WT Asset Management, and WisdomTree Digital Management, Inc., or WT Digital Management, two of our subsidiaries, are registered as investment advisers under the Investment Advisers Act and, as such, are regulated by the SEC.
WisdomTree Asset Management, Inc., or WTAM, and WisdomTree Digital Management, Inc., or WT Digital Management, two of our subsidiaries, are registered as investment advisers under the Investment Advisers Act and, as such, are regulated by the SEC.
Therefore, the ManJer Issuers are required to comply with various obligations under this law including, but not limited to, convening general meetings, keeping proper books and records and filing financial statements. • The Foreign Account Tax Compliance Act, or FATCA , a U.S. federal law that was passed as part of the Hiring Incentives to Restore Employment (HIRE) Act, generally requires that foreign financial institutions and certain other non -financial foreign entities report on the foreign assets held by their U.S. account holders or be subject to withholding on withholdable payments.
Therefore, the ManJer Issuers are required to comply with various obligations under this law including, but not limited to, convening general meetings, keeping proper books and records and filing financial statements. 16 Table of Contents ● The Foreign Account Tax Compliance Act, or FATCA , a U.S. federal law that was passed as part of the Hiring Incentives to Restore Employment (HIRE) Act, generally requires that foreign financial institutions and certain other non-financial foreign entities report on the foreign assets held by their U.S. account holders or be subject to withholding on withholdable payments.
We also offer a wide array of benefits including generous healthcare coverage, paid vacation (unlimited in the U.S.), parental, sabbatical and sick leave, life and travel insurance, short- and long -term disability benefits and, in the U.S., a 401(k) plan with a matching contribution of up to 50% of eligible employee contributions. Our Product Categories U.S.
We also offer a wide array of benefits including generous healthcare coverage, paid vacation (unlimited in the U.S.), parental, sabbatical and sick leave, life and travel insurance, short- and long-term disability benefits, educational assistance and, in the U.S., a 401(k) plan with a matching contribution of up to 50% of eligible employee contributions. Our Product Categories U.S.
SFDR requires WisdomTree Management Limited, as a UCITS management company, to disclose in a consistent and harmonized manner how environmental, social and governance, or ESG, factors are adopted in its decision -making process. SFDR also requires certain pre -contractual and periodic disclosure requirements for in scope WTICAV’s Sub -funds , such as UCITS financial products.
SFDR requires WisdomTree Management Limited, as a UCITS management company, to disclose in a consistent and harmonized manner how environmental, social and governance, or ESG, factors are adopted in its decision-making process. SFDR also requires certain pre-contractual and periodic disclosure requirements for in scope WTICAV Sub-funds, such as UCITS financial products.
Our social media strategy allows us to continually enhance our brand reputation of expertise and thought leadership in the ETP industry. For example, we have an established presence on LinkedIn, X (formerly Twitter), Instagram, Reddit and YouTube, and our blog content is syndicated across multiple business -oriented websites.
Our social media strategy allows us to continually enhance our brand reputation of expertise and thought leadership in the ETP industry. For example, we have an established presence on LinkedIn, X, Instagram, Reddit and YouTube, and our blog content is syndicated across multiple business-oriented websites.
Therefore, WTICAV is required to comply with various obligations under the ICAV Act such as, but not limited to, keeping proper books and records. The segregation of liability between Sub -funds means there cannot be, as a matter of Irish law, cross -contamination of liability between Sub -funds .
WTICAV is registered as an ICAV under the ICAV Act. Therefore, WTICAV is required to comply with various obligations under the ICAV Act such as, but not limited to, keeping proper books and records. The segregation of liability between Sub-funds means there cannot be, as a matter of Irish law, cross-contamination of liability between Sub-funds.
WMAI is not authorized or regulated by the Central Bank by virtue of issuing ETPs. 23 Table of Contents The Central Bank, as competent authority under the Prospectus Regulation, has approved the Base Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Regulation.
WMAI is not authorized or regulated by the Central Bank by virtue of issuing ETPs. 19 Table of Contents The Central Bank, as competent authority under the Prospectus Regulation, has approved the Base Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Regulation.
Since the ManJer Issuers are based in non -EU jurisdictions, obligations are only indirectly applicable to them, but a certain level of interaction with EU counterparties is required to comply with some of these requirements. 21 Table of Contents WisdomTree Issuer X Limited is also primarily subject to the following legislation and regulatory requirements: • The Control of Borrowing (Jersey) Order 1958.
Since the ManJer Issuers are based in non-EU jurisdictions, obligations are only indirectly applicable to them, but a certain level of interaction with EU counterparties is required to comply with some of these requirements. WisdomTree Issuer X Limited is also primarily subject to the following legislation and regulatory requirements: ● The Control of Borrowing (Jersey) Order 1958.
See “Non -GAAP Financial Measures” included in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information. 4 Table of Contents Seasonality We believe seasonal fluctuations in the asset management industry are common, however such trends are generally masked by global market events and market volatility in general.
See “Non-GAAP Financial Measures” included in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information. Seasonality We believe seasonal fluctuations in the asset management industry are common, however such trends are generally masked by global market events and market volatility in general.
Many of our index -based equity ETFs are based on our own indexes and we do not license them from, nor do we pay licensing fees to, third parties for these indexes. We do, however, license third -party indexes for certain of our fixed income, currency and alternative ETFs. 24 Table of Contents On March 6, 2012, the U.S.
Many of our index-based equity ETFs are based on our own indexes and we do not license them from, nor do we pay licensing fees to, third parties for these indexes. We do, however, license third-party indexes for certain of our fixed income, currency, equity and alternative ETFs. On March 6, 2012, the U.S.
We were incorporated under the laws of the state of Delaware on September 19, 1985 as Financial Data Systems, Inc. and were ultimately renamed WisdomTree, Inc. on November 7, 2022. 2 Table of Contents Assets Under Management WisdomTree ETPs We offer ETPs covering equity, fixed income, commodities, leveraged -and-inverse , currency, alternatives and cryptocurrency.
We were incorporated under the laws of the state of Delaware on September 19, 1985 as Financial Data Systems, Inc. and were ultimately renamed WisdomTree, Inc. on November 7, 2022. Assets Under Management WisdomTree ETPs We offer ETPs covering equity, fixed income, commodities, leveraged-and-inverse, currency, alternatives and cryptocurrency.
Therefore, period -to-period comparisons of our or the industry’s flows and operating results may not be meaningful or indicative of results in future periods. Our Industry – ETPs We believe ETPs have been one of the most innovative investment products to emerge in the last two decades in the asset management industry.
Therefore, period-to-period comparisons of our or the industry’s flows and operating results may not be meaningful or indicative of results in future periods. 4 Table of Contents Our Industry – ETPs We believe ETPs have been one of the most innovative investment products to emerge in the last two decades in the asset management industry.
We also leverage the strength and reach of our existing brand, in addition to utilizing a highly focused “test, learn, iterate” paid and social media marketing strategy, to drive awareness and user adoption for WisdomTree Prime. • Sales support.
We also leverage the strength and reach of our existing brand, in addition to utilizing a highly focused “test, learn, iterate” paid and social media marketing strategy, to drive awareness and user adoption for WisdomTree Prime. 12 Table of Contents ● Sales support.
In addition, our common stock is listed on the New York Stock Exchange and we are therefore also subject to its rules including corporate governance listing standards, as well as federal and state securities laws. • FINRA Rules. FINRA rules and guidance may affect how WisdomTree U.S. listed ETFs are sold by member firms.
In addition, our common stock is listed on the New York Stock Exchange and we are therefore also subject to its rules including corporate governance listing standards, as well as federal and state securities laws. 15 Table of Contents ● FINRA Rules. FINRA rules and guidance may affect how WisdomTree U.S. listed ETFs are sold by member firms.
We remain committed to being a trusted provider of innovative products and services guided by proactive engagement and regulatory collaboration. U.S. Regulation All aspects of our business are subject to various federal and state laws and regulations.
We remain committed to being a trusted provider of innovative products and services guided by proactive engagement and regulatory collaboration. 14 Table of Contents U.S. Regulation All aspects of our business are subject to various federal and state laws and regulations.
However, Jersey tax authorities have applied less onerous reporting obligations to interests such as ETCs that are regularly traded on an established securities market and are held through CREST, the U.K. based central securities depository. 20 Table of Contents • The Collective Investment Funds (Jersey) Law 1988.
However, Jersey tax authorities have applied less onerous reporting obligations to interests such as ETCs that are regularly traded on an established securities market and are held through CREST, the U.K. based central securities depository. ● The Collective Investment Funds (Jersey) Law 1988.
See “Other Income/(Expenses)” in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information. • Net income – We reported net income of $50.7 million and $102.5 million during the years ended December 31, 2022 and 2023, respectively.
See “Other Income/(Expenses)” in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information. ● Net income – We reported net income of $102.5 million and $66.7 million during the years ended December 31, 2023 and 2024, respectively.
These increases were partly offset by the termination of our deferred consideration—gold payments obligation on May 10, 2023. • Other Income/(Expenses) – Other income/(expenses) includes interest income and interest expense, gains and losses on revaluation/termination of deferred consideration—gold payments, impairments and other losses and gains.
These increases were partly offset by lower contractual gold payments associated with the termination of our deferred consideration—gold payments obligation on May 10, 2023. ● Other Income/(Expenses) – Other income/(expenses) includes interest income and interest expense, gains and losses on revaluation/termination of deferred consideration—gold payments, impairments and other losses and gains.
The chart below sets forth the asset mix of our ETPs at December 31, 2021, 2022 and 2023: Our Operating and Financial Results We operate as an ETP sponsor and asset manager, providing investment advisory services globally through our subsidiaries in the U.S. and Europe. U.S.
The chart below sets forth the asset mix of our ETPs at December 31, 2022, 2023 and 2024: 2 Table of Contents Our Operating and Financial Results We operate as an ETP sponsor and asset manager, providing investment advisory services globally through our subsidiaries in the U.S. and Europe. U.S.
In evaluating the performance of our U.S. listed equity, fixed income and alternative ETFs against actively managed and index based mutual funds and ETFs, over 80% of our U.S. listed AUM covered by Morningstar were in the top two quartiles of peer performance in the 3 -year and 10 -year timeframes.
In evaluating the performance of our U.S. listed equity, fixed income and alternative ETFs against actively managed and index based mutual funds and ETFs, over 80% of our U.S. listed AUM covered by Morningstar were in the top quartile of peer performance on the 3-year timeframe and over 65% of our U.S. listed AUM covered by Morningstar were in the top two quartiles of peer performance on the 10-year timeframe.
Regulations adopted by the CFTC have required WT Asset Management to become a member of the NFA and register as a commodity pool operator for a select number of our ETFs. • Products Exchange Listing Requirements.
Regulations adopted by the CFTC have required WTAM to become a member of the NFA and register as a commodity pool operator for a select number of our ETFs. ● Products Exchange Listing Requirements.
We create comprehensive materials to support our sales process of our ETP products, including whitepapers, research reports, webinars, blogs, podcasts, videos and performance data for our products. Our marketing automation system connects seamlessly to our database of financial advisors to provide the sales team with additional insights about their clients.
We create comprehensive materials to support our ETP sales process, including white papers, research reports, webinars, blogs, podcasts, videos and performance data for our products. Our marketing automation system connects directly to our database of financial advisors to provide our sales team with additional insights about their clients.
FINRA rules also apply to our fund marketing and sales material. 18 Table of Contents • Federal Money Services Business and State Money Transmission Laws.
FINRA rules also apply to our fund marketing and sales material. ● Federal Money Services Business and State Money Transmission Laws.
All ETCs are currently subject to PRIIPs and KIDs have been produced since January 1, 2018. • MiFID II.
All ETCs are currently subject to PRIIPs and KIDs have been produced since January 1, 2018. 17 Table of Contents ● MiFID II.
We outsource to third parties those services that are not our core competencies or may be resource or risk intensive, such as the portfolio management responsibilities and fund accounting operations of our products. In addition, our licensing costs are moderated since we create our own indexes for most of our ETFs.
We outsource to third parties those services that are not our core competencies or may be resource or risk intensive, such as portfolio management and fund accounting operations of our products. Additionally, our licensing costs are moderated since we create our own indexes for most of our ETFs, further enhancing operational efficiency.
International Developed Market Equity Our International Developed Market Equity products offer a variety of strategies including currency hedged and dynamic currency hedged products, exposures to large, mid and small -cap companies in these markets and multifactor strategies. Total AUM of our International Developed Market Equity products was $15.1 billion at December 31, 2023.
Total AUM of our Fixed Income products was $20.0 billion at December 31, 2024. International Developed Market Equity Our International Developed Market Equity products offer a variety of strategies including currency hedged and dynamic currency hedged products, exposures to large, mid and small-cap companies in these markets and multifactor strategies.
According to Morningstar, from January 1, 2021 through December 31, 2023, equity ETFs have generated positive inflows of approximately $1.9 trillion, while long -term equity mutual funds have generated outflows of approximately ($830) billion. In addition, ETF fixed income flows are benefiting from a broader range of investors gravitating toward fixed income products in the ETF structure.
According to Morningstar, from January 1, 2022 through December 31, 2024, equity ETFs have generated positive inflows of approximately $2.0 trillion, while long-term equity mutual funds have generated outflows of approximately ($1.6) trillion. In addition, ETF fixed income flows are benefiting from a broader range of investors gravitating toward fixed income products in the ETF structure.
The Central Bank also has produced guidance that provides direction on issues relating to the funds industry, certain of which set forth conditions not contained in the UCITS Regulations or the Central Bank Regulations with which UCITS must conform. • The Irish Collective Asset -Management Vehicle Act 2015 (“ICAV Act”). WTICAV is registered as an ICAV under the ICAV Act.
The Central Bank also has produced guidance that provides direction on issues relating to the funds industry, certain of which set forth conditions not contained in the UCITS Regulations or the Central Bank Regulations with which UCITS must conform. 18 Table of Contents ● The Irish Collective Asset-Management Vehicle Act 2015 (“ICAV Act”).
By definition, ETFs represent a basket of securities and each fund may contain hundreds or even thousands of different individual securities. The “instant diversification” of ETFs provides investors with broad exposure to an asset class, market sector or geography. The ETF sector of the asset management industry continues to demonstrate that it is favored among investors.
By definition, ETFs represent a basket of securities and each fund may contain hundreds or even thousands of different individual securities. The “instant diversification” of ETFs provides investors with broad exposure to an asset class, market sector or geography. 6 Table of Contents The ETF sector of the asset management industry remains highly favored among investors.
Additionally, in the U.S., we communicate to our retail database about new product launches and provide ETF education through a monthly newsletter. • Social media. We have implemented a social media strategy that allows us to connect directly with financial advisors and investors by offering timely access to our research material and more general market commentary.
Additionally, we share updates on product launches and provide financial education to our retail database through a monthly newsletter. ● Social media. We have implemented a social media strategy that allows us to connect directly with financial advisors and investors by offering timely access to our research material and more general market commentary.
As we have expanded our international presence, a number of our subsidiaries and international operations have become subject to regulatory systems, in various jurisdictions, comparable to those covering our operations in the U.S.
International Regulation Our operations outside the U.S. are subject to the laws and regulations of various non-U.S. jurisdictions and non-U.S. regulatory agencies and bodies. As we have expanded our international presence, a number of our subsidiaries and international operations have become subject to regulatory systems, in various jurisdictions, comparable to those covering our operations in the U.S.
Patent and Trademark Office and in various foreign jurisdictions. We also have registered Modern Alpha as a service mark with the U.S. Patent and Trademark Office and in various foreign jurisdictions and have applied for trademark registration of the WisdomTree Prime name and logo design.
We have registered the WisdomTree name and logo design, Modern Alpha and the WisdomTree Prime name and logo design as service marks with the U.S. Patent and Trademark Office. The WisdomTree name and logo design and Modern Alpha are also registered as service marks in various foreign jurisdictions.
As above, CSDR introduced measures to prevent settlement failures, with settlement failures resulting in penalty charges applied by the Central Securities Depositaries to failing parties. Intellectual Property We regard our name, WisdomTree, as material to our business and have registered the WisdomTree name and logo design as a service mark with the U.S.
As above, CSDR introduced measures to prevent settlement failures, with settlement failures resulting in penalty charges applied by the Central Securities Depositaries to failing parties. Intellectual Property We regard our name, WisdomTree, as material to our business.
We also launched the industry’s first smart beta corporate bond suite. Other product offerings include those that seek to track a yield -enhanced index of U.S. investment grade bonds and international fixed income products which are denominated in either local or U.S. currencies. Total AUM of our Fixed Income products was $21.2 billion at December 31, 2023.
We also launched the industry’s first smart beta corporate bond suite and first floating rate U.S. Treasury product. Other product offerings include those that seek to track a yield-enhanced index of U.S. investment grade bonds and international fixed income products which are denominated in either local or U.S. currencies.
Total AUM of our Leveraged & Inverse products was $1.8 billion at December 31, 2023. Cryptocurrency Our cryptocurrency ETPs provide investors with a simple, secure and cost -efficient way to gain exposure to the price of cryptocurrencies, while utilizing the best of traditional financial infrastructure and product structuring.
Strategies span across equity, commodity, government bond and currency exposures. Total AUM of our Leveraged & Inverse products was $1.9 billion at December 31, 2024. Cryptocurrency Our cryptocurrency ETPs provide investors with a simple, secure and cost-efficient way to gain exposure to the price of cryptocurrencies, while utilizing the best of traditional financial infrastructure and product structuring.
In addition, we consult with our senior advisers, including Professor Jeremy Siegel, Senior Economist to WisdomTree, on product development ideas, model collaboration and market commentaries. Product Development We are focused on driving continued growth through innovative product development including through our Modern Alpha approach and our digital assets offerings.
We also collaborate with senior advisers, including Professor Jeremy Siegel, on product development ideas, model strategies and market commentaries. Product Development We are focused on driving continued growth through innovative product development, including through our Modern Alpha approach and our digital assets offerings.
Total AUM of our Commodity & Currency products was $21.3 billion at December 31, 2023. 13 Table of Contents Fixed Income Our Fixed Income products seek to enhance income potential within the fixed income universe. We offer a suite of rising rate bond products based on leading fixed income benchmarks we license from third parties.
Total AUM of our Commodity & Currency products was $21.9 billion at December 31, 2024. Fixed Income Our Fixed Income products seek to enhance income potential within the fixed income universe. We offer a suite of bond products based on either leading fixed income benchmarks we license from third parties or active strategies.
All ETC prospectuses (except WisdomTree Issuer X Limited’s prospectus) are also approved by the Financial Conduct Authority, or FCA, as U.K.
All ETC prospectuses are also approved by the Financial Conduct Authority, or FCA, as U.K.
In the U.S. market, a key factor differentiating ETFs, grantor trusts and limited partnerships from exchange -traded notes is that the former hold assets underlying the ETP. Exchange traded notes, on the other hand, are debt instruments issued by the exchange -traded note sponsor.
In the U.S. market, a key factor differentiating ETFs, grantor trusts and limited partnerships from exchange-traded notes is that the former hold assets underlying the ETP. Exchange traded notes, on the other hand, are debt instruments issued by the exchange-traded note sponsor. Also, each of these structures has implications for taxes, liquidity, tracking error and credit risk.
We believe this trend is due to the inherent benefits of ETFs – transparency, liquidity and tax efficiency. 6 Table of Contents We believe that our growth, and the growth of the industry in which we operate, will continue to be driven by the following factors: • Education and greater investor awareness.
We believe this trend is due to the inherent benefits of ETFs – transparency, liquidity and tax efficiency. We anticipate our growth, along with that of the industry, will continue to be driven by the following factors: ● Increased investor awareness.
Our research is typically academic -type research to support our products, including white papers on the strategies underlying our indexes and ETPs, investment insights on current market trends, and types of investment strategies that drive long -term performance.
Our research is academic in nature and aims to support our products with white papers on the strategies underlying our indexes and ETPs, insights on market trends, and analyses of investment approaches that drive long-term performance.
Therefore, the insolvency of one Sub -fund cannot affect another Sub -fund . 22 Table of Contents • EMIR. EMIR provides for OTC derivative contracts to be submitted to central clearing and imposes, inter alia, margin posting and other risk mitigation techniques, reporting and record keeping requirements.
Therefore, the insolvency of one Sub-fund cannot affect another Sub-fund. ● EMIR. EMIR provides for OTC derivative contracts to be submitted to central clearing and imposes, inter alia, margin posting and other risk mitigation techniques, reporting and record keeping requirements. WTICAV uses OTC derivatives instruments to hedge the currency risk of some of its sub-funds, which are subject to EMIR.
Patent and Trademark Office issued to us our patent on Financial Instrument Selection and Weighting System and Method, which is embodied in our dividend weighted equity indexes. We currently do not rely upon our patent for a competitive advantage.
Patent and Trademark Office issued to us our patent on Financial Instrument Selection and Weighting System and Method, which is embodied in our dividend weighted equity indexes.
As of December 31, 2023, aggregate AUM of ETPs globally was $11.6 trillion. The chart below reflects the AUM of the global ETP industry since 2006: Source: ETFGI LLP As of December 31, 2023, we were the fourteenth largest ETP sponsor globally based on AUM.
As of December 31, 2024, aggregate AUM of ETPs globally was $13.8 trillion. The chart below reflects the AUM of the global ETP industry since 2006: Source: Morningstar As of December 31, 2024, we were the 15 th largest ETP sponsor globally based on AUM.
WTICAV uses OTC derivatives instruments to hedge the currency risk of some of its sub -funds , which are subject to EMIR. WTICAV has adhered to the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by the International Swaps and Derivatives Association, Inc. The Central Bank has been designated as the competent authority for EMIR. • BMR.
WTICAV has adhered to the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by the International Swaps and Derivatives Association, Inc. The Central Bank has been designated as the competent authority for EMIR. ● BMR.
In short, we want to add choice in the market and seek to introduce thoughtful investment solutions. Lastly, when launching new products, we seek to expand and diversify our overall product line. Competition The asset management industry is highly competitive and we face substantial competition in virtually all aspects of our business.
In short, we want to add choice in the market and seek to introduce thoughtful investment solutions. Lastly, when launching new products, we seek to expand and diversify our overall product line. Competition The asset management industry is highly competitive, with significant competition across product offerings, fees, brand recognition and service quality.
In addition, approximately 50% of our U.S. listed AUM is rated 4- or 5 -star by Morningstar. • Differentiated product set, powered by innovation and performance . Our products span a variety of traditional and high growth asset classes covering equity, fixed income, commodity, leveraged -and-inverse , currency, alternative strategies and cryptocurrency, and include both passive and actively managed funds.
In addition, approximately 59% were rated 4- or 5-star by Morningstar. ● Differentiated product set, powered by innovation and performance. Our product suite spans traditional and high growth asset classes including equity, fixed income, commodity, leveraged-and-inverse, currency, alternative strategies and cryptocurrency, across both passive and actively managed funds.
All new employees attend a compliance training session with a compliance officer, and thereafter, employees are required to attend firmwide annual compliance training and to complete compliance certifications annually and in some instances, quarterly. We also conduct mandatory cybersecurity training and other training programs as required by law.
All new employees attend a compliance training session with a compliance officer during onboarding, and thereafter, employees are required to attend firmwide annual compliance training and to complete compliance certifications annually and in some instances, quarterly.
Time in the office generally is not prescribed, and team leaders are empowered to determine how their teams work best, based on their roles, with employees remaining accountable for achieving individual, team and Company outcomes.
We embrace a “Work Smart” philosophy that transcends physical work settings, with a focus on optimizing productivity, efficiency and effectiveness of our work. Time in the office generally is not prescribed, and team leaders are empowered to determine how their teams work best, based on their roles, with employees remaining accountable for achieving individual, team and Company outcomes.
ETFs provide exposure to a variety of broad -based indexes across equities, fixed income, commodities and other asset classes and strategies, and can be used as both long -term portfolio holdings or short -term trading tools.
ETFs are used in various ways by a range of investors with varying strategies and objectives, from conservative to speculative uses including: ● Low-cost index investing. ETFs provide exposure to a variety of broad-based indexes across equities, fixed income, commodities and other asset classes and strategies, and can be used as both long-term portfolio holdings or short-term trading tools.
We have launched many first -to-market products and pioneered alternative weighting we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management to offer investors cost -effective funds that are built to perform.
We have launched many first-to-market products and pioneered a unique alternative-weighting approach called “Modern Alpha” that combines the outperformance potential of active management with the cost effective benefits of passive management.
Building on our heritage of innovation, we are also developing and have launched next -generation digital products, services and structures, including digital or blockchain -enabled mutual funds (“Digital Funds”) and tokenized assets, as well as our blockchain -native digital wallet, WisdomTree Prime, which is currently available in the U.S. in 38 states, representing approximately 70% of the U.S. population.
Building on our heritage of innovation, we have introduced next-generation digital products and services, including blockchain-enabled mutual funds (“Digital Funds”), tokenized assets and our blockchain-native digital wallet, WisdomTree Prime ® , which is currently available in 45 U.S. states, covering approximately 80% of the U.S. population. Our institutional platform, WisdomTree Connect™, further expands access to our tokenized assets.
Equity We offer equity products that provide access to the securities of large, mid and small -cap companies located in the U.S., as well as particular market sectors and styles. Our U.S.
Equity We offer equity products that provide access to the securities of large, mid and small-cap companies located in the U.S., as well as particular market sectors and styles. Our U.S. Equity products generally track our own indexes and quantitative active strategies. Total AUM of our U.S. Equity products was $35.4 billion at December 31, 2024.
Investors in a U.S. listed ETF pay identical advisory fees regardless of the investors’ size, structure or sophistication. Unlike mutual funds, U.S. listed ETFs generally do not have different share classes or different expense structures for retail and institutional clients and ETFs typically are not sold with sales loads or 12b -1 fees.
Unlike mutual funds, U.S. listed ETFs generally do not have different share classes or different expense structures for retail and institutional clients and ETFs typically are not sold with sales loads or 12b-1 fees. In many cases, ETFs offer lower expense ratios than comparable mutual funds.
In keeping with “Work Smart,” we now maintain a smaller office footprint globally to better align with the number of employees expected to collaborate in person on any given day, while providing a space for employees to work and socialize.
In keeping with “Work Smart,” we maintain an office footprint globally that aligns with the number of employees expected to collaborate in person on any given day, while providing a space for employees to work and socialize. Our offices are located in buildings with robust security procedures, fire safety and sanitation and health practices.
We believe that our early launch of products in a number of asset classes or strategies, including fundamental weighting and currency hedging, along with commodities including gold, certain fixed income, alternative and thematic categories, positions us well to maintain our standing as one of the leaders of the ETP industry.
For example, our early launches in asset classes such as fundamental weighting and currency hedging, and commodities (including gold), certain fixed income, and thematic categories, have positioned us to maintain our standing as one of the leaders of the ETP industry.
Regulators in these non -U .S. jurisdictions may have broad authority with respect to the regulation of financial services including, among other things, the authority to grant or cancel required licenses or registrations. 19 Table of Contents Jersey-Domiciled Issuers (Managed by WisdomTree Management Jersey Limited) One of our subsidiaries, WisdomTree Management Jersey Limited, or ManJer, is a Jersey based management company providing investment and other management services to several Jersey -domiciled issuers, or ManJer Issuers, of exchange -traded commodities, or ETCs, each of which was established as a special purpose vehicle to issue exchange -traded securities.
Jersey-Domiciled Issuers (Managed by WisdomTree Management Jersey Limited) One of our subsidiaries, WisdomTree Management Jersey Limited, or ManJer, is a Jersey based management company providing investment and other management services to several Jersey-domiciled issuers, or ManJer Issuers, of exchange-traded commodities, or ETCs, each of which was established as a special purpose vehicle to issue exchange-traded securities.
Listed ETFs The AUM of our U.S. listed exchange traded funds, or U.S. listed ETFs, increased from $56.0 billion at December 31, 2022 to $72.5 billion at December 31, 2023 due to net inflows and market appreciation. 3 Table of Contents European Listed ETPs The AUM of our European listed (including internationally cross -listed ) ETPs, or European listed ETPs, increased from $26.0 billion at December 31, 2022 to $27.6 billion at December 31, 2023, due to market appreciation, partly offset by net outflows.
Listed ETFs The AUM of our U.S. listed exchange traded funds, or U.S. listed ETFs, increased from $72.5 billion at December 31, 2023 to $79.1 billion at December 31, 2024 due to market appreciation and net inflows.
Emerging Market Equity Our Emerging Market Equity products provide access to exposure of large, mid and small -cap companies located in Taiwan, China, India, Russia, South Africa, South Korea and other emerging markets regions.
Total AUM of our International Developed Market Equity products was $17.6 billion at December 31, 2024. Emerging Market Equity Our Emerging Market Equity products provide access to exposure of large, mid and small-cap companies located in Taiwan, China, India, Russia, South Africa, South Korea and other emerging markets regions. These products also track our own indexes or quantitative active strategies.
Leveraged & Inverse We offer leveraged products which seek to achieve a return that is a multiple of the performance of the underlying index and inverse products that seek to deliver the opposite of the performance in the index or benchmark they track. Strategies span across equity, commodity, government bond and currency exposures.
Total AUM of our Emerging Market Equity products was $10.5 billion at December 31, 2024. Leveraged & Inverse We offer leveraged products which seek to achieve a return that is a multiple of the performance of the underlying index and inverse products that seek to deliver the opposite of the performance in the index or benchmark they track.
We distribute our research and insights through our sales professionals, online through our website and blog, targeted emails to financial advisors, or through financial media or social media outlets. Finally, the team supports our sales professionals in meetings as market experts and through custom analysis on client portfolio holdings.
This content is distributed via our sales professionals, our website and blog, targeted emails to financial advisors, and through financial media and social media channels. Additionally, the team supports sales efforts by serving as market experts during client meetings and providing custom analysis on portfolio holdings.
Human Capital Resources We compete in the highly competitive asset management industry. Attracting, retaining and motivating highly skilled, and sometimes highly specialized, employees in operations, product development, research, technology, sales and marketing and other positions is crucial to our ability to compete effectively.
Human Capital Resources We operate in the highly competitive asset management industry, where attracting, retaining and motivating skilled employees across operations, product development, research, technology, sales and marketing is critical to our success. Our ability to recruit and retain talent depends on our culture, career development opportunities and competitive compensation and benefits.
We had approximately $100.1 billion in assets under management, or AUM, as of December 31, 2023. Our family of ETPs includes products that provide exposure to equities, fixed income, commodities, leveraged -and-inverse , currency, alternatives and cryptocurrency strategies.
As of December 31, 2024, we managed approximately $109.8 billion in assets under management, or AUM. Our ETPs span a broad range of strategies including equities, fixed income, commodities, leveraged-and-inverse, currency, alternatives and cryptocurrency exposures.
By using this process, ETFs can avoid the transaction fees and tax impact incurred by mutual funds that sell securities to generate cash to pay out redemptions. • Uniform pricing. From a cost perspective, ETFs are one of the most equitable investment products on the market.
However, most ETFs typically redeem their shares through “in-kind” redemptions in which low-cost securities are transferred out of the ETF in exchange for fund shares in a non-taxable transaction. By using this process, ETFs can avoid the transaction fees and tax impact incurred by mutual funds that sell securities to generate cash to pay out redemptions. ● Uniform pricing.
We strive to differentiate ourselves through our sense of community and purpose integrated into our culture, while encouraging a culture where every employee has a voice. Employee Profile At December 31, 2023, we had 303 full -time employees globally, consisting of 190 in the U.S. and 113 in Europe. We consider our relations with employees to be good.
We foster a sense of community and purpose, encouraging an inclusive workplace where every voice is heard. Employee Profile As of December 31, 2024, we had 313 full-time employees globally, with 201 in the U.S. and 112 in Europe. We consider our relations with employees to be good.
However, while these low -cost products have accumulated a significant amount of AUM recently, we estimate that these same funds represent only approximately 34% of global revenues. 16 Table of Contents Being a first mover, or one of the first providers of ETPs in a particular asset class, can be a significant advantage, as the first ETP in a category to attract scale in AUM and trading liquidity is generally viewed as the most attractive product.
Currently, funds with fees of 20 basis points or less account for approximately 73% of net flows globally over the past three years, though these funds represent only approximately 32% of global revenues. 13 Table of Contents Being a first mover or one of the first providers of ETPs in a particular asset class can be a significant advantage, as the first ETP in a category to attract scale in AUM and trading liquidity is generally viewed as the most attractive product.
Available Information Company Website and Public Filings Our website is located at www.wisdomtree.com , and our investor relations website is located at https://ir.wisdomtree.com .
We currently do not rely upon our patent for a competitive advantage. 20 Table of Contents Available Information Company Website and Public Filings Our website is located at https://www.wisdomtree.com , and our investor relations website is located at https://ir.wisdomtree.com .
ITEM 1. BUSINESS Our Company We are a global financial innovator, offering a well -diversified suite of exchange traded products, or ETPs, models, solutions and products leveraging blockchain technology. We empower investors and consumers to shape their future and support financial professionals to better serve their clients and grow their businesses.
ITEM 1. BUSINESS Our Company We are a global financial innovator, offering a diverse suite of ETPs, models, solutions and products leveraging blockchain technology. Our offerings empower investors to shape their financial future and equip financial professionals to grow their businesses. Leveraging the latest financial infrastructure, we create products that emphasize access, transparency and provide an enhanced user experience.
We create our own indexes, most of which weight companies in our equity ETFs by a measure of fundamental value and are rebalanced annually. By contrast, traditional indexes are market capitalization weighted and tend to track the momentum of the market. We also offer actively managed ETFs, as well as ETFs based on third -party indexes.
By contrast, traditional indexes are market capitalization weighted and tend to track the momentum of the market. We also offer actively managed ETFs and ETFs that track third-party indexes.
Our blockchain -native digital wallet, WisdomTree Prime, provides access to bitcoin, ether, tokenized gold and U.S. dollar tokens, as well as 13 Digital Funds, including a government money market fund and other digital funds offering asset allocation, fixed income and equity exposures.
We generally consider our product pricing to be well-positioned within the competitive landscape. Beyond traditional ETPs, we are diversifying into blockchain technology and digital assets. WisdomTree Prime, our blockchain-native digital wallet, provides access to digital assets such as bitcoin, ether, tokenized gold, U.S. dollar tokens and 13 Digital Funds, including a government money market fund and asset allocation products.
These products are distributed through all major channels in the asset management industry, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers primarily through our sales force.
Our products are distributed across all major asset management industry channels, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers, primarily through our dedicated sales team. We believe technology is transforming how financial advisors conduct business, and through our Advisor and Portfolio Solutions programs we offer technology-enabled and research-driven solutions.
Our Sales, Marketing and Research Efforts Sales We distribute our ETPs through all major channels within the asset management industry, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers.
We also intend to explore additional alternative strategy products in the future. Total AUM of our Alternative products was $0.5 billion at December 31, 2024. Our Sales, Marketing and Research Efforts Sales We distribute our ETPs across major asset management channels, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers, and online brokers.
We are committed to being a trusted provider of innovative products and services guided by proactive engagement and continued collaboration with current and new regulators. Competition in the digital assets industry on a global basis is increasing, ranging from large, established financial incumbents to smaller, early -stage financial technology providers and companies.
We are committed to providing trusted, innovative products and services through proactive engagement and collaboration with regulators. 7 Table of Contents Global competition in the digital assets industry is intensifying, with players ranging from established financial incumbents to early-stage financial technology providers. Varying regulatory and compliance standards across jurisdictions may impact a company’s competitive positioning.
As the “baby boomer” generation continues to mature and retire, we expect that there will be a greater demand for a broad range of investment solutions, with an emphasis on income generation and principal protection, and that more of these investors will seek advice from professional financial advisors.
As the “baby boomer” generation continues to retire, we anticipate increased demand for diverse investment solutions focused on income generation and principal protection, with more investors seeking guidance from financial advisors.
The WisdomTree Trust generally has obligations with respect to the qualification of the registered investment companies for pass -through tax treatment under the Internal Revenue Code. • U.S. Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA).
WisdomTree Trust, WisdomTree Digital Trust and the WisdomTree Bitcoin Fund each have their own respective requirements they must satisfy to qualify for pass-through tax treatment under the Internal Revenue Code. ● U.S. Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA).
We have invested significant resources to establish the WisdomTree brand and to promote our products through online and television targeted advertising and social media, as well as through our public relations efforts. Close to 40% of our employees are dedicated to marketing, research and sales.
This distinctive approach allows us to lead with innovative products that are built to perform. ● Extensive marketing, research and sales efforts. We have made substantial investments to build the WisdomTree brand and promote our products through targeted online, television and social media advertising, as well as through public relations.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeHowever, an activist campaign that seeks to replace members of our Board of Directors or changes in our strategic direction could have an adverse effect on us because: • responding to actions by activist stockholders is costly and may be disruptive, time -consuming and divert the attention of our Board of Directors and senior management from the pursuit of business strategies, which could adversely affect our results of operations and financial condition; • perceived uncertainties about our future direction as a result of changes to the composition of our Board of Directors or changes to our stockholder base may lead to the perception of a change in the direction of the business, instability or lack of continuity which may be exploited by our competitors, may result in the loss of potential business opportunities and may make it more difficult to attract and retain qualified personnel and business partners; • these types of actions could cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business; and • if individuals are elected to our Board of Directors with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and to create additional value for our stockholders. 36 Table of Contents A change of control of our Company would automatically terminate our investment management agreements relating to the WisdomTree U.S. listed ETFs and Digital Funds, unless the Board of Trustees of the WisdomTree Trust, WisdomTree Digital Trust and shareholders of each voted to continue the agreements.
Biggest changeHowever, an activist campaign that seeks to replace or remove members of our Board of Directors or changes in our strategic direction could have an adverse effect on us because: ● responding to actions by activist stockholders is costly and may be disruptive, time-consuming and divert the attention of our Board of Directors and senior management from the pursuit of business strategies, which could adversely affect our results of operations and financial condition; 33 Table of Contents ● perceived uncertainties about our future direction as a result of changes to the composition of our Board of Directors, or senior management team, including our Chief Executive Officer, or changes to our stockholder base may lead to the perception of a change in the direction of the business, instability or lack of continuity, which may be exploited by our competitors, may result in the loss of potential business opportunities and may make it more difficult to attract and retain qualified personnel and business partners; ● these types of actions could cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business; and ● if individuals are elected to our Board of Directors with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and to create additional value for our stockholders.
As a result, we may further adjust our product offerings, which may result in the closing of some of our ETPs, changing their investment objective or offering of new funds. The investment performance of our products is important to our success.
As a result, we may further adjust our product offerings, which may result in closing some of our ETPs, changing their investment objective or offering new funds. The investment performance of our products is important to our success.
Generally, the Stockholder Rights Agreement works by causing substantial dilution to any person or group (other than specified exempt persons) that acquires 10% (or 20% in the case of passive stockholders) or more of the shares of common stock without the approval of the Board of Directors (such person or group, an “Acquiring Person”) through the issuance of “Rights” to stockholders of record as of, and subsequent to, the close of business on March 28, 2023, which Rights entitle the registered holders thereof (other than the Acquiring Person) to receive additional shares of our common stock upon exercise of such Rights.
Generally, the Stockholder Rights Agreement works by causing substantial dilution to any person or group (other than specified exempt persons) that acquires 10% (or 20% in the case of passive stockholders) or more of our shares of common stock without the approval of the Board of Directors (such person or group, an “Acquiring Person”) through the issuance of “Rights” to stockholders of record as of, and subsequent to, the close of business on March 28, 2023, which Rights entitle the registered holders thereof (other than the Acquiring Person) to receive additional shares of our common stock upon exercise of such Rights.
The market price of our common stock has been fluctuating significantly and may continue to do so, depending upon many factors, some of which may be beyond our control, including: • actions of activist stockholders against us, which have been costly and may be disruptive and may cause uncertainty about the strategic direction of our business; • decreases in our AUM; • variations in our quarterly operating results; • differences between our actual financial operating results and those expected by investors and analysts; • publication of research reports about us or the investment management industry; • changes in expectations concerning our future financial performance and the future performance of the ETP industry and the asset management industry in general, including financial estimates and recommendations by securities analysts; 37 Table of Contents • our strategic moves and those of our competitors, such as acquisitions or consolidations; • changes in the regulatory framework of the ETP industry and the asset management industry in general and regulatory action, including action by the SEC to lessen the regulatory requirements or shorten the process under the Investment Company Act to become an ETP sponsor; • the level of demand for our stock, including the amount of short interest in our stock; • changes in general economic or market conditions; and • realization of any other of the risks described elsewhere in this section.
The market price of our common stock has been fluctuating significantly and may continue to do so, depending upon many factors, some of which may be beyond our control, including: ● actions of activist stockholders against us, which have been costly and may be disruptive and may cause uncertainty about the strategic direction of our business; ● decreases in our AUM; ● variations in our quarterly operating results; ● differences between our actual financial operating results and those expected by investors and analysts; ● publication of research reports about us or the investment management industry; ● changes in expectations concerning our future financial performance and the future performance of the ETP industry and the asset management industry in general, including financial estimates and recommendations by securities analysts; ● our strategic moves and those of our competitors, such as acquisitions or consolidations; ● changes in the regulatory framework of the ETP industry and the asset management industry in general and regulatory action, including action by the SEC to lessen the regulatory requirements or shorten the process under the Investment Company Act to become an ETP sponsor; ● the level of demand for our stock, including the amount of short interest in our stock; ● changes in general economic or market conditions; and ● realization of any other of the risks described elsewhere in this section.
If our European products and operations experience any negative consequences or are perceived negatively in non -U .S. markets, it may also harm our reputation in other markets, including the U.S. market. We have and may continue to pursue acquisitions or other strategic transactions.
If our European products and operations experience any negative consequences or are perceived negatively in non-U.S. markets, it may also harm our reputation in other markets, including the U.S. market. We have pursued, and may continue to pursue, acquisitions and other strategic transactions.
While strong investment performance could stimulate sales of our ETPs, poor investment performance, on an absolute basis or as compared to third -party benchmarks or competitive products, could lead to a decrease in sales or stimulate redemptions, thereby lowering the AUM and reducing our revenues.
While strong investment performance could stimulate sales of our ETPs, poor investment performance, on an absolute basis or as compared to third-party benchmarks or competitive products, could lead to a decrease in sales or stimulate redemptions, thereby lowering AUM and reducing our revenues.
Each of the regulatory bodies with jurisdiction over us has regulatory powers dealing with many aspects of our business, including the authority to grant, and, in specific circumstances to cancel, permissions to carry on particular businesses.
Each of the regulatory bodies with jurisdiction over us has regulatory powers over many aspects of our business, including the authority to grant, and, in specific circumstances to cancel, permissions to carry on particular businesses.
We face the risk of significant intervention by regulatory authorities, including extended investigation activity, adoption of costly or restrictive new regulations and judicial or administrative proceedings that may result in substantial penalties. Among other things, we could be fined or be prohibited from engaging in some of our business activities.
We face the risk of significant intervention by regulatory authorities, including extended investigation activity, adoption of costly or restrictive new regulations and judicial or administrative proceedings that may result in substantial penalties. Among other things, we have been and could be fined or be prohibited from engaging in some of our business activities.
If these products and initiatives are not successful, or their implementation or launches are delayed, including in connection with our inability to obtain new product regulatory approvals, we may not be able to offset their costs, which could have an adverse effect on our business, reputation, financial condition and operating results.
If these products and services are not successful, or their implementation or launches are delayed, including in connection with our inability to obtain new product regulatory approvals, we may not be able to offset their costs, which could have an adverse effect on our business, reputation, financial condition and operating results.
Other Company Risks Responding to actions of activist stockholders against us has been costly and the possibility that activist stockholders may wage proxy contests or seek representation on our Board of Directors in the future may be disruptive and cause uncertainty about the strategic direction of our business.
Other Company Risks Responding to actions of activist stockholders against us has been costly and the possibility that activist stockholders may wage proxy contests or contested solicitations or seek representation on our Board of Directors in the future may be disruptive and cause uncertainty about the strategic direction of our business.
Any inability to access and successfully sell our products through our distribution channels could have a negative effect on our AUM levels and adversely impact our business. 29 Table of Contents Performance and Investment Risks Many of our ETPs have a limited track record and poor investment performance could cause our revenues to decline.
Any inability to access and successfully sell our products through our distribution channels could have a negative effect on our AUM levels and adversely impact our business. 26 Table of Contents Performance and Investment Risks Many of our ETPs have a limited track record and poor investment performance could cause our revenues to decline.
If we were unable to manage our strategic initiatives, it could have a material adverse effect on our business. We have and may continue to pursue acquisitions or strategic transactions. These initiatives have placed increased demands on our management and other resources and may continue to do so in the future.
If we were unable to manage our strategic initiatives, it could have a material adverse effect on our business. We have pursued, and may continue to pursue, acquisitions and other strategic transactions. These initiatives have placed increased demands on our management and other resources and may continue to do so in the future.
In determining whether to approve the agreements, the Independent Trustees consider factors such as the nature and quality of the services provided by us, the fees charged by us and the costs and profits realized by us in connection with such services, as well as any ancillary or “fall -out ” benefits from such services, the extent to which economies of scale are shared with the WisdomTree U.S. listed ETFs or Digital Funds, and the level of fees paid by other similar funds.
In determining whether to approve the agreements, the Independent Trustees consider factors such as the nature and quality of the services provided by us, the fees charged by us and the costs and profits realized by us in connection with such services, as well as any ancillary or “fall-out” benefits from such services, the extent to which economies of scale are shared with the WisdomTree U.S. listed ETFs or Digital Funds, and the level of fees paid by other similar funds.
Our results of operations are impacted by the magnitude of our expenses and may fluctuate as a result of inflation, as well as discretionary spending, including additional headcount, accruals for incentive compensation, marketing, advertising, sales and other expenses we incur in connection with our operations.
Our results of operations are impacted by the magnitude of our expenses and may fluctuate as a result of inflation, as well as discretionary spending, including additional headcount, accruals for incentive compensation, marketing, advertising, sales and other expenses we incur in our operations.
New regulation, revised regulatory or judicial interpretations, revised viewpoints, outcomes of lawsuits against other fund complexes or growth in our ETP assets and/or profitability related to the annual approval process for investment advisory agreements may result in the reduction of fees under these agreements, which would mean a reduction in our revenues or otherwise may lead to an increase in costs or expenses.
New regulations, revised regulatory or judicial interpretations, revised viewpoints, outcomes of lawsuits against other fund complexes or growth in our ETP and Digital Fund assets and/or profitability related to the annual approval process for investment advisory agreements may result in the reduction of fees under these agreements, which would mean a reduction in our revenues or otherwise may lead to an increase in costs or expenses.
The occurrence of any of the foregoing could result in unexpected expenses, reduce our revenues and adversely affect our business and financial results. We have been issued trademark and other intellectual property rights, but may not be able to enforce or protect such intellectual property rights, which may harm our business.
The occurrence of any of the foregoing could result in unexpected expenses, reduce our revenues and adversely affect our business and financial results. 30 Table of Contents We have been issued trademark and other intellectual property rights but may not be able to enforce or protect such intellectual property rights, which may harm our business.
From time to time, we may be subject to litigation. In any litigation in which we are involved, we may be forced to incur costs and expenses to defend ourselves or to pay a settlement or judgment or comply with any injunctions in connection therewith if there is an unfavorable outcome. The expense of defending litigation may be significant.
In any litigation in which we are involved, we may be forced to incur costs and expenses to defend ourselves or to pay a settlement or judgment or comply with any injunctions in connection therewith if there is an unfavorable outcome. The expense of defending litigation may be significant.
Our Board of Directors could, therefore, issue preferred stock with dividend rights superior to that of the common stock, which could also limit the payment of dividends on the common stock. 39 Table of Contents
Our Board of Directors could, therefore, issue preferred stock with dividend rights superior to that of the common stock, which could also limit the payment of dividends on the common stock. 36 Table of Contents
If we are unable to retain and attract key personnel, it could have an adverse effect on our business, our results of operations and financial condition. 31 Table of Contents Expense and Cash Management Risks Our expenses are subject to fluctuations that could materially affect our operating results.
If we are unable to retain and attract key personnel, it could have an adverse effect on our business, our results of operations and financial condition. Expense and Cash Management Risks Our expenses are subject to fluctuations that could materially affect our operating results.
For example, we are licensed as a money transmitter or the equivalent in many U.S. states and the District of Columbia, but we may be unable to obtain such licenses in all U.S. states (including in the state of New York) or may experience significant delays, and this could have an adverse effect on our digital assets business.
For example, we are licensed as a money transmitter or the equivalent in many U.S. states and the District of Columbia, but we may be unable to obtain such licenses in all U.S. states or may experience significant delays, and this could have an adverse effect on our digital assets business.
If a third -party vendor fails to develop and maintain sufficient internal control processes or adequate data privacy controls and security systems, such failure could adversely affect us. For example, we have been notified of a deficiency in the internal controls of a third -party vendor of software we utilize in our accounting processes.
If a third-party vendor fails to develop and maintain sufficient internal control processes or adequate data privacy controls and security systems, such failure could adversely affect us. For example, in the past, we were notified of a deficiency in the internal controls of a third-party vendor of software we utilize in our accounting processes.
The risks associated with blockchain technology may not emerge until the technology is widely used, which could adversely impact our digital assets business. Fork risks Blockchain software is generally open -source . Any user can download the software, modify it and then propose that the blockchain network adopt the modification.
The risks associated with blockchain technology may not fully emerge until the technology is more widely adopted, which could adversely impact our digital assets business. Fork risks Blockchain software is generally open-source. Any user can download the software, modify it and then propose that the blockchain network adopt the modification.
Our fundamentally -weighted equity products are designed to provide the potential for better risk -adjusted investment returns over full market cycles and are best suited for investors with a longer -term investment horizon. However, the investment approach of our equity products may not perform well during certain shorter periods of time during different points in the economic cycle.
Our Modern Alpha strategies are designed to provide the potential for better risk-adjusted investment returns over full market cycles and are best suited for investors with a longer-term investment horizon. However, the investment approach of our equity products may not perform well during certain shorter periods of time during different points in the economic cycle.
If we seek to enforce our rights, we could be subject to litigation, including challenges to our registered intellectual property right and claims that our intellectual property right is invalid or is otherwise not enforceable in jurisdictions where our intellectual property right is not registered.
If we seek to enforce our rights, we could be subject to litigation, including challenges to our registered intellectual property rights and claims that our intellectual property rights are invalid or are otherwise not enforceable in jurisdictions where our intellectual property rights are not registered.
The requirements imposed by our regulators are designed to ensure the integrity of the financial markets and to protect investors in WisdomTree ETPs and our advisory clients and are not designed to protect our stockholders. Consequently, these regulations often serve to limit our activities, including through WisdomTree ETP investor protection and market conduct requirements.
The requirements imposed by our regulators are designed to ensure the integrity of the financial markets and to protect investors in our products and our advisory clients and are not designed to protect our stockholders. Consequently, these regulations often serve to limit our activities, including through investor protection and market conduct requirements.
To do so may require, among other things: • continuing to retain, motivate and manage our existing employees and/or attract and integrate new employees; • developing, implementing and improving our operational, financial, accounting, reporting and other internal systems and controls on a timely basis; and • maintaining and developing our various support functions including human resources, information technology, legal and corporate communications.
To do so may require, among other things: ● continuing to retain, motivate and manage our existing employees and/or attract and integrate new employees; ● developing and enhancing our operational, financial, accounting, reporting and other internal systems and controls on a timely basis; and ● maintaining and expanding support functions, including human resources, information technology, legal and corporate communications.
We depend on R&H Fund Services (Jersey) Limited in respect of the products issued by the ManJer Issuers (except WisdomTree Issuer X Limited), JTC Trust Company Jersey in respect of products issued by WisdomTree Issuer X Limited, APEX IFS Limited in respect of the products issued by WMAI and State Street Fund Services (Ireland) Limited in respect of the WisdomTree UCITS ETFs, to provide fund accounting, administration and, transfer agency services, as well as custody services in the case of the WisdomTree UCITS ETFs.
We depend on Apex Financial Services (Alternative Funds) Limited in respect of the products issued by the ManJer Issuers (except WisdomTree Issuer X Limited), JTC Trust Company Jersey in respect of products issued by WisdomTree Issuer X Limited, APEX IFS Limited in respect of the products issued by WMAI and State Street Fund Services (Ireland) Limited in respect of the WisdomTree UCITS ETFs, to provide fund accounting, administration and, transfer agency services, as well as custody services in the case of the WisdomTree UCITS ETFs.
There are jurisdictions with more stringent and robust regulatory and compliance requirements than others which could impact the ability of a company to compete in the digital assets industry.
There are jurisdictions with more stringent and robust regulatory and compliance requirements than others which could impact a company’s ability to compete in the digital assets industry.
We have identified sufficient mitigating controls to alleviate the deficiency and do not believe the third -party ’s deficiency has a material impact on our operations or financial reporting. Any internal control failures that may arise in the future could adversely affect us if not sufficiently mitigated. The products issued by our European business are subject to counterparty risks.
We identified sufficient mitigating controls to alleviate the deficiency and do not believe the third-party’s deficiency had a material impact on our operations or financial reporting. Any internal control failures that may arise in the future could adversely affect us if not sufficiently mitigated. The products issued by our European business are subject to counterparty risks.
WT Asset Management is also a member of the NFA and registered as a commodity pool operator for certain of our ETFs. As a commodity pool operator, we are subject to oversight by the NFA and the CFTC pursuant to regulatory authority under the Commodity Exchange Act.
WTAM is also a member of the NFA and registered as a commodity pool operator for certain of our ETFs. As a commodity pool operator, we are subject to oversight by the NFA and the CFTC pursuant to regulatory authority under the Commodity Exchange Act.
We currently have outstanding $150.0 million of 3.25% convertible senior notes due 2026 and $130.0 million in aggregate principal amount of 5.75% convertible senior notes due 2028, which we collectively refer to as the Convertible Notes.
We currently have outstanding $150.0 million in aggregate principal amount of 3.25% Convertible Senior Notes due 2026, $25.8 million in aggregate principal amount of 5.75% Convertible Senior Notes due 2028 and $345.0 million in aggregate principal amount of 3.25% Convertible Senior Notes due 2029, which we collectively refer to as the Convertible Notes.
We may not have the ability to raise the funds necessary to settle conversions of the Convertible Notes or to repurchase the Convertible Notes upon a fundamental change.
We may not have the ability to raise the funds necessary to settle conversions of the Convertible Notes, repurchase the Convertible Notes upon a fundamental change, or refinance our Convertible Notes upon maturity.
The Rights will expire at the close of business on March 16, 2024, unless previously redeemed or exchanged by the Company. See Note 19 to our Consolidated Financial Statements for additional information.
The Rights will expire at the close of business on March 17, 2025, unless previously redeemed or exchanged by the Company. See Note 19 to our Consolidated Financial Statements for additional information.
In addition, the SEC recently approved a broad set of rules regarding data reporting and fund liquidity, fund valuation and funds’ use of derivatives, which are imposing additional expense and require additional administrative services and requirements, among other matters, in seeking to comply with these rules.
In addition, the SEC approved a broad set of rules regarding data reporting and fund liquidity, fund valuation and funds’ use of derivatives, which impose additional expense and require additional administrative services and requirements, among other matters, to comply with these rules.
In addition, an unfavorable outcome in any such litigation, including actual and potential claims by investors in our WisdomTree WTI Crude Oil 3x Daily Leveraged ETP totaling approximately €23.6 million ($26.1 million), could have a material adverse effect on our business, results of operations, financial condition and cash flows. See Note 14 to our Consolidated Financial Statements for additional information.
In addition, an unfavorable outcome in any such litigation, including actual and potential claims by investors in our WisdomTree WTI Crude Oil 3x Daily Leveraged ETP totaling approximately €27.4 million ($28.5 million), could have a material adverse effect on our business, results of operations, financial condition and cash flows. See Note 14 to our Consolidated Financial Statements for additional information.
At December 31, 2023, approximately 12% of our AUM were in ETPs backed by gold and approximately 10% were in ETPs backed by other commodities. Precious metals such as gold are often viewed as “safe haven” assets as they tend to attract demand during periods of economic and geopolitical uncertainty.
At December 31, 2024, approximately 13% of our AUM were in ETPs backed by gold and approximately 9% were in ETPs backed by other commodities. Precious metals such as gold are often viewed as “safe haven” assets as they tend to attract demand during periods of economic and geopolitical uncertainty.
A fork could adversely affect our digital assets business. 35 Table of Contents Anti-Money Laundering (“AML”) risks The decentralized infrastructure and anonymous or pseudonymous nature of digital assets could facilitate and create the opportunity for money laundering and terrorist financing activities, thereby circumventing certain anti -money laundering and counter terrorist financing laws and regulations designed to prevent financial crimes which could negatively impact our digital assets business.
Anti-Money Laundering (“AML”) risks The decentralized infrastructure and anonymous or pseudonymous nature of digital assets could facilitate and create the opportunity for money laundering and terrorist financing activities, thereby circumventing certain anti-money laundering and counter terrorist financing laws and regulations designed to prevent financial crimes which could negatively impact our digital assets business.
Our ability to complete future strategic transactions depends upon a number of factors that are not entirely within our control, including our ability to identify suitable merger or acquisition candidates, negotiate acceptable terms, conclude satisfactory agreements and secure financing.
Our ability to complete such transactions depends upon a number of factors that are not entirely within our control, including our ability to identify suitable merger or acquisition candidates, negotiate favorable terms, conclude satisfactory agreements and secure necessary financing.
At December 31, 2023, 54% of our AUM was concentrated in ten of our WisdomTree ETPs with approximately 18% in three of our domestic equity ETFs, 17% in the WisdomTree Floating Rate Treasury Fund, or USFR, 10% in three of our precious metal products, 6% in two of our emerging markets ETFs, and 3% in one of our international developed market equity ETPs.
At December 31, 2024, 55% of our AUM was concentrated in ten of our WisdomTree ETPs with approximately 21% in three of our domestic equity ETFs, 15% in the WisdomTree Floating Rate Treasury Fund, or USFR, 10% in three of our precious metal products, 6% in two of our international developed market equity ETPs and 3% in one of our emerging markets ETFs.
The WisdomTree name and brand is a valuable asset and any damage to it could hamper our ability to maintain and grow our AUM and attract and retain employees, thereby having a material adverse effect on our revenues. Risks to our reputation may range from regulatory issues to unsubstantiated accusations. Managing such matters may be expensive, time -consuming and difficult.
The WisdomTree name and brand is a valuable asset and any damage to it could hamper our ability to maintain and grow our AUM and attract and retain employees, thereby having a material adverse effect on our revenues. Risks to our reputation may range from regulatory issues to unsubstantiated accusations.
Substantially all our revenues are derived from advisory fees earned on our AUM, in both the international and U.S. markets. As a result, our business can be expected to generate lower revenues in declining market environments or general economic downturns.
A significant portion of our revenues is derived from advisory fees earned on our AUM, in both the international and U.S. markets. As a result, our business can be expected to generate lower revenues in declining market environments or general economic downturns.
The Stockholder Rights Agreement was adopted in response to stockholder activism concerns and is intended to protect the Company and its stockholders from efforts by a single stockholder or group of stockholders to obtain control of the Company without paying a control premium through a number of recognized stockholder protections.
The Stockholder Rights Agreement is intended to protect the Company and its stockholders from efforts by a single stockholder or group of stockholders to obtain control of the Company without paying a control premium through a number of recognized stockholder protections.
We are dependent upon the effectiveness of our own, and our vendors’, information security policies, procedures and capabilities to protect the technology systems used to operate our business, to protect the data that reside on or are transmitted through them and to maintain adequate internal controls.
We are dependent upon the effectiveness of our own, and our vendors’, information security policies, procedures and capabilities to protect the technology systems used to operate our business (including emerging technologies, such as artificial intelligence (AI) programs), to protect the data that reside on or are transmitted through them and to maintain adequate internal controls.
Our or our ETPs’ failure to comply with applicable laws or regulations could result in fines, censure, suspensions of personnel or other sanctions, including revocation of our registration as an investment adviser.
Our ETPs’ and Digital Funds’ failure to comply with applicable laws or regulations has in the past, and could in the future, result in fines, censure, suspensions of personnel or other sanctions, including revocation of our registration as an investment adviser.
If a fork occurs, the original blockchain and the forked blockchain could potentially compete with each other for users and other participants, leading to a loss of these for the original blockchain.
If a fork occurs, the original blockchain and the forked blockchain could potentially compete with each other for users and other participants, leading to a loss of these for the original blockchain. A fork could adversely affect our digital assets business.
At December 31, 2023, approximately 29% and 15% of our AUM was held in products with exposure to the U.S. and international developed markets, respectively.
At December 31, 2024, approximately 32% and 16% of our AUM was held in products with exposure to the U.S. and international developed markets, respectively.
We depend on third -party vendors to provide us with many services that are critical to operating our business, including Mellon Investments Corporation, Newton Investment Management North America, LLC and Voya Investment Management Co., LLC as sub -advisers providing portfolio management services, and State Street Bank and Trust Company, or State Street, to provide custody services, fund accounting, administration, transfer agency and securities lending services.
We outsource to third-party vendors to provide us with many services that are critical to operating our business, including Mellon Investments Corporation, Newton Investment Management North America, LLC and Voya Investment Management Co., LLC as sub-advisers providing portfolio management services, and The Bank of New York Mellon, or BNY Mellon, to provide custody services, fund accounting, administration, transfer agency and securities lending services.
Even if a sanction imposed against us, our personnel or our ETPs is small in monetary amount, the adverse publicity arising from the imposition of sanctions against us, our personnel or our ETPs by regulators could harm our reputation and thus result in redemptions from our products and impede our ability to retain and attract investors in WisdomTree ETPs, all of which may reduce our revenues.
See Note 14 to our Consolidated Financial Statements for additional information. 29 Table of Contents Even if a sanction imposed against us, our personnel or our ETPs or Digital Funds is small in monetary amount, the adverse publicity arising from the imposition of sanctions against us, our personnel or our ETPs or Digital Funds by regulators could harm our reputation and thus result in redemptions from our products and impede our ability to retain and attract investors in WisdomTree ETPs and Digital Funds, all of which may reduce our revenues.
Operational failures could materially affect our business and harm investors in these products. We have launched products in Europe that are indexed to baskets of cryptocurrencies or that may allow for staking. We have outsourced the administrator, transfer agent and custodial functions for these products.
We have launched products in Europe that are indexed to baskets of cryptocurrencies or that may allow for staking. We have outsourced the administrator, transfer agent and custodial functions for these products.
Our U.S. employees generally may voluntarily terminate their employment at any time. The market for these individuals is extremely competitive and is likely to become more so as additional investment management firms enter the ETF industry and as the digital assets market continues to develop. Our compensation methods may not enable us to recruit and retain required personnel.
The market for these individuals is extremely competitive and is likely to become more so as additional investment management firms enter the ETP industry and as the digital assets market continues to develop. Our compensation methods may not enable us to recruit and retain required personnel.
The effect of any future legal or regulatory change or interpretation both domestically and internationally is unknown and such change could be substantial and adverse to our digital assets business. 34 Table of Contents In addition, we are actively engaged with a variety of U.S. federal and state regulators (e.g., the SEC, FINRA, NYDFS and other state regulators) to secure, as necessary, or maintain the appropriate regulatory, registration and/or licensing approvals for various business initiatives and operations, including but not limited to: a New York state -chartered limited purpose trust company; money services and money transmitter business; limited purpose broker -dealer ; transfer agent; investment adviser; and investment funds.
In addition, we are actively engaged with a variety of U.S. federal and state regulators (e.g., the SEC, FINRA, NYDFS and other state regulators) to secure, as necessary, or maintain the appropriate regulatory, registration and/or licensing approvals for various business initiatives and operations, including but not limited to: a New York state-chartered limited purpose trust company; money services and money transmitter business; limited purpose broker-dealer; transfer agent; investment adviser; and investment funds.
Outsourced service provider risks We rely on third -party service providers in connection with different facets of our digital assets business, including but not limited to custodial arrangements, blockchain and wallet infrastructure, banking relationships, cloud computing, payment platforms and processors, data infrastructure, customer support, compliance support and product development, including mobile application development, all of which are critical to the success of our digital assets business.
Failure to successfully manage these risks in the development and implementation of our digital assets business could have a material adverse effect on our business, reputation, financial condition and operating results. 31 Table of Contents Third-party service provider risks We rely on third-party service providers in connection with different facets of our digital assets business, including but not limited to custodial arrangements, blockchain and wallet infrastructure, banking relationships, cloud computing, payment platforms and processors, data infrastructure, customer support, compliance support and product development, including mobile application development, all of which are critical to the success of our digital assets business.
Risks Relating to our Common and Preferred Stock and Convertible Notes The market price of our common stock has been fluctuating significantly and may continue to do so, and you could lose all or part of your investment.
Managing such matters may be expensive, time-consuming and difficult. 34 Table of Contents Risks Relating to our Common Stock and Convertible Notes The market price of our common stock has been fluctuating significantly and may continue to do so, and you could lose all or part of your investment.
Increasing competition, a failure to maintain business relationships and other factors could impair our distribution capabilities and increase the cost of conducting business. In addition, several of the largest custodial platforms and online brokerage firms eliminated trading commissions for ETFs.
We rely on various third-party distribution channels, including registered investment advisers, wirehouse and institutional channels to sell our products. Increasing competition, a failure to maintain business relationships and other factors could impair our distribution capabilities and increase the cost of conducting business. In addition, several of the largest custodial platforms and online brokerage firms eliminated trading commissions for ETFs.
If our policies and procedures do not adequately protect us from exposure and our exposure is not adequately covered by insurance or other risk -shifting tools, we may incur losses that would adversely affect our financial condition and could cause a reduction in our revenues as investors in our products shift their investments to the products of our competitors. 28 Table of Contents Competition and Distribution Risks The asset management business is intensely competitive, and we may experience pressures on our pricing and market share, which could reduce revenues and profit margins.
If our policies and procedures do not adequately protect us from exposure and our exposure is not adequately covered by insurance or other risk-shifting tools, we may incur losses that would adversely affect our financial condition and could cause a reduction in our revenues as investors in our products shift their investments to the products of our competitors.
In the event of any default by, or the insolvency of, any counterparty, the relevant products may be exposed to the under -segregation of assets, fraud or other factors that may result in the recovery of less than all of the property of our issuers that was held in custody or safekeeping in the case of physically backed products or the recovery of property that is insufficient in value to cover all amounts payable to holders of the applicable products upon their redemption.
In the event of any default by, or the insolvency of, any counterparty, the relevant products may be exposed to the under-segregation of assets, fraud or other factors that may result in the recovery of less than all of the property of our issuers that was held in custody or safekeeping in the case of physically backed products or the recovery of property that is insufficient in value to cover all amounts payable to holders of the applicable products upon their redemption. 25 Table of Contents The impact of market stress or counterparty financial condition may not be accurately foreseen or evaluated and, as a result, we may not take sufficient action to reduce counterparty risks effectively.
Our failure to complete strategic transactions or to integrate and manage acquired or combined businesses successfully could materially and adversely affect our business, results of operations and financial conditions. 30 Table of Contents We instruct trades and perform other operational processes in respect of crypto basket ETPs that we have launched in Europe.
Our failure to successfully execute or integrate these transactions could materially and adversely affect our business, results of operations and financial condition. 27 Table of Contents We instruct trades and perform other operational processes in respect of crypto basket ETPs that we have launched in Europe. Operational failures could materially affect our business and harm investors in these products.
If the digital asset awards for verifying and confirming transactions on a blockchain network are not sufficiently high to incentivize miners, miners may cease to verify and confirm such transactions or otherwise demand higher fees, which could negatively affect the value of a digital asset.
If the digital asset awards for verifying and confirming transactions on a blockchain network are not sufficiently high to incentivize miners, miners may cease to verify and confirm such transactions or otherwise demand higher fees, which could negatively affect the value of a digital asset. 32 Table of Contents Blockchain technology risks Blockchain technology is a relatively new, untested technology and rapidly evolving field that operates as a distributed ledger.
Blockchain technology risks Blockchain technology is a relatively new and untested technology which operates as a distributed ledger. Blockchain systems could be vulnerable to fraud, particularly if a significant minority of participants colluded to defraud the rest. Access to a given blockchain requires an individualized key, which if compromised, could result in loss due to theft, destruction or inaccessibility.
Blockchain systems could be vulnerable to fraud, particularly if a significant minority of participants colluded to defraud the rest. Access to a given blockchain requires an individualized key, which if compromised, could result in loss due to theft, destruction or inaccessibility. There is little regulation of blockchain technology other than the intrinsic public nature of the blockchain system.
We depend on R&H Fund Services (Jersey) Limited in respect of the products issued by our Jersey-domiciled issuers, or ManJer Issuers, of ETCs (except WisdomTree Issuer X Limited), JTC Trust Company Jersey in respect of products issued by WisdomTree Issuer X Limited, APEX IFS Limited in respect of the products issued by WMAI and State Street Fund Services (Ireland) Limited in respect of the WisdomTree UCITS ETFs to provide us with critical administrative services to those products.
Operational and technical errors in the context of staking could damage the reputation of digital assets or result in losses for investors. 24 Table of Contents We depend on Apex Financial Services (Alternative Funds) Limited in respect of the products issued by our Jersey-domiciled issuers, or ManJer Issuers, of ETCs (except WisdomTree Issuer X Limited), JTC Trust Company Jersey in respect of products issued by WisdomTree Issuer X Limited, APEX IFS Limited in respect of the products issued by WMAI and State Street Fund Services (Ireland) Limited in respect of the WisdomTree UCITS ETFs to provide us with critical administrative services to those products.
This could result in limited growth or a reduction in the overall ETP market and result in our revenues not growing as rapidly as it has in the recent past or even in a reduction of revenues. 25 Table of Contents Concentration Risks We derive a substantial portion of our revenues from a limited number of products and, as a result, our operating results are particularly exposed to investor sentiment toward investing in the products’ strategies and our ability to maintain the AUM of these products, as well as the performance of these products.
Concentration Risks We derive a substantial portion of our revenues from a limited number of products and, as a result, our operating results are particularly exposed to investor sentiment toward investing in the products’ strategies and our ability to maintain the AUM of these products, as well as the performance of these products.
On June 16, 2023, our stockholders voted to ratify the adoption by our Board of Directors of the Stockholder Rights Agreement, dated March 17, 2023 and subsequently amended on May 4, 2023 and on May 10, 2023 (as amended, the “Stockholder Rights Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, as Rights Agent.
Our Stockholder Rights Agreement, dated March 17, 2023 and subsequently amended on May 4, 2023, May 10, 2023, March 18, 2024, March 25, 2024 and April 30, 2024 (as amended, the “Stockholder Rights Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, as Rights Agent, was adopted by our Board of Directors and ratified by our stockholders in response to stockholder activism concerns.
Our failure to repurchase notes at a time when the repurchase is required by the applicable indenture or to pay any cash payable on future conversions of the notes as required by the indenture would constitute a default under the indenture. The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and liquidity.
Our failure to refinance our convertible notes upon maturity, repurchase notes at a time when the repurchase is required by the applicable indenture or to pay any cash payable on future conversions of the notes as required by the applicable indenture would constitute a default under such indenture.
In addition, any future strategic transactions may result in the issuance of a significant amount of our common stock or other securities that could be dilutive to our stockholders, require substantial borrowings, result in changes in our board composition and/or management team, constitute a change of control of our Company, lead to significant changes in our product offering, business operations and earning and risk profiles, and/or result in a decline in the price of our common stock.
Such transactions may result in changes in our board and/or management team, constitute a change of control of our Company, lead to significant changes in our product offering, business operations and earning and risk profiles, and/or result in a decline in the price of our common stock.
In the event the conditional conversion feature of the Convertible Notes is triggered, holders of notes will be entitled to convert the notes at any time during specified periods at their option, as described in the indentures.
The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and liquidity. The conditional conversion feature of the Convertible Notes, if triggered, will entitle holders to convert the notes at any time during specified periods at their option, as described in the indentures.
These risks can be exacerbated during periods when there is low demand for an ETP, when the markets in the underlying investments are closed, when market conditions are extremely volatile or when trading is disrupted.
These risks can be exacerbated during periods when there is low demand for an ETP, the markets in the underlying investments are closed, market conditions are extremely volatile or trading is disrupted. This could result in limited growth or a reduction in the overall ETP market and could slow our revenue growth or even lead to a decline in revenues.
Regulators in these non -U .S. jurisdictions may have broad authority with respect to the regulation of financial services including, among other things, the authority to grant or cancel required licenses or registrations. 32 Table of Contents From time to time, we may be involved in legal proceedings that could require significant management time and attention, possibly resulting in significant expense or in an unfavorable outcome, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
From time to time, we may be involved in legal proceedings that could require significant management time and attention, possibly resulting in significant expense or in an unfavorable outcome, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. From time to time, we may be subject to litigation.
There is little regulation of blockchain technology other than the intrinsic public nature of the blockchain system. Any future regulatory developments could affect the viability and expansion of our use of blockchain technology. There are currently a number of competing blockchain platforms with competing intellectual property claims.
Any future regulatory developments could affect the viability and expansion of our use of blockchain technology. There are currently a number of competing blockchain platforms with competing intellectual property claims. The uncertainty inherent in these competing technologies could cause companies to use alternatives to blockchain.
Segments of the mining community were against this change, which was complex and involved a merger of the then existing Ethereum blockchain with the new Ethereum blockchain, which could potentially lead to greater centralization.
These technological advancements may introduce new risks, including potential vulnerabilities in consensus mechanisms and data propagation challenges. Segments of the mining community were against the proof-of-stake validation change, which was complex and involved a merger of the then existing Ethereum blockchain with the new Ethereum blockchain, which could potentially lead to greater centralization.
We also have launched our digital assets business and expenses ultimately incurred in the near and long -term may be higher than anticipated. Accordingly, fluctuations in our expenses could materially affect our operating results and may vary from quarter to quarter.
As we continue to invest in our digital assets business, related expenses may exceed initial expectations in both the near and long term. Accordingly, fluctuations in our expenses could materially affect our operating results and may vary from quarter to quarter.
Some financial institutions operate in a more favorable regulatory environment and/or have proprietary products, sources of revenue and distribution channels, which may provide them and their investment products with certain competitive advantages, including in pricing ETPs as loss leaders. Further consolidation within the industry may also put us at a competitive disadvantage.
Some of our competitors maintain a larger market share, a broader product range and greater financial resources. Certain financial institutions also operate in more favorable regulatory environments and/or have proprietary products, revenue sources and distribution channels, which may provide competitive advantages, including in pricing ETPs as loss leaders. Further industry consolidation may also heighten competitive pressures.
One of our U.S. subsidiaries, WT Asset Management, is a registered investment adviser and is subject to oversight by the SEC pursuant to its regulatory authority under the Investment Advisers Act. We also must comply with certain requirements under the Investment Company Act, with respect to the WisdomTree U.S. listed ETFs for which WT Asset Management acts as investment adviser.
We also must comply with certain requirements under the Investment Company Act with respect to the WisdomTree U.S. listed ETFs for which WTAM acts as investment adviser and with respect to our Digital Funds for which WT Digital Management acts as an investment adviser.
If we are not ultimately successful in defending ourselves against these claims in litigation, we may be subject to the risks described in the immediately preceding risk factor entitled “We may from time to time be subject to claims of infringement of third -party intellectual property rights, which could harm our business.” Digital Assets Risks As we endeavor to expand our digital assets product offerings and services beyond our existing ETP business, we believe the risks associated with our digital assets business include, but are not limited to, the following risks: 33 Table of Contents Competition risks Competition in the digital assets industry on a global basis is increasing, ranging from large, established financial incumbents to smaller, early -stage financial technology providers and companies.
Digital Assets Risks As we expand our digital assets product offerings and services beyond our existing ETP business, we believe the risks associated with our digital assets business include, but are not limited to, the following: Competition risks Competition in the digital assets industry on a global basis is increasing, ranging from large, established financial incumbents to smaller, early-stage financial technology providers and companies.
In addition, the content and use of our marketing and sales materials and of our sales force in the U.S. regarding our U.S. listed ETFs is subject to the regulatory authority of FINRA. The SEC also has recently adopted rule amendments that are designed to modernize sales and marketing materials and, as a result, impact marketing materials.
The SEC also has recently adopted rule amendments that are designed to modernize sales and marketing materials and, as a result, could impact our marketing materials.
Our Board of Directors and management strive to maintain constructive, ongoing communications with our stockholders, including the Investor, and welcome their views and opinions with the goal of enhancing value for all stockholders.
Activist stockholders may from time to time attempt to effect changes in our strategic direction, and in furtherance thereof, may seek changes in how the Company is governed. Our Board of Directors and management strive to maintain constructive, ongoing communications with our stockholders and welcome their views and opinions with the goal of enhancing value for all stockholders.
A significant portion of our AUM is held in products with exposure to U.S. and international developed markets, and we therefore have exposure to domestic and foreign market conditions and are subject to currency exchange rate risks.
We currently do not enter into arrangements to hedge against fluctuations in the price of gold and any hedging we may undertake in the future may not be cost-effective or sufficient to hedge against this gold exposure. 23 Table of Contents A significant portion of our AUM is held in products with exposure to U.S. and international developed markets, and we therefore have exposure to domestic and foreign market conditions and are subject to currency exchange rate risks.
It might require us to devote a significant portion of management’s time to negotiate a similar relationship with other vendors or have these services provided by multiple vendors, which would require us to coordinate the transfer of these functions to another vendor or vendors. 27 Table of Contents The WisdomTree UCITS ETFs primarily depend on either of Assenagon Asset Management S.A. or Irish Life Investment Managers Limited to provide portfolio management services and other third parties to provide many critical services to operate the WisdomTree UCITS ETFs.
It might require us to devote a significant portion of management’s time to negotiate a similar relationship with other vendors or have these services provided by multiple vendors, which would require us to coordinate the transfer of these functions to another vendor or vendors.
The uncertainty inherent in these competing technologies could cause companies to use alternatives to blockchain. In addition, blockchain networks may undergo technological developments, such as the Ethereum blockchain’s change in September 2022 from proof -of-work mining to a blockchain based on proof -of-stake validation.
In addition, blockchain networks may undergo technological developments, such as the Ethereum blockchain’s change in September 2022 from proof-of-work mining to a blockchain based on proof-of-stake validation and the implementation of EIP-4844 in March 2024, which enhances data availability and reduces costs for rollups.
If such an investor were to broadly change or withdraw its investments in our ETPs because of a change to its investment strategy, market conditions or any other reason, it may significantly change the amount and mix of our AUM, which may negatively affect our revenues and operating margins. 26 Table of Contents Third-Party Provider Risks We primarily depend on Mellon Investments Corporation, Newton Investment Management North America, LLC and Voya Investment Management Co., LLC to provide portfolio management services, State Street Bank and Trust Company to provide us with critical administrative services to operate our business and our U.S. listed ETFs, and other third parties to provide many other critical services to operate our business and our U.S. listed ETFs.
Third-Party Service Provider Risks We primarily depend on Mellon Investments Corporation, Newton Investment Management North America, LLC and Voya Investment Management Co., LLC to provide portfolio management services, The Bank of New York Mellon to provide us with critical administrative services to operate our business and our U.S. listed ETFs, and other third parties to provide many other critical services to operate our business and our U.S. listed ETFs.
We rely on third-party distribution channels to sell our products, and increased competition, a failure to maintain business relationships and other factors could adversely impact our business. We rely on various third -party distribution channels, including registered investment advisers, wirehouse and institutional channels to sell our products.
Given these evolving industry dynamics, we have experienced—and may continue to experience—pricing and market share pressures, which could reduce our revenues and profit margins. We rely on third-party distribution channels to sell our products, and increased competition, a failure to maintain business relationships and other factors could adversely impact our business.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Governance Committee oversees the prioritization and escalation of risks from cybersecurity threats and is responsible for strategy, operations, financial management, information technology, compliance, legal, administration and corporate governance. The members of the Governance Committee collectively possess experience in these areas, including cybersecurity and risk management. The Audit Committee oversees our management of cybersecurity risks.
Biggest changeThe CIO is a member of our Governance Committee and regularly reports on cybersecurity risk management to other members of the Governance Committee comprised of the Company’s senior executive officers. The Governance Committee oversees the prioritization and escalation of risks from cybersecurity threats and is responsible for strategy, operations, financial management, information technology, compliance, legal, administration and corporate governance.
The CIO regularly reports to the Audit Committee on our cybersecurity risks, and the chair of the Audit Committee reports on these discussions with the full Board of Directors. In addition, the CIO provides periodic reports to our Board of Directors.
The CIO regularly reports to the Audit Committee on our cybersecurity risks, and the chair of the Audit Committee reports on these discussions with the full Board of Directors.
Currently, the CIO role is held by an individual who has been in the role for over nine years, has over 22 years of cybersecurity, information technology and systems engineering experience, and has advanced training in the field of technology. 40 Table of Contents The CIO is a member of our Governance Committee and regularly reports on cybersecurity risk management to other members of the Governance Committee comprised of the Company’s senior executive officers.
Currently, the CIO role is held by an individual who has been in the role for over nine years, has over 23 years of cybersecurity, information technology and systems engineering experience, and has advanced training in the field of technology.
While we have not, as of the date of this Report, experienced a cybersecurity incident that resulted in a material adverse impact to our business or operations, there can be no guarantee that we will not experience such an incident in the future. For information regarding cybersecurity risks that may materially affect our Company, see “Item 1A.
In addition, the CIO provides periodic reports to our Board of Directors. 37 Table of Contents While we have not, as of the date of this Report, experienced a cybersecurity incident that materially affected or is reasonably likely to materially affect our Company, including our business strategy, results of operations or financial condition, there can be no guarantee that we will not experience such an incident in the future.
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The members of the Governance Committee collectively possess experience in these areas, including cybersecurity and risk management. The Audit Committee oversees our management of cybersecurity risks.
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For information regarding cybersecurity risks that may materially affect our Company, see “Item 1A. Risk Factors” included in this Report.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThis reduced footprint, as compared to our prior headquarters, better aligns with the number of employees expected to collaborate in person on any given day.
Biggest changeThis reduced footprint, as compared to our prior headquarters, better aligns with the number of employees expected to collaborate in person on any given day, in line with our “Work Smart” philosophy described in Business – Human Capital Resources . We believe that this space is sufficient to meet our needs until the expiration of the license agreement.
ITEM 2. PROPERTIES Our principal executive office is located at 250 West 34 th Street, 3 rd Floor, New York, New York, pursuant to a license agreement that expires in April 2025, with the option to terminate in April 2024.
ITEM 2. PROPERTIES Our principal executive office is located at 250 West 34 th Street, 3 rd Floor, New York, New York, pursuant to a license agreement that expires in April 2027, with the option to extend until April 2028.
Removed
While we believe having a physical office space for employees to work and socialize is important, we embrace a “Work Smart” philosophy that transcends physical work settings, with a focus on optimizing productivity, efficiency and effectiveness of our work.
Removed
Time in the office generally is not prescribed, and team leaders are empowered to determine how their teams work best, based on their roles, with employees remaining accountable for achieving individual, team and Company outcomes. We believe that this space is sufficient to meet our needs until the expiration of the license agreement.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 14 to our Consolidated Financial Statements for additional information regarding actual and potential claims by investors in our WisdomTree WTI Crude Oil 3x Daily Leveraged ETP totaling approximately €23.6 million ($26.1 million). ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 41 Table of Contents PART II
Biggest changeSee Note 14 to our Consolidated Financial Statements for additional information regarding (1) a $4.0 million civil money penalty in connection with the SEC ESG Settlement and (2) actual and potential claims brought by investors in our WisdomTree WTI Crude Oil 3x Daily Leveraged ETP totaling approximately €27.4 million ($28.5 million), including an appealed claim for total damages of €7.8 million ($8.2 million).
ITEM 3. LEGAL PROCEEDINGS We may be subject to reviews, inspections and investigations by the SEC, CFTC, NFA, state and foreign regulators, as well as legal proceedings arising in the ordinary course of business.
ITEM 3. LEGAL PROCEEDINGS We may be subject to reviews, inspections and investigations by federal regulators including, but not limited to, the SEC, Commodity Futures Trading Commission (CFTC), National Futures Association (NFA), Financial Industry Regulatory Authority (FINRA), state and foreign regulators, as well as legal proceedings arising in the ordinary course of business.
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ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. Mine Safety Disclosures 41 PART II 42 ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 42 ITEM 6. [Reserved] 42 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 43 ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk 73 ITEM 8.
Biggest changeITEM 4. Mine Safety Disclosures 38 PART II 38 ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 38 ITEM 6. [Reserved] 39 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 40 ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk 66 ITEM 8.
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Financial Statements and Supplementary Data 66 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 67 ITEM 9A. Controls and Procedures 67 ITEM 9B. Other Information 67 ITEM 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 67 PART III 68 ITEM 10. Directors, Executive Officers and Corporate Governance 68 ITEM 11. Executive Compensation 68 ITEM 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 68 ITEM 13. Certain Relationships and Related Transactions, and Director Independence 68 ITEM 14. Principal Accountant Fees and Services 68 PART IV 68 ITEM 15. Exhibits; Financial Statement Schedules 68 ITEM 16.
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Form 10-K Summary 69 Unless otherwise indicated, references to “the Company,” “we,” “us,” “our” and “WisdomTree” mean WisdomTree, Inc. and its subsidiaries. WisdomTree ® , WisdomTree Prime ® , WisdomTree Connect™ and Modern Alpha ® are trademarks of WisdomTree, Inc. in the United States and in other countries.
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All other trademarks are the property of their respective owners. i Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K, or Report, contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management.
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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.
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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.
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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 our results.
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Factors that may cause actual results to differ materially from current expectations include, among other things, those listed in the section entitled “Risk Factors” and elsewhere in this Report.
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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.
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You should read this Report and the documents that we reference in this Report and have filed with the U.S. Securities and Exchange Commission, or the SEC, as exhibits to this Report, 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.
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In particular, forward-looking statements in this Report may include statements about: ● anticipated trends, conditions and investor sentiment in the global markets and exchange-traded products, or ETPs; ● anticipated levels of inflows into and outflows out of our ETPs; ● our ability to deliver favorable rates of return to investors; ● competition in our business; ● whether we will experience future growth; ● our ability to develop new products and services and their potential for success; ● our ability to maintain current vendors or find new vendors to provide services to us at favorable costs; ● our ability to successfully implement our strategy relating to digital assets and blockchain-enabled financial services, including WisdomTree Prime and WisdomTree Connect, and achieve its objectives; ● our ability to successfully operate and expand our business in non-U.S. markets; ● the effect of laws and regulations that apply to our business; and ● actions of activist stockholders.
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The forward-looking statements in this Report represent our views as of the date of this Report. We anticipate that subsequent events and developments may cause our views to change.
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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 Report. 1 Table of Contents PART I

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTotal Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs Period (in thousands) October 1, 2023 to October 31, 2023 — $ — — November 1, 2023 to November 30, 2023 — $ — — December 1, 2023 to December 31, 2023 — $ — — Total — $ — — $ 96,406 In addition, on November 20, 2023, we repurchased our Series C Non -Voting Convertible Preferred Stock, par value $0.01 per share (the “Series C Preferred Stock”), which was convertible into approximately 13.1 million shares of our common stock, for aggregate cash consideration of approximately $84.4 million.
Biggest changePrior to this approval, as of December 31, 2024, approximately $33.5 million remained available under the program for future purchases, and no shares were repurchased during the three months ended December 31, 2024. 38 Table of Contents Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs Period (in thousands) October 1, 2024 to October 31, 2024 — $ — — November 1, 2024 to November 30, 2024 — $ — — December 1, 2024 to December 31, 2024 — $ — — Total — $ — — $ 33,536 In addition, on August 13, 2024, we repurchased all of our then-outstanding Series A Non-Voting Convertible Preferred Stock (the “Series A Preferred Stock”), which was convertible into 14,750,000 shares of our common stock, from ETFS Capital Limited, or ETFS Capital, for aggregate cash consideration of approximately $143.8 million.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the New York Stock Exchange under the symbol “WT.” As of December 31, 2023, there were 30 holders of record of shares of our common stock and we believe there were approximately 18,000 beneficial owners of our common stock.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the New York Stock Exchange under the symbol “WT.” As of December 31, 2024, there were 28 holders of record of shares of our common stock and we believe there were approximately 45,000 beneficial owners of our common stock.
See Note 23 to our Consolidated Financial Statements for additional information.
See Note 11 to our Consolidated Financial Statements for additional information.
On February 22, 2022, our Board of Directors approved an increase of $85.7 million to our share repurchase program and extended the term for three years through April 27, 2025. There were no shares repurchased under this program during the three months ended December 31, 2023.
On February 24, 2025, our Board of Directors approved an increase of $129.2 million to our share repurchase program, bringing the total authorization to $150.0 million, and extended the program’s term for three years through April 27, 2028.
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As of December 31, 2023, approximately $96.4 million remained under this program for future purchases.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(in thousands, except per share amounts) Q4/23 Q3/23 Q2/23 Q1/23 Q4/22 Q3/22 Q2/22 Q1/22 Operating Revenues: Advisory fees $ 86,988 $ 86,598 $ 82,004 $ 77,637 $ 70,913 $ 70,616 $ 75,586 $ 76,517 Other income 3,856 3,825 3,720 4,407 2,397 1,798 1,667 1,851 Total revenues 90,844 90,423 85,724 82,044 73,310 72,414 77,253 78,368 Operating Expenses: Compensation and benefits 27,860 27,955 26,319 27,398 24,831 23,714 24,565 24,787 Fund management and administration 18,445 18,023 17,727 17,153 16,906 16,285 16,076 15,494 Marketing and advertising 4,951 3,833 4,465 4,007 4,240 3,145 3,894 4,023 Sales and business development 3,881 3,383 3,326 2,994 3,407 2,724 3,131 2,609 Contractual gold payments — — 1,583 4,486 4,107 4,105 4,446 4,450 Professional fees 3,201 3,719 8,334 3,715 2,666 2,367 4,308 4,459 Occupancy, communications and equipment 1,208 1,203 1,172 1,101 1,110 986 1,049 753 Depreciation and amortization 335 307 121 109 104 58 53 47 Third-party distribution fees 2,549 2,694 1,881 2,253 1,793 1,833 1,818 2,212 Other 2,379 2,601 2,615 2,257 2,427 2,324 2,109 1,845 Total operating expenses 64,809 63,718 67,543 65,473 61,591 57,541 61,449 60,679 Operating income 26,035 26,705 18,181 16,571 11,719 14,873 15,804 17,689 Other Income/(Expenses): Interest expense (3,758) (3,461) (4,021) (4,002) (3,736) (3,734) (3,733) (3,732) Gain/(loss) on revaluation/termination of deferred consideration — — 41,361 20,592 (35,423) 77,895 2,311 (17,018) Interest income 1,225 791 1,000 1,083 945 811 770 794 Impairments (339) (2,703) — (4,900) — — — — Loss on extinguishment of convertible notes — — — (9,721) — — — — Other gains and losses, net 1,602 (2,512) 1,286 (2,007) (1,815) (5,289) (4,474) (24,707) Income/(loss) before income taxes 24,765 18,820 57,807 17,616 (28,310) 84,556 10,678 (26,974) Income tax expense/(benefit) 5,688 5,836 3,555 1,383 (21) 3,327 2,673 (16,713) Net income/(loss) $ 19,077 $ 12,984 $ 54,252 $ 16,233 $ (28,289) $ 81,229 $ 8,005 $ (10,261) Earnings/(loss) per share—basic $ 0.16 $ 0.07 $ 0.32 $ 0.10 $ (0.20) $ 0.50 $ 0.05 $ (0.08) Earnings/(loss) per share—diluted $ 0.16 $ 0.07 $ 0.32 $ 0.10 $ (0.20) $ 0.50 $ 0.05 $ (0.08) Dividends per common share $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03 61 Table of Contents Q4/23 Q3/23 Q2/23 Q1/23 Q4/22 Q3/22 Q2/22 Q1/22 Percent of Total Revenues Operating Revenues Advisory fees 95.8% 95.8% 95.7% 94.6% 96.7% 97.5% 97.8% 97.6% Other income 4.2% 4.2% 4.3% 5.4% 3.3% 2.5% 2.2% 2.4% Total revenues 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Operating Expenses Compensation and benefits 30.6% 31.0% 30.7% 33.5% 34.0% 32.7% 31.7% 31.5% Fund management and administration 20.3% 20.0% 20.7% 20.9% 23.1% 22.5% 20.7% 19.8% Marketing and advertising 5.5% 4.2% 5.2% 4.9% 5.8% 4.3% 5.0% 5.1% Sales and business development 4.3% 3.7% 3.9% 3.6% 4.6% 3.8% 4.1% 3.3% Contractual gold payments — n/a 1.8% 5.5% 5.6% 5.7% 5.8% 5.7% Professional fees 3.5% 4.1% 9.7% 4.5% 3.6% 3.3% 5.6% 5.7% Occupancy, communications and equipment 1.3% 1.3% 1.4% 1.3% 1.5% 1.4% 1.4% 1.0% Depreciation and amortization 0.4% 0.3% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% Third-party distribution fees 2.8% 3.0% 2.2% 2.7% 2.4% 2.5% 2.4% 2.8% Other 2.6% 2.9% 3.1% 2.8% 3.3% 3.2% 2.7% 2.4% Total operating expenses 71.3% 70.5% 78.8% 79.8% 84.0% 79.5% 79.5% 77.4% Operating income 28.7% 29.5% 21.2% 20.2% 16.0% 20.5% 20.5% 22.6% Other Income/(Expenses) Interest expense (4.1%) (3.8%) (4.7%) (4.9%) (5.1%) (5.2%) (4.8%) (4.8%) Gain/(loss) on revaluation/termination of deferred consideration — — 48.2% 25.1% (48.3%) 107.6% 3.0% (21.7%) Interest income 1.3% 0.9% 1.2% 1.3% 1.3% 1.1% 1.0% 1.0% Impairments (0.4%) (3.0%) — (6.0%) — — — — Loss on extinguishment of convertible notes — — — (11.8%) — — — — Other gains and losses, net 1.8% (2.8%) 1.5% (2.4%) (2.5%) (7.3%) (5.8%) (31.5%) Income/(loss) before income taxes 27.3% 20.8% 67.4% 21.5% (38.6%) 116.8% 13.8% (34.4%) Income tax expense/(benefit) 6.3% 6.5% 4.1% 1.7% (0.0%) 4.6% 3.5% (21.3%) Net income/(loss) 21.0% 14.4% 63.3% 19.8% (38.6%) 112.2% 10.4% (13.1%) 62 Table of Contents Q4/23 Q3/23 Q2/23 Q1/23 Q4/22 Q3/22 Q2/22 Q1/22 Operating Statistics GLOBAL ETPs (in millions ) Beginning of period assets $ 93,735 $ 93,666 $ 90,740 $ 81,993 $ 70,878 $ 74,302 $ 79,407 $ 77,479 (Outflows)/inflows (255) 1,983 2,327 6,341 5,264 1,747 3,852 1,319 Market appreciation/(depreciation) 6,644 (1,914) 599 2,406 5,851 (5,171) (8,957) 609 End of period assets $ 100,124 $ 93,735 $ 93,666 $ 90,740 $ 81,993 $ 70,878 $ 74,302 $ 79,407 Average assets during the period $ 96,557 $ 95,743 $ 91,578 $ 87,508 $ 77,649 $ 74,677 $ 77,738 $ 77,809 Average advisory fee during the period 0.36% 0.36% 0.36% 0.36% 0.36% 0.41% 0.40% 0.41% Number of ETPs—end of the period 337 344 344 341 339 347 344 341 U.S.
Biggest change(in thousands, except per share amounts) Q4/24 Q3/24 Q2/24 Q1/24 Q4/23 Q3/23 Q2/23 Q1/23 Operating Revenues: Advisory fees $ 102,264 $ 101,659 $ 98,938 $ 92,501 $ 86,988 $ 86,598 $ 82,004 $ 77,637 Other revenues 8,433 11,509 8,096 4,337 3,856 3,825 3,720 4,407 Total revenues 110,697 113,168 107,034 96,838 90,844 90,423 85,724 82,044 Operating Expenses: Compensation and benefits 30,032 29,405 30,790 31,054 27,860 27,955 26,319 27,398 Fund management and administration 22,858 21,004 20,139 19,962 18,445 18,023 17,727 17,153 Marketing and advertising 6,117 4,897 5,110 4,408 4,951 3,833 4,465 4,007 Sales and business development 4,101 3,465 3,640 3,611 3,881 3,383 3,326 2,994 Contractual gold payments — — — — — — 1,583 4,486 Professional fees 4,559 6,315 6,594 3,630 3,201 3,719 8,334 3,715 Occupancy, communications and equipment 1,423 1,397 1,314 1,210 1,208 1,203 1,172 1,101 Depreciation and amortization 504 447 418 383 335 307 121 109 Third-party distribution fees 3,161 2,983 2,687 2,307 2,549 2,694 1,881 2,253 Other 2,902 2,463 2,831 2,323 2,379 2,601 2,615 2,257 Total operating expenses 75,657 72,376 73,523 68,888 64,809 63,718 67,543 65,473 Operating income 35,040 40,792 33,511 27,950 26,035 26,705 18,181 16,571 Other Income/(Expenses): Interest expense (5,616 ) (5,027 ) (4,140 ) (4,128 ) (3,758 ) (3,461 ) (4,021 ) (4,002 ) Gain on revaluation/termination of deferred consideration — — — — — — 41,361 20,592 Interest income 2,147 1,795 1,438 1,398 1,225 791 1,000 1,083 Impairments — — — — (339 ) (2,703 ) — (4,900 ) Loss on extinguishment of convertible notes — (30,632 ) — — — — — (9,721 ) Other gains and losses, net 2,627 (3,062 ) (1,283 ) 2,592 1,602 (2,512 ) 1,286 (2,007 ) Income before income taxes 34,198 3,866 29,526 27,812 24,765 18,820 57,807 17,616 Income tax expense 6,890 8,351 7,767 5,701 5,688 5,836 3,555 1,383 Net income/(loss) $ 27,308 $ (4,485 ) $ 21,759 $ 22,111 $ 19,077 $ 12,984 $ 54,252 $ 16,233 Earnings/(loss) per share—basic $ 0.19 $ (0.13 ) $ 0.13 $ 0.14 $ 0.16 $ 0.07 $ 0.32 $ 0.10 Earnings/(loss) per share—diluted $ 0.18 $ (0.13 ) $ 0.13 $ 0.13 $ 0.16 $ 0.07 $ 0.32 $ 0.10 Dividends per common share $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03 57 Table of Contents Q4/24 Q3/24 Q2/24 Q1/24 Q4/23 Q3/23 Q2/23 Q1/23 Percent of Total Revenues Operating Revenues Advisory fees 92.4 % 89.8 % 92.4 % 95.5 % 95.8 % 95.8 % 95.7 % 94.6 % Other revenues 7.6 % 10.2 % 7.6 % 4.5 % 4.2 % 4.2 % 4.3 % 5.4 % Total revenues 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Operating Expenses Compensation and benefits 27.1 % 26.0 % 28.8 % 32.1 % 30.6 % 31.0 % 30.7 % 33.5 % Fund management and administration 20.6 % 18.6 % 18.8 % 20.6 % 20.3 % 20.0 % 20.7 % 20.9 % Marketing and advertising 5.5 % 4.3 % 4.8 % 4.6 % 5.5 % 4.2 % 5.2 % 4.9 % Sales and business development 3.7 % 3.1 % 3.4 % 3.7 % 4.3 % 3.7 % 3.9 % 3.6 % Contractual gold payments — — — — — n/a 1.8 % 5.5 % Professional fees 4.1 % 5.6 % 6.2 % 3.7 % 3.5 % 4.1 % 9.7 % 4.5 % Occupancy, communications and equipment 1.3 % 1.2 % 1.2 % 1.2 % 1.3 % 1.3 % 1.4 % 1.3 % Depreciation and amortization 0.5 % 0.4 % 0.4 % 0.4 % 0.4 % 0.3 % 0.1 % 0.1 % Third-party distribution fees 2.9 % 2.6 % 2.5 % 2.4 % 2.8 % 3.0 % 2.2 % 2.7 % Other 2.6 % 2.2 % 2.6 % 2.4 % 2.6 % 2.9 % 3.1 % 2.8 % Total operating expenses 68.3 % 64.0 % 68.7 % 71.1 % 71.3 % 70.5 % 78.8 % 79.8 % Operating income 31.7 % 36.0 % 31.3 % 28.9 % 28.7 % 29.5 % 21.2 % 20.2 % Other Income/(Expenses) Interest expense (5.1 %) (4.4 %) (3.8 %) (4.2 %) (4.1 %) (3.8 %) (4.7 %) (4.9 %) Gain on revaluation/termination of deferred consideration — — — — — — 48.2 % 25.1 % Interest income 1.9 % 1.6 % 1.3 % 1.4 % 1.3 % 0.9 % 1.2 % 1.3 % Impairments — — — — (0.4 %) (3.0 %) — (6.0 %) Loss on extinguishment of convertible notes — (27.1 %) — — — — — (11.8 %) Other gains and losses, net 2.4 % (2.7 %) (1.2 %) 2.7 % 1.8 % (2.8 %) 1.5 % (2.4 %) Income before income taxes 30.9 % 3.4 % 27.6 % 28.7 % 27.3 % 20.9 % 67.4 % 21.5 % Income tax expense 6.2 % 7.4 % 7.3 % 5.9 % 6.3 % 6.5 % 4.1 % 1.7 % Net income/(loss) 24.7 % (4.0 %) 20.3 % 22.8 % 21.0 % 14.4 % 63.3 % 19.8 % 58 Table of Contents Q4/24 Q3/24 Q2/24 Q1/24 Q4/23 Q3/23 Q2/23 Q1/23 Operating Statistics GLOBAL ETPs (in millions ) Beginning of period assets $ 112,577 $ 109,686 $ 107,230 $ 100,124 $ 93,735 $ 93,666 $ 90,740 $ 81,993 (Outflows)/inflows (281 ) (2,395 ) 340 1,988 (255 ) 1,983 2,328 6,341 Market (depreciation)/appreciation (2,517 ) 5,286 2,116 5,118 6,644 (1,914 ) 598 2,406 End of period assets $ 109,779 $ 112,577 $ 109,686 $ 107,230 $ 100,124 $ 93,735 $ 93,666 $ 90,740 Average assets during the period $ 112,349 $ 110,369 $ 108,479 $ 102,461 $ 96,641 $ 95,743 $ 91,578 $ 87,508 Average advisory fee during the period 0.36 % 0.37 % 0.37 % 0.36 % 0.36 % 0.36 % 0.36 % 0.36 % Number of ETPs—end of the period 353 352 350 338 337 344 344 341 U.S.
Cash and cash equivalents decreased $2.8 million during the year ended December 31, 2023 due to $184.3 million used to repurchase and settle our 4.25% Convertible Senior Notes due 2023, $57.4 million used to purchase financial instruments owned, at fair value, $50.0 million used to terminate our deferred consideration—gold payments obligation, $40.0 million used to repurchase our Series C Preferred Stock, $20.1 million used to pay dividends on our common stock, $11.2 million used to purchase investments, $3.6 million used to repurchase our common stock, $3.5 million used to pay issuance costs in respect of our 5.75% Convertible Senior Notes due 2028, or the 2023 Notes, $2.1 million used for software development and $1.2 million used in other activities.
Cash and cash equivalents decreased $2.8 million during the year ended December 31, 2023 due to $184.3 million used to repurchase and settle our 4.25% Convertible Senior Notes due 2023, $57.4 million used to purchase financial instruments owned, at fair value, $50.0 million used to terminate our deferred consideration—gold payments obligation, $40.0 million used to repurchase our Series C Preferred Stock, $20.1 million used to pay dividends on our common stock, $11.2 million used to purchase investments, $3.6 million used to repurchase our common stock, $3.5 million used to pay issuance costs in respect of our 5.75% Convertible Senior Notes due 2028, $2.1 million used for software development and $1.2 million used in other activities.
Operating Expenses (in thousands) Year Ended December 31, Change Percent Change 2023 2022 Compensation and benefits $ 109,532 $ 97,897 $ 11,635 11.9% Fund management and administration 71,348 64,761 6,587 10.2% Marketing and advertising 17,256 15,302 1,954 12.8% Sales and business development 13,584 11,871 1,713 14.4% Contractual gold payments 6,069 17,108 (11,039) (64.5%) Professional fees 18,969 13,800 5,169 37.5% Occupancy, communications and equipment 4,684 3,898 786 20.2% Depreciation and amortization 872 262 610 232.8% Third-party distribution fees 9,377 7,656 1,721 22.5% Other 9,852 8,705 1,147 13.2% Total operating expenses $ 261,543 $ 241,260 $ 20,283 8.4% As a Percent of Revenues: Year Ended December 31, 2023 2022 Compensation and benefits 31.6% 32.5% Fund management and administration 20.4% 21.5% Marketing and advertising 4.9% 5.1% Sales and business development 3.9% 3.9% Contractual gold payments 1.7% 5.7% Professional fees 5.4% 4.6% Occupancy, communications and equipment 1.3% 1.3% Depreciation and amortization 0.2% 0.1% Third-party distribution fees 2.7% 2.5% Other 2.8% 2.9% Total operating expenses 74.9% 80.1% Compensation and benefits Compensation and benefits expense increased 11.9% from $97.9 million during the year ended December 31, 2022 to $109.5 million during the year ended December 31, 2023 due to higher stock -based compensation and headcount.
Operating Expenses Year Ended December 31, Percent (in thousands) 2023 2022 Change Change Compensation and benefits $ 109,532 $ 97,897 $ 11,635 11.9% Fund management and administration 71,348 64,761 6,587 10.2% Marketing and advertising 17,256 15,302 1,954 12.8% Sales and business development 13,584 11,871 1,713 14.4% Contractual gold payments 6,069 17,108 (11,039 ) (64.5% ) Professional fees 18,969 13,800 5,169 37.5% Occupancy, communications and equipment 4,684 3,898 786 20.2% Depreciation and amortization 872 262 610 232.8% Third-party distribution fees 9,377 7,656 1,721 22.5% Other 9,852 8,705 1,147 13.2% Total operating expenses $ 261,543 $ 241,260 $ 20,283 8.4% 53 Table of Contents Year Ended December 31, As a Percent of Revenues: 2023 2022 Compensation and benefits 31.6 % 32.5 % Fund management and administration 20.4 % 21.5 % Marketing and advertising 4.9 % 5.1 % Sales and business development 3.9 % 3.9 % Contractual gold payments 1.7 % 5.7 % Professional fees 5.4 % 4.6 % Occupancy, communications and equipment 1.3 % 1.3 % Depreciation and amortization 0.2 % 0.1 % Third-party distribution fees 2.7 % 2.5 % Other 2.8 % 2.9 % Total operating expenses 74.9 % 80.1 % Compensation and benefits Compensation and benefits expense increased 11.9% from $97.9 million during the year ended December 31, 2022 to $109.5 million during the year ended December 31, 2023 due to higher stock-based compensation and headcount.
Gains and losses also generally arise from the sale of gold earned from advisory fees paid by our physically -backed gold ETPs, foreign exchange fluctuations and other miscellaneous items. 56 Table of Contents Income Taxes Our effective income tax rate for 2023 was 13.8%, resulting in income tax expense of $16.5 million.
Gains and losses also generally arise from the sale of gold earned from advisory fees paid by our physically-backed gold ETPs, foreign exchange fluctuations and other miscellaneous items. 55 Table of Contents Income Taxes Our effective income tax rate for 2023 was 13.8%, resulting in income tax expense of $16.5 million.
The fees we pay our sub -advisers generally are the higher of the fixed minimums per fund, which range from $25,000 to $180,000 per year, or the percentage fee, which ranges between 0.01% and 0.50% per annum of average daily AUM at various breakpoint levels depending on the nature of the ETP.
The fees we pay our sub-advisers generally are the higher of the fixed minimums per fund, which range from $25,000 to $180,000 per year, or the percentage fee, which ranges between 0.01% and 0.20% per annum of average daily AUM at various breakpoint levels depending on the nature of the ETP.
To attract and retain qualified personnel, we must maintain competitive employee compensation and benefit plans and amounts we pay may be affected by inflation. Virtually all of our employees receive incentive compensation which is variable and will fluctuate taking into consideration our operating and financial results, as well as discretion.
To attract and retain qualified personnel, we must maintain competitive employee compensation and benefit plans and amounts we pay may be affected by inflation. Virtually all of our employees receive incentive compensation which is variable and will fluctuate taking into consideration our operating and financial results, as well as individual performance and discretion.
At our election, we will also settle our conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted in either cash, shares of our common stock or a combination of cash and shares of its common stock. • Redemption price: We may redeem for cash all or any portion of the Convertible Notes, at our option, on or after August 20, 2025 and June 20, 2023 in respect of the 2023 Notes and the 2021 Notes, respectively, and on or prior to the 55 th scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price for the respective Convertible Notes then in effect for at least 20 trading days, including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding the redemption date.
At our election, we will also settle the conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted in either cash, shares of our common stock or a combination of cash and shares of common stock. ● Redemption price: We may redeem for cash all or any portion of the Convertible Notes, at our option, on or after August 20, 2026 and August 20, 2025 in respect of the 2029 Notes and the 2028 Notes, respectively, and June 20, 2023 in respect of the 2026 Notes and on or prior to the 55 th scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price for the respective Convertible Notes then in effect for at least 20 trading days, including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding the redemption date.
On or after May 15, 2028 and March 15, 2026 in respect of the 2023 Notes, and the 2021 Notes, respectively, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Notes at any time, regardless of the foregoing circumstances. • Cash settlement of principal amount: Upon conversion, we will pay cash up to the aggregate principal amount of the Convertible Notes to be converted.
On or after May 15, 2029 and May 15, 2028 in respect of the 2029 Notes and the 2028 Notes, respectively, and March 15, 2026 in respect of the 2026 Notes, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Notes at any time, regardless of the foregoing circumstances. ● Cash settlement of principal amount: Upon conversion, we will pay cash up to the aggregate principal amount of the Convertible Notes to be converted.
When performing our goodwill impairment test, we consider a qualitative assessment, when appropriate, and the market approach and its market capitalization when determining the fair value of the reporting unit. The results of our analysis indicated no impairment based upon a quantitative assessment.
When performing our goodwill impairment test, we consider a qualitative assessment, when appropriate, and the market approach and its market capitalization when determining the fair value of the reporting unit. The results of our most recent analysis indicated no impairment based upon a quantitative assessment.
During the second quarter of 2023, we terminated this obligation for aggregate consideration totaling approximately $137.0 million. 65 Table of Contents • Gains or losses on financial instruments owned: We account for our financial instruments owned as trading securities, which requires these instruments to be measured at fair value with gains and losses reported in net income.
During the second quarter of 2023, we terminated this obligation for aggregate consideration totaling approximately $137.0 million. ● Gains or losses on financial instruments owned: We account for our financial instruments owned as trading securities, which requires these instruments to be measured at fair value with gains and losses reported in net income.
We assume no obligation to update or revise publicly any forward -looking statements, whether as a result of new information, future events or otherwise, unless required by law. Introduction We are a global financial innovator, offering a well -diversified suite of ETPs, models, solutions and products leveraging blockchain technology.
We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law. Introduction We are a global financial innovator, offering a diverse suite of ETPs, models, solutions and products leveraging blockchain technology.
We are not responsible for extraordinary expenses, taxes and certain other expenses related to the funds. We depend on a number of parties to provide critical portfolio management services to our ETPs.
We are not responsible for extraordinary expenses, taxes and certain other expenses related to the funds. We depend on a number of parties to provide critical administrative, custody and portfolio management services to our ETPs.
The Series C Preferred Stock was subsequently repurchased on November 20, 2023 as described in “Payable to GBH” below. See Note 12 to our Consolidated Financial Statements for additional information. Payable to GBH On November 20, 2023, we repurchased our Series C Preferred Stock from GBH for aggregate cash consideration of approximately $84.4 million.
The Series C Preferred Stock was subsequently repurchased on November 20, 2023 as described in “Payable to GBH” below. See Note 12 to our Consolidated Financial Statements for additional information. 64 Table of Contents Payable to GBH On November 20, 2023, we repurchased our Series C Preferred Stock from GBH for aggregate cash consideration of approximately $84.4 million.
The results of our analysis identified no indicators of impairment to be recognized based upon a quantitative assessment (discounted cash flow analysis) which relied upon significant unobservable inputs including projected revenue growth rates of 3.0% and a weighted average cost of capital of 10.5%.
The results of our most recent analysis identified no indicators of impairment to be recognized based upon a quantitative assessment (discounted cash flow analysis) which relied upon significant unobservable inputs including projected revenue growth rates of 3.0% and a weighted average cost of capital of 10.3%.
Key terms of the Convertible Notes are as follows: 2023 Notes 2021 Notes Principal outstanding $ 130.0 $ 150.0 Maturity date (unless earlier converted, repurchased or redeemed) August 15, 2028 June 15, 2026 Interest rate 5.75% 3.25% Conversion price $ 9.54 $ 11.04 Conversion rate 104.8658 90.5797 Redemption price $ 12.40 $ 14.35 • Interest rate: Payable semiannually in arrears on February 15 and August 15 of each year for the 2023 Notes (beginning on August 15, 2023) and on June 15 and December 15 of each year for the 2021 Notes. • Conversion price: Convertible at an initial conversion rate set forth in the table above into shares of our common stock, per $1,000 principal amount of notes (equivalent to an initial conversion price set forth in the table above), subject to adjustment. 69 Table of Contents • Conversion: Holders may convert at their option at any time prior to the close of business on the business day immediately preceding May 15, 2028 and March 15, 2026 for the 2023 Notes and the 2021 Notes, respectively, only under the following circumstances: (i) if the last reported sale price of our common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the respective Convertible Notes on each applicable trading day; (ii) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sales price of our common stock and the conversion rate on each such trading day; (iii) upon a notice of redemption delivered by us in accordance with the terms of the indentures but only with respect to the Convertible Notes called (or deemed called) for redemption; or (iv) upon the occurrence of specified corporate events.
Key terms of the Convertible Notes are as follows: 2026 Notes 2028 Notes 2029 Notes Principal outstanding $150.0 $25.8 $345.0 Issuance date June 14, 2021 February 14, 2023 August 13, 2024 Maturity date (unless earlier converted, repurchased or redeemed) June 15, 2026 August 15, 2028 August 15, 2029 Interest rate 3.25% 5.75% 3.25% Initial conversion price $11.04 $9.54 $11.82 Initial conversion rate 90.5797 104.8658 84.5934 Redemption price $14.35 $12.40 $15.37 ● Interest rate: Payable semiannually in arrears on February 15 and August 15 of each year for the 2029 Notes and the 2028 Notes and on June 15 and December 15 of each year for the 2026 Notes. ● Conversion price: Convertible at an initial conversion rate into shares of our common stock, per $1,000 principal amount of notes (equivalent to an initial conversion price set forth in the table above), subject to adjustment. ● Conversion: Holders may convert at their option at any time prior to the close of business on the business day immediately preceding May 15, 2029 and May 15, 2028 for the 2029 Notes and the 2028 Notes, respectively, and March 15, 2026 for the 2026 Notes, only under the following circumstances: (i) if the last reported sale price of our common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the respective Convertible Notes on each applicable trading day; (ii) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sales price of our common stock and the conversion rate on each such trading day; (iii) upon a notice of redemption delivered by us in accordance with the terms of the indentures but only with respect to the Convertible Notes called (or deemed called) for redemption; or (iv) upon the occurrence of specified corporate events.
The range also 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. A wide range is provided in consideration of uncertain market conditions.
The range also considers variability in incentive compensation with drivers including the magnitude of our flows, revenue and operating income growth, margin expansion and our stock price performance in relation to our peers. A range is provided in consideration of uncertain market conditions.
These advisory fees are calculated based on a percentage of the ETPs’ average daily net assets. As of the date of this Report, our weighted average fee rates by product category are as follows: Commodity & Currency: 37bps Leveraged & Inverse: 84bps International Developed Market Equity: 49bps Fixed Income: 16bps U.S.
These advisory fees are calculated based on a percentage of the ETPs’ average daily net assets. As of the date of this Report, our weighted average fee rates by product category are as follows: Commodity & Currency: 35bps Leveraged & Inverse: 81bps International Developed Market Equity: 49bps Fixed Income: 16bps U.S.
We exclude these items when calculating our non -GAAP financial measurements as the gains and losses introduce volatility in earnings and are not core to our operating business. • Tax windfalls and shortfalls upon vesting and exercise of stock -based compensation awards: GAAP requires the recognition of tax windfalls and shortfalls within income tax expense.
We exclude these items when calculating our non-GAAP financial measurements as the gains and losses introduce volatility in earnings and are not core to our operating business. 60 Table of Contents ● Tax windfalls and shortfalls upon vesting and stock-based compensation awards: GAAP requires the recognition of tax windfalls and shortfalls within income tax expense.
These items arise upon the vesting and exercise of stock -based compensation awards and the magnitude is directly correlated to the number of awards vesting/exercised as well as the difference between the price of our stock on the date the award was granted and the date the award vested or was exercised.
These items arise upon the vesting of stock-based compensation awards and the magnitude is directly correlated to the number of awards vesting as well as the difference between the price of our stock on the date the award was granted and the date the award vested.
Equities and fixed income gathered the majority of those flows. Source: Morningstar 46 Table of Contents Industry Developments Asset Management – Consolidation In the recent past, a number of acquisitions in the asset management industry have either been announced or completed.
Equities and fixed income gathered the majority of those flows. Source: Morningstar Industry Developments Asset Management – Consolidation In the recent past, a number of acquisitions in the asset management industry have either been announced or completed.
These decreases were partly offset by $130.0 million of proceeds from the issuance of the 2023 Notes, $123.6 million of proceeds from the sale of financial instruments owned, at fair value, $85.6 million of net cash provided by operating activities, $28.8 million of proceeds from the exit from our investment in Securrency, Inc. in connection with the sale of Securrency, Inc. to an unaffiliated third party, $1.5 million from receipt of contingent consideration related to the sale of our Canadian ETF business, and $1.1 million from other activities.
These decreases were partly offset by $130.0 million of proceeds from the issuance of the 5.75% Convertible Senior Notes due 2028, $123.6 million of proceeds from the sale of financial instruments owned, at fair value, $85.6 million of net cash provided by operating activities, $28.8 million of proceeds from the exit from our investment in Securrency, Inc. in connection with the sale of Securrency, Inc. to an unaffiliated third party, $1.5 million from receipt of contingent consideration related to the sale of our Canadian ETF business, and $1.1 million from other activities.
Headcount was 273 and 303 at December 31, 2022 and 2023, respectively. 54 Table of Contents Fund management and administration Fund management and administration expense increased 10.2% from $64.8 million during the year ended December 31, 2022 to $71.3 million during the year ended December 31, 2023 primarily due to higher average AUM and inflows.
Headcount was 273 and 303 at December 31, 2022 and 2023, respectively. Fund management and administration Fund management and administration expense increased 10.2% from $64.8 million during the year ended December 31, 2022 to $71.3 million during the year ended December 31, 2023 primarily due to higher average AUM and inflows.
We have significant opportunities ahead in both ETPs and the Portfolio Solutions business and as an early mover in digital assets and blockchain -enabled financial services, which positions us well for success to grow in this competitive landscape. Components of Operating Revenue Advisory fees Substantially all of our revenues are comprised of advisory fees we earn from our ETPs.
We have significant opportunities ahead in both ETPs and the Portfolio Solutions business and as an early mover in digital assets and blockchain-enabled financial services, which positions us well for success to grow in this competitive landscape. Components of Operating Revenue Advisory fees A significant portion of our revenues is comprised of advisory fees we earn from our ETPs.
Third-Party Distribution Expense We currently estimate third -party distribution expense to be approximately $10.0 million to $11.0 million for the year ending December 31, 2024, which is dependent upon the AUM growth on our respective platforms.
Third-Party Distribution Expense We currently estimate third-party distribution expense to be approximately $11.0 million to $12.0 million for the year ending December 31, 2025, which is dependent upon the AUM growth on our respective platforms.
Investments in debt instruments are accounted for at fair value, with changes in fair value reported in other income/(expenses). Revenue Recognition We earn substantially all of our revenue in the form of advisory fees from our ETPs and recognize this revenue over time, as the performance obligation is satisfied.
Investments in debt instruments are accounted for at fair value, with changes in fair value reported in other income/(expenses). Revenue Recognition We earn a significant portion of our revenues in the form of advisory fees from our ETPs and recognize this revenue over time, as the performance obligation is satisfied.
See the section titled “Issuance of Convertible Notes” above for additional information. Deferred Consideration–Gold Payments On May 10, 2023, we entered into and closed on a Sale, Purchase and Assignment Deed to terminate our obligations relating to the contractual gold payments.
We may settle and/or refinance these obligations when due See the section titled “Issuance of Convertible Notes” above for additional information. Deferred Consideration–Gold Payments On May 10, 2023, we entered into and closed on a Sale, Purchase and Assignment Deed to terminate our obligations relating to the contractual gold payments.
Under the terms of the transaction, we paid GBH $40.0 million on the closing date, with the remainder of the purchase price payable in equal, interest -free installments on the first, second and third anniversaries of the closing date. The implied price per share was $6.02 when considering the interest -free financing element of the transaction.
Under the terms of the transaction, we paid GBH $54.8 million to date, with the remainder of the purchase price payable in equal, interest-free installments on the second and third anniversaries of the closing date. The implied price per share was $6.02 when considering the interest-free financing element of the transaction.
Use of Capital Our business does not require us to maintain a significant cash position. However, certain of our subsidiaries are required to maintain a minimum level of regulatory capital, which at December 31, 2023 was approximately $29.2 million in the aggregate.
Use of Capital Our business does not require us to maintain a significant cash position. However, certain of our subsidiaries are required to maintain a minimum level of regulatory capital, which at December 31, 2024 was approximately $39.4 million in the aggregate.
Additional business highlights include the following: • Strong product performance with over 80% of our U.S. listed AUM covered by Morningstar in the top two quartiles of peer performance on the 3 -year and 10 -year timeframes.
Additional business highlights include the following: ● We achieved strong product performance with over 80% of our U.S. listed AUM covered by Morningstar in the top quartile of peer performance on the 3-year timeframe and over 65% of our U.S. listed AUM covered by Morningstar in the top two quartiles of peer performance on the 10-year timeframe.
We also maintain a capital return program which includes a $0.03 per share quarterly cash dividend and authority to purchase our common stock through April 27, 2025, including purchases to offset future equity grants made under our equity plans.
We also maintain a capital return program which includes a $0.03 per share quarterly cash dividend and authority to purchase our common stock through April 27, 2025, including purchases to offset future equity grants made under our equity plans and purchases made in open market or privately negotiated transactions.
Other Other expenses increased 13.2% from $8.7 million during the year ended December 31, 2022 to $9.9 million during the year ended December 31, 2023 primarily due to higher travel, public relations and Board of Directors expenses. 55 Table of Contents Other Income/(Expenses) (in thousands) Year Ended December 31, Change Percent Change 2023 2022 Interest expense $ (15,242) $ (14,935) $ (307) 2.1% Gain on revaluation/termination of deferred consideration—gold payments 61,953 27,765 34,188 123.1% Interest income 4,099 3,320 779 23.5% Impairments (7,942) — (7,942) n/a Loss on extinguishment of convertible notes (9,721) — (9,721) n/a Other losses, net (1,631) (36,285) 34,654 95.5% Total other income/(expenses), net $ 31,516 $ (20,135) $ 51,651 256.5% As a Percent of Revenues: Year Ended December 31, 2023 2022 Interest expense (4.4%) (5.0%) Gain on revaluation/termination of deferred consideration—gold payments 17.8% 9.2% Interest income 1.2% 1.1% Impairments (2.3%) — Loss on extinguishment of convertible notes (2.8%) — Other losses, net (0.5%) (12.0%) Total other income/(expenses), net 9.0% (6.7%) Interest expense Interest expense was essentially unchanged during the year ended December 31, 2023.
Other Income/(Expenses) Year Ended December 31, Percent (in thousands) 2023 2022 Change Change Interest expense $ (15,242 ) $ (14,935 ) $ (307 ) 2.1 % Gain on revaluation/termination of deferred consideration—gold payments 61,953 27,765 34,188 123.1 % Interest income 4,099 3,320 779 23.5 % Impairments (7,942 ) — (7,942 ) n/a Loss on extinguishment of convertible notes (9,721 ) — (9,721 ) n/a Other losses, net (1,631 ) (36,285 ) 34,654 95.5 % Total other income/(expenses), net $ 31,516 $ (20,135 ) $ 51,651 256.5 % Year Ended December 31, As a Percent of Revenues: 2023 2022 Interest expense (4.4 %) (5.0 %) Gain on revaluation/termination of deferred consideration—gold payments 17.8 % 9.2 % Interest income 1.2 % 1.1 % Impairments (2.3 %) — Loss on extinguishment of convertible notes (2.8 %) — Other losses, net (0.5 %) (12.0 %) Total other income/(expenses), net 9.0 % (6.7 %) Interest expense Interest expense was essentially unchanged during the year ended December 31, 2023.
Equity: 31bps Alternatives: 58bps Emerging Market Equity: 59bps Cryptocurrency: 36bps We determine the appropriate advisory fee to charge for our ETPs based on the cost of operating each ETP considering the types of securities the ETPs will hold, fees third -party service providers will charge us for operating the ETPs and our competitors’ fees for similar ETPs.
Equity: 30bps Alternatives: 50bps Emerging Market Equity: 61bps Cryptocurrency: 32bps We determine the appropriate advisory fee to charge for our ETPs based on the cost of operating each ETP considering the types of securities the ETPs will hold, fees third-party service providers will charge us for operating the ETPs and our competitors’ fees for similar ETPs.
Marketing and advertising Marketing and advertising expenses are recorded when incurred and include the following: • advertising and product promotion campaigns that are initiated to promote our existing and new ETPs as well as brand awareness; • development and maintenance of our website; and • creation and preparation of marketing materials.
Marketing and advertising Marketing and advertising expenses are recorded when incurred and include the following: ● advertising and product promotion campaigns that are initiated to promote our existing and new ETPs as well as brand awareness; ● marketing campaigns to attract WisdomTree Prime and WisdomTree Connect users; 44 Table of Contents ● development and maintenance of our website; and ● creation and preparation of marketing materials.
We believe that current cash flows generated by our operating activities and existing cash balances should be sufficient for us to fund our operations for the foreseeable future. 70 Table of Contents Our ability to satisfy our contractual obligations as they arise are discussed in the section titled “Contractual Obligations” below.
Capital Resources Our principal source of financing is our operating cash flow. We believe that current cash flows generated by our operating activities and existing cash balances should be sufficient for us to fund our operations for the foreseeable future. Our ability to satisfy our contractual obligations as they arise are discussed in the section titled “Contractual Obligations” below.
Contractual Obligations Convertible Notes We currently have $280.0 million aggregate principal amount of Convertible Notes outstanding, of which $150.0 million and $130.0 million are scheduled to mature on June 15, 2026 and August 15, 2028, respectively, unless earlier converted, repurchased or redeemed.
Contractual Obligations Convertible Notes We currently have $520.8 million in aggregate principal amount of Convertible Notes outstanding, of which $150.0 million, $25.8 million and $345.0 million are scheduled to mature on June 15, 2026, August 15, 2028 and August 15, 2029, in respect of the 2026 Notes, the 2028 Notes and the 2029 Notes, respectively, unless earlier converted, repurchased or redeemed.
Expense Guidance for the Year Ending December 31, 2024 Compensation Expense Our compensation expense for the year ending December 31, 2024 is currently estimated to range from $108.0 million to $118.0 million and takes into consideration planned hires as well as year -end compensation adjustments and the annualization of hires made during 2023.
Expense Guidance for the Year Ending December 31, 2025 Compensation to Revenue Ratio Our compensation to revenue ratio for the year ending December 31, 2025 is currently estimated to range from 28% to 30% and takes into consideration planned hires as well as year-end compensation adjustments and the annualization of hires made during 2024.
See Note 13 to our Consolidated Financial Statements for additional information. 71 Table of Contents Off-Balance Sheet Arrangements We do not have any off -balance sheet financing or other arrangements and have neither created nor are party to any special -purpose or off -balance sheet entities for the purpose of raising capital, incurring debt or operating our business.
Off-Balance Sheet Arrangements We do not have any off-balance sheet financing or other arrangements and have neither created nor are party to any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business.
No sinking fund is provided for the Convertible Notes. • Limited investor put rights: Holders of the Convertible Notes have the right to require us to repurchase for cash all or a portion of their notes at 100% of their principal amount, plus any accrued and unpaid interest, upon the occurrence of certain change of control transactions or liquidation, dissolution or common stock delisting events. • Conversion rate increase in certain customary circumstances: In certain circumstances, conversions in connection with a “make -whole fundamental change” (as defined in the indentures) or conversions of Convertible Notes called (or deemed called) for redemption may result in an increase to the conversion rate, provided that the conversion rate will not exceed 167.7853 shares and 144.9275 shares of our common stock per $1,000 principal amount of the 2023 Notes and the 2021 Notes, respectively (the equivalent of 43,551,214 shares of our common stock), subject to adjustment. • Seniority and Security: The 2023 Notes and 2021 Notes rank equal in right of payment, and are our senior unsecured obligations, but are subordinated in right of payment to our obligations to make certain redemption payments (if and when due) in respect of our Series A Preferred Stock (See Note 11 to our Consolidated Financial Statements).
No sinking fund is provided for the Convertible Notes. 63 Table of Contents ● Limited investor put rights: Holders of the Convertible Notes have the right to require us to repurchase for cash all or a portion of their notes at 100% of their principal amount, plus any accrued and unpaid interest, upon the occurrence of certain change of control transactions or liquidation, dissolution or common stock delisting events. ● Conversion rate increase in certain customary circumstances: In certain circumstances, conversions in connection with a “make-whole fundamental change” (as defined in the indentures) or conversions of Convertible Notes called (or deemed called) for redemption may result in an increase to the conversion rate, provided that the conversion rate will not exceed 103.6269 shares, 167.7853 shares and 144.9275 shares of our common stock per $1,000 principal amount of the 2029 Notes, the 2028 Notes and the 2026 Notes, respectively (the equivalent of 61,826,817 shares of our common stock based on the aggregate principal amount of Convertible Notes outstanding), subject to adjustment. ● Seniority and Security: The Convertible Notes rank equal in right of payment and are our senior unsecured obligations.
Under the fair value method, compensation expense is measured at the grant date based on the estimated fair value of the award and is recognized as an expense over the vesting period. 47 Table of Contents Fund management and administration Fund management and administration expenses are expensed when incurred and are comprised of the following costs we pay third -party service providers to operate our ETPs and Digital Funds: • portfolio management of our ETPs (sub -advisory ); • fund accounting and administration; • custodial and storage services; • market making; • transfer agency; • accounting and tax services; • printing and mailing of shareholder materials; • index calculation; • indicative values; • distribution fees; • legal and compliance services; • exchange listing fees; • trustee fees and expenses; • preparation of regulatory reports and filings; • insurance; • certain local income taxes; and • other administrative services.
Fund management and administration Fund management and administration expenses are expensed when incurred and are comprised of the following costs we pay third-party service providers to operate our ETPs and Digital Funds: ● portfolio management of our ETPs (sub-advisory); ● fund accounting and administration; ● custodial and storage services; ● market making; ● transfer agency; ● accounting and tax services; ● printing and mailing of shareholder materials; ● index calculation; ● indicative values; ● distribution fees; ● legal and compliance services; ● exchange listing fees; ● trustee fees and expenses; ● preparation of regulatory reports and filings; ● insurance; ● certain local income taxes; and ● other administrative services.
Our tax rate differs from the federal statutory rate of 21% primarily due to a $19.9 million reduction in unrecognized tax benefits associated with the release of the tax -related indemnification asset described above, a reduction in the valuation allowance on foreign net operating losses, a non -taxable gain on revaluation of deferred consideration and a lower tax rate on foreign earnings.
The effective tax rate differs from the federal statutory rate of 21% primarily due to a non-taxable gain on revaluation/termination of deferred consideration, a reduction in unrecognized tax benefits associated with the release of a tax-related indemnification asset and a lower tax rate on foreign earnings.
We empower investors and consumers to shape their future and support financial professionals to better serve their clients and grow their businesses. We are leveraging the latest financial infrastructure to create products that provide access, transparency and an enhanced user experience.
Our offerings empower investors to shape their financial future and equip financial professionals to grow their businesses. Leveraging the latest financial infrastructure, we create products that emphasize access, transparency and provide an enhanced user experience.
The Convertible Notes require cash settlement of the principal amount, while settlement of the conversion obligation in excess of the aggregate principal amount may be satisfied in either cash, shares of our common stock or a combination of cash and shares of its common stock. We currently anticipate refinancing these obligations when due.
The Convertible Notes require cash settlement of up to the principal amount, while settlement of the conversion obligation in excess of the aggregate principal amount may be satisfied in either cash, shares of our common stock or a combination of cash and shares of our common stock.
Operating Leases Total future minimum lease payments with respect to our operating lease liabilities were $0.6 million at December 31, 2023. Cash flows generated by our operating activities and existing cash balances should be sufficient to satisfy the future minimum lease payments.
Operating Leases Total future minimum lease payments with respect to our operating lease liabilities were $1.0 million at December 31, 2024. Cash flows generated by our operating activities and existing cash balances should be sufficient to satisfy the future minimum lease payments. See Note 13 to our Consolidated Financial Statements for additional information.
Source: FactSet 45 Table of Contents U.S. Listed ETF Industry Flows U.S. listed ETF net flows for the year ended December 31, 2023 were $489.1 billion. U.S. equity and fixed income gathered the majority of those flows. Source: Morningstar European Listed ETP Industry Flows European listed ETP net flows were $146.5 billion for the year ended December 31, 2023.
Listed ETF Industry Flows U.S. listed ETF net flows for the year ended December 31, 2024 were $867.9 billion. U.S. equity and fixed income gathered the majority of those flows. Source: Morningstar 42 Table of Contents European Listed ETP Industry Flows European listed ETP net flows were $98.4 billion for the year ended December 31, 2024.
Sales and business development Sales and business development expenses are recorded when incurred and include the following: • travel and entertainment or conference related expenses for our sales force; • market data services for our research team; • sales related software tools; • voluntary payment of certain costs associated with the creation or redemption of ETP shares, as we may elect from time to time; and • legal and other advisory fees associated with the development of new funds or business initiatives. 48 Table of Contents Contractual gold payments Contractual gold payments expense represented an obligation requiring us to pay 9,500 ounces of gold annually from the advisory fee income we earned for managing physically backed gold ETPs.
Sales and business development Sales and business development expenses are recorded when incurred and include the following: ● travel and entertainment or conference related expenses for our sales force; ● market data services for our research team; ● sales related software tools; ● voluntary payment of certain costs associated with the creation or redemption of ETP shares, as we may elect from time to time; and ● legal and other advisory fees associated with the development of new funds or business initiatives.
In connection with the issuance of the 2023 Notes, we repurchased $115.0 million in aggregate principal amount of the 2020 Notes. As a result of this repurchase, we recognized a loss on extinguishment of approximately $9.7 million during the year ended December 31, 2023.
In connection with the issuance of the 2029 Notes, we repurchased $104.2 million in aggregate principal amount of 2028 Notes. As a result of this repurchase, we recognized a loss on extinguishment of approximately $30.6 million during the year ended December 31, 2024.
This estimated rate may change and is dependent upon our actual taxable income earned in relation to our forecasts as well as any other items which may arise that are not currently forecasted.
This estimated rate may change and is dependent upon our actual taxable income earned in relation to our forecasts as well as any other items which may arise that are not currently forecasted. Such items may include, but are not limited to, increases or decreases in valuation allowances and any stock-based compensation windfalls or shortfalls.
Gains and losses also generally arise from the sale of gold earned from advisory fees paid by our physically -backed gold ETPs, foreign exchange fluctuations and other miscellaneous items. Income Taxes Our effective income tax rate for the year ended December 31, 2022 was negative 26.9%, resulting in an income tax benefit of $10.7 million.
Gains and losses also generally arise from the sale of gold earned from advisory fees paid by our physically-backed gold ETPs, foreign exchange fluctuations and other miscellaneous items. 52 Table of Contents Income Taxes Our effective income tax rate for 2024 was 30.1%, resulting in an income tax expense of $28.7 million.
We exclude this item when calculating our non -GAAP financial measurements as recognition of interest expense is non -cash and contrary to the stated terms of our obligation. • Other items: Unrealized gains and losses recognized on our investments, changes in deferred tax asset valuation allowances, expenses incurred in response to an activist campaign, impairment charges, a loss on extinguishment of debt and a gain recognized upon the sale of our Canadian ETF business (including the remeasurement of contingent consideration) are excluded when calculating our non -GAAP financial measurements. 66 Table of Contents Adjusted Net Income and Diluted Earnings per Share: Years Ended December 31, 2023 2022 2021 Net income, as reported $ 102,546 $ 50,684 $ 49,797 Deduct: Gain on revaluation/termination of deferred consideration (61,953) (27,765) (2,018) Add back: Loss on extinguishment of convertible notes, net of income taxes 9,623 — — Add back: Impairments, net of income taxes 6,013 — 12,247 Add back: Expenses incurred in response to an activist campaign, net of income taxes 4,452 3,376 — Add back: Increase in deferred tax valuation allowance on financial instruments owned and investments 2,113 4,729 — Deduct: Gain recognized from the sale of Canadian ETF business, including remeasurement of contingent consideration (1,477) — (787) Add back/(deduct): Unrealized loss/(gain) recognized on our investments, net of income taxes 607 290 (284) Add back: Losses on financial instruments owned, at fair value, net of income taxes 392 12,505 2,507 Add back: Litigation expenses associated with certain provisions of the Stockholder Rights Agreement, net of income taxes 367 — — Add back: Imputed interest on payable to GBH, net of income taxes 224 — — Deduct: Tax windfalls upon vesting and exercise of stock-based compensation awards (176) (541) (110) Deduct: Decrease in deferred tax valuation allowance on net operating losses of a European subsidiary — (1,609) — Adjusted net income $ 62,731 $ 41,669 $ 61,352 Deduct: Income distributed to participating securities (2,770) (2,186) (2,168) Deduct: Undistributed income allocable to participating securities (5,868) (2,509) (4,630) Adjusted net income available to common stockholders $ 54,093 $ 36,974 $ 54,554 Weighted average diluted shares, excluding participating securities (See Note 21 to our Consolidated Financial Statements) 147,827 143,295 145,055 Adjusted earnings per share—diluted $ 0.37 $ 0.26 $ 0.38 Adjusted net income as reported on a non -GAAP basis during the year ended December 31, 2023 also excludes a gain of $8.0 million recognized upon the repurchase of our Series C Preferred Stock, which was convertible into approximately 13.1 million shares of our common stock.
Years Ended December 31, Adjusted Net Income and Diluted Earnings per Share: 2024 2023 2022 Net income, as reported $ 66,693 $ 102,546 $ 50,684 Add back: Loss on extinguishment of convertible notes, net of income taxes 29,410 9,623 — Add back: Civil money penalty in connection with SEC ESG Settlement 4,000 — — Add back: Expenses incurred in response to an activist campaign, net of income taxes 3,760 4,452 3,376 (Deduct)/add back: (Gains)/Losses on financial instruments owned, at fair value, net of income taxes (3,671 ) 392 12,505 Add back: Imputed interest on payable to GBH, net of income taxes 1,996 224 — (Deduct)/add back: (Decrease)/increase in deferred tax valuation allowance on financial instruments owned and investments (903 ) 2,113 4,729 Add back: Unrealized loss recognized on our investments, net of income taxes 858 607 290 Deduct: Tax windfalls upon vesting and exercise of stock-based compensation awards (764 ) (176 ) (541 ) Deduct: Gain on revaluation/termination of deferred consideration — (61,953 ) (27,765 ) Add back: Impairments, net of income taxes — 6,013 — Deduct: Gain recognized from the sale of Canadian ETF business, including remeasurement of contingent consideration — (1,477 ) — Add back: Litigation expenses associated with certain provisions of the Stockholder Rights Agreement, net of income taxes — 367 — Deduct: Decrease in deferred tax valuation allowance on net operating losses of a European subsidiary — — (1,609 ) Adjusted net income $ 101,379 $ 62,731 $ 41,669 Deduct: Income distributed to participating securities (1,406 ) (2,770 ) (2,186 ) Deduct: Undistributed income allocable to participating securities (5,069 ) (5,868 ) (2,509 ) Adjusted net income available to common stockholders $ 94,904 $ 54,093 $ 36,974 Weighted average diluted shares, excluding participating securities (See Note 21 to our Consolidated Financial Statements) 149,253 147,827 143,295 Adjusted earnings per share—diluted $ 0.64 $ 0.37 $ 0.26 During the years ended December 31, 2024 and 2023, we recognized a loss of $13.2 million (which includes an excise tax of $1.8 million) and a gain of $8.0 million, respectively, related to the repurchase of the Series A Preferred Stock and the Series C Preferred Stock.
Advisory fees are based on a percentage of the ETPs’ average daily net assets. Progress is measured using the practical expedient under the output method resulting in the recognition of revenue in the amount for which we have a right to invoice. 72 Table of Contents
Progress is measured using the practical expedient under the output method resulting in the recognition of revenue in the amount for which we have a right to invoice. 65 Table of Contents Other revenues are earned from swap providers associated with certain of our European listed ETPs, the nature of which are based on a percentage of the ETPs’ average daily net assets.
Third-party distribution fees Third -party distribution fees increased 22.5% from $7.7 million during the year ended December 31, 2022 to $9.4 million during the year ended December 31, 2023 primarily due to AUM growth we are experiencing in Latin America.
Third-party distribution fees Third-party distribution fees increased 22.5% from $7.7 million during the year ended December 31, 2022 to $9.4 million during the year ended December 31, 2023 primarily due to AUM growth we are experiencing in Latin America. 54 Table of Contents Other Other expenses increased 13.2% from $8.7 million during the year ended December 31, 2022 to $9.9 million during the year ended December 31, 2023 primarily due to higher travel, public relations and Board of Directors expenses.
During the year ended December 31, 2023, we repurchased 635,653 shares of our common stock under the repurchase program for an aggregate cost of $3.6 million. Currently, approximately $96.4 million remains under this program for future purchases.
During the year ended December 31, 2024, we repurchased 6,800,301 shares of our common stock under the repurchase program for an aggregate cost of $62.9 million. Currently, $150.0 million remains under this program for future purchases.
The chart below sets forth the asset mix of our ETPs at December 31, 2021, 2022 and 2023: 51 Table of Contents Key Operating Statistics The following table presents key operating statistics that serve as indicators for the performance of our business: Year Ended December 31, 2023 2022 2021 GLOBAL ETPs (in millions ) Beginning of period assets $ 81,993 $ 77,479 $ 67,392 Inflows 10,396 12,182 4,660 Market appreciation/(depreciation) 7,735 (7,668) 5,427 End of period assets $ 100,124 $ 81,993 $ 77,479 Average assets during the period $ 92,847 $ 76,969 $ 73,430 Average advisory fee during the period 0.36% 0.38% 0.41% Number of ETPs—end of the period 337 339 329 US LISTED ETFs (in millions ) Beginning of period assets $ 55,973 $ 48,210 $ 38,517 Inflows 10,795 14,572 4,950 Market appreciation/(depreciation) 5,718 (6,809) 4,743 End of period assets $ 72,486 $ 55,973 $ 48,210 Average assets during the period $ 64,967 $ 49,723 $ 44,325 Number of ETPs—end of the period 76 79 75 EUROPEAN LISTED ETPs (in millions ) Beginning of period assets $ 26,020 $ 29,269 $ 28,875 Outflows (399) (2,390) (290) Market appreciation/(depreciation) 2,017 (859) 684 End of period assets $ 27,638 $ 26,020 $ 29,269 Average assets during the period $ 27,880 $ 27,246 $ 29,105 Number of ETPs—end of the period 261 260 254 PRODUCT CATEGORIES (in millions ) U.S.
The chart below sets forth the asset mix of our ETPs at December 31, 2022, 2023 and 2024: 47 Table of Contents Key Operating Statistics The following table presents key operating statistics that serve as indicators for the performance of our business: Year Ended December 31, 2024 2023 2022 GLOBAL ETPs (in millions ) Beginning of period assets $ 100,124 $ 81,993 $ 77,479 (Outflows)/Inflows (348 ) 10,397 12,180 Market appreciation/(depreciation) 10,003 7,734 (7,666 ) End of period assets $ 109,779 $ 100,124 $ 81,993 Average assets during the period $ 108,417 $ 92,867 $ 76,969 Average advisory fee during the period 0.36% 0.36% 0.38% Number of ETPs—end of the period 353 337 339 US LISTED ETFs (in millions ) Beginning of period assets $ 72,486 $ 55,973 $ 48,210 Inflows 1,399 10,795 14,572 Market appreciation/(depreciation) 5,210 5,718 (6,809 ) End of period assets $ 79,095 $ 72,486 $ 55,973 Average assets during the period $ 78,588 $ 64,988 $ 49,723 Number of ETPs—end of the period 78 76 79 EUROPEAN LISTED ETPs (in millions ) Beginning of period assets $ 27,638 $ 26,020 $ 29,269 Outflows (1,747 ) (398 ) (2,392 ) Market appreciation/(depreciation) 4,793 2,016 (857 ) End of period assets $ 30,684 $ 27,638 $ 26,020 Average assets during the period $ 29,829 $ 27,879 $ 27,246 Number of ETPs—end of the period 275 261 260 PRODUCT CATEGORIES (in millions ) U.S.
Investments We account for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed within ASU 2016 -01 , Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities , to the extent such investments are not subject to consolidation or the equity method.
Investments We account for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed within Accounting Standards Codification Topic 321, Investments – Equity Securities , to the extent such investments are not subject to consolidation or the equity method.
We have launched many first -to-market products and pioneered alternative weighting we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management to offer investors cost -effective funds that are built to perform.
We have launched many first-to-market products and pioneered a unique alternative-weighting approach called “Modern Alpha” that combines the outperformance potential of active management with the cost effective benefits of passive management.
Interest income Interest income, which is recognized on an accrual basis, arises from investing our corporate cash into interest -bearing financial instruments. 49 Table of Contents Other losses, net Included herein are gains and losses arising from our financial instruments owned and investments, the sale of gold earned from advisory fees paid by physically -backed gold ETPs, foreign exchange and other miscellaneous items.
Other gains/(losses), net Included herein are gains and losses arising from our financial instruments owned and investments, the sale of gold earned from advisory fees paid by physically-backed gold ETPs, foreign exchange and other miscellaneous items.
GAAP, this amount is excluded from net income, but is required to be added to net income to arrive at income available to common stockholders in the calculation of earnings per share. 67 Table of Contents Liquidity and Capital Resources The following table summarizes key data regarding our liquidity, capital resources and use of capital to fund our operations: December 31, 2023 December 31, 2022 Balance Sheet Data (in thousands): Cash and cash equivalents $ 129,305 $ 132,101 Financial instruments owned, at fair value 58,722 126,239 Accounts receivable 35,473 30,549 Securities held-to-maturity 230 259 Total: Liquid assets 223,730 289,148 Less: Total current liabilities (103,216) (148,434) Less: Other assets—seed capital (WisdomTree Digital Funds) (18,308) (1,765) Less: Regulatory capital requirements (29,156) (25,988) Total: Available liquidity $ 73,050 $ 112,961 Year Ended December 31, 2023 2022 2021 Cash Flow Data (in thousands): Operating cash flows $ 85,600 $ 55,087 $ 75,318 Investing cash flows 82,049 (37,657) (99,632) Financing cash flows (171,636) (22,780) 92,553 Foreign exchange rate effect 1,191 (3,258) (955) (Decrease)/increase in cash and cash equivalents $ (2,796) $ (8,608) $ 67,284 Liquidity We consider our available liquidity to be our liquid assets, less our current liabilities and regulatory capital requirements of certain European subsidiaries.
GAAP. 61 Table of Contents Liquidity and Capital Resources The following table summarizes key data regarding our liquidity, capital resources and use of capital to fund our operations: December 31, 2024 December 31, 2023 Balance Sheet Data (in thousands): Cash and cash equivalents $ 181,191 $ 129,305 Financial instruments owned, at fair value 85,439 58,722 Accounts receivable 44,866 35,473 Securities held-to-maturity 206 230 Total: Liquid assets 311,702 223,730 Less: Total current liabilities (109,197 ) (103,216 ) Less: Other assets—seed capital (WisdomTree Digital Funds) (20,866 ) (18,308 ) Less: Regulatory capital requirements (39,423 ) (29,156 ) Total: Available liquidity $ 142,216 $ 73,050 Year Ended December 31, 2024 2023 2022 Cash Flow Data (in thousands): Operating cash flows $ 113,461 $ 85,600 $ 55,087 Investing cash flows (23,875 ) 82,049 (37,657 ) Financing cash flows (36,000 ) (171,636 ) (22,780 ) Foreign exchange rate effect (1,700 ) 1,191 (3,258 ) Increase/(decrease) in cash and cash equivalents $ 51,886 $ (2,796 ) $ (8,608 ) Liquidity We consider our available liquidity to be our liquid assets, less our current liabilities, seed capital in WisdomTree Digital Funds and regulatory capital requirements of certain of our subsidiaries.
Building on our heritage of innovation, we are also developing and have launched next -generation digital products, services and structures, including Digital Funds and tokenized assets, as well as our blockchain -native digital wallet, WisdomTree Prime, which is currently available in the U.S. in 38 states, representing approximately 70% of the U.S. population.
Building on our heritage of innovation, we have introduced next-generation digital products and services, including Digital Funds, tokenized assets, and our blockchain-native digital wallet, WisdomTree Prime, which is currently available in 45 U.S. states, covering approximately 80% of the U.S. population. Our institutional platform, WisdomTree Connect, further expands access to our products.
Changes in product mix have led to a decline in our average advisory fee, which for the years ended December 31, 2021, 2022 and 2023 were 0.41%, 0.38% and 0.36%, respectively.
Our revenues are also highly correlated to the level and relative mix of our AUM, as well as the fee rate associated with our ETPs. Changes in product mix have led to a decline in our average advisory fee, which for the years ended December 31, 2022, 2023 and 2024 were 0.38%, 0.36% and 0.36%, respectively.
Revaluation/termination of deferred consideration–gold payments Deferred consideration arose in connection with the ETFS Acquisition and was remeasured each reporting period using forward -looking gold prices observed on the CMX exchange, a selected discount rate and perpetual growth rate. This obligation was terminated on May 10, 2023 for approximately $137.0 million.
Revaluation/termination of deferred consideration–gold payments Deferred consideration arose in connection with our acquisition of the European exchange-traded commodity, currency and leveraged-and-inverse business of ETFS Capital Limited, or the ETFS Acquisition, and was remeasured each reporting period using forward-looking gold prices observed on the CMX exchange, a selected discount rate and perpetual growth rate.
Discretionary Spending Discretionary spending includes marketing, sales, professional fees, occupancy and equipment, depreciation and amortization and other expenses. We currently estimate our discretionary spending for the year ending December 31, 2024 to range from $64.0 million to $68.0 million.
Discretionary Spending Discretionary spending includes marketing, sales, professional fees, occupancy and equipment, depreciation and amortization and other expenses. We currently estimate our discretionary spending for the year ending December 31, 2025 to range from $68.0 million to $72.0 million. Not included in the guidance above are any potential non-recurring expenses we may incur in response to a potential proxy contest.
Our average advisory fee decreased from 0.41% during the year ended December 31, 2021 to 0.38% during the year ended December 31, 2022 due to AUM mix shift.
Our average advisory fee declined from 0.38% during the year ended December 31, 2022 to 0.36% during the year ended December 31, 2023.
Our advisory fee revenues may fluctuate based on general stock market trends, which include market value appreciation or depreciation, currency fluctuations against the U.S. dollar, increased competition and level of inflows or outflows from our ETPs.
Our advisory fee revenues may fluctuate based on general stock market trends, which include market value appreciation or depreciation, currency fluctuations against the U.S. dollar, increased competition and level of inflows or outflows from our ETPs. 43 Table of Contents Other revenues Other revenues include rebates from swap providers to our European listed ETPs, creation/redemption fees earned on our European non-UCITS products and fees from licensing our indexes and index data to third parties.
Occupancy, communications and equipment Occupancy, communications and equipment expense includes costs for our corporate headquarters in New York City as well as office related costs in our other locations. Depreciation and amortization Depreciation and amortization expense results from amortization of internally -developed software as well as depreciation on fixed assets, which are depreciated/amortized over three to five years.
Depreciation and amortization Depreciation and amortization expense results from amortization of internally-developed software as well as depreciation on fixed assets, which are depreciated/amortized over three to five years.
These items were partly offset by tax shortfalls associated with the vesting and exercise of stock -based compensation and non -deductible executive compensation. 60 Table of Contents Quarterly Results The following tables set forth our unaudited consolidated quarterly statement of operations data, both in dollar amounts and as a percentage of total revenues, and our unaudited consolidated quarterly operating data for the quarters in 2023 and 2022.
These items were partly offset by an increase in the deferred tax asset valuation allowance on losses recognized on financial instruments owned. 56 Table of Contents Quarterly Results The following tables set forth our unaudited consolidated quarterly statement of operations data, both in dollar amounts and as a percentage of total revenues, and our unaudited consolidated quarterly operating data for the quarters in 2024 and 2023.
Equity Beginning of period assets $ 24,112 $ 23,860 $ 18,367 Inflows 1,616 3,346 1,544 Market appreciation/(depreciation) 3,428 (3,094) 3,949 End of period assets $ 29,156 $ 24,112 $ 23,860 Average assets during the period $ 25,701 $ 22,881 $ 21,254 Commodity & Currency Beginning of period assets $ 22,097 $ 24,599 $ 25,879 Outflows (1,774) (2,912) (1,479) Market appreciation 1,013 410 199 End of period assets $ 21,336 $ 22,097 $ 24,599 Average assets during the period $ 22,843 $ 23,406 $ 25,027 Fixed Income Beginning of period assets $ 15,273 $ 4,356 $ 3,324 Inflows 5,940 11,300 1,130 Market depreciation (16) (383) (98) End of period assets $ 21,197 $ 15,273 $ 4,356 Average assets during the period $ 19,804 $ 9,039 $ 3,565 52 Table of Contents Year Ended December 31, 2023 2022 2021 International Developed Market Equity Beginning of period assets $ 10,195 $ 11,894 $ 9,414 Inflows 2,850 101 1,260 Market appreciation/(depreciation) 2,058 (1,800) 1,220 End of period assets $ 15,103 $ 10,195 $ 11,894 Average assets during the period $ 12,824 $ 10,568 $ 10,750 Emerging Market Equity Beginning of period assets $ 8,116 $ 10,375 $ 8,539 Inflows 1,678 27 2,041 Market appreciation/(depreciation) 932 (2,286) (205) End of period assets $ 10,726 $ 8,116 $ 10,375 Average assets during the period $ 9,287 $ 8,843 $ 10,619 Leveraged & Inverse Beginning of period assets $ 1,754 $ 1,777 $ 1,486 (Outflows)/inflows (5) 193 41 Market appreciation/(depreciation) 66 (216) 250 End of period assets $ 1,815 $ 1,754 $ 1,777 Average assets during the period $ 1,813 $ 1,704 $ 1,679 Cryptocurrency Beginning of period assets $ 136 $ 357 $ 168 Inflows 50 36 84 Market appreciation/(depreciation) 228 (257) 105 End of period assets $ 414 $ 136 $ 357 Average assets during the period $ 247 $ 230 $ 312 Alternatives Beginning of period assets $ 310 $ 261 $ 215 Inflows 41 91 39 Market appreciation/(depreciation) 26 (42) 7 End of period assets $ 377 $ 310 $ 261 Average assets during the period $ 328 $ 298 $ 224 Headcount 303 273 241 Note: Previously issued statistics may be restated due to fund closures and trade adjustments Source: WisdomTree Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Selected Operating and Financial Information Year Ended December 31, Change Percent Change 2023 2022 AUM (in millions) Average AUM $ 92,847 $ 76,969 $ 15,878 20.6% Operating Revenues (in thousands) Advisory fees $ 333,227 $ 293,632 $ 39,595 13.5% Other income 15,808 7,713 8,095 105.0% Total revenues $ 349,035 $ 301,345 $ 47,690 15.8% 53 Table of Contents Operating Revenues Advisory fees Advisory fee revenues increased 13.5% from $293.6 million during the year ended December 31, 2022 to $333.2 million during the year ended December 31, 2023 as higher average AUM was partially offset by a decline in our average advisory fee.
Equity Beginning of period assets $ 29,156 $ 24,112 $ 23,860 Inflows 2,184 1,616 3,345 Market appreciation/(depreciation) 4,074 3,428 (3,093 ) End of period assets $ 35,414 $ 29,156 $ 24,112 Average assets during the period $ 32,596 $ 25,721 $ 22,881 Commodity & Currency Beginning of period assets $ 21,336 $ 22,097 $ 24,599 Outflows (3,140 ) (1,774 ) (2,911 ) Market appreciation 3,710 1,013 409 End of period assets $ 21,906 $ 21,336 $ 22,097 Average assets during the period $ 22,070 $ 22,843 $ 23,406 Fixed Income Beginning of period assets $ 21,197 $ 15,273 $ 4,356 (Outflows)/inflows (1,062 ) 5,939 11,299 Market depreciation (92 ) (15 ) (382 ) End of period assets $ 20,043 $ 21,197 $ 15,273 Average assets during the period $ 20,973 $ 19,804 $ 9,039 48 Table of Contents Year Ended December 31, 2024 2023 2022 International Developed Market Equity Beginning of period assets $ 15,103 $ 10,195 $ 11,894 Inflows 1,522 2,852 101 Market appreciation/(depreciation) 977 2,056 (1,800 ) End of period assets $ 17,602 $ 15,103 $ 10,195 Average assets during the period $ 17,963 $ 12,824 $ 10,568 Emerging Market Equity Beginning of period assets $ 10,726 $ 8,116 $ 10,375 (Outflows)/inflows (654 ) 1,678 27 Market appreciation/(depreciation) 396 932 (2,286 ) End of period assets $ 10,468 $ 10,726 $ 8,116 Average assets during the period $ 11,460 $ 9,287 $ 8,843 Leveraged & Inverse Beginning of period assets $ 1,815 $ 1,754 $ 1,777 (Outflows)/inflows (66 ) (5 ) 192 Market appreciation/(depreciation) 175 66 (215 ) End of period assets $ 1,924 $ 1,815 $ 1,754 Average assets during the period $ 1,923 $ 1,813 $ 1,704 Cryptocurrency Beginning of period assets $ 414 $ 136 $ 357 Inflows 749 50 36 Market appreciation/(depreciation) 749 228 (257 ) End of period assets $ 1,912 $ 414 $ 136 Average assets during the period $ 997 $ 247 $ 230 Alternatives Beginning of period assets $ 377 $ 310 $ 261 Inflows 119 41 91 Market appreciation/(depreciation) 14 26 (42 ) End of period assets $ 510 $ 377 $ 310 Average assets during the period $ 435 $ 328 $ 298 Headcount 313 303 273 Note: Previously issued statistics may be restated due to fund closures and trade adjustments Source: WisdomTree 49 Table of Contents Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Selected Operating and Financial Information Year Ended December 31, 2024 2023 Change Percent Change AUM (in millions) Average AUM $ 108,417 $ 92,867 $ 15,550 16.7 % Operating Revenues (in thousands) Advisory fees $ 395,362 $ 333,227 $ 62,135 18.6 % Other revenues 32,375 15,808 16,567 104.8 % Total revenues $ 427,737 $ 349,035 $ 78,702 22.5 % Operating Revenues Advisory fees Advisory fee revenues increased 18.6% from $333.2 million during the year ended December 31, 2023 to $395.4 million during the year ended December 31, 2024 due to higher average AUM.
Our average advisory fee declined from 0.38% during the year ended December 31, 2022 to 0.36% during the year ended December 31, 2023. Other income Other income increased 105.0% from $7.7 million during the year ended December 31, 2022 to $15.8 million during the year ended December 31, 2023 primarily due to large flows from some of our European products.
Other revenues Other revenues increased 105.0% from $7.7 million during the year ended December 31, 2022 to $15.8 million during the year ended December 31, 2023 primarily due to higher other revenues attributable to our European listed ETPs.
In the U.K., we were also named Best Workplace for medium -sized companies for a fourth consecutive year and a 2023 Best Workplace for Women for medium -sized companies by Great Place to Work . • We won “Best Leveraged & Inverse ETF Issuer ($100M+)” and “Best Crypto Issuer Linked ETF Issuer ($100M+)” at the 2023 ETF Express Europe Awards and our European business won “Best ETF Issuer” at the Online Money Awards, marking the second consecutive year of winning the award.
In the U.K., we were also named Best Workplace for medium-sized companies for the fifth consecutive year and a 2024 Best Workplace for Women by Great Place to Work . ● We were named “Best Leveraged & Inverse ETF Issuers ($1bn+)” at the ETF Express European ETF Awards and “Best ETF Provider” at the Diaman Quant Awards in Italy.
Not included in the guidance above are any potential non -recurring expenses we may incur in response to a potential proxy contest. Such expenses could be material to our results of operations for the year ending December 31, 2024. Gross Margin We define gross margin as total operating revenues less fund management and administration expenses.
Such expenses could be material to our results of operations for the year ending December 31, 2025. Gross Margin We define gross margin as total operating revenues less fund management and administration expenses. Gross margin percentage is calculated as gross margin divided by total operating revenues.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Selected Operating and Financial Information Year Ended December 31, Change Percent Change 2022 2021 AUM (in millions) Average AUM $ 76,969 $ 73,430 $ 3,539 4.8% Operating Revenues (in thousands) Advisory fees $ 293,632 $ 298,052 $ (4,420) (1.5%) Other income 7,713 6,266 1,447 23.1% Total revenues $ 301,345 $ 304,318 $ (2,973) (1.0%) Operating Revenues Advisory fees Advisory fee revenues decreased 1.5% from $298.1 million during the year ended December 31, 2021 to $293.6 million in the comparable period in 2022 as higher average AUM was offset by a decline in our average advisory fee.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Selected Operating and Financial Information Year Ended December 31, Percent 2023 2022 Change Change AUM (in millions) Average AUM $ 92,867 $ 76,969 $ 15,898 20.7% Operating Revenues (in thousands) Advisory fees $ 333,227 $ 293,632 $ 39,595 13.5% Other revenues 15,808 7,713 8,095 105.0% Total revenues $ 349,035 $ 301,345 $ 47,690 15.8% Operating Revenues Advisory fees Advisory fee revenues increased 13.5% from $293.6 million during the year ended December 31, 2022 to $333.2 million during the year ended December 31, 2023 as higher average AUM was partially offset by a decline in our average advisory fee.
We had 75 U.S. listed ETFs and 254 European listed ETPs at December 31, 2021 compared to 79 U.S. listed ETFs and 269 European listed ETPs at December 31, 2022.
We had 76 U.S. listed ETFs and 261 European listed ETPs at December 31, 2023 compared to 78 U.S. listed ETFs and 275 European listed ETPs at December 31, 2024.
These increases were partly offset by $67.7 million used to purchase financial instruments owned, at fair value, $21.9 million used to purchase investments, $19.4 million used to pay dividends, $3.4 million used to repurchase our common stock and $3.4 million from other activities. 68 Table of Contents Cash and cash equivalents increased $67.3 million during the year ended December 31, 2021 due to $150.0 million of proceeds from the issuance of our 3.25% Convertible Senior Notes due 2026, or the 2021 Notes, $75.3 million of net cash provided by operating activities, $19.4 million of proceeds from the sale of financial instruments owned, at fair value and $2.4 million of proceeds from the receipt of contingent consideration from the sale of our Canadian ETF business.
These increases were partly offset by $67.7 million used to purchase financial instruments owned, at fair value, $21.9 million used to purchase investments, $19.4 million used to pay dividends, $3.4 million used to repurchase our common stock and $3.4 million from other activities. 62 Table of Contents Convertible Notes We have the following convertible notes outstanding as of December 31, 2024: ● $150.0 million in aggregate principal amount of 3.25% Convertible Senior Notes due 2026 (the “2026 Notes”); ● $25.8 million in aggregate principal amount of 5.75% Convertible Senior Notes due 2028 (the “2028 Notes”); and ● $345.0 million in aggregate principal amount of 3.25% Convertible Senior Notes due 2029 (the “2029 Notes”).
These products are distributed through all major channels in the asset management industry, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers primarily through our sales force.
Our products are distributed across all major asset management industry channels, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers, primarily through our dedicated sales team. We believe technology is transforming how financial advisors conduct business, and through our Advisor and Portfolio Solutions programs we offer technology-enabled and research-driven solutions.
In addition, approximately 50% of our U.S. listed AUM is rated 4- or 5 -star by Morningstar (less than 5% in 1 -and 2 -star funds). • We launched nine new European listed ETPs, three new U.S. listed ETPs (including the WisdomTree Bitcoin Fund which was among the first to launch in the U.S.) and 12 new Digital Funds.
In addition, approximately 59% of our U.S. listed AUM is rated 4- or 5-star by Morningstar (less than 5% in 1-and 2-star funds). ● We launched 14 new European listed ETPs and two new U.S. listed ETPs spanning all our major product categories. ● We celebrated the 10-year anniversary of WisdomTree in Europe.
Equity Beginning of period assets $ 25,644 $ 26,001 $ 24,534 $ 24,112 $ 20,952 $ 21,058 $ 23,738 $ 23,860 Inflows/(outflows) 487 864 414 (149) 1,022 1,239 306 779 Market appreciation/(depreciation) 3,025 (1,221) 1,053 571 2,138 (1,345) (2,986) (901) End of period assets $ 29,156 $ 25,644 $ 26,001 $ 24,534 $ 24,112 $ 20,952 $ 21,058 $ 23,738 Average assets during the period $ 26,844 $ 26,501 $ 24,732 $ 24,725 $ 23,492 $ 22,534 $ 22,362 $ 23,134 63 Table of Contents Q4/23 Q3/23 Q2/23 Q1/23 Q4/22 Q3/22 Q2/22 Q1/22 Commodity & Currency Beginning of period assets $ 20,465 $ 22,384 $ 24,924 $ 22,097 $ 19,561 $ 23,624 $ 26,302 $ 24,599 (Outflows)/inflows (449) (1,815) (1,513) 2,003 796 (2,180) (475) (1,053) Market appreciation/(depreciation) 1,320 (104) (1,027) 824 1,740 (1,883) (2,203) 2,756 End of period assets $ 21,336 $ 20,465 $ 22,384 $ 24,924 $ 22,097 $ 19,561 $ 23,624 $ 26,302 Average assets during the period $ 21,254 $ 22,278 $ 24,033 $ 23,807 $ 20,345 $ 21,625 $ 25,766 $ 25,891 Fixed Income Beginning of period assets $ 21,797 $ 20,215 $ 18,708 $ 15,273 $ 11,695 $ 9,192 $ 5,418 $ 4,356 (Outflows)/inflows (715) 1,671 1,471 3,513 3,392 2,628 4,038 1,242 Market appreciation/(depreciation) 115 (89) 36 (78) 186 (125) (264) (180) End of period assets $ 21,197 $ 21,797 $ 20,215 $ 18,708 $ 15,273 $ 11,695 $ 9,192 $ 5,418 Average assets during the period $ 21,889 $ 20,965 $ 19,185 $ 17,176 $ 13,962 $ 10,077 $ 7,426 $ 4,691 International Developed Market Equity Beginning of period assets $ 13,902 $ 13,423 $ 11,433 $ 10,195 $ 9,183 $ 9,968 $ 11,422 $ 11,894 Inflows/(outflows) 9 798 1,593 450 40 (115) 79 97 Market appreciation/(depreciation) 1,192 (319) 397 788 972 (670) (1,533) (569) End of period assets $ 15,103 $ 13,902 $ 13,423 $ 11,433 $ 10,195 $ 9,183 $ 9,968 $ 11,422 Average assets during the period $ 14,267 $ 13,873 $ 12,276 $ 10,879 $ 10,000 $ 10,032 $ 10,695 $ 11,543 Emerging Market Equity Beginning of period assets $ 9,569 $ 9,191 $ 8,811 $ 8,116 $ 7,495 $ 8,386 $ 9,991 $ 10,375 Inflows/(outflows) 412 451 329 486 (53) 114 (223) 189 Market appreciation/(depreciation) 745 (73) 51 209 674 (1,005) (1,382) (573) End of period assets $ 10,726 $ 9,569 $ 9,191 $ 8,811 $ 8,116 $ 7,495 $ 8,386 $ 9,991 Average assets during the period $ 9,833 $ 9,652 $ 8,998 $ 8,666 $ 7,770 $ 8,329 $ 9,155 $ 10,116 64 Table of Contents Q4/23 Q3/23 Q2/23 Q1/23 Q4/22 Q3/22 Q2/22 Q1/22 Leveraged & Inverse Beginning of period assets $ 1,781 $ 1,864 $ 1,785 $ 1,754 $ 1,523 $ 1,618 $ 1,860 $ 1,777 (Outflows)/inflows (59) (1) 12 43 59 45 90 (1) Market appreciation/(depreciation) 93 (82) 67 (12) 172 (140) (332) 84 End of period assets $ 1,815 $ 1,781 $ 1,864 $ 1,785 $ 1,754 $ 1,523 $ 1,618 $ 1,860 Average assets during the period $ 1,803 $ 1,894 $ 1,798 $ 1,757 $ 1,623 $ 1,589 $ 1,770 $ 1,835 Cryptocurrency Beginning of period assets $ 243 $ 248 $ 239 $ 136 $ 163 $ 151 $ 383 $ 357 Inflows/(outflows) 28 10 (1) 13 (4) — 3 37 Market appreciation/(depreciation) 143 (15) 10 90 (23) 12 (235) (11) End of period assets $ 414 $ 243 $ 248 $ 239 $ 136 $ 163 $ 151 $ 383 Average assets during the period $ 325 $ 238 $ 236 $ 190 $ 152 $ 178 $ 265 $ 324 Alternatives Beginning of period assets $ 334 $ 340 $ 306 $ 310 $ 306 $ 305 $ 293 $ 261 Inflows/(outflows) 32 5 22 (18) 12 16 34 29 Market appreciation/(depreciation) 11 (11) 12 14 (8) (15) (22) 3 End of period assets $ 377 $ 334 $ 340 $ 306 $ 310 $ 306 $ 305 $ 293 Average assets during the period $ 342 $ 342 $ 320 $ 308 $ 305 $ 313 $ 299 $ 275 Headcount 303 299 291 279 273 274 264 253 Note: Previously issued statistics may be restated due to fund closures and trade adjustments Source: WisdomTree 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.
Equity Beginning of period assets $ 34,643 $ 31,834 $ 31,670 $ 29,156 $ 25,643 $ 26,001 $ 24,534 $ 24,112 Inflows/(outflows) 1,099 328 221 536 487 864 414 (149 ) Market (depreciation)/appreciation (328 ) 2,481 (57 ) 1,978 3,026 (1,222 ) 1,053 571 End of period assets $ 35,414 $ 34,643 $ 31,834 $ 31,670 $ 29,156 $ 25,643 $ 26,001 $ 24,534 Average assets during the period $ 35,714 $ 33,175 $ 31,339 $ 30,154 $ 26,928 $ 26,501 $ 24,732 $ 24,725 Commodity & Currency Beginning of period assets $ 23,034 $ 21,987 $ 21,944 $ 21,336 $ 20,466 $ 22,384 $ 24,924 $ 22,097 (Outflows)/inflows (440 ) (741 ) (1,499 ) (460 ) (449 ) (1,815 ) (1,513 ) 2,003 Market (depreciation)/appreciation (688 ) 1,788 1,542 1,068 1,319 (103 ) (1,027 ) 824 End of period assets $ 21,906 $ 23,034 $ 21,987 $ 21,944 $ 21,336 $ 20,466 $ 22,384 $ 24,924 Average assets during the period $ 22,989 $ 22,016 $ 22,437 $ 20,837 $ 21,254 $ 22,278 $ 24,033 $ 23,807 Fixed Income Beginning of period assets $ 20,767 $ 21,430 $ 21,218 $ 21,197 $ 21,797 $ 20,215 $ 18,708 $ 15,273 (Outflows)/inflows (387 ) (897 ) 236 (14 ) (715 ) 1,670 1,471 3,513 Market (depreciation)/appreciation (337 ) 234 (24 ) 35 115 (88 ) 36 (78 ) End of period assets $ 20,043 $ 20,767 $ 21,430 $ 21,218 $ 21,197 $ 21,797 $ 20,215 $ 18,708 Average assets during the period $ 20,398 $ 21,135 $ 21,277 $ 21,082 $ 21,889 $ 20,965 $ 19,185 $ 17,176 International Developed Market Equity Beginning of period assets $ 18,075 $ 19,385 $ 18,103 $ 15,103 $ 13,902 $ 13,423 $ 11,433 $ 10,195 Inflows/(outflows) 63 (1,391 ) 1,253 1,597 9 799 1,594 450 Market (depreciation)/appreciation (536 ) 81 29 1,403 1,192 (320 ) 396 788 End of period assets $ 17,602 $ 18,075 $ 19,385 $ 18,103 $ 15,103 $ 13,902 $ 13,423 $ 11,433 Average assets during the period $ 17,716 $ 18,636 $ 18,809 $ 16,691 $ 14,267 $ 13,873 $ 12,276 $ 10,879 59 Table of Contents Q4/24 Q3/24 Q2/24 Q1/24 Q4/23 Q3/23 Q2/23 Q1/23 Emerging Market Equity Beginning of period assets $ 12,452 $ 11,875 $ 11,189 $ 10,726 $ 9,569 $ 9,191 $ 8,811 $ 8,116 (Outflows)/inflows (908 ) (20 ) 57 217 412 451 329 486 Market (depreciation)/appreciation (1,076 ) 597 629 246 745 (73 ) 51 209 End of period assets $ 10,468 $ 12,452 $ 11,875 $ 11,189 $ 10,726 $ 9,569 $ 9,191 $ 8,811 Average assets during the period $ 11,407 $ 12,083 $ 11,448 $ 10,900 $ 9,833 $ 9,652 $ 8,998 $ 8,666 Leveraged & Inverse Beginning of period assets $ 2,082 $ 1,922 $ 1,828 $ 1,815 $ 1,781 $ 1,864 $ 1,785 $ 1,754 (Outflows)/inflows (69 ) 71 (18 ) (50 ) (59 ) (1 ) 12 43 Market (depreciation)/appreciation (89 ) 89 112 63 93 (82 ) 67 (12 ) End of period assets $ 1,924 $ 2,082 $ 1,922 $ 1,828 $ 1,815 $ 1,781 $ 1,864 $ 1,785 Average assets during the period $ 2,032 $ 1,962 $ 1,905 $ 1,792 $ 1,803 $ 1,894 $ 1,798 $ 1,757 Cryptocurrency Beginning of period assets $ 1,054 $ 838 $ 874 $ 414 $ 243 $ 248 $ 239 $ 136 Inflows/(outflows) 315 201 75 158 28 10 (1 ) 13 Market appreciation/(depreciation) 543 15 (111 ) 302 143 (15 ) 10 90 End of period assets $ 1,912 $ 1,054 $ 838 $ 874 $ 414 $ 243 $ 248 $ 239 Average assets during the period $ 1,599 $ 917 $ 856 $ 614 $ 325 $ 238 $ 236 $ 190 Alternatives Beginning of period assets $ 470 $ 415 $ 404 $ 377 $ 334 $ 340 $ 306 $ 310 Inflows/(outflows) 46 54 15 4 32 5 22 (18 ) Market (depreciation)/appreciation (6 ) 1 (4 ) 23 11 (11 ) 12 14 End of period assets $ 510 $ 470 $ 415 $ 404 $ 377 $ 334 $ 340 $ 306 Average assets during the period $ 494 $ 445 $ 408 $ 391 $ 342 $ 342 $ 320 $ 308 Headcount 313 314 304 300 303 299 291 279 Note: Previously issued statistics may be restated due to fund closures and trade adjustments Source: WisdomTree 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.
These increases were partly offset by $115.5 million used to purchase financial instruments owned, at fair value, $34.5 million used to repurchase our common stock, $19.5 million used to pay dividends on our common stock, $5.8 million used to purchase investments, $4.3 million used to pay the 2021 Notes issuance costs and $0.2 million from other activities.
These increases were partially offset by $143.8 million used to repurchase the Series A Preferred Stock, $132.7 million to repurchase a portion of our 5.75% Convertible Senior Notes due 2028, $69.4 million used to purchase financial instruments owned, at fair value, $62.9 million used to repurchase our common stock, $19.0 million used to pay dividends, $14.8 million paid to GBH, $7.7 million used to pay convertible notes issuance costs, $2.3 million used to pay for software development and $2.1 million used in other activities.
LISTED ETFs (in millions ) Beginning of period assets $ 68,018 $ 65,903 $ 61,283 $ 55,973 $ 48,043 $ 47,255 $ 48,622 $ 48,210 (Outflows)/inflows (67) 3,601 3,249 4,012 4,232 3,812 4,278 2,250 Market appreciation/(depreciation) 4,535 (1,486) 1,371 1,298 3,698 (3,024) (5,645) (1,838) End of period assets $ 72,486 $ 68,018 $ 65,903 $ 61,283 $ 55,973 $ 48,043 $ 47,255 $ 48,622 Average assets during the period $ 69,717 $ 68,008 $ 62,712 $ 59,430 $ 53,655 $ 49,466 $ 48,270 $ 47,499 Number of ETFs—end of the period 76 80 80 80 79 78 77 77 EUROPEAN LISTED ETPs ( in millions ) Beginning of period assets $ 25,717 $ 27,763 $ 29,457 $ 26,020 $ 22,835 $ 27,047 $ 30,785 $ 29,269 (Outflows)/inflows (188) (1,618) (922) 2,329 1,032 (2,065) (426) (931) Market appreciation/(depreciation) 2,109 (428) (772) 1,108 2,153 (2,147) (3,312) 2,447 End of period assets $ 27,638 $ 25,717 $ 27,763 $ 29,457 $ 26,020 $ 22,835 $ 27,047 $ 30,785 Average assets during the period $ 26,840 $ 27,735 $ 28,866 $ 28,078 $ 23,994 $ 25,211 $ 29,468 $ 30,310 Number of ETPs—end of the period 261 264 264 261 260 269 267 264 PRODUCT CATEGORIES U.S.
LISTED ETFs (in millions ) Beginning of period assets $ 81,267 $ 79,722 $ 78,087 $ 72,486 $ 68,018 $ 65,903 $ 61,283 $ 55,973 (Outflows)/inflows (40 ) (1,650 ) 1,106 1,983 (67 ) 3,601 3,249 4,012 Market (depreciation)/appreciation (2,132 ) 3,195 529 3,618 4,535 (1,486 ) 1,371 1,298 End of period assets $ 79,095 $ 81,267 $ 79,722 $ 78,087 $ 72,486 $ 68,018 $ 65,903 $ 61,283 Average assets during the period $ 80,661 $ 80,335 $ 78,523 $ 74,831 $ 69,801 $ 68,008 $ 62,712 $ 59,430 Number of ETFs—end of the period 78 78 78 77 76 80 80 80 EUROPEAN LISTED ETPs ( in millions ) Beginning of period assets $ 31,310 $ 29,964 $ 29,143 $ 27,638 $ 25,717 $ 27,763 $ 29,457 $ 26,020 (Outflows)/inflows (241 ) (745 ) (766 ) 5 (188 ) (1,618 ) (921 ) 2,329 Market (depreciation)/appreciation (385 ) 2,091 1,587 1,500 2,109 (428 ) (773 ) 1,108 End of period assets $ 30,684 $ 31,310 $ 29,964 $ 29,143 $ 27,638 $ 25,717 $ 27,763 $ 29,457 Average assets during the period $ 31,688 $ 30,034 $ 29,956 $ 27,630 $ 26,840 $ 27,735 $ 28,866 $ 28,078 Number of ETPs—end of the period 275 274 272 261 261 264 264 261 PRODUCT CATEGORIES U.S.
We had approximately $100.1 billion in AUM as of December 31, 2023. Our family of ETPs includes products that provide exposure to equities, fixed income, commodities, leveraged -and-inverse , currency, alternatives and cryptocurrency strategies.
As of December 31, 2024, we managed approximately $109.8 billion in AUM. Our ETPs span a broad range of strategies including equities, fixed income, commodities, leveraged-and-inverse, currency, alternatives and cryptocurrency exposures.
Headcount was 241 and 273 at December 31, 2021 and 2022, respectively. Fund management and administration Fund management and administration expense increased 9.9% from $58.9 million during the year ended December 31, 2021 to $64.8 million in the comparable period in 2022 primarily due to higher average AUM, product launches and inflows.
Headcount was 303 and 313 at December 31, 2023 and 2024, respectively. Fund management and administration Fund management and administration expense increased 17.7% from $71.3 million during the year ended December 31, 2023 to $84.0 million during the year ended December 31, 2024 primarily due to higher average AUM.
Bank Trust Company, National Association, as trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (“Rule 144A”).
Each class of notes were issued pursuant to indentures dated as of the issuance dates between us and U.S. Bank Trust Company, National Association, as trustee (either initially or as successor to U.S. Bank National Association, the “Trustee”), in private offerings to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−0 removed11 unchanged
Biggest changeIn addition, our Convertible Notes bear interest at fixed rates of 5.75% and 3.25% for the 2023 Notes and the 2021 Notes, respectively. Therefore, we have no direct financial statement risk associated with changes in interest rates. However, the fair value of the Convertible Notes changes primarily when the market price of our common stock fluctuates or interest rates change.
Biggest changeIn addition, our Convertible Notes bear interest at fixed rates of 3.25% for the 2026 Notes and the 2029 Notes and 5.75% for the 2028 Notes, respectively. Therefore, we have no direct financial statement risk associated with changes in interest rates.
We currently do not enter into arrangements to hedge against fluctuations in the price of these commodities and cryptocurrencies and any hedging we may undertake in the future may not be cost -effective or sufficient to hedge against this exposure. 73 Table of Contents
We currently do not enter into arrangements to hedge against fluctuations in the price of these commodities and cryptocurrencies and any hedging we may undertake in the future may not be cost-effective or sufficient to hedge against this exposure.
During the years ended December 31, 2022 and 2023, we recognized losses on these financial instruments of $16.5 million and $0.5 million, respectively, and any losses recognized in the future may be material to our operating results. We do not anticipate that changes in interest rates will have a material impact on our financial condition or cash flows.
During the years ended December 31, 2023 and 2024, we recognized losses on these financial instruments of $0.5 million and $4.9 million, respectively, and any losses recognized in the future may be material to our operating results. We do not anticipate that changes in interest rates will have a material impact on our financial condition or cash flows.
Interest Rate Risk We invest our corporate cash in short -term interest earning assets, primarily in federal agency debt instruments, WisdomTree fixed income ETFs, U.S. treasuries, corporate bonds, money market instruments at a commercial bank and other financial instruments which totaled $127.4 million and $109.2 million as of December 31, 2022 and 2023, respectively.
Interest Rate Risk We invest our corporate cash in short-term interest earning assets, primarily in federal agency debt instruments, WisdomTree fixed income ETFs, U.S. treasuries, corporate bonds, money market instruments at a commercial bank and other financial instruments which totaled $109.2 million and $134.0 million as of December 31, 2023 and 2024, respectively.
Exchange Rate Risk We are subject to currency translation exposure on the results of our non -U .S. operations, primarily in the U.K. and Europe.
However, the fair value of the Convertible Notes changes primarily when the market price of our common stock fluctuates or interest rates change. Exchange Rate Risk We are subject to currency translation exposure on the results of our non-U.S. operations, primarily in the U.K. and Europe.

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