Insiders ranked by realized 90-day signed return on their open-market trades at Wisdomtree, Inc.. Minimum 3 scored trades. Returns are signed - a sale followed by a rally counts against the insider.
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.22pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.21pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.22pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+21
adverse+11
failure+5
loss+4
hazardous+4
Positive rising
profitability+10
opportunities+6
able+4
successful+4
achieve+3
Risk Factors (Item 1A)
16,100 words
ITEM 1A.
RISK FACTORS
Any investment in our common stock involves a high degree of risk. You should carefully consider the specific risk factors described below in addition to the other information contained in this Report before making a decision to invest in our common stock. If any of these risks actually occur, our business, operating results, financial condition and prospects could be harmed. This could cause the trading price of our common stock to decline and a loss of all or part of your investment. Certain statements below are forward-looking statements. See the section entitled “Cautionary Note Regarding Forward-Looking Statements.”
Summary of Risk Factors
Our business faces various risks that could impact our ability to achieve objectives, as well as adversely affect our financial condition, results of operations, cash flow, and overall prospects. These risks, detailed below, include but are not limited to:
Market Risks
· Impact on AUM from declining prices and volatile market conditions
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
loss+5
clawback+2
forfeited+2
penalty+1
volatility+1
Positive rising
gains+9
greater+3
collaboration+3
innovation+2
leading+2
MD&A (Item 7)
14,995 words
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and the related notes and the other financial information included elsewhere in this Report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below. For a more complete description of the risks noted above and other risks that could cause our actual results to materially differ from our current expectations, please see Item 1A. “Risk Factors” of this Report. 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 and solutions, private market investments and digital asset-related products. 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 and and provide an user experience.
· Risks of intellectual property infringementclaims or failure to protect trademarks and intellectual property rights
· Expanded and evolving regulatory requirements and increased supervisory oversight related to the Ceres Acquisition
Digital Assets Risks
· Risks tied to our digital assets business, including competition, product development, outsourced services, cybersecurity, blockchain infrastructure and technology, regulatory compliance, anti-money laundering and other related risks
Ceres Risks
· Risks tied to the Ceres Acquisition and our entry into private assets, including execution and capital raising risks and reliance on key personnel, exposure to farmland, real estate and agricultural market conditions, tenant and commodity price risks, regulatory and environmental compliance, risks associated with Ceres Farms’ REIT status, and risks related to the pursuit of new business opportunities
Other Company Risks
· Potential actions by activist stockholders
· Risks of change in control resulting in the termination of investment management agreements
· Challenges securing approval for advisory agreements and fees
· Reputational risk
Risks Related to Common
Stock and Convertible Notes
· Volatility in the market price of common stock
· Negative commentary or downgrades by equity analysts
· Challenges in raising funds for convertible note settlements or repurchases
· Risks tied to conditional conversion features of convertible notes
· Impact of future issuances of common stock or equity-linked securities
· Anti-takeover provisions in corporate governance documents
· Stockholder rights plan terms and conditions
· Failure to pay dividends or repurchase common stock
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Market Risks
Declining prices of securities, gold and other precious metals and other commodities and changes in interest rates and general market conditions can adversely affect our business by reducing the market value of the assets we manage or causing WisdomTree ETP investors to sell their fund shares and trigger redemptions.
We are subject to risks arising from declining prices of securities, gold and other precious metals and other commodities, which may result in a decrease in demand for investment products, a higher redemption rate and/or a decline in AUM. The financial markets are highly volatile and prices for financial assets may increase or decrease for many reasons, including general economic conditions, trade uncertainties, rising or falling interest rates, the strengthening or weakening of the U.S. dollar, events such as a pandemic or war, geopolitical conflicts, political events, acts of terrorism and other matters beyond our control. 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. Such adverse conditions would likely cause the value of our AUM to decrease, which would result in lower advisory fees, or cause investors in the WisdomTree ETPs to sell their shares in favor of investments they perceive to offer greateropportunity or lower risk, thus triggering redemptions that would also result in decreased AUM and lower fees.
Fluctuations in the amount and mix of our AUM may negatively impact revenues and operating margins.
The level of our revenues depends on the amount and mix of our AUM. Our revenues are derived primarily from advisory fees based on a percentage of the value of our AUM and vary with the nature of the ETPs, which have different fee levels. Fluctuations in the amount and mix of our AUM may be attributable in part to market conditions outside of our control that have had, and in the future could have, a negative impact on our revenues and operating margins.
Abnormally wide bid/ask spreads and market disruptions that halt or disrupt trading or create extreme volatility could undermine investor confidence in the ETP investment structure and limit investor acceptance of ETPs.
ETPs trade on exchanges in market transactions that generally approximate the value of the referenced assets or underlying portfolio of securities held by the particular ETP. Trading involves risks including the potential lack of an active market for fund shares, abnormally wide bid/ask spreads (the difference between the prices at which shares of an ETP can be bought and sold) that can exist for a variety of reasons, and losses from trading. 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.
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.
At December 31, 2025, 50% of our AUM was concentrated in ten of our WisdomTree ETPs with approximately 18% in three of our domestic equity ETFs, 15% in four of our precious metal products, 11% in the WisdomTree Floating Rate Treasury Fund, or USFR, and 6% in two of our international developed market equity ETPs. As a result, our operating results are particularly exposed to the performance of these funds and our ability to maintain the AUM of these funds, as well as investor sentiment toward investing in the funds’ strategies. If the AUM in these funds were to decline, either because of declining market values or net outflows from these funds, our revenues would be adversely affected.
Declining commodity prices, and gold prices in particular, including as a result of changes in demand for commodities and gold as an investment, could materially and adversely affect our business.
At December 31, 2025, approximately 17% of our AUM were in ETPs backed by gold and approximately 11% 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. Accommodative monetary policies are also favorable as the opportunity cost of forgoing investment in interest-bearing assets is low. Market conditions that are not conducive to investment in precious metals, such as a rising interest rate environment, may lead to declining prices that are linked to our ETPs and thereby adversely affect our AUM and revenues. We cannot provide any assurance that our products backed by precious metals will benefit from favorable market conditions. In addition, changes in long-term demand cycles for commodities generally and cyclicality in demand for commodities as an investment asset, could reduce demand for certain of our products, limit our ability to successfully launch new products and also may lead to redemptions by existing investors.
Also, a portion of the advisory fee revenues we receive on our ETPs backed by gold are paid in gold ounces. While we may readily sell the gold that we earn under these advisory contracts, we still may maintain a position. 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.
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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.
At December 31, 2025, approximately 29% and 18% of our AUM was held in products with exposure to the U.S. and international developed markets, respectively. Therefore, the success of our business is closely tied to various conditions in these markets which may be affected by domestic and foreign political, social and economic uncertainties, monetary policies conducted in these regions and other factors.
In addition, fluctuations in foreign currency exchange rates could reduce the revenues we earn from certain foreign invested products. This occurs because an increase in the value of the U.S. dollar relative to non-U.S. currencies may result in a decrease in the dollar value of the AUM in these products, which, in turn, would result in lower revenues. Furthermore, investors may perceive certain foreign invested products, as well as certain of our currency and fixed income products to be a less attractive investment opportunity when the value of the U.S. dollar rises relative to non-U.S. currencies, which could have the effect of reducing investments in these products, thus reducing revenues. Our products exposed to the U.S. market may benefit from a rising U.S. dollar, but we can provide no assurance that this will be the case. Also, a weakening U.S. dollar relative to the euro or yen may make less attractive our international hedged equity products, as unhedged alternatives would benefit from the appreciation of the foreign currency or currencies while our products would not, which could result in redemptions in our funds.
Withdrawals or broad changes in investments in our ETPs by investors with significant positions may negatively impact revenues and operating margins.
We have had in the past, and may have in the future, investors who maintain significant positions in one or more of our ETPs. 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.
Third-Party Service Provider Risks
We primarily depend on Mellon Investments Corporation, Newton Investment Management North America, LLC, Voya Investment Management Co., LLC and Insight North America 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. The failure of key vendors to adequately provide such services could materially affect our operating business and harm investors in our products.
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, Voya Investment Management Co., LLC and Insight North America 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. We also rely on third-party providers to license indexes to certain of our U.S. listed ETFs and European listed ETPs, perform index calculation services for our indexes and a third-party distributor for our products. The failure of any of these key vendors to provide us and our products with these services could lead to operational issues and result in financial loss to us and investors in our products.
We depend on HSBC and JP Morgan to provide us with critical physical custody services for precious metals that back our ETCs. The failure of HSBC and JP Morgan to adequately safeguard the physical assets could materially adversely affect our business and harm investors in our products.
We depend on HSBC and JP Morgan to provide us with critical physical custody services for precious metals that back our ETCs. Such products that are backed by physical metal are subject to risks associated with the custody of physical assets, including the risk that access to the metal held in the secure facilities managed by HSBC and JP Morgan could be restricted by a pandemic (such as the COVID-19 pandemic), natural events (such as an earthquake) or human actions (such as a terrorist attack). In addition, there is a risk that the physical metal could be lost, stolen, damaged or restricted. The failure of HSBC and JP Morgan to successfully provide us with these services could result in financial loss to us and investors in our products and our recovery of any losses from a custodian, sub-custodian or insurer may be inadequate.
We depend on Swissquote Bank Ltd , BitGo Trust Company, Inc. and Coinbase Custody Trust LLC to provide us with critical custody services for digital currencies that back WisdomTree digital assets. The failure of any of these custodians to adequately safeguard these digital assets could materially adversely affect our business and harm investors in this product.
Products that are backed by digital currencies are subject to the risks associated with the custody of digital assets, including the risk that the digital currencies or the blockchain infrastructure could be impacted by hacks or other malicious actions. WisdomTree Issuer X Limited, the issuer of WisdomTree Europe’s crypto ETPs, is reliant on the security procedures and infrastructure of its custodians to safeguard the underlying digital currency cryptographic keys. There is no guarantee that the arrangements of the custodian will fully protect from loss of assets. Damage to the infrastructure or loss of these assets may render the digital currency inaccessible and adversely impact the value of an investment in digital assets. The digital currencies may also be exposed to the internet briefly before reaching the secure accounts of the custodian. There are additional risks involved with an investment backed by digital currencies such as changes to the protocol (such as forks) which could damage the reputation of digital assets or result in losses for investors. The risks associated with digital currencies and the failure of the custodian to safeguard the underlying assets could result in financial loss to us and investors in our products and our recovery of any losses from a custodian may be inadequate. The custodians perform additional services to crypto ETPs that may derive additional revenue by delegating a part of our assets to validate transactions on the relevant blockchain (“staking”). There are certain operational and technological risks associated with staking such as penalties due to bad validator behavior. Operational and technical errors in the context of staking could damage the reputation of digital assets or result in losses for investors.
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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 BNY Mellon Fund Services (Ireland) Designated Activity Company in respect of the WisdomTree UCITS ETFs to provide us with critical administrative services to those products. The failure of any of those providers to adequately provide such services could materially affect our operating business and harm investors in those products.
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 BNY Mellon Fund Services (Ireland) Designated Activity Company 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. The failure of any service provider to successfully provide these services could result in financial loss to the products, us and investors in those products. In addition, because each of the service providers provides a multitude of important services, changing these vendor relationships would be challenging. 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 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. The failure of key vendors to adequately provide such services could materially affect our operating business and harm investors in the WisdomTree UCITS ETFs.
The WisdomTree UCITS ETFs depend on third-party vendors to provide many services that are critical to operating our business, including Assenagon Asset Management S.A. and Irish Life Investment Managers Limited as investment managers that provide us with portfolio management services and third-party providers of index calculation services. The failure of any of these key vendors to provide the WisdomTree UCITS ETFs with these services could lead to operational issues and result in financial loss to us and investors in the WisdomTree UCITS ETFs.
Failure of third-party vendors to maintain sufficient internal controls could adversely affect us.
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. 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.
The products issued by our European business depend on the services of counterparties, custodians and other agents and are therefore subject to a variety of counterparty risks, which are detailed above. Products issued by WMAI, certain WisdomTree UCITS ETFs and certain products issued by the ManJer Issuers are backed by swap, derivative or similar arrangements, which are subject to risks associated with the creditworthiness of their counterparties, including the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the relevant arrangement (whether or not bona fide) or because of a credit, liquidity, regulatory, tax or operational problem. Any deterioration of the credit or downgrade in the credit rating of a counterparty, or the custodian holding the collateral, could cause the associated products to trade at a discount to the value of the underlying assets.
The terms of contracts with counterparties are generally complex, often customized and often not subject to regulatory oversight. A voluntary or involuntarydefault by a counterparty may occur at any time without notice. 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.
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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. Any losses due to a counterparty’s failure to perform its contractual obligations will be borne by the relevant product issuer and there could be a substantial delay in recovering assets due from counterparties or it may not be possible to do so at all. Defaults by, or even rumors or questions about, the solvency of counterparties may increase operational risks or transaction costs, which may negatively affect the investment performance of the relevant products and have a material adverse effect on our business and operations.
Our risk management policies and procedures, and those of our third-party vendors upon which we rely, may not be fully effective in identifying or mitigating risk exposure, including employee misconduct. If our policies and procedures do not adequately protect us from exposure to these risks, we may incur losses that would adversely affect our financial condition, reputation and market share.
We have developed risk management policies and procedures and we continue to refine them as we conduct our business. Many of our procedures involve oversight of third-party vendors that provide us with critical services such as portfolio management, custody, fund accounting and administration, and index calculation as further described in “Third-Party Provider Risks” above. However, our policies and procedures to identify, monitor and manage risks may not be fully effective in mitigating our risk exposure. Deficiencies in the risk management policies and procedures, internal systems and controls of our third-party vendors may adversely affect our systems and controls. Moreover, we are subject to the risks of errors and misconduct by our employees, including fraud and non-compliance with policies. These risks are difficult to detect in advance and deter, and could harm our business, results of operations or financial condition. Although we maintain insurance and use other traditional risk-shifting tools, such as third-party indemnification, to manage certain exposures, they are subject to terms such as deductibles, coinsurance, limits and policy exclusions, as well as risk of counterparty denial of coverage, default or insolvency. 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.
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.
The asset management industry is intensely competitive, with significant challenges across product offerings, fees, brand recognition and service quality. We face direct competition from other ETP sponsors and mutual fund companies, as well as indirect competition from larger financial institutions, including banks, insurance companies and diversified investment firms with broader distribution channels, greater resources and multiple revenue streams. Many of these larger competitors operate extensive sales networks and attract clients through retail bank and broker-dealer channels, which may not be as accessible to us.
The adoption of Rule 6c-11, known as the ETF Rule, has further intensified competition by removing the need for exemptive relief filings to issue ETFs, reducing barriers to entry in the ETP space. We anticipate that more firms, including both new entrants and established asset managers, will continue to enter and expand within the ETP market. Additionally, the introduction of non-transparent active ETFs—which are not required to disclose holdings daily—may allow traditional mutual fund sponsors to compete more effectively against ETFs by preserving their proprietary strategies.
Price competition spans both commoditized offerings, such as traditional, market cap-weighted index products, and more specialized categories, like factor-based or thematic ETPs. In recent years, larger firms have trended toward fee reductions, offering some products at lower prices or as loss leaders, supported by alternative revenue sources. New entrants often seek to differentiate themselves by offering low-fee ETPs; as a result, funds priced at 20 basis points or less have captured approximately 70% of global net flows over the past three years. This fee compression trend continues, with many of our competitors well-positioned to benefit.
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.
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.
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. 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.
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Performance and Investment Risks
Many of our ETPs have a limited track record and poor investment performance could cause our revenues to decline.
Many of our ETPs have a limited track record upon which an evaluation of their investment performance can be made. Certain investors limit their investments to ETPs with track records of ten years or more. Furthermore, as part of our strategy, we continuously evaluate our product offerings to ensure that all our funds are useful, compelling and differentiated investment offerings, to align our overall product line more competitively in the current ETP landscape and to reallocate our resources to areas of greater client interest. 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. 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. 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.
Operational Risks
Our European business subjects us to increased operational, regulatory, financial and other risks.
We face increased operational, regulatory, financial, compliance, reputational and foreign exchange rate risks as a result of conducting our business internationally. The failure of our compliance and internal control systems to properly mitigate such additional risks, or of our infrastructure to support our European business, could result in operational failures and regulatory fines or sanctions. 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.
Operational risks related to the post-acquisition integration of Ceres could adversely affect our business, results of operations and financial condition.
Following the Ceres Acquisition, we face operational risks associated with integrating, where appropriate, its business, personnel, systems, processes and control environment into our existing operations. The integration process may be more complex, time-consuming or costly than anticipated and may require significant management attention, which could divert resources from our other businesses. In addition, Ceres operates in asset classes and strategies that differ from our traditional ETP business and may require enhancements to our operational infrastructure, risk management practices, valuation processes, compliance framework and internal controls. Any failure to effectively integrate operations, retain key personnel, harmonize systems and controls, or appropriately manage new and evolving operational requirements could result in operational inefficiencies, control deficiencies, increased costs, regulatory scrutiny, reputational harm or an inability to achieve the anticipated benefits of the acquisition, any of which could materially adversely affect our business and financial results.
We have pursued, and may continue to pursue, acquisitions and other strategic transactions. Any strategic transactions that we are a party to will result in increased demands on our management and other resources, may be significant in size relative to our assets and operations, result in significant changes in our business and materially and adversely affect our stock price. 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. We may not be able to manage our operations effectively or achieve our desired objectives on a timely or profitable basis. 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.
If we are unable to manage these initiatives effectively, there could be a material adverse effect on our ability to maintain or increase revenues and profitability.
Managing strategic initiatives may require continued investment in personnel, information technology infrastructure and marketing activities, as well as further development and implementation of financial, operational and compliance systems and controls. We may not be successful in implementing all of the processes that are necessary. Unless such initiatives result in an increase in our revenues that is at least proportionate to the increase in the costs associated with implementing them, our future profitability will be adversely affected.
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In addition, future strategic transactions could involve issuing significant equity or debt, which may dilute stockholders or require substantial borrowings. 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.
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. Our failure to successfully execute or integrate these transactions could materially and adversely affect our business, results of operations and financial condition.
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.
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. While we typically outsource portfolio management services to third-party sub-advisers for our products, in this case, we instead act as determination agent and facilitate buy and sell orders via the custodian who deals directly with a broker to rebalance these crypto basket ETPs in line with the indices. These rebalances typically occur quarterly. Expanding trading volumes may increase the risk of trading errors. The failure of any of our vendors to provide us and our products with the outsourced services and our failure to correctly place trade orders could lead to operational issues and result in financial loss to us and/or investors in our products. For products through which we derive additional revenue by staking, we operationally delegate the relevant assets to validators in our role as determination agent. Operational errors in the process could materially affect our business and harm investors in these products. In addition, staking features, such as lock-up periods, staking reward payout periods and reward amounts, are not necessarily fixed over time and can cause liquidity risk or delay the standard settlement period. This may cause redemptions to be delayed and may result in a financial loss to investors.
Catastrophic and unpredictable events could have a material adverse effect on our business.
A terrorist attack, war, power failure, cyber-attack, natural disaster, pandemic event or other catastrophic or unpredictable event could adversely affect our revenues, expenses and operating results by: interrupting our normal business operations; inflicting employee casualties, including loss of our key employees; requiring substantial expenditures and expenses to repair, replace and restore normal business operations; and reducing investor confidence. We have a disaster recovery plan to address certain contingencies, but this plan may not be sufficient in responding or ameliorating the effects of all disaster scenarios. Similarly, these types of events could also affect the ability of the third-party vendors that we rely upon to conduct our business, including parties that provide us with sub-advisory portfolio management services, custodial, fund accounting and administration services or index calculation services, to continue to provide these necessary services to us, even though they may also have disaster recovery plans to address these contingencies. In addition, a failure of the stock exchanges on which our products trade to function properly could cause a material disruption to our business. If we or our third-party vendors are unable to respond adequately or in a timely manner, these failures may result in a loss of revenues and/or increased expenses, either of which would have a material adverse effect on our operating results.
Technology Risks
Any significant limitation or failure of our technology systems, or of our third-party vendors’ technology systems, or any security breach of our information and cyber security infrastructure, software applications, technology or other systems that are critical to our operations could interrupt or damage our operations and result in material financial loss, regulatory violations, reputational harm or legal liability.
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. Information security risks for us and our third-party vendors have increased significantly in recent years, in part because of the proliferation of new technologies, including AI, the ubiquity of internet connections, and the increased sophistication and activities of threat actors. Although we and our third-party vendors take protective measures to secure information, our and our vendors’ technology systems have experienced cybersecurity threats and may still be vulnerable to unauthorized access, computer viruses or other events that could result in inaccuracies in our information or system disruptions or failures, which could materially interrupt or damage our operations. In addition, our vendors may incorporate AI tools into their offerings or operations, and such AI tools may not meet existing or rapidly evolving regulatory, cybersecurity, privacy or industry standards, which could expose us to operational, compliance or reputational risks. These risks have increased with the launch of the WisdomTree Prime mobile application and may continue to increase in the future as the mobile application’s availability expands. In addition, technology is subject to rapid change and we cannot guarantee that our competitors may not implement more advanced technology platforms for their products, which could affect our business. Any inaccuracies, delays, system failures or breaches, or advancements in technology, and the cost necessary to address them, could subject us to client dissatisfaction and losses or result in material financial loss, regulatory violations, reputational harm or legal liability, which, in turn, could cause a decline in our earnings or stock price.
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A failure to effectively manage the development and use of AI, combined with an evolving regulatory environment, could have an adverse effect on our growth, reputation or business.
We use AI, including machine learning, in our business and expect to continue to expand our AI capabilities, including through generative AI. AI methods are complex and rapidly evolving, and their introduction into new or existing processes may result in new or enhanced governmental or regulatory scrutiny, intellectual property or other litigation, data protection and confidentiality concerns, information security risks, social or ethical challenges, competitive harm or other complications. For example, datasets used to develop and test AI models, the content generated by AI systems, or AI-driven decision-making processes may be found to be insufficient, biased or harmful, or lead to adverse business decisions or operating errors. AI technologies, including generative AI, may also produce content that appears credible but is factually inaccurate or flawed or legally problematic, increasing regulatory, reputational and legal risks. The use of AI technologies may also increase the risk of inadvertent disclosure or misuse of our proprietary or confidential information. In addition, intellectual property ownership and licensing rights, including copyright, surrounding AI technologies remain uncertain, as U.S. courts and regulatory bodies have yet to address key issues. Furthermore, AI-related regulations are evolving globally, with emerging frameworks such as the EU AI Act and increasing scrutiny from U.S. federal and state regulators, including the Federal Trade Commission and SEC. Efforts to incorporate AI technologies responsibly require continued investment in operational controls and procedures, development and implementation of appropriate protections and safeguards for data use, including with respect to data leakage, and compliance with evolving regulatory requirements. Our competitors may adopt or deploy AI technologies more effectively or more rapidly than we do, which could place us at a competitive disadvantage with respect to operational efficiency, cost management or market participation. Any failure to successfully integrate AI technologies, respond to client or market demands or effectively manage AI-related risks could harm our growth and reputation, adversely impact product offerings, client interactions or business initiatives, and expose us to legal and regulatory liabilities and additional costs, including regulatory fines or sanctions, which may cause our AUM, revenues and earnings to decline.
Human Capital Risks
Our ability to operate effectively could be impaired if we fail to retain or recruit key personnel.
The success of our business is highly dependent on our ability to attract, retain and motivate skilled employees across operations, product development, research, technology, sales and marketing. 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 ETP industry and as the digital assets market continues to develop. Our compensation methods may not enable us to recruit and retain required personnel. For example, price volatility in our common stock may impact our ability to effectively use equity grants as an employee compensation incentive. Also, we may need to increase compensation levels, which would decrease our net income or increase our losses. 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.
Our ability to successfully operate and grow the acquired Ceres business depends on the retention of key personnel, and the loss of such individuals could adversely affect our business.
The success of the acquired Ceres business is highly dependent on the continued service of certain key investment, operational and management personnel with specialized expertise, client relationships and knowledge of the acquired strategies. The integration of Ceres into our organization may create uncertainty among employees and could result in increased attrition, particularly if compensation structures, incentive arrangements, roles or cultural dynamics change or if market conditions adversely affect compensation outcomes. If we are unable to retain key personnel or effectively recruit and integrate additional talent necessary to support and grow the acquired business, our ability to execute our strategy, maintain investment performance and realize the anticipated benefits of the acquisition could be materially adversely affected.
Expense and Cash Management Risks
Our expenses are subject to fluctuations that could materially affect our operating results.
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. 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.
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Legal and Regulatory Risks
Compliance with extensive, complex and changing regulation imposes significant financial and strategic costs on our business, and non-compliance could result in fines and penalties.
We are subject to extensive regulation of our business and operations. Two of our U.S. subsidiaries, WTAM and WT Digital Management, are registered investment advisers and are 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 our 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. 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. In addition, the content and use of our marketing and sales materials and the conduct of our sales force in the U.S. regarding our U.S. listed ETFs and Digital Funds are 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, could impact our marketing materials. We are also subject to foreign laws and regulatory authorities with respect to operational aspects of our products that invest in securities of issuers in foreign countries, in the marketing, offer and/or sales of our products in foreign jurisdictions and in our offering of investment products domiciled outside of the U.S., such as our ETPs issued by the ManJer Issuers, UCITS ETFs and ETPs issued by WMAI.
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. 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.
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.
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. 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.
The regulatory environment in which we operate also is subject to modifications and further regulation. Concerns have been raised at various times about ETFs’ possible contribution to market volatility as well as the disclosure requirements applicable to certain types of more complex ETFs. In addition, the SEC approved a broad set of rules regarding data reporting and fund liquidity, fund valuation, funds’ use of derivatives and funds’ names, which impose additional expense and require additional administrative services and requirements, among other matters, to comply with these rules. New laws or regulations, or changes in the enforcement of existing laws or regulations, applicable to us or investors in our products also may adversely affect our business, and our ability to function in this environment will depend on our ability to constantly monitor and react to these changes. Compliance with new laws and regulations may result in increased compliance costs and expenses.
Specific regulatory changes also may have a direct impact on our revenues. In addition to regulatory scrutiny and potential fines and sanctions, regulators continue to examine different aspects of the asset management industry. 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.
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. 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.
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Our acquisition of Ceres may subject us to expanded and evolving regulatory requirements and increased supervisory oversight, which could adversely affect our business.
As a result of the Ceres Acquisition, we have expanded into investment strategies, products and markets that are subject to regulatory regimes and supervisory expectations that differ from, and in certain respects are more complex than, those applicable to our traditional ETP business. These expanded activities may subject us to additional oversight by the SEC and other regulatory authorities, including with respect to certain private fund adviser requirements, disclosure obligations, valuation practices, conflicts of interest, liquidity management and investor protection. Regulatory requirements applicable to private and alternative investment strategies continue to evolve, and changes in laws, rules, interpretations or enforcement priorities could increase compliance costs, restrict our activities or require modifications to our business practices or organizational structure. In addition, we may be subject to more frequent or more detailed regulatory examinations, inquiries or information requests, and any failure to comply with applicable regulatory requirements could result in fines, sanctions, remediation obligations, reputational harm or limitations on our ability to operate or grow these businesses, any of which could materially adversely affect our business, results of operations and financial condition.
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. 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 defendinglitigation may be significant. The amount of time to resolve lawsuits is unpredictable and defending ourselves may divert management’s attention from the day-to-day operations of our business, which could adversely affect our business, results of operations, financial condition and cash flows. 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 ($27.8 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.
We may from time to time be subject to claims of infringement of third-party intellectual property rights, which could harm our business.
Third parties may assert against us alleged patent, copyright, trademark or other intellectual property rights to intellectual property that is important to our business. Any claims that our products or processes infringe the intellectual property rights of others, regardless of the merit or resolution of such claims, could cause us to incur significant costs in responding to, defending and resolving such claims, and may divert the efforts and attention of our management from our business. As a result of such intellectual property infringementclaims, we could be required or otherwise decide that it is appropriate to:
pay third-party infringementclaims;
discontinue selling the particular funds subject to infringementclaims;
discontinue using the processes subject to infringementclaims;
develop other intellectual property or products not subject to infringementclaims, which could be time-consuming and costly or may not be possible; or
license the intellectual property from the third party claiminginfringement, which license may not be available on commercially reasonable terms.
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.
Although we have trademarks, including the marks WisdomTree ® , WisdomTree Prime ® and Modern Alpha ® , and other intellectual property rights that are registered in the U.S. and certain other countries, including a patent relating to our index methodology and the operation of our ETFs, our ability to enforce such intellectual property rights is subject to general litigation risks. If we cannot successfully enforce our intellectual property rights, we may lose the value of our brand and business reputation. 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. Furthermore, our assertion of intellectual property rights could result in the other party seeking to assert alleged intellectual property rights of its own or assert other claimsagainst us, which could harm our business. 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.” Additionally, unauthorized third parties may attempt to misuse our trademarks or brand identity, including through impersonation schemes or fraudulent activities in certain jurisdictions. While we take steps to address such misuse, our ability to prevent or mitigate these activities may be limited, and such fraudulent actions could harm our business, reputation, or customer relationships.
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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. 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. Our ability to successfully compete will depend largely on offering innovative products through digital asset exposures (and more broadly in blockchain-enabled financial services, including savings and payments), having strong internal controls and risk management infrastructure to enable customer trust, embracing regulation, developing strategic partnerships with participants in the digital assets ecosystem and broader financial services ecosystem, promoting thought leadership and consumer education or awareness, building upon our brand and attracting and retaining talented employees. Failure to do so could negatively impact the success of our digital assets business.
New product risks
We have and may continue to spend substantial time and resources developing our digital assets product offerings and services. 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.
Our digital assets business subjects us to risks similar to those associated with any new product offerings, including, but not limited to, our ability to accurately anticipate market demand and adoption, technical issues with the operation of the products, and legal and regulatory risks as discussed herein. Substantial risks and uncertainties are associated with the introduction of new products and services, including rapid technological change in the industry, significant and ongoing investments required to bring new products and services to market in a timely manner at competitive prices, protection of intellectual property and other confidential information, the competition for employees with the necessary expertise and experience, and producing sales and other materials that fully and accurately describe the product or service and its underlying risks and that are compliant with applicable regulations. New products or services may fail to operate or perform as expected and may not produce anticipated efficiencies, savings or benefits. Our failure to manage these risks and uncertainties also exposes us to enhanced risk of operational lapses and third-party claims, which may result in the recognition of financial statement liabilities.
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.
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. The loss of, or interruption of service from, a critical third-party service provider could adversely impact our digital assets business, operating results and financial condition. We may incur significant costs to resolve any such disruptions in service. In addition, such third-party service providers may be subject to financial, legal, regulatory and labor issues, data security and cybersecurity incidents, denial-of-service attacks, sabotage, privacy breaches or violations, fraud and other misconduct, which could directly or indirectly have an impact on our digital assets products and services. If any third-party service provider fails to adequately or appropriately render services or fails to meet its contractual requirements, including compliance with applicable laws and regulations, we could be subject to regulatory enforcement actions and claims from third parties, including our customers, and suffer economic and reputational harm that could have an adverse effect on our digital assets business, operating results and financial condition.
Cybersecurity risks
The use of various technologies is vital to our digital assets business and will become more prevalent, which will make us more susceptible to operational and data security risks resulting from a breach in cybersecurity, including cyberattacks. A breach in cybersecurity, intentional or unintentional, may have an adverse impact on our digital assets business in many ways, including but not limited to, the loss or destruction of proprietary information, theft or corruption of data, denial-of-service attacks on websites or network resources, and the unauthorized release or misuse of confidential information.
Regulatory risks
The digital assets industry is rapidly evolving at an unprecedented rate. There is a high degree of regulatory uncertainty associated with the digital assets industry, which means that the products and services our digital assets business provides or may provide in the future could subject us to enhanced regulatory scrutiny or otherwise materially impact the quality or nature of such products or services. Recent changes in the U.S. administration, Congress and U.S. federal agencies may result in significant regulatory and policy developments relating to digital assets, including those that may affect our operating environment in substantial and unpredictable ways by changing the costs of doing business, the scope of permissible activities and competitive factors in the digital assets industry. 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.
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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. As we seek to expand globally, similar approvals and/or reliance on exemptions will be required in applicable foreign markets, which also may involve approvals specific to a digital assets or related business. As we secure the appropriate regulatory, registration and/or licensing approvals, or otherwise rely on, seek or confirm exemptions therefrom, in connection with our digital assets business, we are and will be subject to a myriad of complex and evolving global policy frameworks and associated regulatory requirements that we need to comply with, or otherwise be exempt from, to ensure our digital assets products and services are successfully brought to different markets in a compliant manner. Failure to secure and/or comply with any such approvals and exemptions could result in, among other things, revocation of required licenses or registrations, loss of approved status, private litigation, administrative enforcement actions, sanctions, civil and criminal liability, and constraints on our ability to continue to operate our digital assets business, and have an adverse effect on our digital assets business.
Blockchain infrastructure risks
The consensus or governance mechanisms of blockchain networks are subject to change and malfunctions and may not receive adequate adoption from users and miners, which could negatively impact the blockchain network’s ability to scale and improve programmability, transparency, auditability and security. In addition, blockchain networks face significant challenges in connection with the volume, speed, security and cost of transactions, and their efforts to increase or enhance such characteristics of the blockchain network may not be successful or adversely affect other characteristics of the blockchain network. 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.
Blockchain technology risks
Blockchain technology is a relatively new, untested technology and rapidly evolving field that 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. 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. 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 and the implementation of EIP-4844 in March 2024, which enhances data availability and reduces costs for rollups. 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. Further, certain miners and other users resisted adoption of the new Ethereum blockchain and it is possible that the two Ethereum blockchains (among potentially others) will endure and compete going forward, which may also slow or impede transactions. 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. When a modification is introduced and a substantial majority of users consent to the modification, the change is implemented and the blockchain network remains uninterrupted. However, if less than a substantial majority of users consent to the proposed modification, and the blockchain consensus mechanism, such as that used by Ethereum, allows for the modification to nonetheless be implemented by some users and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “fork” (i.e., “split”) of the blockchain network (and the blockchain), with one version running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two (or more) versions of the blockchain network running in parallel, but with each version’s native asset lacking interchangeability. Additionally, a fork could be introduced by an unintentional, unanticipated software flaw in the multiple versions of otherwise compatible software users run. 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.
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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. In addition, certain aspects of our digital assets business will have significantly greater anti-money laundering risk, including risk of fines or sanctions, than our historical ETP business due to the greater number of potential customers, which may also include customers considered to be higher risk and/or customer types considered to be higher risk, for which anti-money laundering and related obligations will apply.
Data privacy risks
In connection with the products or services offered by our digital assets business, we may collect, store, process, or transmit nonpublic information (including personally identifiable information and sensitive personally identifiable information) of a customer or consumer to a significantly greater extent than in our historical ETP business. Any change or failure to comply with data privacy laws or regulations related to the collection, processing, use and storage of such nonpublic information could materially affect our digital assets business and overall financial health.
Other risks
The risk of loss in purchasing, selling, trading, using or holding digital assets can be substantial. The price and liquidity of digital assets may be subject to high degrees of volatility resulting in large deviations or fluctuations from normalized levels. There is also heightened custodial risk due to the unique safekeeping attributes associated with public and private keys of digital assets.
Ceres Risks
Through our acquisition of Ceres, we entered the private asset markets and may not be successful.
Acquiring Ceres marked our entry into the private asset markets, specifically farmland. There is significant competition in the private asset markets and real estate industry. There can be no assurance that we will be successful in the private assets market, that Ceres will be able to raise additional capital for Ceres’ funds, that Ceres will achieve its objectives and operate successfully, that we will have a suitable return on our investment in Ceres or that we will be able to recover the costs we have incurred in acquiring Ceres. Our management team currently has limited experience in private asset markets and no direct experience in farmland investments and is largely dependent on the experience and performance of key employees of Ceres. Although we have entered into employment agreements with certain key employees of Ceres, there can be no assurance that such employees will continue their employment with us. Loss of key employees of Ceres could have a material adverse effect on our ability to implement our business strategy and to achieve our objectives with respect to the Ceres Acquisition.
Ceres’ performance is subject to risks associated with investments in direct real estate-related assets.
Ceres provides investment advisory services to, and manages, private funds, and a separate pooled investment vehicle, Ceres Farms, that invests its assets in farmland real estate. Investments in direct real estate-related assets are subject to various risks, including without limitation: the cyclical nature of the real estate market and changes in national or local economic or market conditions; the financial condition of the buyers and sellers of properties; government regulation and increases in trade tariffs; changes in supply of, or demand for, properties in a geographic area; illiquidity of farmland investments; various forms of competition; fluctuations in lease rates; changes in interest rates and in the availability, cost and terms of financing; promulgation and enforcement of governmental regulations, including rules relating to zoning, land use and environmental protection; impact of third-party mineral rights ownership on properties; changes in real estate tax rates, energy prices and other operating expenses; changes in applicable laws and increased governmental regulation; and various uninsured or uninsurable risks and losses.
Ceres is subject to concentration risks arising from its concentration in real estate. Given the cyclical nature of the real estate market, changes in national or local economic or market conditions could have an adverse effect on Ceres. In addition, changes in the financial condition of tenants, buyers and sellers of property, competition, fluctuations in lease rates, the length of leases, and in the availability of financing will have a significant impact on Ceres’ performance. The geographic concentration of Ceres Farms’ properties in the U.S. Midwest makes its operations more vulnerable to local economic downturns and adverse farmland-specific risks, such as adverse weather events, changes in the local climate, access to water and plant disease exposure, than those of larger, more diversified companies.
Ceres Farms pays real estate taxes on its properties and such taxes may increase. Ceres Farms acquires real properties primarily by borrowing new funds secured by a mortgage on the purchased real estate, and incurring mortgage debt increases the risk of loss since defaults on indebtedness secured by a property may result in lenders initiating foreclosure.
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Ceres’ business is dependent in part upon the profitability of Ceres Farms’ tenants’ farming operations, and a sustained downturn in the profitability of their farming operations could have a material adverse effect on the amount of rent Ceres Farms can collect and, consequently, its cash flow and net profits, and Ceres’ results of operations.
Ceres Farms depends on its tenants to operate the farms it owns in a manner that generates revenues sufficient to allow them to meet their obligations to Ceres Farms, including their obligations to pay rent, maintain certain insurance coverage and maintain the properties generally. The ability of Ceres Farms’ tenants to fulfill their obligations under their leases depends, in part, upon the overall profitability of their farming operations, which could be adversely impacted by, among other things, adverse weather conditions, crop prices, crop disease, pests and unfavorable or uncertain political, economic, business, trade or regulatory conditions. Ceres is susceptible to any decline in the profitability of Ceres Farms’ tenants’ farming operations, to the extent that it would impact the tenants’ abilities to pay rents. In addition, many farms are dependent on a limited number of key individuals whose injury or death may affect the successful operation of the farm. We can provide no assurances that, if a tenant defaults on its obligations to Ceres Farms under a lease, Ceres Farms will be able to lease or re-lease that farm on economically favorable terms in a timely manner, or at all. In addition, Ceres Farms may experience delays in enforcing its rights as landlord and may incur substantial costs in protecting its investment. As a result, any downturn in the profitability of the farming operations of Ceres Farms’ tenants, or a downturn in the farming industry as a whole, could have a material adverse effect on Ceres’ business, results of operations and financial condition.
Ceres Farms’ revenues are subject to risks associated with growing crops and the performance of the agricultural industry.
Ceres Farms’ investment strategy is to acquire and manage farmland which may also include directly managing the operations of these farms. Ceres Farms’ properties grow corn, soybeans, wheat and other primary crops, and specialty crops including seed corn and vegetables. As these crops are commodities, they are subject to wide fluctuations in price. If the value of these crops declines, it could negatively impact the level of rent that Ceres Farms can charge to tenant farmers and cause Ceres Farms to operate at a loss. In circumstances where Ceres Farms’ revenue from a farm is based on a share of crop production, in addition to risks associated with commodity price fluctuations, adverse weather conditions such as flooding or drought, or pest or plant disease problems could damage or destroy the crops and may cause Ceres Farms to operate unprofitably. The value of and revenues from farmland in which Ceres Farms invests will be largely dependent on the performance of the agricultural industry, which is historically cyclical. Crop yields can be affected by numerous factors beyond the control of Ceres Farms, including reductions in the market prices for the farmers’ products, adverse weather and growing conditions, pest and disease problems, and new government regulations regarding farming and the marketing of agricultural products.
Adverse changes in government policies and regulations related to farming could affect the prices of crops and the profitability of farming operations, which could materially and adversely affect the value of Ceres Farms’ properties and its results of operations.
There are a number of government policies and programs that directly or indirectly affect the profitability of farm operators. These include marketing, export, renewable fuel and insurance policies and programs. Government policies and regulations affecting the agricultural industry, such as taxes, tariffs, duties, subsidies, incentives, and import and export restrictions on agricultural commodities and commodity products, can influence the planting of certain crops, the location and size of crop production, whether unprocessed or processed commodity products are traded, the volume and types of imports and exports, the availability and competitiveness of feedstocks as raw materials, and industry profitability. Government policies and regulations may adversely affect the supply of, demand for, and prices of agricultural products. In addition, international trade disputes can adversely affect agricultural commodity trade flows by limiting or disrupting trade between countries or regions. Significant changes to or the elimination of programs and policies could adversely affect crop prices and the profitability of farming operations, including farms owned by Ceres Farms, and adversely affect its business, results of operations and financial condition.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, enacting changes to U.S. agricultural policy, including updates to commodity support programs, crop insurance and trade promotion funding. The legislation poses risks to Ceres’ business. The OBBBA raises statutory reference prices for major commodities, including corn and soybeans, with further annual escalations beginning in 2031. These changes may incentivize increased domestic production, potentially leading to oversupply and downward pressure on market prices, particularly if global demand does not rise proportionately. The OBBBA allocates $2.2 billion toward agricultural trade promotion, which may be deemed a subsidy by international trading partners, potentially triggering retaliatory measures or disputes under World Trade Organization (WTO) rules and restricting market access for U.S. corn and soybean exports. Delays or inconsistencies by federal agencies in administering new reference prices, crop insurance enhancements, or trade programs could create uncertainty for the agricultural industry. In addition, certain tax provisions of the OBBBA may adversely impact Ceres Farms’ tenant farmers who own small farms.
Federal, state and county governments have implemented laws and regulations in connection with farming operations, including those relating to taxes, trade, environmental, labor, immigration and food safety, among others. For example, labor and immigration regulations seek to provide for minimum wages and minimum and maximum work hours, as well as to restrict the hiring of illegal immigrants. If one of Ceres Farms’ tenants is accused of violating, or found to have violated such regulations, it could have a material adverse effect on the tenant’s operating results, which could adversely affect its ability to make its rental payments to Ceres Farms. Increased enforcement of federal immigration policy could adversely affect the overall farming labor market, which could result in upward pressure on wages for farm labor and adversely affect Ceres Farms’ tenants’ profitability and ability to pay rent. In addition, certain states, including Iowa, Minnesota, Wisconsin, Missouri and Kansas, in which a substantial amount of primary crop farmland is located, have laws that prohibit or restrict to varying degrees the ownership of agricultural land by corporations or business entities similar to Ceres Farms. Additional states may, in the future, pass similar or more restrictive laws, and Ceres Farms may not be legally permitted, or it may become overly burdensome or expensive, to acquire farms in these states, which could impede the growth of Ceres Farm’s portfolio and its ability to diversify geographically in states that might otherwise offer compelling investment opportunities.
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Potential liability for environmental matters could materially and adversely affect Ceres’ business, results of operations and financial condition.
Ceres is subject to the risk of liabilities under federal, state and local environmental laws applicable to agricultural properties, including those related to wetlands, groundwater and water runoff. Some of these laws could subject Ceres to responsibility and liability for: the cost of removal or remediation of hazardous substances released on its properties, generally without regard to Ceres’ knowledge of or responsibility for the presence of the contaminants; the costs of investigation, removal or remediation of hazardous substances or chemical releases at disposal facilities for persons who arrange for the disposal or treatment of these substances; and claims by third parties for damages resulting from environmental contaminants. Ceres’ costs of investigation, remediation or removal of hazardous substances may be substantial. In addition, the presence of hazardous substances on one of Ceres Farms’ properties, or the failure to properly remediate a contaminated property, could adversely affect Ceres Farms’ ability to sell or lease the property or to borrow using the property as collateral. Ceres may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from a property. Additionally, Ceres could become subject to new, stricter environmental regulations, which could diminish the utility of Ceres Farms’ properties and have a material adverse impact on its business, results of operations and financial condition. The potential of finding endangered species on or near Ceres Farms’ properties could restrict certain activities on its properties under federal, state and local laws and regulations intended to protect threatened or endangered species.
The failure of Ceres Farmland, LLC to maintain qualification as a REIT for U.S. federal income tax purposes would subject it to U.S. federal income tax on taxable income at regular corporate rates, which could adversely impact its business, results of operations and financial condition.
Ceres Farmland, LLC, a subsidiary of Ceres Farmland Holdings, LP, has elected to be taxed as a REIT for U.S. federal income tax purposes. Ceres Farmland Holdings, LP is a feeder fund that invests its capital in the REIT, which then invests its capital exclusively in Ceres Farms. To maintain qualification as a REIT, Ceres Farmland, LLC must meet various requirements set forth in the Internal Revenue Code of 1986, as amended (the “Code”) concerning, among other things, the ownership of its outstanding interests, the nature of its assets, the sources of its income and the amount of its distributions. There can be no assurance that Ceres Farmland, LLC will remain qualified as a REIT. We believe that the current organization and method of operation will enable Ceres Farmland, LLC to continue to qualify as a REIT. However, at any time, new laws, interpretations or court decisions may change the U.S. federal tax laws relating to, or the U.S. federal income tax consequences of, qualification as a REIT. Ceres Farmland, LLC’s General Partner may at any time, in its sole discretion, determine that it is no longer in Ceres Farmland, LLC’s best interest to qualify as a REIT. Failure of Ceres Farmland, LLC in any taxable year to qualify as a REIT will, among other things, subject Ceres Farmland, LLC’s taxable income to tax at regular corporate rates and distributions to members of Ceres Farmland, LLC in any non-qualifying years will not be deductible by Ceres Farmland, LLC. If Ceres Farmland, LLC’s status as a REIT is terminated or revoked, it may not be eligible to elect REIT status again prior to the fifth taxable year following the year in which it fails to qualify under the Code as a REIT unless certain relief provisions apply. The requirements for qualification as a REIT are extremely complex, and Ceres Farmland, LLC’s compliance with such requirements may depend on factors that are outside of its control or upon the resolution of legal issues for which guidance is lacking. Losing its REIT status would reduce its net earnings available for investment or distribution because of the additional tax liability, which could substantially reduce its ability to pay performance fees to Ceres. Even if Ceres Farmland, LLC qualifies as a REIT, it may be subject to federal income tax in certain circumstances. In addition, any taxable REIT subsidiary of Ceres Farmland, LLC will be subject to federal, state and local income taxes at the applicable corporate rates. To remain qualified as a REIT and to avoid the payment of U.S. federal income and excise taxes, Ceres Farmland, LLC may be forced to borrow funds, use proceeds from the issuance of securities, pay taxable dividends of stock or debt securities or sell assets to make distributions, which may result in Ceres Farmland, LLC distributing amounts that may otherwise be used for operations.
Ceres may not be successful in pursuing new business opportunities, including in solar, AI data infrastructure and water rights, which could adversely affect its financial performance and strategic objectives.
Ceres continues to evaluate opportunities to grow its business, including through the acquisition and leasing of properties for solar energy generation and artificial intelligence (AI) data infrastructure, and the monetization of water rights. While Ceres Farms currently leases certain properties for solar energy use or development and may expand such arrangements, there can be no assurance that it will be able to identify, negotiate or execute additional opportunities on favorable terms or at all. Ceres’ efforts to pursue strategic adjacencies or enter new markets may be hindered by a variety of factors, including regulatory or permitting challenges, lack of demand, competition, technological or infrastructure constraints or insufficient capital investment. There can be no assurance that Ceres’ initiatives to explore new business opportunities, enter new markets or make investments or acquisitions will benefit our or its business operations, generate sufficient revenues to offset related costs, or produce the anticipated benefits of past or future investments.
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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.
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. However, 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;
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.
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. A change in control could occur if a third party were to acquire a controlling interest in our Company.
Under the Investment Company Act, an investment management agreement with a fund must provide for its automatic termination in the event of its assignment. The fund’s board must vote to continue such an agreement following any such assignment and the shareholders of the WisdomTree Trust and WisdomTree Digital Trust must approve the assignment. The cost of obtaining such shareholder approval can be significant and ordinarily would be borne by us. Similarly, under the Investment Advisers Act, a client’s investment management agreement may not be “assigned” by the investment adviser without the client’s consent.
An investment management agreement is considered under both acts to be assigned to another party when a controlling block of the adviser’s securities is transferred. Under both acts, there is a presumption that a stockholder beneficially owning 25% or more of an adviser’s voting stock controls the adviser and conversely a stockholder beneficially owning less than 25% is presumed not to control the adviser. In our case, an assignment of our investment management agreements may occur if a third party were to acquire a controlling interest in our Company. We cannot be certain that the Trustees of the WisdomTree Trust and WisdomTree Digital Trust would consent to assignments of our investment management agreements or approve new agreements with us if a change of control occurs. And even if such approval were obtained, approval from the shareholders of the WisdomTree Trust and WisdomTree Digital Trust would be required to be obtained; such approval could not be guaranteed and even if obtained, likely would result in significant expense. This restriction may discourage potential purchasers from acquiring a controlling interest in our Company.
Our revenues could be adversely affected if the Independent Trustees of the WisdomTree Trust or WisdomTree Digital Trust, as applicable, do not approve the continuation of our advisory agreements or determine that the advisory fees we receive from the WisdomTree U.S. listed ETFs or Digital Funds should be reduced.
Our revenues are derived primarily from investment advisory agreements with related parties. Our advisory agreements with the WisdomTree Trust and WisdomTree Digital Trust, and the fees we collect from the WisdomTree U.S. listed ETFs and Digital Funds are subject to review and approval by the Independent Trustees of the WisdomTree Trust and WisdomTree Digital Trust, as applicable. The advisory agreements are subject to initial review and approval. After the initial two-year term of the agreement for each ETF or Digital Fund, the continuation of such agreement must be reviewed and approved at least annually by a majority of the Independent Trustees. 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 revenues would be adversely affected if the Independent Trustees do not approve the continuation of our advisory agreements or determines that the advisory fees we charge to any particular fund are too high, resulting in a reduction of our fees.
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Damage to our reputation could adversely affect our business.
We believe we have developed a strong brand and a reputation for innovative, thoughtful products, favorable long-term investment performance and excellent client services. 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 unsubstantiatedaccusations. Managing such matters may be expensive, time-consuming and difficult.
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.
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:
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.
In addition, stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock. Furthermore, in the past, market fluctuations and price declines in a company’s stock have led to securities class action litigations or other derivative stockholder lawsuits. If such a suit were to arise, it could cause substantial costs to us and divert our resources regardless of the outcome.
If equity research analysts issue unfavorable commentary or downgrade our common stock, the price of our common stock could decline.
The trading market for our common stock relies in part on the research and reports that equity research analysts publish about us and our business. We do not control the opinions of these analysts. The price and trading volume of our common stock could decline if one or more equity analysts issue unfavorable commentary or downgrade our common stock or cease publishing reports about us or our business.
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.
We currently have outstanding $150.0 million in aggregate principal amount of 3.25% Convertible Senior Notes due 2026, $345.0 million in aggregate principal amount of 3.25% Convertible Senior Notes due 2029 and $475.0 million in aggregate principal amount of 4.625% Convertible Senior Notes due 2030, which we collectively refer to as the Convertible Notes. Holders of the Convertible Notes have the right to require us to repurchase their notes upon the occurrence of certain change of control transactions or liquidation, dissolution or common stock delisting events (each, a “fundamental change”), at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, as described in the respective indentures between us and the trustee. In addition, upon conversion of the Convertible Notes, we will be required to make cash payments in respect of the notes being converted as described in the indentures. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of notes surrendered therefor or notes being converted. In addition, our ability to repurchase the notes or to pay cash upon conversions of the notes may be limited by law, regulatory authority or agreements governing our future indebtedness. 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.
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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. If one or more holders elect to convert their notes, we would be required to settle any converted principal through the payment of cash, which could adversely affect our liquidity.
Future issuances of our common stock or equity-linked securities could lower our stock price and dilute the interests of existing stockholders.
We may issue additional shares of our common stock or equity-linked securities in the future, either in connection with an acquisition or for other business reasons. The issuance of a substantial amount of common stock or equity-linked securities could have the effect of substantially diluting the interests of our current stockholders. In addition, the sale of a substantial amount of common stock or equity-linked securities in the public market, either in the initial issuance or in a subsequent resale by the target company in an acquisition which received such common stock as consideration or by investors who acquired such common stock in a private placement, could have a material adverse effect on the market price of our common stock.
Provisions in our certificate of incorporation and by-laws may prevent or delay an acquisition of our Company, which could decrease the market value of our common stock.
Provisions of Delaware law, our certificate of incorporation and our by-laws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable. These provisions may also prevent or delay attempts by stockholders to replace or remove our current management or members of our Board of Directors. These provisions include:
limitations on the removal of directors;
advance notice requirements for stockholder proposals and nominations;
the inability of stockholders to act by written consent or to call special meetings;
the ability of our Board of Directors to make, alter or repeal our by-laws; and
the authority of our Board of Directors to issue preferred stock with such terms as our Board of Directors may determine.
In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which limits business combination transactions with stockholders of 15% or more of our outstanding voting stock that our Board of Directors has not approved. These provisions and other similar provisions make it more difficult for stockholders or potential acquirers to acquire us without negotiation. These provisions may apply even if some stockholders may consider the transaction beneficial to them.
As a result, these provisions could limit the price that investors are willing to pay in the future for shares of our common stock. These provisions might also discourage a potential acquisition proposal or tender offer, even if the acquisition proposal or tender offer is at a premium over the then current market price for our common stock.
The payment of dividends to our stockholders and our ability to repurchase our common stock is subject to the discretion of our Board of Directors and may be limited by our financial condition and any applicable laws.
Any determination as to the payment of dividends or stock repurchases, as well as the level of such dividends or repurchases, will depend on, among other things, general economic and business conditions, our level of AUM, our strategic plans, our financial results and condition, limitations associated with new credit facilities or other agreements that could limit the amount of dividends we are permitted to pay or the stock we may repurchase, and any applicable laws, including the Inflation Reduction Act, which includes an excise tax that would impose a 1% surcharge on stock repurchases. If, as a consequence of these various limitations and restrictions, we are unable to generate sufficient income from our business, we may need to reduce or eliminate the payment of dividends on our common stock or cease repurchasing our common stock. Any change in our stock repurchases or the level of our dividends or the suspension of the payment thereof could adversely affect our stock price.
In addition, our Board of Directors is authorized, without stockholder approval, to issue preferred stock with such terms as our Board of Directors may, in its discretion, determine. 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.
transparency
enhanced
Building on our heritage of innovation, we continue to broaden our capabilities beyond our core ETP business. We offer next-generation digital products and services related to tokenized real world assets and stablecoins, including Digital Funds, as well as our institutional platform, WisdomTree Connect, and blockchain-native digital wallet, WisdomTree Prime. We also have expanded into private assets through our acquisition of Ceres, a leading U.S.-based alternative asset manager specializing in farmland investments.
As of December 31, 2025, we managed approximately $144.5 billion in AUM. Our products span a broad range of strategies including equities, fixed income, commodities, leveraged-and-inverse, currency, alternatives and cryptocurrency exposures. 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.
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. These include portfolio construction, asset allocation, practice management services and digital tools to help advisors address technology challenges and scale their businesses.
As pioneers in tokenization and blockchain technology, we view this as the next phase in the evolution in financial services. Through our digital assets strategy, we are committed to “responsible DeFi,” aligning with regulatory standards to foster growth in this rapidly evolving space. We believe that expanding into digital assets and blockchain-enabled financial services not only complements our core competencies, but will diversify our revenue streams and further contribute to our growth.
Executive Summary
Our business delivered strongprogress in 2025 as we advanced our long-term strategic initiatives and further strengthened the foundation for durable growth. We ended the year with AUM of $144.5 billion at December 31, 2025, up 31.6% as compared to the prior year, driven by favorable market conditions and net inflows of $8.5 billion, representing annualized organic growth of approximately 8%. Revenues and operating income increased 15.4% and 26.9%, respectively, year over year, driving approximately 300 basis points of operating margin expansion, supported by higher average AUM, improved revenue capture and continued operating discipline. These results underscore the resilience of our business model and the benefits of our strategy to diversify revenue streams and enhance earnings quality.
A significant strategic milestone in 2025 was the Ceres Acquisition, which marked our entry into private assets and added exposure to U.S. farmland, which we believe to be one of the largest and most underpenetrated real asset classes. At December 31, 2025, we managed $1.9 billion in farmland-based strategies, an asset class with low correlation to traditional financial markets that enhances the diversification of our overall platform. This acquisition also increased our revenue capture and resulted in operating margin expansion of more than 200 basis points.
Our Portfolio Solutions business continued to gain traction. Assets under advisement in our models offering reached $6.1 billion, an increase of approximately 60% from the prior year, supported by deeper engagement across major wealth platforms and registered investment advisers. The program provides advisors with customized evaluations, a suite of model portfolios and Shared CIO services designed to support scalable, repeatable investment processes. In addition, our strategic minority investment in, and multi-year collaboration with, Quorus enables certain of our investment strategies to be implemented in SMAs via the Quorus platform, and our model portfolios to be made available there, with integrated trading and rebalancing, providing advisors with additional customization options and implementation flexibility, and expanding our reach within the wealth management ecosystem. Together, these initiatives contribute to more consistent and higher-quality revenue streams.
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We also achieved notable growth in digital assets. Digital assets AUM increased to $0.8 billion as of December 31, 2025, driven primarily by the expansion of our tokenized money market offering, the WisdomTree Treasury Money Market Digital Fund. Early adoption of this product highlights the broader potential for tokenization across real world assets, including future applications in fixed income and equities. Institutional clients access our Digital Funds through WisdomTree Connect, while WisdomTree Prime provides direct-to-consumer access to digital assets, such as bitcoin, ether, tokenized gold, U.S. dollar tokens and 15 Digital Funds. Our continued focus on “responsible DeFi” ensures these offerings remain aligned with regulatory standards while positioning us at the forefront of blockchain-enabled financial innovation.
Our initiatives across ETPs, private assets, digital assets, models and SMAs are integral to our long-term growth strategy and are intended to drive sustained AUM growth, revenue diversification, improved revenue capture and stronger operating margins. We believe this strategic alignment positions us to continue delivering stockholder value and driving future performance.
Additional 2025 business highlights include the following:
We launched 25 new European listed ETPs and 12 new U.S. listed ETFs spanning all our major product categories. This includes the launch of the WisdomTree Europe Defence UCITS ETF which accumulated $3.9 billion of AUM by December 31, 2025.
We achievedstrong product performance, with over 74% of our U.S. listed AUM covered by Morningstar in the top two quartiles of peer performance on the 15-year timeframe and over 68% of our U.S. listed AUM covered by Morningstar in the top two quartiles of peer performance on the 5-year timeframe. In addition, approximately 40% were rated 4- or 5-star by Morningstar.
We completed a private offering of $475.0 million in aggregate principal amount of convertible senior notes due 2030, bearing interest at a rate of 4.625% and issued with a conversion price of $19.15 per share to facilitate the Ceres Acquisition. Concurrent with the issuance, we repurchased approximately 6.8 million shares of our common stock and extinguished $24.0 million aggregate principal amount of our 5.75% convertible senior notes due 2028 (the “2028 Notes”) (conversion price of $9.54 per share). We subsequently extinguished the remaining $1.8 million principal amount of these 2028 Notes in November 2025.
We appointed The Bank of New York Mellon Corporation to serve as our core banking-as-a-service (BaaS) infrastructure provider for WisdomTree Prime.
We made a strategic minority investment in, and entered into a multi-year collaboration with, Quorus, enabling certain of our investment strategies to be implemented in customizable, tax-efficient SMA formats, and our model portfolios to be made available with integrated, tax-aware trading and rebalancing capabilities, strengthening our presence in the growing custom portfolio solutions market.
We expanded our global footprint through a strategic collaboration with Korea Investment Management Co. Ltd. (KIM) based on the licensing of WisdomTree indexes in connection with the launch of a suite of innovative ETFs by KIM marketed under the KIM ACE label for the Korean market.
We made a $2.5 million strategic minority investment in AlphaBeta ETF Ltd to accelerate AI-driven ETF innovation by collaborating on the launch of AI-driven strategies in an ETF format.
In the U.S., we were named a “2025 Best Places to Work in Money Management” by Pensions & Investments for the sixth consecutive year and ranked first within the category for managers with 100-499 employees. In the U.K., we were named “Best Workplace” for medium-sized companies for the sixth consecutive year and a “2025 Best Workplace for Women” by Great Place to Work .
We received numerous industry awards and recognitions, including being named #58 on Fortune ’s list of America’s Most Innovative Companies, receiving multiple honors at the 2025 ETF Express European ETF Awards, and earning top distinctions for our digital asset and fintech solutions from leading industry organizations.
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Market Environment
The following chart reflects the annual returns of the broad-based equity indexes and gold prices over the last three years.
Source: FactSet
U.S. Listed ETF Industry Flows
U.S. listed ETF net flows for the year ended December 31, 2025 were $1,419.5 billion. U.S. equity and fixed income gathered the majority of those flows.
Source: Morningstar
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European Listed ETP Industry Flows
European listed ETP net flows were $246.6 billion for the year ended December 31, 2025. 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 trends have accelerated as fee compression, cost pressures and increased regulations have weighed on the industry, highlighting the importance of scale and operating efficiency to compete in today’s market. 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. 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:
34bps
Leveraged & Inverse:
81bps
International Developed Market Equity:
47bps
Fixed Income:
17bps
U.S. Equity:
29bps
Alternatives:
39bps
Emerging Market Equity:
60bps
Cryptocurrency:
28bps
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. From time to time, we implement voluntary waivers of a portion of our advisory fee. In addition, we earn a fee based on daily aggregate AUM of our ETPs in exchange for bearing certain fund expenses.
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.
Management fees
Management fees are earned in exchange for Ceres providing investment advisory and other management services to Ceres Farms. Management fees are generally 1% of each member’s capital account balance as of the last day of each calendar quarter, if that balance exceeds $1 million (otherwise 2%). Management fees are subject to adjustment for any contractual waivers as well as contributions and redemptions arising in any particular quarter.
Performance fees
Performance fees represent variable consideration and are earned based on a specified percentage of Ceres Farms’ net profits, generally equal to 20%, subject to contractual fee waivers, high-water marks and loss recovery requirements. Performance fees are earned only after members have recovered prior losses and applicable thresholds have been met. Performance fee revenues are recognized when it is probable that a significant reversal of cumulative revenues recognized will not occur, which generally occurs upon the determination of fund profits that are no longer subject to clawback or reversal under the governing agreements.
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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.
Components of Operating Expenses
Our operating expenses consist primarily of costs related to selling, operating and marketing our ETPs as well as the infrastructure needed to run our business.
Compensation and benefits
Employee compensation and benefits expenses are expensed when incurred and include salaries, incentive compensation, and related benefit costs. 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.
Also included in compensation and benefits are costs related to equity awards granted to our employees. Our executive management and Board of Directors strongly believe that equity awards are an important part of our employees’ overall compensation package and that incentivizing our employees with equity in the Company aligns the interests of our employees with that of our stockholders. We use the fair value method in recording compensation expense for equity-based awards. 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.
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.
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 fees we pay our sub-advisers generally are the higher of the fixed minimums per fund, which range from $0 to $158 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. In addition, we pay certain costs based on transactions in our ETPs or based on inflow levels.
The fees we pay for accounting, tax, transfer agency, index calculation, indicative values and exchange listing are based on the number of products we have. The remaining fees are based on a combination of both AUM and number of funds, or as incurred.
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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 Connect and WisdomTree Prime users;
development and maintenance of our website; and
creation and preparation of marketing materials.
Our discretionary advertising comprises the largest portion of this expense. In addition, we may incur expenditures in certain periods to attract inflows, the benefit of which may or may not be recognized from increases to our AUM in future periods. However, due to the discretionary nature of some of these costs, they can generally be reduced if there were a decline in the markets.
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.
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. Our obligation to continue making these payments was terminated on May 10, 2023. See Note 9 to our Consolidated Financial Statements for additional information.
Professional fees
Professional fees are expensed when incurred and consist of fees we pay to corporate advisers including accountants, tax advisers, legal counsel, investment bankers, human resources or other consultants. Professional fees also include expenses we pay third-party service providers related to WisdomTree Prime and expenses incurred in response to an activist campaign. These expenses fluctuate based on our needs or requirements at the time. Certain of these costs are at our discretion and can fluctuate year to year.
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.
Third-party distribution fees
Third-party distribution fees, which are expensed as incurred, include payments made to enable our products and models to be included on certain third-party platforms in exchange for commission-free trading or other preferential access. These expenses also include payments to our third-party marketing agents in Latin America and Israel.
Acquisition-related costs
We account for business combinations in accordance with ASC Topic 805, Business Combinations (“ASC 805”), with acquisitions recorded using the acquisition method. Transaction costs associated with acquisitions are expensed as incurred.
Other
Other expenses consist primarily of insurance premiums, general office related expenses, securities license fees for our sales force, public company related expenses, corporate related travel and entertainment and Board of Director fees, including stock-based compensation related to equity awards granted to our directors.
Components of Other Income/(Expenses) of a Recurring Nature
Interest expense
We recognize interest expense using the effective interest method which includes the amortization of discounts, premiums and issuance costs.
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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, 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. See Note 9 to our Consolidated Financial Statements for additional information.
Interest income
Interest income, which is recognized on an accrual basis, arises from investing our corporate cash into interest-bearing financial instruments.
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. Also included are losses arising from the release of tax-related indemnification assets upon the expiration of the statute of limitations, for which an equal and offsetting benefit is recognized in income tax expense.
Income Taxes
Our income tax expense consists of taxes due to federal, various state and local and certain foreign authorities.
Expense Guidance for the Year Ending December 31, 2026
Compensation to Revenue Ratio
Our compensation to revenue ratio for the year ending December 31, 2026 is currently estimated to range from 26% to 28% and takes into consideration planned hires as well as year-end compensation adjustments and the annualization of hires made during 2025. 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.
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, 2026 to range from $80.0 million to $86.0 million.
Not included in the guidance above is intangible asset amortization arising from the Ceres Acquisition of approximately $5.7 million.
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. For the year ending December 31, 2026, we currently estimate that our gross margin percentage will be 82.0% to 83.0% taking into consideration current AUM, revenue levels and anticipated fund launches. If AUM increases, we would anticipate further gross margin expansion.
Third-Party Distribution Expense
We currently estimate third-party distribution expense to be approximately $17.0 million to $19.0 million for the year ending December 31, 2026, which is dependent upon the AUM growth on our respective platforms.
Interest Expense
We currently estimate our interest expense for the year ending December 31, 2026 to be approximately $40.0 million, taking into consideration the retirement of our 3.25% Convertible Senior Notes due 2026 (the “2026 Notes”).
Not included in the guidance above is approximately $0.9 million of interest cost we are required to impute under U.S. GAAP related to our interest-free financing of the shares of Series C Non-Voting Convertible Preferred Stock (the “Series C Preferred Stock”) we repurchased from Gold Bullion Holdings (Jersey) Limited (“GBH”), a subsidiary of the World Gold Council, in November 2023.
Interest Income
We currently estimate our interest income for the year ending December 31, 2026 to be approximately $8.0 million, based upon the magnitude of our forecasted interest earning assets and interest rates. It is anticipated our interest earning assets will decline in the second half of the year following the retirement of our 2026 Notes.
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Income Tax Expense
We currently estimate that our consolidated normalized effective tax rate will be approximately 24.0% for the year ending December 31, 2026, taking into consideration the current distribution of profits among our U.S. and European businesses.
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. Additional corporate tax legislation could also impact our normalized effective tax rate.
Weighted Average Diluted Shares
We currently estimate our weighted average diluted shares to be between 152.0 million and 157.0 million during the year ending December 31, 2026. This guidance contemplates incremental shares associated with our Convertible Notes assuming a stock price approximating recent levels. While our Convertible Notes require principal to be paid in cash, our diluted shares would need to be increased for any incremental shares associated with an exercise of the conversion option if our stock price exceeds the applicable conversion price of our Convertible Notes of $11.04 per share for the 2026 Notes, $11.82 per share for the 3.25% Convertible Senior Notes due 2029 (the “2029 Notes”) and $19.15 per share for the 4.625% Convertible Senior Notes due 2030 (the “2030 Notes”).
Factors that May Impact our Future Financial Results
Our AUM is well diversified across products covering equity, commodities, fixed income, leveraged-and-inverse, cryptocurrency, currency, alternatives and private assets. As a result, our operating results are particularly exposed to investor sentiment toward investing in these products’ strategies and our ability to maintain AUM of these products, as well as the performance of these products.
Our revenues are also highly correlated to the level and relative mix of our AUM, as well as the fee rate associated with our products. Changes in product mix have led to a decline in our average advisory fee, which for the years ended December 31, 2023, 2024 and 2025 were 0.36%, 0.36% and 0.35%, respectively.
The chart below sets forth the asset mix of our products at December 31, 2023, 2024 and 2025:
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Key Operating Statistics
The following table presents key operating statistics that serve as indicators for the performance of our business:
Year Ended December 31,
GLOBAL PRODUCTS ($ in millions )
Beginning of period assets
Add: Digital assets—Jan. 1, 2025
Add: Assets acquired—Ceres Acquisition
Inflows/(outflows)
Market appreciation
End of period assets
Average assets during the period
Average ETP advisory fee during the period
Total revenue yield
Number of products-end of period
ETPs AND TOKENIZED PRODUCTS
U.S. LISTED ETFs ($ in millions )
Beginning of period assets
Inflows
Market appreciation
End of period assets
Average assets during the period
Number of ETFs—end of the period
EUROPEAN LISTED ETPs ($ in millions )
Beginning of period assets
Inflows/(outflows)
Market appreciation
End of period assets
Average assets during the period
Number of ETPs—end of the period
DIGITAL ASSETS ($ in millions )
Beginning of period assets
Add: Digital Assets—Jan. 1, 2025
Inflows
Market appreciation
End of period assets
Average assets during the period
Number of products—end of the period
PRIVATE ASSETS ($ in millions )
Beginning of period assets
Add: Assets acquired—Ceres Acquisition
Inflows
Market appreciation
End of period assets
Average assets during the period
Number of products—end of the period
ETPs AND TOKENIZED PRODUCT CATEGORIES ($ in millions )
U.S. Equity
Beginning of period assets
Add: Digital Assets—Jan. 1, 2025
Inflows
Market appreciation
End of period assets
Average assets during the period
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Year Ended December 31,
Commodity & Currency
Beginning of period assets
Add: Digital Assets—Jan. 1, 2025
Inflows/(outflows)
Market appreciation
End of period assets
Average assets during the period
International Developed Market Equity
Beginning of period assets
Inflows
Market appreciation
End of period assets
Average assets during the period
Fixed Income
Beginning of period assets
Add: Digital Assets—Jan. 1, 2025
Inflows/(outflows)
Market appreciation/(depreciation)
End of period assets
Average assets during the period
Emerging Market Equity
Beginning of period assets
(Outflows)/inflows
Market appreciation
End of period assets
Average assets during the period
Leveraged & Inverse
Beginning of period assets
Inflows/(outflows)
Market appreciation
End of period assets
Average assets during the period
Cryptocurrency
Beginning of period assets
Add: Digital Assets—Jan. 1, 2025
Inflows
Market (depreciation)/appreciation
End of period assets
Average assets during the period
Alternatives
Beginning of period assets
Inflows
Market appreciation
End of period assets
Average assets during the period
Headcount
Note: Previously issued statistics may be restated due to fund closures and trade adjustments
Source: WisdomTree
(1) Includes 17 digital assets products, which were launched prior to January 1, 2025.
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Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Selected Operating and Financial Information
Year Ended
December 31,
Percent
Change
Change
AUM (in millions)
Average AUM
Operating Revenues (in thousands)
Advisory fees
Management fees
Performance fees
Other revenues
Total revenues
Operating Revenues
Advisory fees
Advisory fee revenues increased 11.3% from $395.4 million during the year ended December 31, 2024 to $440.0 million during the year ended December 31, 2025 due to higher average AUM, partly offset by a lower average advisory fee. Our average advisory fee was 0.36% during the year ended December 31, 2024 and 0.35% during the year ended December 31, 2025.
Management fees
Management fees were $4.9 million during the year ended December 31, 2025 as a result of the Ceres Acquisition, which was completed in October 2025. We earn management fees in exchange for providing investment advisory and other management services to Ceres Farms.
Performance fees
Performance fees were $7.1 million during the year ended December 31, 2025 as a result of the Ceres Acquisition, which was completed in October 2025. We earn performance fees based on a specified percentage of Ceres Farms’ net profits, subject to contractual fee waivers, high-water marks and loss recovery requirements.
Other revenues
Other revenues increased 29.0% from $32.4 million during the year ended December 31, 2024 to $41.8 million during the year ended December 31, 2025 due to higher other revenues attributable to our European listed ETPs.
Operating Expenses
Year Ended
December 31,
Percent
(in thousands)
Change
Change
Compensation and benefits
Fund management and administration
Marketing and advertising
Sales and business development
Professional fees
Occupancy, communications and equipment
Depreciation and amortization
Third-party distribution fees
Acquisition-related costs
Other
Total operating expenses
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Year Ended
December 31,
As a Percent of Revenues:
Compensation and benefits
Fund management and administration
Marketing and advertising
Sales and business development
Professional fees
Occupancy, communications and equipment
Depreciation and amortization
Third-party distribution fees
Acquisition-related costs
Other
Total operating expenses
Compensation and benefits
Compensation and benefits expense increased 13.5% from $121.3 million during the year ended December 31, 2024 to $137.7 million during the year ended December 31, 2025 due to higher incentive compensation and increased headcount. Headcount was 313 and 360 at December 31, 2024 and 2025, respectively.
Fund management and administration
Fund management and administration expense increased 6.2% from $84.0 million during the year ended December 31, 2024 to $89.1 million during the year ended December 31, 2025 primarily due to higher average AUM. We had 78 U.S. listed ETFs, 275 European listed ETPs and 17 tokenized products at December 31, 2024 compared to 86 U.S. listed ETFs, 300 European listed ETPs, 19 tokenized products and one private assets product at December 31, 2025.
Marketing and advertising
Marketing and advertising expense was essentially unchanged from the year ended December 31, 2024.
Sales and business development
Sales and business development expense increased 10.4% from $14.8 million during the year ended December 31, 2024 to $16.4 million during the year ended December 31, 2025 primarily resulting from increases in travel and events spending.
Professional fees
Professional fees decreased 38.1% from $21.1 million during the year ended December 31, 2024 to $13.1 million during the year ended December 31, 2025 as the prior year included $5.0 million of expenses incurred in response to an activist campaign and $4.3 million of legal and other related expenses incurred in connection with the SEC ESG Settlement that were covered by insurance.
Occupancy, communications and equipment
Occupancy, communications and equipment expense increased 22.3% from $5.3 million during the year ended December 31, 2024 to $6.5 million during the year ended December 31, 2025 due to higher equipment and communication expenses driven by increased headcount.
Depreciation and amortization
Depreciation and amortization expense increased 115.6% from $1.8 million during the year ended December 31, 2024 to $3.8 million during the year ended December 31, 2025 due to higher amortization of software development costs, as well as approximately $1.4 million of intangible asset amortization arising from the Ceres Acquisition.
Third-party distribution fees
Third-party distribution fees increased 43.1% from $11.1 million during the year ended December 31, 2024 to $15.9 million during the year ended December 31, 2025 due to our strong growth and AUM expansion across our distribution platforms.
Acquisition-related costs
During the year ended December 31, 2025, we recorded $4.7 million of acquisition-related costs incurred in connection with the Ceres Acquisition.
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Other
Other expenses increased 12.4% from $10.5 million during the year ended December 31, 2024 to $11.8 million during the year ended December 31, 2025 primarily due to higher dues, subscriptions and other miscellaneous expenses.
Other Income/(Expenses)
Year Ended
December 31,
Percent
(in thousands)
Change
Change
Interest expense
Interest income
Loss on extinguishment of convertible notes
Remeasurement of contingent consideration
Other gains, net
Total other income/(expenses), net
Year Ended December 31,
As a Percent of Revenues:
Interest expense
Interest income
Loss on extinguishment of convertible notes
Remeasurement of contingent consideration
Other gains, net
Total other income/(expenses), net
Interest expense
Interest expense increased 60.9% from $18.9 million during the year ended December 31, 2024 to $30.4 million during the year ended December 31, 2025 due to a higher level of debt outstanding, inclusive of the 2030 Notes issued in August 2025 to facilitate the Ceres Acquisition, partly offset by a lower average interest rate.
Our effective interest rate on our outstanding Convertible Notes during the years ended December 31, 2024 and 2025 was 4.5% and 4.1%, respectively.
Interest income
Interest income increased 61.8% from $6.8 million during the year ended December 31, 2024 to $11.0 million during the year ended December 31, 2025 due to a higher level of interest-earning assets, including from temporarily investing proceeds received from the issuance of the 2030 Notes prior to completing the Ceres Acquisition.
Remeasurement of contingent consideration
Contingent consideration related to the Ceres Acquisition increased from $11.1 million on October 1, 2025 to $11.8 million at December 31, 2025 resulting in a $0.7 million loss on remeasurement recognized during the year ended December 31, 2025. See Note 11 to our Consolidated Financial Statements for additional information.
Other gains, net
Other gains, net were $0.9 million and $2.0 million during the years ended December 31, 2024 and 2025, respectively. The current year includes net gains on our financial instruments owned of $1.9 million and $1.2 million of foreign currency remeasurement losses on U.S. dollars held by foreign subsidiaries. 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 2025 was 23.3%, resulting in an income tax expense of $33.1 million. Our tax rate differs from the federal statutory rate of 21.0% primarily due to a non-deductible loss on extinguishment of convertible notes and state and local income taxes. These items were partly offset by a reduction in the valuation allowance on capital losses and a lower tax rate on foreign earnings.
Our effective income tax rate for 2024 was 30.1%, resulting in an income tax expense of $28.7 million. Our tax rate differs from the federal statutory rate of 21.0% primarily due to a non-deductible loss on extinguishment of convertible notes, a non-deductible civil money penalty of $4.0 million in connection with the SEC ESG Settlement and non-deductible executive compensation. These items were partly offset by a lower tax rate on foreign earnings.
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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Selected Operating and Financial Information
Year Ended
December 31,
Percent
Change
Change
AUM (in millions)
Average AUM
Operating Revenues (in thousands)
Advisory fees
Other revenues
Total revenues
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 remained 0.36%, unchanged from the year ended December 31, 2023.
Other revenues
Other revenues increased 104.8% from $15.8 million during the year ended December 31, 2023 to $32.4 million during the year ended December 31, 2024 due to higher other revenues attributable to our European listed ETPs and $4.3 million of other revenues related to legal and other related expenses incurred in connection with the SEC ESG Settlement that were covered by insurance.
Operating Expenses
Year Ended
December 31,
Percent
(in thousands)
Change
Change
Compensation and benefits
Fund management and administration
Marketing and advertising
Sales and business development
Contractual gold payments
Professional fees
Occupancy, communications and equipment
Depreciation and amortization
Third-party distribution fees
Other
Total operating expenses
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Year Ended
December 31,
As a Percent of Revenues:
Compensation and benefits
Fund management and administration
Marketing and advertising
Sales and business development
Contractual gold payments
Professional fees
Occupancy, communications and equipment
Depreciation and amortization
Third-party distribution fees
Other
Total operating expenses
Compensation and benefits
Compensation and benefits expense increased 10.7% from $109.5 million during the year ended December 31, 2023 to $121.3 million during the year ended December 31, 2024 due to higher stock-based compensation, incentive compensation and headcount. 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. 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.
Marketing and advertising
Marketing and advertising expense increased 19.0% from $17.3 million during the year ended December 31, 2023 to $20.5 million during the year ended December 31, 2024 primarily resulting from higher spending related to our U.S. listed and digital products.
Sales and business development
Sales and business development expense increased 9.1% from $13.6 million during the year ended December 31, 2023 to $14.8 million during the year ended December 31, 2024 primarily resulting from increases in travel and events spending.
Contractual gold payments
There was no contractual gold payments expense recognized during the year ended December 31, 2024 due to the termination of our deferred consideration—gold payments obligation on May 10, 2023. See Note 9 to our Consolidated Financial Statements for additional information.
Professional fees
Professional fees increased 11.2% from $19.0 million during the year ended December 31, 2023 to $21.1 million during the year ended December 31, 2024 due to $4.3 million of legal and other related expenses incurred in connection with the SEC ESG Settlement that were covered by insurance, partly offset by lower expenses incurred in response to an activist campaign.
Occupancy, communications and equipment
Occupancy, communications and equipment expense increased 14.1% from $4.7 million during the year ended December 31, 2023 to $5.3 million during the year ended December 31, 2024 due to the increased cost of renewed office leases.
Depreciation and amortization
Depreciation and amortization expense increased 100.9% from $0.9 million during the year ended December 31, 2023 to $1.8 million during the year ended December 31, 2024 due to higher amortization of software development costs.
Third-party distribution fees
Third-party distribution fees increased 18.8% from $9.4 million during the year ended December 31, 2023 to $11.1 million during the year ended December 31, 2024 primarily due to growth in AUM across our various platforms, as well as new platform relationships that expanded our distribution reach.
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Other
Other expenses increased 6.8% from $9.9 million during the year ended December 31, 2023 to $10.5 million during the year ended December 31, 2024 primarily due to higher insurance and travel-related expenses.
Other Income/(Expenses)
Year Ended
December 31,
Percent
(in thousands)
Change
Change
Interest expense
Gain on revaluation/termination of deferred consideration—gold payments
Interest income
Impairments
Loss on extinguishment of convertible notes
Other gains/(losses), net
Total other income/(expenses), net
Year Ended December 31,
As a Percent of Revenues:
Interest expense
Gain on revaluation/termination of deferred consideration—gold payments
Interest income
Impairments
Loss on extinguishment of convertible notes
Other gains/(losses), net
Total other income/(expenses), net
Interest expense
Interest expense increased 24.1% from $15.2 million during the year ended December 31, 2023 to $18.9 million during the year ended December 31, 2024 due to a higher level of debt outstanding, partly offset by a lower average interest rate.
Our effective interest rate on our outstanding Convertible Notes during the years ended December 31, 2023 and 2024 was 4.9% and 4.5%, respectively.
Gain on revaluation/termination of deferred consideration
No gains or losses on revaluation/termination of deferred consideration—gold payments were recognized during the year ended December 31, 2024, as this obligation was terminated on May 10, 2023 for approximately $137.0 million. See Note 9 to our Consolidated Financial Statements for additional information.
Interest income
Interest income increased 65.4% from $4.1 million during the year ended December 31, 2023 to $6.8 million during the year ended December 31, 2024 due to a higher level of interest-bearing assets.
Impairments
No impairments were recognized during the year ended December 31, 2024, while during the year ended December 31, 2023, we recognized a non-cash impairment charge of $7.9 million primarily related to our investment in Securrency, Inc. upon the sale of Securrency, Inc. to an unrelated third party. (See Notes 7 and 26 to our Consolidated Financial Statements).
Other gains/(losses), net
Other gains/(losses), net were ($1.6) million and $0.9 million during the years ended December 31, 2023 and 2024, respectively. The year ended December 31, 2024 includes a $4.0 million civil money penalty in connection with the SEC ESG Settlement. Also included are net gains of $4.9 million and net losses of $1.1 million on our financial instruments owned and our investments, respectively. 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.
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Income Taxes
Our effective income tax rate for 2024 was 30.1%, resulting in an income tax expense of $28.7 million. Our tax rate differs from the federal statutory rate of 21.0% primarily due to a non-deductible loss on extinguishment of convertible notes, a non-deductible civil money penalty of $4.0 million in connection with the SEC ESG Settlement and non-deductible executive compensation. These items were partly offset by a lower tax rate on foreign earnings.
Our effective income tax rate for 2023 was 13.8%, resulting in income tax expense of $16.5 million. 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. These items were partly offset by a non-deductible loss on extinguishment of our 4.25% Convertible Senior Notes due 2023 during the first quarter of 2023, an increase in the deferred tax asset valuation allowance on losses recognized on our investments and non-deductible executive compensation.
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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 2025 and 2024. In our opinion, this unaudited information has been prepared on substantially the same basis as the consolidated financial statements appearing elsewhere in this Report and includes all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the unaudited consolidated quarterly data. The unaudited consolidated quarterly data should be read together with the consolidated financial statements and related notes included elsewhere in this Report. The results for any quarter are not necessarily indicative of results for any future period, and you should not rely on them as such.
(in thousands, except per share amounts)
Operating Revenues:
Advisory fees
Management fees
Performance fees
Other revenues
Total revenues
Operating Expenses:
Compensation and benefits
Fund management and administration
Marketing and advertising
Sales and business development
Professional fees
Occupancy, communications and equipment
Depreciation and amortization
Third-party distribution fees
Acquisition-related costs
Other
Total operating expenses
Operating income
Other Income/(Expenses):
Interest expense
Interest income
Loss on extinguishment of convertible notes
Remeasurement of contingent consideration
Other gains and losses, net
Income before income taxes
Income tax expense
Net income/(loss)
Earnings/(loss) per share—basic
Earnings/(loss) per share—diluted
Dividends per common share
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Percent of Total Revenues
Operating Revenues
Advisory fees
Management fees
Performance fees
Other revenues
Total revenues
Operating Expenses
Compensation and benefits
Fund management and administration
Marketing and advertising
Sales and business development
Professional fees
Occupancy, communications and equipment
Depreciation and amortization
Third-party distribution fees
Acquisition-related costs
Other
Total operating expenses
Operating income
Other Income/(Expenses)
Interest expense
Interest income
Loss on extinguishment of convertible notes
Remeasurement of contingent consideration
Other gains and losses, net
Income before income taxes
Income tax expense
Net income/(loss)
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Operating Statistics
GLOBAL PRODUCTS ($ in millions )
Beginning of period assets
Add: Digital assets—Jan. 1, 2025
Add: Assets acquired—Ceres Acquisition
(Outflows)/inflows
Market appreciation/(depreciation)
End of period assets
Average assets during the period
Average ETP advisory fee during the period
Total revenue yield
Number of products-end of period
ETPs AND TOKENIZED PRODUCTS
U.S. LISTED ETFs ($ in millions )
Beginning of period assets
(Outflows)/inflows
Market appreciation/(depreciation)
End of period assets
Average assets during the period
Number of ETFs—end of the period
EUROPEAN LISTED ETPs ($ in millions )
Beginning of period assets
Inflows/(outflows)
Market appreciation/(depreciation)
End of period assets
Average assets during the period
Number of ETPs—end of the period
DIGITAL ASSETS ($ in millions )
Beginning of period assets
Add: Digital Assets—Jan. 1, 2025
Inflows
Market (depreciation)/appreciation
End of period assets
Average assets during the period
Number of products—end of the period
PRIVATE ASSETS ($ in millions )
Beginning of period assets
Add: Assets acquired—Ceres Acquisition
Inflows
Market appreciation
End of period assets
Average assets during the period
Number of products—end of the period
PRODUCT CATEGORIES ($ in millions )
U.S. Equity
Beginning of period assets
Add: Digital Assets—Jan. 1, 2025
Inflows
Market appreciation/(depreciation)
End of period assets
Average assets during the period
Commodity & Currency
Beginning of period assets
Add: Digital Assets—Jan. 1, 2025
Inflows/(outflows)
Market appreciation/(depreciation)
End of period assets
Average assets during the period
International Developed Market Equity
Beginning of period assets
Inflows/(outflows)
Market appreciation/(depreciation)
End of period assets
Average assets during the period
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Fixed Income
Beginning of period assets
Add: Digital Assets—Jan. 1, 2025
(Outflows)/inflows
Market (depreciation)/appreciation
End of period assets
Average assets during the period
Emerging Market Equity
Beginning of period assets
(Outflows)/inflows
Market appreciation/(depreciation)
End of period assets
Average assets during the period
Leveraged & Inverse
Beginning of period assets
(Outflows)/inflows
Market appreciation/(depreciation)
End of period assets
Average assets during the period
Cryptocurrency
Beginning of period assets
Add: Digital Assets—Jan. 1, 2025
(Outflows)/inflows
Market (depreciation)/appreciation
End of period assets
Average assets during the period
Alternatives
Beginning of period assets
Inflows
Market appreciation/(depreciation)
End of period assets
Average assets during the period
Headcount
Includes 17 digital assets products, which were launched prior to January 1, 2025.
Note: Previously issued statistics may be restated due to fund closures and trade adjustments
Source: WisdomTree
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Non-GAAP Financial Measurements
In an effort to provide additional information regarding our results as determined by GAAP, we also disclose certain non-GAAP information which we believe provides useful and meaningful information. Our management reviews these non-GAAP financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-GAAP measurements so as to share this perspective of management. Non-GAAP measurements do not have any standardized meaning, do not replace nor are superior to GAAP financial measurements and are unlikely to be comparable to similar measures presented by other companies. These non-GAAP financial measurements should be considered in the context with our GAAP results. The non-GAAP financial measurements contained in this Report include:
Adjusted Net Income and Diluted Earnings per Share.
We disclose adjusted net income and diluted earnings per share as non-GAAP financial measurements in order to report our results exclusive of items that are non-recurring or not core to our operating business. We believe presenting these non-GAAP financial measurements provides investors with a consistent way to analyze our performance. These non-GAAP financial measurements exclude the following:
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 exclude these items when calculating our non-GAAP financial measurements as the gains and losses introduce earnings volatility and are not core to our operating business.
Foreign currency remeasurement gains and losses on U.S. dollars held by foreign subsidiaries: GAAP requires account balances to be remeasured into an entity’s functional currency, with resulting gains and losses reported in net income. Foreign subsidiaries holding U.S. dollars remeasure these balances into their functional currencies and recognize the gains and losses. Beginning in the second quarter of 2025, we began excluding remeasurement effects from our non-GAAP financial measures, as they introduce earnings volatility, are not core to our operations and arise from balances denominated in our reporting currency.
Tax windfalls and shortfalls upon vesting of stock-based compensation awards: GAAP requires the recognition of tax windfalls and shortfalls within income tax expense. These items arise upon the vesting 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. We exclude these items when calculating our non-GAAP financial measurements as they introduce earnings volatility and are not core to our operating business.
Amortization of intangible assets and remeasurement of contingent consideration arising from our acquisition of Ceres Partners, LLC: On October 1, 2025, we completed the Ceres Acquisition for aggregate consideration consisting of (i) $275 million in cash payable at closing, subject to customary post-closing adjustments and (ii) contingent consideration of up to $225 million, payable in 2030, contingent upon Ceres achieving a compound annual growth rate (“CAGR”) in revenues of 12% to 22% during the measurement period of January 1, 2025 through December 31, 2029. GAAP requires contingent consideration to be re-measured each reporting period with changes in fair value reported in net income. In addition, a portion of the consideration totaling $143.5 million was allocated to intangible assets, which is amortized over 25 years. We exclude changes in fair value of contingent consideration and amortization of intangible assets arising from the Ceres Acquisition when calculating our non-GAAP financial measurements as these items are not core to our operating business.
Other items: Losses on extinguishment of convertible notes, acquisition-related costs, changes in deferred tax asset valuation allowance, imputed interest on our payable to GBH, gains and losses recognized on our investments, a civil money penalty in connection with the SEC ESG Settlement, expenses incurred in response to an activist campaign, gain on revaluation/termination of deferred consideration, impairments, remeasurement of contingent consideration payable to us from the sale of our former Canadian ETF business and litigation expenses associated with certain provisions of our Stockholder Rights Agreement, dated as of March 17, 2023, as amended, are excluded when calculating our non-GAAP financial measurements.
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Years Ended December 31,
Adjusted Net Income and Diluted Earnings per Share:
Net income, as reported
Add back: Loss on extinguishment of convertible notes, net of income taxes
Add back: Acquisition-related costs, net of income taxes
Deduct: Tax windfalls upon vesting and exercise of stock-based compensation awards
(Deduct)/add back: (Decrease)/increase in deferred tax valuation allowance on capital losses
(Deduct)/add back: (Gains)/Losses on financial instruments owned, at fair value, net of income taxes
Add back: Imputed interest on payable to GBH, net of income taxes
Add back: Amortization of intangible assets arising from the Ceres Acquisition, net of income taxes
Add back: Foreign currency remeasurement losses on U.S. dollar balances, net of income taxes
Add back: Increase in fair value of contingent consideration, net of income taxes
(Deduct)/add back: (Gains)/losses recognized on investments, net of income taxes
Add back: Civil money penalty in connection with SEC ESG Settlement
Add back: Expenses incurred in response to an activist campaign, net of income taxes
Deduct: Gain on revaluation/termination of deferred consideration
Add back: Impairments, net of income taxes
Deduct: Gain recognized from the sale of Canadian ETF business, including remeasurement of contingent consideration
Add back: Litigation expenses associated with certain provisions of the Stockholder Rights Agreement, net of income taxes
Adjusted net income
Deduct: Income distributed to participating securities
Deduct: Undistributed income allocable to participating securities
Adjusted net income available to common stockholders
Weighted average diluted shares, excluding participating securities (See Note 20 to our Consolidated Financial Statements)
Adjusted earnings per share—diluted
During the year ended December 31, 2025, we recognized an excise tax of $0.7 million on stock repurchases. 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 Non-Voting Convertible Preferred Stock (“Series A Preferred Stock”) and the Series C Preferred Stock. These items are excluded from net income, but are required to be added to net income to arrive at income available to common stockholders in the calculation of earnings per share under U.S. GAAP.
Liquidity and Capital Resources
The following table summarizes key information regarding our liquidity, capital resources and use of capital to fund our operations:
December 31,
December 31,
Balance Sheet Data (in thousands):
Cash and cash equivalents
Financial instruments owned, at fair value
Accounts receivable
Total: Liquid assets
Less: Total current liabilities
Less: Other assets—seed capital (WisdomTree Digital Funds)
Less: Regulatory capital requirements
Total: Available liquidity
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Year Ended December 31,
Cash Flow Data (in thousands):
Operating cash flows
Investing cash flows
Financing cash flows
Foreign exchange rate effect
Increase/(decrease) in cash and cash equivalents
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. Liquid assets consist of cash, cash equivalents and restricted cash, financial instruments owned, at fair value, accounts receivable and securities held-to-maturity. Our financial instruments owned, at fair value are highly liquid investments. Accounts receivable are current assets and primarily represent receivables from advisory fees we earn from our ETPs. Our current liabilities consist primarily of payments owed to vendors and third parties in the normal course of business and accrued incentive compensation for employees.
Cash, cash equivalents and restricted cash increased $130.5 million during the year ended December 31, 2025 due to $475.0 million of proceeds from the issuance of the 2030 Notes, $147.9 million of net cash provided by operating activities, $12.6 million of proceeds from the sale of financial instruments owned, at fair value and $5.6 million from other activities. These increases were partly offset by $270.3 million paid for the Ceres Acquisition, $102.7 million used to repurchase our common stock, $39.3 million used to repurchase our 2028 Notes, $32 million used to purchase financial instruments owned, at fair value, $20.1 million used to purchase investments, $17.3 million used to pay dividends, $14.8 million paid to GBH, $11.1 million used to pay convertible notes issuance costs and $3.0 million used to pay for software development.
Cash, cash equivalents and restricted cash increased $51.9 million during the year ended December 31, 2024 due to $345.0 million of proceeds from the issuance of the 2029 Notes, $113.5 million of net cash provided by operating activities and $48.1 million of proceeds from the sale of financial instruments owned, at fair value. 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 2028 Notes, $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.
Cash, cash equivalents and restricted cash 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 2028 Notes, $2.1 million used for software development and $1.2 million used in other activities. These decreases were partly offset by $130.0 million of proceeds from the issuance of our 2028 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.
Convertible Notes
We have the following convertible notes outstanding as of December 31, 2025:
$150.0 million in aggregate principal amount of the 2026 Notes;
$345.0 million in aggregate principal amount the 2029 Notes; and
$475.0 million in aggregate principal amount of the 2030 Notes.
Each class of notes was 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.
In connection with the issuance of the 2030 Notes, we repurchased $24.0 million in aggregate principal amount of our 2028 Notes. As a result of this repurchase, we recognized a loss on extinguishment of $13.0 million during the year ended December 31, 2025. Additionally, on November 25, 2025, we redeemed the remaining $1.8 million in aggregate principal amount of the 2028 Notes, resulting in a loss on extinguishment of $0.8 million.
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As of December 31, 2025, we had an aggregate principal amount of $970.0 million outstanding of the 2026 Notes, the 2029 Notes and the 2030 Notes (collectively, the “Convertible Notes”).
Key terms of the Convertible Notes are as follows:
2026 Notes
2029 Notes
2030 Notes
Principal outstanding
Issuance date
June 14, 2021
August 13, 2024
August 14, 2025
Maturity date (unless earlier converted, repurchased or redeemed)
June 15, 2026
August 15, 2029
August 15, 2030
Interest rate
Initial conversion price
Initial conversion rate
Redemption price
Interest rate: Payable semiannually in arrears on February 15 and August 15 of each year for the 2030 Notes and the 2029 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, 2030, May 15, 2029 and March 15, 2026 for the 2030 Notes, the 2029 Notes and the 2026 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. On or after May 15, 2030, May 15, 2029 and March 15, 2026 in respect of the 2030 Notes, the 2029 Notes and the 2026 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. 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, 2027, August 20, 2026 and June 20, 2023 in respect of the 2030 Notes, the 2029 Notes and the 2026 Notes, respectively, and on or prior to the 45th scheduled trading day with respect to the 2030 Notes and the 55th scheduled trading day with respect to the 2029 Notes and the 2026 Notes 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. 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 75.7003 shares, 103.6269 shares and 144.9275 shares of the Company’s common stock per $1,000 principal amount of the 2030 Notes, the 2029 Notes and the 2026 Notes, respectively (the equivalent of 93,448,048 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.
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The indentures contain customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the respective holders of not less than 25% in aggregate principal amount of the respective series of Convertible Notes outstanding may declare the entire principal amount of all such respective Convertible Notes to be repurchased, plus any accrued special interest, if any, to be immediately due and payable.
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.
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, 2025 was approximately $38.9 million in the aggregate. Notwithstanding these regulatory capital requirements, we expect that our main uses of cash will be to fund the ongoing operations of our business. 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, 2028, including purchases to offset future equity grants made under our equity plans and purchases made in open market or privately negotiated transactions.
During the year ended December 31, 2025, we repurchased 8,096,862 shares of our common stock under the repurchase program for an aggregate cost of $102.7 million. Currently, $250.0 million remains under this program for future purchases. In addition, on August 13, 2024, we repurchased all of our then-outstanding Series A Preferred Stock, which was convertible into 14,750,000 shares of our common stock, from ETFS Capital for aggregate cash consideration of approximately $143.8 million.
Contractual Obligations
Convertible Notes
We currently have $970.0 million in aggregate principal amount of Convertible Notes outstanding, of which $150.0 million, $345.0 million and $475 million are scheduled to mature on June 15, 2026, August 15, 2029 and August 15, 2030, in respect of the 2026 Notes, the 2029 Notes and the 2030 Notes, respectively, unless earlier converted, repurchased or redeemed. Conditional conversions or a requirement to repurchase the Convertible Notes upon the occurrence of a fundamental change may accelerate payment.
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. We may settle and/or refinance these obligations when due.
See the section titled “Issuance of Convertible Notes” above for additional information.
Contingent Consideration
Pursuant to the Ceres Purchase Agreement, up to $225.0 million of additional consideration is payable in 2030, contingent upon Ceres achieving a compound annual growth rate (“CAGR”) in revenue of 12% to 22% during the earnout measurement period of January 1, 2025 through December 31, 2029, as follows:
If the revenue CAGR for the earnout period is equal to or less than 12%, then the aggregate amount of the earnout consideration will be $0;
If the revenue CAGR for the earnout period is greater than 12% but less than 22%, then the aggregate amount of the earnout consideration will be pro-rated using straight-line interpolation between $0 and $225.0 million; and
If the revenue CAGR for the earnout period is equal to or greater than 22%, then the aggregate amount of the earnout consideration will be $225.0 million.
We have determined that the earnout should be classified as contingent consideration as (i) continuing employment is not a condition for payment (except as described below), (ii) non-employee sellers are entitled to similar payments based upon their relative ownership percentages and (iii) the payment formula described above is tied to the valuation of the acquired business. Under ASC 805, contingent consideration must be recognized at the acquisition date as part of the consideration transferred for the acquired business.
In connection with the Ceres Acquisition, the sellers established a retention bonus plan for certain Ceres employees pursuant to which the greater of $3.05 million or 10% of any earnout consideration in excess of $50.0 million will be forfeited by the sellers and paid to participating employees, contingent upon continued employment through earnout payment date. Any amounts forfeited due to employee attrition revert to the sellers. This compensation will be recognized over the service period with an equal and offsetting receivable from the sellers.
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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. Pursuant to that agreement, we paid consideration totaling $136.9 million, including an aggregate of $50.0 million in cash and the issuance of 13,087 shares of Series C Preferred Stock (valued at $86.9 million, based on the closing price of our common stock on May 9, 2023 of $6.64 per share), which was convertible into 13,087,000 shares of our common stock. 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. Under the terms of the transaction, we have paid GBH $69.6 million to date, with the remainder of the purchase price payable on the third anniversary of the closing date. The implied price per share was $6.02 when considering the interest-free financing element of the transaction.
Operating Leases
Total future minimum lease payments with respect to our operating lease liabilities were $3.3 million at December 31, 2025. 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.
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.
Critical Accounting Policies and Estimates
Business Combinations
We account for business combinations under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, which requires an allocation of the consideration paid by us to the identifiable assets, intangible assets and liabilities based on the estimated fair values as of the closing date of the acquisition. Contingent consideration obligations that are elements of consideration transferred are recognized at the acquisition date as part of the fair value transferred in exchange for the acquired business and are remeasured to fair value each reporting period. The excess of the fair value of purchase price over the fair values of the identifiable assets, intangible assets and liabilities is recorded as goodwill.
Goodwill and Intangible Assets
Goodwill is the excess of the purchase price over the fair values of the identifiable net assets at the acquisition date. We test goodwill for impairment at least annually and at the time of a triggering event requiring re-evaluation, if one were to occur. Goodwill is considered impaired when the estimated fair value of the reporting unit that was allocated the goodwill is less than its carrying value. If the estimated fair value of such reporting unit is less than its carrying value, goodwill impairment is recognized based on that difference, not to exceed the carrying amount of goodwill. A reporting unit is an operating segment or a component of an operating segment provided that the component constitutes a business for which discrete financial information is available and management regularly reviews the operating results of that component.
We test goodwill for impairment at the reporting unit level and have determined that we have a single reporting unit, consistent with our single operating segment. Goodwill is assessed for impairment annually on November 30 th . When performing our goodwill impairment test, we consider a qualitative assessment, when appropriate, and the market approach and our 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.
Indefinite-lived intangible assets are tested for impairment at least annually and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Indefinite-lived intangible assets are impaired if their estimated fair value is less than their carrying value. We may rely on a qualitative assessment when performing our intangible asset impairment test. Otherwise, the impairment evaluation is performed at the lowest level of reasonably identifiable cash flows independent of other assets. The annual impairment testing date for our intangible assets is November 30 th . 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%.
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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. Under the measurement alternative, these financial instruments are carried at cost, less any impairment (assessed quarterly), plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. In addition, income is recognized when dividends are received only to the extent they are distributed from net accumulated earnings of the investee. Otherwise, such distributions are considered returns of investment and are recorded as a reduction of the cost of the investment. See Note 7 to our Consolidated Financial Statements for information.
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. 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.
We earn management fees in exchange for Ceres providing investment advisory and other management services to Ceres Farms. Management fees are generally calculated as a stated percentage of members’ capital account balances as of the last day of each calendar quarter, subject to adjustment for any contractual waivers as well as contributions and redemptions arising in any particular quarter. Management fees are recognized as revenue over time, as the performance obligation is satisfied.
We earn performance fees based on a specified percentage of Ceres Farms’ net profits, subject to contractual fee waivers, high-water marks and loss recovery requirements. Performance fees are earned only after members have recovered prior losses and applicable thresholds have been met. Performance fee revenues are recognized when it is probable that a significant reversal of cumulative revenues recognized will not occur, which generally occurs upon the determination of fund profits that are no longer subject to clawback or reversal under the governing agreements.
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. We also earn transaction-based income on flows associated with certain European listed ETPs. There is no significant judgment in calculating amounts due, which are invoiced monthly or quarterly in arrears and are not subject to any potential reversal. 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.
