WisdomTree(WT) - 2025 Q2 - Quarterly Report

Form 10-Q Cover Page Registrant Information WisdomTree, Inc, a large accelerated filer incorporated in Delaware, filed its Form 10-Q for the period ended June 30, 2025 - WisdomTree, Inc is a large accelerated filer[4][5] - Common Stock, $0.01 par value, is traded on The New York Stock Exchange under the symbol WT[4] Cautionary Note Regarding Forward-Looking Statements Forward-Looking Statements Overview The report contains forward-looking statements based on management's beliefs and assumptions, which involve risks and uncertainties - Forward-looking statements are based on management's beliefs and assumptions and relate to future events or financial performance, involving known and unknown risks and uncertainties[10][11] - Factors that may cause actual results to differ materially include those listed in the 'Risk Factors' section of the Annual Report on Form 10-K for fiscal year ended December 31, 2024[11] Specific Forward-Looking Statements Forward-looking statements address trends, inflows, competition, growth, digital assets, and the proposed acquisition of Ceres Partners, LLC - Forward-looking statements include anticipated trends in global markets and ETPs, inflows/outflows, ability to deliver returns, competition, future growth, new product development, vendor relationships, digital asset strategy (WisdomTree Prime, Connect), international expansion, regulatory effects, and the proposed acquisition of Ceres Partners, LLC[13] PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents the company's unaudited consolidated financial statements, detailing its financial position, performance, and cash flows Consolidated Balance Sheets Total assets increased to $1,066,877 thousand, driven by higher cash and financial instruments, while stockholders' equity grew significantly | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Total Assets | $1,066,877 | $1,033,540 | $33,337 | | Total Liabilities | $621,790 | $633,560 | $(11,770) | | Total Stockholders' Equity | $445,087 | $399,980 | $45,107 | - Cash, cash equivalents and restricted cash increased by $12,482 thousand from $181,191 thousand at December 31, 2024, to $193,673 thousand at June 30, 2025[16] - Convertible notes—current increased significantly from $0 at December 31, 2024, to $149,170 thousand at June 30, 2025, indicating a reclassification of a portion of long-term debt to current[16] Consolidated Statements of Operations Revenue and net income grew for both the three and six-month periods ended June 30, 2025, with diluted EPS increasing year-over-year | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $112,621 | $107,034 | 5.2% | | Operating Income | $34,632 | $33,511 | 3.3% | | Net Income | $24,777 | $21,759 | 13.9% | | Diluted EPS | $0.17 | $0.13 | 30.8% | | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $220,703 | $203,872 | 8.3% | | Operating Income | $68,794 | $61,461 | 11.9% | | Net Income | $49,406 | $43,870 | 12.6% | | Diluted EPS | $0.34 | $0.26 | 30.8% | - Advisory fees, the primary revenue source, increased by 4.3% for the three months and 5.9% for the six months ended June 30, 2025, driven by higher average AUM[18] Consolidated Statements of Comprehensive Income Comprehensive income increased for both the three and six-month periods, significantly influenced by positive foreign currency translation adjustments | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Income | $24,777 | $21,759 | | Foreign currency translation adjustment, net of income taxes | $3,561 | $(24) | | Comprehensive Income | $28,338 | $21,735 | | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Income | $49,406 | $43,870 | | Foreign currency translation adjustment, net of income taxes | $5,467 | $(383) | | Comprehensive Income | $54,873 | $43,487 | Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased to $445,087 thousand, driven by net income and other comprehensive income, partially offset by dividends and repurchases | Metric (in thousands) | June 30, 2025 | January 1, 2025 | | :--- | :--- | :--- | | Total Stockholders' Equity | $445,087 | $399,980 | | Net Income | $49,406 | N/A | | Other Comprehensive Income | $5,467 | N/A | | Shares Repurchased | $(12,714) | N/A | | Dividends | $(8,817) | N/A | - Stock-based compensation recognized for the six months ended June 30, 2025, was $11,765 thousand[26] Consolidated Statements of Cash Flows Net cash from operating activities increased, while investing and financing activities resulted in cash outflows, leading to a net increase in cash | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (in thousands) | | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $45,176 | $31,172 | $14,004 | | Net Cash Used in Investing Activities | $(16,712) | $(9,699) | $(7,013) | | Net Cash Used in Financing Activities | $(23,505) | $(17,693) | $(5,812) | | Net Increase in Cash, Cash Equivalents and Restricted Cash | $12,482 | $3,154 | $9,328 | - Cash paid for income taxes was $13,468 thousand and for interest was $8,850 thousand for the six months ended June 30, 2025[29] Notes to Consolidated Financial Statements The notes detail the company's accounting policies and provide disclosures on its global ETP, digital asset business, and specific financial items 1. Organization and Description of Business WisdomTree is a global financial innovator offering ETPs, models, and digital asset products, including its digital wallet WisdomTree Prime - WisdomTree is a global financial innovator offering ETPs, models, solutions, and digital asset-related products, including blockchain-enabled mutual funds ("Digital Funds"), WisdomTree Prime, and WisdomTree Connect[31] - Key subsidiaries include WisdomTree Asset Management, Inc (U.S ETFs), WisdomTree Management Jersey Limited (European ETPs), WisdomTree Digital Management, Inc (Digital Funds), and WisdomTree Digital Trust Company, LLC (virtual currency business)[31] 2. Significant Accounting Policies The company's financial statements adhere to U.S GAAP, with key policies covering consolidation, revenue recognition, and fair value measurement - The Company operates as a single operating segment as an ETP sponsor and asset manager, based on its organizational structure and CODM's resource allocation[35] - Revenue from advisory fees is recognized over time, based on a percentage of ETPs' average daily net assets[38] - The Company adopted ASU 2023-09 (Improvements to Income Tax Disclosures) on a prospective basis for the year ended December 31, 2024[69] 3. Cash, Cash Equivalents and Restricted Cash Total cash, cash equivalents, and restricted cash increased to $193,673 thousand, with a significant portion held at three financial institutions | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Cash, Cash Equivalents and Restricted Cash | $193,673 | $181,191 | | Cash Equivalents | $114,140 | $48,336 | | Regulatory Capital Requirements | $37,407 | $39,423 | | Restricted Cash | $14,289 | $13,403 | 4. Fair Value Measurements Total assets measured at fair value were $212,739 thousand, with the majority classified as Level 1 based on quoted prices in active markets - Fair value measurements are categorized into Level 1 (quoted prices for identical instruments in active markets), Level 2 (quoted prices for similar instruments or model-derived valuations with observable inputs), and Level 3 (instruments with significant unobservable drivers)[72][73] - Cash equivalents and ETFs are generally classified as Level 1 due to active, liquid markets, while pass-through GSEs and some fixed income are Level 2[78][79] | Asset Category (in thousands) | Total (June 30, 2025) | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Cash equivalents | $114,140 | $114,140 | $— | $— | | Financial instruments owned, at fair value | $97,749 | $83,753 | $7,415 | $850 | | Total | $212,739 | $198,925 | $12,964 | $850 | 5. Financial instruments owned Financial instruments owned increased to $97,749 thousand, including trading securities and seed capital for WisdomTree Digital Funds | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Financial instruments owned | $97,749 | $85,439 | | Trading securities | $81,141 | $69,805 | | Other assets—seed capital (WisdomTree Digital Funds) | $16,608 | $15,634 | | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net trading gains/(losses) | $1,110 | $(67) | $503 | $1,837 | 6. Investments Total investments increased to $13,843 thousand, driven by a new strategic investment of $4,000 thousand in Quorus Inc - In June 2025, WisdomTree made a $4,000 thousand strategic investment in Quorus Inc, acquiring approximately 23.8% ownership[87] - The investment in Fnality International Limited (5.4% ownership) is valued at $8,993 thousand, with net unrealized gains of $511 thousand and $758 thousand recognized for the three and six months ended June 30, 2025, respectively[84][85] | Investment (in thousands) | June 30, 2025 (Carrying Value) | December 31, 2024 (Carrying Value) | | :--- | :--- | :--- | | Fnality International Limited—Series B-1 Preference Shares | $8,993 | $8,235 | | Quorus Inc.—Series Seed-1 Preferred Stock | $4,000 | $— | | Other investments | $850 | $687 | | Total | $13,843 | $8,922 | 7. Fixed Assets, Net Net fixed assets decreased slightly to $316 thousand due to ongoing depreciation of equipment | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Equipment | $1,186 | $1,069 | | Less: accumulated depreciation | $(870) | $(733) | | Total Fixed Assets, Net | $316 | $336 | 8. Convertible Notes The company has $520,845 thousand in aggregate principal of convertible notes outstanding with maturities in 2026, 2028, and 2029 - The fair value of the Convertible Notes (classified as Level 2) was $600,359 thousand at June 30, 2025, up from $571,031 thousand at December 31, 2024[98] - Interest expense on Convertible Notes was $5,022 thousand for the three months and $10,008 thousand for the six months ended June 30, 2025[96] | Note Series | Principal Outstanding (in thousands) | Issuance Date | Maturity Date | Interest Rate | Initial Conversion Price | | :--- | :--- | :--- | :--- | :--- | :--- | | 2026 Notes | $150,000 | June 14, 2021 | June 15, 2026 | 3.25% | $11.04 | | 2028 Notes | $25,845 | February 14, 2023 | August 15, 2028 | 5.75% | $9.54 | | 2029 Notes | $345,000 | August 13, 2024 | August 15, 2029 | 3.25% | $11.82 | 9. Payable to Gold Bullion Holdings (Jersey) Limited ("GBH") The company has an outstanding payable related to the repurchase of preferred stock from GBH, recorded at its present value - WisdomTree repurchased Series C Preferred Stock from GBH for approximately $84,411 thousand, with $54,800 thousand paid to date and the remainder in interest-free installments[99] - Interest expense recognized on this obligation was $468 thousand for the three months and $923 thousand for the six months ended June 30, 2025[100] | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current Payable to GBH | $14,804 | $14,804 | | Long-term Payable to GBH | $13,083 | $12,159 | | Total Payable to GBH | $27,887 | $26,963 | 10. Leases The company holds operating leases for office facilities and equipment with a weighted-average remaining term of 1.8 years | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Weighted-average remaining lease term (in years) | 1.8 | 0.9 | | Weighted-average discount rate | 6.6% | 6.6% | | Period | Future Minimum Lease Payments (Undiscounted, in thousands) | | :--- | :--- | | Remainder of 2025 | $675 | | 2026 | $1,190 | | 2027 and thereafter | $333 | | Total | $2,198 | 11. Contingencies The company is involved in legal proceedings related to the closure of a leveraged ETP, with potential losses expected to be covered by insurance - Seven of eight legal actions related to the 3OIL ETP closure have been resolved in the company's favor, with two appealed[105] - Total damages sought for open and appealed claims were approximately €15,270 thousand ($17,900 thousand) at June 30, 2025. An additional claim for up to €8,350 thousand ($9,790 thousand) was received[105] - The company expects potential losses to be covered by insurance, less a $500 thousand deductible, and no accrual has been made[106] 12. Variable Interest Entities WisdomTree holds interests in non-consolidated VIEs but is not the primary beneficiary, with maximum loss exposure of $9,843 thousand - WisdomTree is not the primary beneficiary of any VIEs, as it does not control the activities that most significantly impact their economic performance[108] | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Carrying Amount—Assets (VIEs) | $9,843 | $8,922 | | Maximum Exposure to Loss | $9,843 | $8,922 | 13. Revenues from Contracts with Customers Operating revenues increased, driven by advisory fees recognized over time, with the United States being the largest geographic contributor | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Advisory fees | $103,241 | $98,938 | $202,790 | $191,439 | | Other revenues | $9,380 | $8,096 | $17,913 | $12,433 | | Total operating revenues | $112,621 | $107,034 | $220,703 | $203,872 | | Geographic Region (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | | United States | $139,281 | $135,712 | | Jersey | $67,561 | $57,727 | | Ireland | $13,861 | $10,433 | | Total | $220,703 | $203,872 | 14. Related Party Transactions Revenues are primarily from advisory agreements with related parties, and the company holds significant investments in its own products - Revenues are primarily derived from investment advisory agreements with related parties (WTT, ManJer Issuers, WMAI, WTICAV) for licensing indexes and providing management services[115] - The company has investments in WisdomTree products totaling $107,212 thousand at June 30, 2025, including seed investments in Digital Funds[118] | Related Party (in thousands) | June 30, 2025 (Receivable) | December 31, 2024 (Receivable) | | :--- | :--- | :--- | | Receivable from WTT | $24,177 | $24,672 | | Receivable from ManJer Issuers | $6,379 | $5,155 | | Receivable from WMAI and WTICAV | $6,854 | $5,132 | | Total | $37,410 | $34,959 | 15. Stock-Based Awards The company grants various equity awards, with total unrecognized stock-based compensation expense of $26,359 thousand - Equity awards granted include RSAs, RSUs, deferred RSUs, PRSUs, and stock options, with PRSUs tied to relative Total Shareholder Return (TSR) performance against a peer group[121][122] - Unrecognized stock-based compensation expense was $26,359 thousand at June 30, 2025, with a weighted-average remaining vesting period of 1.14 years[123] | Metric (in thousands) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | | :--- | :--- | :--- | | Stock-based compensation expense | $5,527 | $11,765 | 16. Earnings Per Share Basic and diluted EPS were calculated using the two-class method, excluding potential shares from convertible notes as they were anti-dilutive - Diluted EPS is calculated using the two-class method, which resulted in the lowest diluted EPS amount for common stock[126] - Potential common shares from convertible notes were not included in diluted shares for the periods presented because the average stock price was lower than the conversion price[126] | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Basic EPS | $0.17 | $0.13 | $0.35 | $0.27 | | Diluted EPS | $0.17 | $0.13 | $0.34 | $0.26 | 17. Income Taxes The effective income tax rate was 22.3% for the quarter, differing from the federal statutory rate due to state taxes and foreign earnings - The "One Big Beautiful Bill Act" (OBBBA) was enacted on July 4, 2025, extending or modifying several tax provisions, but is not anticipated to have a material impact on the company's financial statements[140][141] | Metric | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Effective Income Tax Rate | 22.3% | 20.6% | 26.3% | 23.5% | | Income Tax Expense (in thousands) | $7,093 | $12,832 | $7,767 | $13,468 | | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Deferred Tax Assets, Net | $6,145 | $11,656 | | Valuation Allowance | $(6,191) | $(21,908) | 18. Shares Repurchased The share repurchase program was increased to $150,000 thousand, with 1,282,498 shares repurchased for $12,714 thousand in H1 2025 - The share repurchase program was increased to $150,000 thousand and extended through April 27, 2028[142] - As of June 30, 2025, $149,980 thousand remained available under the share repurchase program[144] | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | | Shares Repurchased | 1,282,498 | 1,096,278 | | Aggregate Cost (in thousands) | $12,714 | $7,820 | 19. Goodwill and Intangible Assets Goodwill remained stable at $86,841 thousand with no impairment, while net intangible assets increased slightly to $606,236 thousand - The ETFS Acquisition intangible assets ($601,247 thousand) are indefinite-lived and not tax-deductible[147] | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Goodwill | $86,841 | $86,841 | | Intangible Assets, Net | $606,236 | $605,896 | | Metric (in thousands) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | | :--- | :--- | :--- | | Software development amortization expense | $544 | $983 | 20. Segment Information WisdomTree operates as a single operating segment, an ETP sponsor and asset manager, with performance measured by adjusted operating income - The company operates as a single operating segment, an ETP sponsor and asset manager, across the U.S and Europe[149] - Key performance measures include consolidated net income, adjusted operating income, and adjusted operating income margin, which exclude non-recurring or non-core items[150] | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Operating Income | $34,632 | $33,511 | $68,794 | $61,461 | | Adjusted Operating Income | $36,599 | $37,782 | $70,761 | $66,427 | | Operating Income Margin | 30.8% | 31.3% | 31.2% | 30.1% | | Adjusted Operating Income Margin | 32.5% | 35.3% | 32.1% | 32.6% | 21. Subsequent Events The company entered an agreement to acquire Ceres Partners, LLC, a farmland investment manager, for $275.0 million plus potential earnouts - WisdomTree agreed to acquire Ceres Partners, LLC, a farmland investment manager, for $275.0 million cash at closing and up to $225.0 million earnout consideration[155][156] - The acquisition is expected to close in Q4 2025, contingent on regulatory approvals, key employee employment agreements, investor consents, and Ceres's revenue run-rate[159] - The Purchase Agreement includes customary warranties, non-competition/non-solicitation covenants, and indemnification rights, with a representations and warranties insurance policy obtained[157] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses the company's financial performance, AUM trends, the pending Ceres acquisition, and provides updated financial guidance Executive Summary WisdomTree is a global financial innovator with $126.1 billion in AUM, focusing on ETPs and expanding its digital assets strategy - WisdomTree is a global financial innovator offering ETPs, models, solutions, and next-generation digital products like tokenized real-world assets, stablecoins, Digital Funds, WisdomTree Prime, and WisdomTree Connect[163] - As of June 30, 2025, the company managed approximately $126.1 billion in Assets Under Management (AUM)[164] - The company is committed to "responsible DeFi" and expanding into digital assets and blockchain-enabled finance to diversify revenue streams and drive growth[166] Pending Acquisition of Ceres Partners, LLC ("Ceres") WisdomTree will acquire Ceres Partners, a farmland investment manager, for $275.0 million cash plus a potential $225.0 million earnout - WisdomTree will acquire Ceres Partners, LLC, a U.S-based alternative asset manager specializing in farmland investments[168] - The aggregate consideration includes $275.0 million in cash at closing and up to $225.0 million in earnout consideration, payable in 2030, contingent on Ceres achieving a 12% to 22% compound annual revenue growth rate[169] - The acquisition is expected to close in Q4 2025, subject to regulatory approvals, required consents, and financing[168] Assets Under Management The company offers a diverse range of ETPs across multiple asset classes, including equity, fixed income, commodities, and cryptocurrency - WisdomTree offers ETPs covering equity, fixed income, commodities and currency, leveraged-and-inverse, alternatives and cryptocurrency[170] Market Environment Q2 2025 saw equity gains and significant growth in digital assets, driven by regulatory clarity and receding recession fears - Equities made gains in Q2 2025 as U.S trade tariffs were suspended and recession fears receded[172] - Digital asset markets saw major regulatory and institutional developments, with Bitcoin and Ethereum returning over 30%, and the U.S Senate passing the GENIUS Act for stablecoin regulation[173] | Index/Asset | Q2 2025 Increase | | :--- | :--- | | S&P 500 | 10.9% | | MSCI EAFE Index (local currency) | 5.1% | | MSCI EMU Index (local currency) | 5.5% | | MSCI Japan Index (local currency) | 7.6% | | MSCI Emerging Markets Index (U.S. dollar) | 12.2% | | Gold prices | 5.5% | U.S. Listed ETF Industry Flows The U.S listed ETF industry recorded net flows of $241.5 billion in Q2 2025, primarily into equity and fixed income products - U.S listed ETF industry net flows were $241.5 billion for the three months ended June 30, 2025[175] - U.S equity and fixed income gathered the majority of these flows[175] European Listed ETP Industry Flows The European listed ETP industry saw net flows of $54.9 billion in Q2 2025, with equity and fixed income products leading inflows - European listed ETP industry net flows were $54.9 billion for the three months ended June 30, 2025[178] - Equity and fixed income gathered the majority of those flows[178] Our Operating and Financial Results The company reports increased AUM, revenue growth, and improved net income, and provides updated financial guidance for fiscal year 2025 U.S. Listed ETFs U.S listed ETF AUM increased to $85.2 billion at June 30, 2025, driven by market appreciation and net inflows | Metric (in millions) | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | End of period assets | $85,179 | $80,531 | | Inflows | $1,110 | $1,847 | | Market appreciation/(depreciation) | $3,538 | $(411) | European Listed ETPs European listed ETP AUM grew to $40.5 billion at June 30, 2025, due to market appreciation and positive net inflows | Metric (in millions) | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | End of period assets | $40,541 | $35,124 | | Inflows/(outflows) | $2,201 | $1,104 | | Market appreciation | $3,216 | $3,336 | Consolidated Operating Results Total revenues increased 5.2% to $112.6 million in Q2 2025, with net income rising to $24.8 million despite higher operating expenses - Revenue increase was due to higher average AUM, partly offset by a lower average advisory fee[191] - Expense increase was primarily due to acquisition-related costs and higher compensation expense from increased headcount, as well as higher third-party distribution fees and fund management and administration expenses, partly offset by lower professional fees[191] | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $112.6 | $107.0 | 5.2% | | Total Operating Expenses | $78.0 | $73.5 | 6.1% | | Net Income | $24.8 | $21.8 | 13.8% | Guidance Update for the Year Ending December 31, 2025 FY2025 guidance was updated, increasing the estimate for third-party distribution fees and narrowing the range for weighted average diluted shares - The increase in third-party distribution fees is attributed to strong organic growth and AUM expansion across distribution platforms[192] | Metric | FY2025 Guidance | Previous Guidance | Change | | :--- | :--- | :--- | :--- | | Compensation to Revenue Ratio | 28% to 30% | Unchanged | N/A | | Discretionary Spending (excl. acquisition costs) | $68.0M to $72.0M | Unchanged | N/A | | Gross Margin Percentage | 81.0% to 82.0% | Unchanged | N/A | | Third-Party Distribution Fees | $14.0M to $15.0M | $11.0M to $12.0M | Increased | | Interest Expense | $22.0M | Unchanged | N/A | | Interest Income | $8.0M | Unchanged | N/A | | Consolidated Normalized Effective Tax Rate | 24.0% to 25.0% | Unchanged | N/A | | Weighted Average Diluted Shares | 147.0M to 148.0M | 147.0M to 149.0M | Narrowed | Key Operating Statistics Global ETP average assets increased to $119,185 million in Q2 2025, while Digital Assets AUM grew significantly due to strong inflows - The average advisory fee for Global ETPs remained at 0.35% for the three and six months ended June 30, 2025[200] - Headcount increased to 321 at June 30, 2025, from 304 at June 30, 2024[200] | Metric (in millions) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | | :--- | :--- | :--- | | Global ETPs Average Assets | $119,185 | $116,904 | | Global ETPs Inflows | $3,527 | $6,579 | | Global ETPs Market Appreciation | $6,756 | $9,680 | | Digital Assets End of Period Assets | $350 | $350 | | Digital Assets Inflows | $216 | $317 | Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 Q2 2025 revenues rose 5.2% on higher AUM, while net income increased 13.9% despite a 6.1% rise in operating expenses - The average advisory fee decreased from 0.37% in Q2 2024 to 0.35% in Q2 2025[203] - Headcount increased from 304 at June 30, 2024, to 321 at June 30, 2025[206] | Metric (in thousands) | Q2 2025 | Q2 2024 | Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Average AUM | $119,185 | $108,479 | $10,706 | 9.9% | | Total Operating Revenues | $112,621 | $107,034 | $5,587 | 5.2% | | Advisory fees | $103,241 | $98,938 | $4,303 | 4.3% | | Other revenues | $9,380 | $8,096 | $1,284 | 15.9% | | Total Operating Expenses | $77,989 | $73,523 | $4,466 | 6.1% | | Compensation and benefits | $32,827 | $30,790 | $2,037 | 6.6% | | Professional fees | $3,177 | $6,594 | $(3,417) | (51.8%) | | Third-party distribution fees | $4,083 | $2,687 | $1,396 | 52.0% | | Acquisition-related costs | $1,967 | $— | $1,967 | N/A | | Net Income | $24,777 | $21,759 | $3,018 | 13.9% | Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 For H1 2025, revenues grew 8.3% and net income increased 12.6%, driven by higher average AUM despite a lower average advisory fee - The average advisory fee decreased from 0.37% in H1 2024 to 0.35% in H1 2025[223] - Interest expense increased 32.2% to $10,931 thousand, while interest income increased 40.6% to $3,987 thousand[236][237][238] | Metric (in thousands) | H1 2025 | H1 2024 | Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Average AUM | $116,904 | $105,470 | $11,434 | 10.8% | | Total Revenues | $220,703 | $203,872 | $16,831 | 8.3% | | Advisory fees | $202,790 | $191,439 | $11,351 | 5.9% | | Other revenues | $17,913 | $12,433 | $5,480 | 44.1% | | Total Operating Expenses | $151,909 | $142,411 | $9,498 | 6.7% | | Compensation and benefits | $66,615 | $61,844 | $4,771 | 7.7% | | Professional fees | $5,959 | $10,224 | $(4,265) | (41.7%) | | Third-party distribution fees | $7,195 | $4,994 | $2,201 | 44.1% | | Acquisition-related costs | $1,967 | $— | $1,967 | 100.0% | | Net Income | $49,406 | $43,870 | $5,536 | 12.6% | Non-GAAP Financial Measurements The company provides adjusted net income and EPS to exclude non-recurring items, with adjusted diluted EPS at $0.18 for Q2 2025 - Non-GAAP financial measurements (adjusted net income and diluted EPS) exclude items like gains/losses on financial instruments, foreign currency remeasurement, tax windfalls/shortfalls, imputed interest on GBH payable, acquisition-related costs, and other non-recurring items[243] | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income, as reported (in thousands) | $24,777 | $21,759 | $49,406 | $43,870 | | Adjusted net income (in thousands) | $25,863 | $27,075 | $48,877 | $47,331 | | Adjusted earnings per share – diluted | $0.18 | $0.16 | $0.33 | $0.28 | Liquidity and Capital Resources Available liquidity decreased to $31,373 thousand, with operating cash flow serving as the principal financing source for operations and capital returns - Net cash provided by operating activities was $45,176 thousand for the six months ended June 30, 2025[245] - The company has $520.8 million in aggregate principal amount of convertible notes outstanding and a $27,887 thousand payable to GBH[100][250] | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Liquid Assets | $334,492 | $311,496 | | Total Current Liabilities | $(243,853) | $(109,197) | | Available Liquidity | $31,373 | $142,216 | Critical Accounting Policies and Estimates Critical accounting policies involve significant estimates for goodwill and intangible asset impairment, investments, and revenue recognition - Goodwill is tested for impairment at least annually (November 30) using qualitative and quantitative assessments (market approach and market capitalization)[264][266] - Indefinite-lived intangible assets are tested for impairment at least annually (November 30), and finite-lived assets are amortized over their useful lives[267] - Equity investments without readily determinable fair value are accounted for at cost less impairment, adjusted for observable price changes[268] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company is exposed to market risk from fluctuations in asset values, foreign currency rates, and interest rates, which impact advisory fees - Market risk arises from fluctuations in securities or commodity prices, foreign currency exchange rates, and interest rates, directly impacting advisory fees based on ETPs' average market value[273] - The company invests corporate cash in short-term interest-earning assets ($212.0 million at June 30, 2025) and is subject to currency translation exposure from non-U.S operations[275][277] - Fluctuations in commodity and cryptocurrency prices linked to ETPs could materially affect AUM and revenues, as some advisory fees are paid in the underlying assets[279] ITEM 4. CONTROLS AND PROCEDURES Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[280] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[282] PART II: OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company faces claims totaling approximately €23.6 million related to the closure of a leveraged ETP, with most actions resolved in its favor - WisdomTree is subject to legal proceedings, including claims from investors related to the closure of the WisdomTree WTI Crude Oil 3x Daily Leveraged ETP (3OIL)[284] - Total claims amount to approximately €23.6 million ($27.7 million), with €15.2 million ($17.9 million) of claims resolved in the company's favor, which have been appealed[284] ITEM 1A. RISK FACTORS Significant risks relate to the pending acquisition of Ceres Partners, LLC, and the inherent risks of its farmland investment business Risks Related to the Acquisition of Ceres Partners, LLC The Ceres acquisition carries risks including inaccurate assumptions, failure to realize benefits, integration challenges, and potential closing delays - Assumptions regarding revenue, earnings, growth, demand for private investments, and Ceres's ability to raise capital may prove inaccurate, leading to a failure to realize anticipated benefits[286][287] - Completion of the acquisition is subject to conditions like regulatory approvals, consents, and employment agreements, and failure to satisfy these could delay or prevent the closing[290][291] - Direct and indirect costs, including professional fees and integration expenses, will be incurred, and unforeseen expenses could materially impact results[294] Risks Related to the Business of Ceres Partners, LLC Entering the farmland market exposes WisdomTree to increased operational, regulatory, and financial risks inherent in direct real estate investment - Acquiring Ceres and entering private asset markets (farmland) increases operational, regulatory, financial, and compliance risks, especially concerning SEC and FINRA regulations for Ceres's registered investment adviser and broker-dealer entities[296][297] - Ceres's performance is subject to risks of direct real estate-related assets, including market cyclicality, government regulation, illiquidity, and environmental matters[300][308] - Ceres's business is dependent on the profitability of its tenants' farming operations, which can be adversely affected by weather, crop prices, disease, and government policies like the OBBBA, potentially impacting rent collection and cash flow[303][304][305][306] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS No unregistered sales of equity occurred, and the share repurchase program was increased to $150.0 million - No recent unregistered sales of equity securities occurred[312] - The share repurchase program was increased to $150.0 million and extended through April 27, 2028[315] | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Dollar Value of Shares that May Yet Be Purchased (in thousands) | | :--- | :--- | :--- | :--- | | April 1, 2025 to June 30, 2025 | — | $— | $149,980 | | Six Months Ended June 30, 2025 | 1,282,498 | N/A | N/A | | Aggregate Cost (Six Months Ended June 30, 2025) | N/A | N/A | $12,714 | ITEM 3. DEFAULTS UPON SENIOR SECURITIES The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[316] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to the company - This item is not applicable[317] ITEM 5. OTHER INFORMATION No directors or officers adopted, terminated, or modified any Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[318] ITEM 6. EXHIBITS This section lists all exhibits filed, including the Ceres acquisition agreement, corporate documents, and required certifications - Exhibits include the Equity Purchase Agreement for Ceres Partners, LLC, corporate governance documents, convertible note indentures, and various certifications[320] - Financial statements for the quarter ended June 30, 2025, are provided in XBRL format[320]