##### Table of Contents

Temporary equity classification is required for redeemable instruments for which redemption triggers are outside of the issuer’s control. ETFS Capital has the right to redeem all the Preferred Shares specified to be converted during the period of time specified in the Certificate of Designations in the event that: (a) the number of shares of the Company’s common stock authorized by its certificate of incorporation is insufficient to permit the Company to convert all of the Preferred Shares requested by ETFS Capital to be converted; or (b) ETFS Capital does not, upon completion of a change of control of the Company, receive the same amount per Preferred Share as it would have received had each outstanding Preferred Share been converted into common stock immediately prior to the change of control. However, the Company will not be obligated to make any such redemption payments to the extent such payments would be a breach of any covenant or obligation the Company owes to any of its secured creditors or is otherwise prohibited by applicable law.false Q1 0000880631--12-31 Redemption price of $7.70: The Company may redeem for cash all or any portion of the notes, at its option, on or after June 20, 2021 and on or prior to the 55th scheduled trading day immediately preceding the maturity date, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days, including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides 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.P5D P10D Excludes 15,025 participating securities and 16 potentially dilutive non-participating common stock equivalents for the three months ended March 31, 2020 as the Company reported a net loss for the period (shares herein are reported in thousands).Includes amortization of the issuance costs allocated to the Convertible Notes and amortization of the premium associated with the Additional Notes. The effective interest rate prior to January 1, 2021 also included amortization of the discount arising from the bifurcation of the conversion option.Unamortized discount reduced by $4,207 and unamortized issuance costs increased by $119 upon the early adoption of ASU 2020-06, Debt – Debt with Conversion and Other Options, on January 1, 2021. The discount previously arose from the bifurcation of the conversion option which occurred prior to the adoption of ASU 2020-06. The unamortized issuance costs are reported net of the unamortized premium on the Additional Notes.Recorded as an income tax benefit of $5,171 during the three months ended March 31, 2021, along with an equal and offsetting amount recorded in other losses, net, to recognize a reduction in the indemnification asset. During the three months ended March 31, 2020, an income tax benefit of $5,981 was recorded along with an equal and offsetting amount in other losses, net.The gross unrecognized tax benefits were accrued in British pounds sterling. 0000880631 2021-03-31 0000880631 2020-12-31 0000880631 2021-01-01 2021-03-31 0000880631 2020-01-01 2020-03-31 0000880631 2020-01-01 2020-12-31 0000880631 2016-05-21 2016-06-20 0000880631 2031-03-31 0000880631 2018-04-11 0000880631 2020-03-31 0000880631 2023-08-21 2023-08-21 0000880631 2021-04-23 0000880631 2023-05-20 2023-05-20 0000880631 2020-03-31 2020-03-31 0000880631 2019-12-31 0000880631 wetf:FederalAgencyMember 2021-03-31 0000880631 wetf:SeriesARedeemableConvertiblePreferredStockMember 2021-03-31 0000880631 wetf:SecurrencyIncMember 2021-03-31 0000880631 wetf:TradingSecuritiesMember 2021-03-31 0000880631 wetf:SecurrencySeriesAPreferredStockMember 2021-03-31 0000880631 wetf:SecurrencySeriesBConvertiblePreferredStockMember 2021-03-31 0000880631 wetf:EmployeesAndDirectorsMember 2021-03-31 0000880631 us-gaap:EquipmentMember 2021-03-31 0000880631 us-gaap:FurnitureAndFixturesMember 2021-03-31 0000880631 us-gaap:LeaseholdImprovementsMember 2021-03-31 0000880631 wetf:SecurrencyIncSeriesAConvertiblePreferredStockCarryingValueMember 2021-03-31 0000880631 wetf:SecurrencyIncSeriesAConvertiblePreferredStockCostMember 2021-03-31 0000880631 wetf:SecurrencyIncSeriesBConvertiblePreferredStockCarryingValueMember 2021-03-31 0000880631 wetf:SecurrencyIncSeriesBConvertiblePreferredStockCostMember 2021-03-31 0000880631 wetf:SecurrencyIncCarryingValueMember 2021-03-31 0000880631 wetf:SecurrencyIncCostMember 2021-03-31 0000880631 wetf:WisdomTreeTrustMember 2021-03-31 0000880631 wetf:WisdomtreeManagementJerseyLimitedMember 2021-03-31 0000880631 wetf:WisdomtreeMultiAssetIssuerPlcAndWisdomtreeIssuerPlcMember 2021-03-31 0000880631 wetf:ThreeYearShareRepurchaseProgramMember 2021-03-31 0000880631 wetf:AcquisitionOfEtfsBusinessMember 2021-03-31 0000880631 us-gaap:OtherNoncurrentLiabilitiesMember 2021-03-31 0000880631 wetf:AdvisoryFeesMember 2021-03-31 0000880631 wetf:ThroughMarchThirtyFirstTwoThousandFiftyEightMember 2021-03-31 0000880631 wetf:AprilOneTwoThousandFiftyEightAndThereafterMember 2021-03-31 0000880631 us-gaap:SeriesAPreferredStockMember 2021-03-31 0000880631 us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0000880631 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2021-03-31 0000880631 us-gaap:ExchangeTradedFundsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0000880631 us-gaap:ExchangeTradedFundsMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2021-03-31 0000880631 wetf:FederalAgencyMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0000880631 wetf:FederalAgencyMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2021-03-31 0000880631 us-gaap:AllOtherCorporateBondsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0000880631 us-gaap:AllOtherCorporateBondsMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2021-03-31 0000880631 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2021-03-31 0000880631 us-gaap:FairValueMeasurementsNonrecurringMember wetf:SeriesAConvertiblePreferredStockMember 2021-03-31 0000880631 us-gaap:FairValueInputsLevel3Member wetf:SeriesAConvertiblePreferredStockMember us-gaap:FairValueMeasurementsNonrecurringMember 2021-03-31 0000880631 wetf:InternationalBusinessSegmentMember 2021-03-31 0000880631 us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2021-03-31 0000880631 wetf:UsOfficeMember 2021-03-31 0000880631 wetf:WisdomtreeETFMember 2021-03-31 0000880631 srt:MinimumMember 2021-03-31 0000880631 srt:MaximumMember 2021-03-31 0000880631 srt:WeightedAverageMember 2021-03-31 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:FairValueInputsLevel2Member 2021-03-31 0000880631 wetf:AccountingStandardsUpdate202006Member 2021-03-31 0000880631 wetf:TwoFinancialInstitutionsMember 2021-03-31 0000880631 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2021-03-31 0000880631 us-gaap:ConvertibleCommonStockMember 2021-03-31 0000880631 us-gaap:AccountsPayableAndAccruedLiabilitiesMember 2021-03-31 0000880631 wetf:AdvisorEngineMember 2021-03-31 0000880631 wetf:WisdomtreeAssetManagementCanadaIncMember 2021-03-31 0000880631 wetf:WisdomtreeETFMember 2021-03-31 0000880631 us-gaap:ConvertibleDebtMember 2021-03-31 0000880631 wetf:FederalAgencyMember 2020-12-31 0000880631 wetf:SeriesARedeemableConvertiblePreferredStockMember 2020-12-31 0000880631 wetf:TradingSecuritiesMember 2020-12-31 0000880631 us-gaap:EquipmentMember 2020-12-31 0000880631 us-gaap:FurnitureAndFixturesMember 2020-12-31 0000880631 us-gaap:LeaseholdImprovementsMember 2020-12-31 0000880631 wetf:SecurrencyIncSeriesAConvertiblePreferredStockCarryingValueMember 2020-12-31 0000880631 wetf:SecurrencyIncSeriesAConvertiblePreferredStockCostMember 2020-12-31 0000880631 wetf:SecurrencyIncSeriesBConvertiblePreferredStockCarryingValueMember 2020-12-31 0000880631 wetf:SecurrencyIncSeriesBConvertiblePreferredStockCostMember 2020-12-31 0000880631 wetf:SecurrencyIncCarryingValueMember 2020-12-31 0000880631 wetf:SecurrencyIncCostMember 2020-12-31 0000880631 wetf:WisdomTreeTrustMember 2020-12-31 0000880631 wetf:WisdomtreeManagementJerseyLimitedMember 2020-12-31 0000880631 wetf:WisdomtreeMultiAssetIssuerPlcAndWisdomtreeIssuerPlcMember 2020-12-31 0000880631 wetf:WisdomtreeCommodityServicesLlcMember 2020-12-31 0000880631 wetf:SecurrencyIncMember 2020-12-31 0000880631 wetf:ThroughMarchThirtyFirstTwoThousandFiftyEightMember 2020-12-31 0000880631 wetf:AprilOneTwoThousandFiftyEightAndThereafterMember 2020-12-31 0000880631 us-gaap:SeriesAPreferredStockMember 2020-12-31 0000880631 us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0000880631 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0000880631 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0000880631 us-gaap:ExchangeTradedFundsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0000880631 us-gaap:ExchangeTradedFundsMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0000880631 wetf:FederalAgencyMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0000880631 wetf:FederalAgencyMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2020-12-31 0000880631 us-gaap:AllOtherCorporateBondsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0000880631 us-gaap:AllOtherCorporateBondsMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2020-12-31 0000880631 us-gaap:FairValueMeasurementsNonrecurringMember 2020-12-31 0000880631 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0000880631 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel2Member 2020-12-31 0000880631 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0000880631 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2020-12-31 0000880631 wetf:InternationalBusinessSegmentMember 2020-12-31 0000880631 us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2020-12-31 0000880631 wetf:UsOfficeMember 2020-12-31 0000880631 wetf:WisdomtreeETFMember 2020-12-31 0000880631 srt:MinimumMember 2020-12-31 0000880631 srt:MaximumMember 2020-12-31 0000880631 srt:WeightedAverageMember 2020-12-31 0000880631 wetf:TwoFinancialInstitutionsMember 2020-12-31 0000880631 us-gaap:AccountsPayableAndAccruedLiabilitiesMember 2020-12-31 0000880631 wetf:AdvisorEngineMember 2020-12-31 0000880631 wetf:WisdomtreeAssetManagementCanadaIncMember 2020-12-31 0000880631 wetf:WisdomtreeETFMember 2020-12-31 0000880631 us-gaap:ReportableSubsegmentsMember 2021-01-01 2021-03-31 0000880631 wetf:EmployeesAndDirectorsMember 2021-01-01 2021-03-31 0000880631 us-gaap:EquipmentMember 2021-01-01 2021-03-31 0000880631 us-gaap:FurnitureAndFixturesMember 2021-01-01 2021-03-31 0000880631 wetf:ThreeYearShareRepurchaseProgramMember 2021-01-01 2021-03-31 0000880631 wetf:SecurrencySeriesAPreferredStockMember 2021-01-01 2021-03-31 0000880631 wetf:WisdomTreeTrustMember wetf:AdvisoryServicesMember 2021-01-01 2021-03-31 0000880631 wetf:WisdomtreeManagementJerseyLimitedMember wetf:AdvisoryServicesMember 2021-01-01 2021-03-31 0000880631 wetf:WisdomtreeMultiAssetIssuerPlcAndWisdomtreeIssuerPlcMember wetf:AdvisoryServicesMember 2021-01-01 2021-03-31 0000880631 wetf:AdvisoryServicesMember 2021-01-01 2021-03-31 0000880631 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0000880631 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0000880631 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-03-31 0000880631 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0000880631 us-gaap:InvestmentAdvisoryManagementAndAdministrativeServiceMember 2021-01-01 2021-03-31 0000880631 wetf:OtherServicesIncomeMember 2021-01-01 2021-03-31 0000880631 wetf:UnrecognizedTaxBenefitsMember 2021-01-01 2021-03-31 0000880631 wetf:InterestAndPenaltiesMember 2021-01-01 2021-03-31 0000880631 us-gaap:PreferredStockMember 2021-01-01 2021-03-31 0000880631 wetf:DeferredConsiderationObligationMember 2021-01-01 2021-03-31 0000880631 wetf:OptionsMember 2021-01-01 2021-03-31 0000880631 us-gaap:RestrictedStockMember 2021-01-01 2021-03-31 0000880631 us-gaap:RestrictedStockUnitsRSUMember 2021-01-01 2021-03-31 0000880631 wetf:PerformanceBasedRestrictedStockUnitsMember 2021-01-01 2021-03-31 0000880631 wetf:At85thPercentileForGrantsMadeIn2021Member 2021-01-01 2021-03-31 0000880631 wetf:PerformanceBasedRestrictedStockUnitMember srt:MinimumMember 2021-01-01 2021-03-31 0000880631 wetf:PerformanceBasedRestrictedStockUnitMember srt:MaximumMember 2021-01-01 2021-03-31 0000880631 wetf:BelowTwentyFifthPercentileMember 2021-01-01 2021-03-31 0000880631 wetf:AtTwentyFifthPercentileMember 2021-01-01 2021-03-31 0000880631 wetf:AtFiftyPercentileMember 2021-01-01 2021-03-31 0000880631 wetf:At100thPercentileForGrantsMadeIn2019And2020Member 2021-01-01 2021-03-31 0000880631 country:US 2021-01-01 2021-03-31 0000880631 country:JE 2021-01-01 2021-03-31 0000880631 country:IE 2021-01-01 2021-03-31 0000880631 us-gaap:ConvertibleDebtMember 2021-01-01 2021-03-31 0000880631 wetf:WisdomtreeAssetManagementCanadaIncMember 2020-01-01 2020-03-31 0000880631 wetf:ThreeYearShareRepurchaseProgramMember 2020-01-01 2020-03-31 0000880631 wetf:WisdomTreeTrustMember wetf:AdvisoryServicesMember 2020-01-01 2020-03-31 0000880631 wetf:WisdomtreeManagementJerseyLimitedMember wetf:AdvisoryServicesMember 2020-01-01 2020-03-31 0000880631 wetf:WisdomtreeMultiAssetIssuerPlcAndWisdomtreeIssuerPlcMember wetf:AdvisoryServicesMember 2020-01-01 2020-03-31 0000880631 wetf:WisdomtreeAssetManagementCanadaIncMember wetf:AdvisoryServicesMember 2020-01-01 2020-03-31 0000880631 wetf:WisdomtreeCommodityServicesLlcMember wetf:AdvisoryServicesMember 2020-01-01 2020-03-31 0000880631 wetf:AdvisoryServicesMember 2020-01-01 2020-03-31 0000880631 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0000880631 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0000880631 us-gaap:InvestmentAdvisoryManagementAndAdministrativeServiceMember 2020-01-01 2020-03-31 0000880631 wetf:OtherServicesIncomeMember 2020-01-01 2020-03-31 0000880631 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0000880631 wetf:DeferredConsiderationObligationMember 2020-01-01 2020-03-31 0000880631 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0000880631 country:US 2020-01-01 2020-03-31 0000880631 country:JE 2020-01-01 2020-03-31 0000880631 country:IE 2020-01-01 2020-03-31 0000880631 country:CA 2020-01-01 2020-03-31 0000880631 wetf:FormerCreditFacilityMember 2020-01-01 2020-03-31 0000880631 wetf:AdvisorEngineFinancialInterestMember wetf:FinancialInterestsMember 2020-01-01 2020-03-31 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember 2020-06-16 2020-06-16 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember wetf:ConversionPriceMember 2020-06-16 2020-06-16 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember wetf:RedemptionProvisionsMember 2020-06-16 2020-06-16 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember wetf:RedemptionProvisionsMember wetf:UsNationalBankAssociationMember 2020-06-16 2020-06-16 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember wetf:ConversionRateIncreaseMember 2020-06-16 2020-06-16 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember 2020-06-16 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember wetf:ConversionPriceMember 2020-06-16 0000880631 us-gaap:FairValueMeasurementsNonrecurringMember 2020-06-16 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember 2020-08-13 2020-08-13 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember wetf:ConversionPriceMember 2020-08-13 2020-08-13 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember wetf:RedemptionProvisionsMember 2020-08-13 2020-08-13 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember wetf:ConversionRateIncreaseMember 2020-08-13 2020-08-13 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember 2020-08-13 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember wetf:ConversionPriceMember 2020-08-13 0000880631 us-gaap:FairValueMeasurementsNonrecurringMember 2020-08-13 0000880631 us-gaap:PreferredStockMember wetf:AcquisitionOfEtfsBusinessMember 2018-04-01 2018-04-11 0000880631 wetf:AcquisitionOfEtfsBusinessMember 2018-04-11 0000880631 wetf:AcquisitionOfEtfsBusinessMember us-gaap:CommonStockMember 2018-04-11 0000880631 srt:ScenarioForecastMember 2024-08-21 2024-08-21 0000880631 wetf:WisdomtreeAssetManagementCanadaIncMember srt:MinimumMember 2020-02-19 0000880631 wetf:WisdomtreeAssetManagementCanadaIncMember srt:MaximumMember 2020-02-19 0000880631 wetf:WisdomtreeAssetManagementCanadaIncMember 2020-02-19 2020-02-19 0000880631 wetf:ImplementationOfAsu202006Member 2021-01-01 2021-01-01 0000880631 wetf:ThreeYearShareRepurchaseProgramMember 2019-03-25 2019-04-24 0000880631 us-gaap:FairValueMeasurementsNonrecurringMember wetf:AdvisorEngineMember 2020-05-04 0000880631 wetf:AdvisorEngineMember wetf:FairValueOfUpfrontConsiderationReceivedMember 2020-05-04 0000880631 wetf:AdvisorEngineMember 2020-05-04 0000880631 us-gaap:FairValueMeasurementsNonrecurringMember wetf:ThesysGroupIncMember 2020-09-30 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember srt:ScenarioForecastMember 2020-08-13 2023-05-13 0000880631 wetf:ConvertibleSeniorNotesDueTwoThousandAndTwentyThreeMember us-gaap:PrivatePlacementMember srt:ScenarioForecastMember 2021-06-20 2023-05-21 0000880631 us-gaap:FairValueMeasurementsNonrecurringMember wetf:SeriesAConvertiblePreferredStockMember 2021-03-08 0000880631 us-gaap:FairValueInputsLevel3Member wetf:MeasurementInputExpectedVolatilityMember 2021-03-08 0000880631 us-gaap:FairValueInputsLevel3Member us-gaap:MeasurementInputExpectedTermMember 2021-03-08 0000880631 us-gaap:SubsequentEventMember 2029-12-31 0000880631 us-gaap:SubsequentEventMember 2031-03-31 0000880631 wetf:AdvisorEngineMember 2020-04-01 2020-06-30 0000880631 us-gaap:ReportableSubsegmentsMember 2020-12-31 0000880631 us-gaap:ReportableSubsegmentsMember 2021-03-31 0000880631 us-gaap:CommonStockMember 2020-12-31 0000880631 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0000880631 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0000880631 us-gaap:RetainedEarningsMember 2020-12-31 0000880631 us-gaap:CommonStockMember srt:RestatementAdjustmentMember 2020-12-31 0000880631 us-gaap:AdditionalPaidInCapitalMember srt:RestatementAdjustmentMember 2020-12-31 0000880631 us-gaap:AccumulatedOtherComprehensiveIncomeMember srt:RestatementAdjustmentMember 2020-12-31 0000880631 us-gaap:RetainedEarningsMember srt:RestatementAdjustmentMember 2020-12-31 0000880631 srt:RestatementAdjustmentMember 2020-12-31 0000880631 wetf:UnrecognizedTaxBenefitsMember 2020-12-31 0000880631 wetf:InterestAndPenaltiesMember 2020-12-31 0000880631 wetf:DeferredConsiderationObligationMember 2020-12-31 0000880631 wetf:DeferredConsiderationObligationMember 2021-03-31 0000880631 wetf:UnrecognizedTaxBenefitsMember 2021-03-31 0000880631 wetf:InterestAndPenaltiesMember 2021-03-31 0000880631 wetf:OptionsMember 2020-12-31 0000880631 wetf:OptionsMember 2021-03-31 0000880631 us-gaap:RestrictedStockMember 2020-12-31 0000880631 us-gaap:RestrictedStockUnitsRSUMember 2020-12-31 0000880631 wetf:PerformanceBasedRestrictedStockUnitsMember 2020-12-31 0000880631 us-gaap:RestrictedStockMember 2021-03-31 0000880631 us-gaap:RestrictedStockUnitsRSUMember 2021-03-31 0000880631 wetf:PerformanceBasedRestrictedStockUnitsMember 2021-03-31 0000880631 us-gaap:RetainedEarningsMember 2021-03-31 0000880631 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0000880631 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0000880631 us-gaap:CommonStockMember 2021-03-31 0000880631 us-gaap:CommonStockMember 2019-12-31 0000880631 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0000880631 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0000880631 us-gaap:RetainedEarningsMember 2019-12-31 0000880631 wetf:DeferredConsiderationObligationMember 2019-12-31 0000880631 wetf:DeferredConsiderationObligationMember 2020-03-31 0000880631 us-gaap:RetainedEarningsMember 2020-03-31 0000880631 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0000880631 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0000880631 us-gaap:CommonStockMember 2020-03-31 iso4217:USD utr:Day utr:Year xbrli:shares xbrli:pure utr:Month iso4217:EUR iso4217:CAD iso4217:USD xbrli:shares utr:oz utr:Y
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
10-Q
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021
or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from
to
.
Commission File Number
001-10932
WisdomTree Investments, Inc.
(Exact name of registrant as specified in its charter)

Delaware |  | 13-3487784
(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)

245 Park Avenue, 35 th Floor New York, New York |  | 10167
(Address of principal executive offices) |  | (Zip Code)

212-801-2080
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Stock, $0.01 par value |  | WETF |  | The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule
12b-2
of the Exchange Act.

Large accelerated filer |  | ☐ |  | Accelerated filer |  | ☒
Non-accelerated filer |  | ☐ |  | Smaller reporting company |  | ☐
|  |  |  | Emerging growth company |  | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act). Yes ☐ No ☒
As of April 2
3
, 2021, there were 149,591,742 shares of the registrant’s Common Stock, $0.01 par value per share, outstanding.

Table of Contents
WISDOMTREE INVESTMENTS, INC.
Form
10-Q
For the Quarterly Period Ended March 31, 2021

|  | Page Number |
PART I: FINANCIAL INFORMATION |  |  | 4 |
Item 1. Financial Statements |  |  | 4 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |  |  | 30 |
Item 3. Quantitative and Qualitative Disclosures about Market Risk |  |  | 45 |
Item 4. Controls and Procedures |  |  | 46 |
PART II: OTHER INFORMATION |  |  | 46 |
Item 1. Legal Proceedings |  |  | 46 |
Item 1A. Risk Factors |  |  | 46 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |  |  | 46 |
Item 3. Defaults Upon Senior Securities |  |  | 47 |
Item 4. Mine Safety Disclosures |  |  | 47 |
Item 5. Other Information |  |  | 47 |
Item 6. Exhibits |  |  | 48 |

Unless otherwise indicated, references to “the Company,” “we,” “us,” “our” and “WisdomTree” mean WisdomTree Investments, Inc. and its subsidiaries.
WisdomTree
®
and Modern Alpha
®
are trademarks of WisdomTree Investments, Inc. in the United States and in other countries. All other trademarks are the property of their respective owners.
2

Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form
10-Q
contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect our results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed in the section entitled “Risk Factors” included in our Annual Report on Form
10-K
for the fiscal year ended December 31, 2020. If one or more of these or other risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Report and the documents that we reference in this Report and have filed with the Securities and Exchange Commission, or the SEC, as exhibits to this Report, completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.
In particular, forward-looking statements in this Report may include statements about:

| • |  | the ultimate duration of the COVID-19 pandemic and its short-term and long-term impact on our business and the global economy;

| • |  | anticipated trends, conditions and investor sentiment in the global markets and exchange traded products, or ETPs;

| • |  | anticipated levels of inflows into and outflows out of our ETPs;

| • |  | our ability to deliver favorable rates of return to investors;

| • |  | competition in our business;

| • |  | our ability to develop new products and services;

| • |  | our ability to maintain current vendors or find new vendors to provide services to us at favorable costs;

| • |  | our ability to successfully operate and expand our business in non-U.S. markets; and

| • |  | the effect of laws and regulations that apply to our business.

The forward-looking statements in this Report represent our views as of the date of this Report. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. Therefore, these forward-looking statements do not represent our views as of any date other than the date of this Report.
3

Table of Contents
PART I: FINANCIAL INFORMATION

ITEM 1. | FINANCIAL STATEMENTS

WisdomTree Investments, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Per Share Amounts)

|  | March 31, 2021 |  |  | December 31, 2020 |
|  | (unaudited) |  |  |  |
Assets |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 62,302 |  |  | $ | 73,425 |
Securities owned, at fair value (including $23,626 and $23,932 invested in WisdomTree ETFs at March 31, 2021 and December 31, 2020, respectively) |  |  | 34,771 |  |  |  | 34,895 |
Accounts receivable (including $27,258 and $26,884 due from related parties at March 31, 2021 and December 31, 2020, respectively) |  |  | 30,341 |  |  |  | 29,455 |
Income taxes receivable |  |  | 126 |  |  |  | — |
Prepaid expenses |  |  | 4,187 |  |  |  | 3,827 |
Other current assets |  |  | 237 |  |  |  | 259 |
Total current assets |  |  | 131,964 |  |  |  | 141,861 |
Fixed assets, net |  |  | 7,432 |  |  |  | 7,579 |
Indemnification receivable (Note 19) |  |  | 22,222 |  |  |  | 27,016 |
Securities held-to-maturity |  |  | 411 |  |  |  | 451 |
Deferred tax assets, net |  |  | 6,215 |  |  |  | 8,063 |
Investments (Note 7) |  |  | 13,849 |  |  |  | 8,112 |
Right of use assets – operating leases (Note 12) |  |  | 15,841 |  |  |  | 16,327 |
Goodwill (Note 21) |  |  | 85,856 |  |  |  | 85,856 |
Intangible assets (Note 21) |  |  | 601,247 |  |  |  | 601,247 |
Other noncurrent assets |  |  | 180 |  |  |  | 180 |
Total assets |  | $ | 885,217 |  |  | $ | 896,692 |
Liabilities and stockholders’ equity |  |  |  |  |  |  |  |
Liabilities |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Fund management and administration payable |  | $ | 17,980 |  |  | $ | 19,564 |
Compensation and benefits payable |  |  | 8,568 |  |  |  | 22,803 |
Deferred consideration – gold payments (Note 9) |  |  | 15,637 |  |  |  | 17,374 |
Operating lease liabilities (Note 12) |  |  | 2,958 |  |  |  | 3,135 |
Income taxes payable |  |  | — |  |  |  | 916 |
Accounts payable and other liabilities |  |  | 11,415 |  |  |  | 10,207 |
Total current liabilities |  |  | 56,558 |  |  |  | 73,999 |
Convertible notes (Note 10) |  |  | 171,163 |  |  |  | 166,646 |
Deferred consideration – gold payments (Note 9) |  |  | 211,509 |  |  |  | 212,763 |
Operating lease liabilities (Note 12) |  |  | 17,012 |  |  |  | 17,434 |
Other noncurrent liabilities (Note 19) |  |  | 22,222 |  |  |  | 27,016 |
Total liabilities |  |  | 478,464 |  |  |  | 497,858 |
Preferred stock – Series A Non-Voting Convertible, par value $0.01; 14.750 shares authorized, issued and outstanding; redemption value of $88,642 and $72,667 at March 31, 2021 and December 31, 2020, respectively) (Note 11) |  |  | 132,569 |  |  |  | 132,569 |
Contingencies (Note 13 ) |  |  |  |  |  |  |  |
Stockholders’ equity |  |  |  |  |  |  |  |
Preferred stock, par value $0.01; 2,000 shares authorized: |  |  | — |  |  |  | — |
Common stock, par value $0.01; 250,000 shares authorized; issued and outstanding: 149,811 and 148,716 at March 31, 2021 and December 31, 2020, respectively |  |  | 1,498 |  |  |  | 1,487 |
Additional paid-in capital |  |  | 314,274 |  |  |  | 317,075 |
Accumulated other comprehensive income |  |  | 985 |  |  |  | 1,102 |
Accumulated deficit |  |  | (42,573 | ) |  |  | (53,399 | )
Total stockholders’ equity |  |  | 274,184 |  |  |  | 266,265 |
Total liabilities and stockholders’ equity |  | $ | 885,217 |  |  | $ | 896,692 |

The accompanying notes are an integral part of these consolidated financial statements
4

Table of Contents
WisdomTree Investments, Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)

|  | Three Months Ended March 31, |
|  | 2021 |  |  | 2020 |
Operating Revenues: |  |  |  |  |  |  |  |
Advisory fees |  | $ | 71,616 |  |  | $ | 62,950 |
Other income |  |  | 1,214 |  |  |  | 924 |
Total revenues |  |  | 72,830 |  |  |  | 63,874 |
Operating Expenses: |  |  |  |  |  |  |  |
Compensation and benefits |  |  | 22,627 |  |  |  | 17,295 |
Fund management and administration |  |  | 15,521 |  |  |  | 14,485 |
Marketing and advertising |  |  | 3,006 |  |  |  | 2,468 |
Sales and business development |  |  | 2,145 |  |  |  | 3,417 |
Contractual gold payments (Note 9) |  |  | 4,270 |  |  |  | 3,760 |
Professional fees |  |  | 2,013 |  |  |  | 1,273 |
Occupancy, communications and equipment |  |  | 1,475 |  |  |  | 1,551 |
Depreciation and amortization |  |  | 252 |  |  |  | 256 |
Third-party distribution fees |  |  | 1,343 |  |  |  | 1,355 |
Acquisition and disposition-related costs |  |  | — |  |  |  | 383 |
Other |  |  | 1,571 |  |  |  | 1,997 |
Total operating expenses |  |  | 54,223 |  |  |  | 48,240 |
Operating income |  |  | 18,607 |  |  |  | 15,634 |
Other Income/(Expenses): |  |  |  |  |  |  |  |
Interest expense |  |  | (2,296 | ) |  |  | (2,419 | )
Gain/(loss) on revaluation of deferred consideration – gold payments (Note 9) |  |  | 2,832 |  |  |  | (2,208 | )
Interest income |  |  | 231 |  |  |  | 163 |
Impairments (Notes 12 and 22) |  |  | (303 | ) |  |  | (19,672 | )
Other losses, net |  |  | (5,893 | ) |  |  | (2,507 | )
Income/(loss) before income taxes |  |  | 13,178 |  |  |  | (11,009 | )
Income tax benefit |  |  | (1,969 | ) |  |  | (2,371 | )
Net income/(loss) |  | $ | 15,147 |  |  | $ | (8,638 | )
Earnings/(loss) per share – basic (Note 18) |  | $ | 0.09 |  |  | $ | (0.06 | )
Earnings/(loss) per share – diluted (Note 18) |  | $ | 0.09 |  |  | $ | (0.06 | )
Weighted-average common shares – basic (Note 18) |  |  | 145,649 |  |  |  | 152,519 |
Weighted-average common shares – diluted (Note 18) |  |  | 161,831 |  |  |  | 152,519 |
Cash dividends declared per common share |  | $ | 0.03 |  |  | $ | 0.03 |

The accompanying notes are an integral part of these consolidated financial statements
5

Table of Contents
WisdomTree Investments, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income/(Loss)
(In Thousands)
(Unaudited)

|  | Three Months Ended March 31, |
|  | 2021 |  |  | 2020 |
Net income/(loss) |  | $ | 15,147 |  |  | $ | (8,638 | )
Other comprehensive loss |  |  |  |  |  |  |  |
Reclassification of foreign currency translation adjustment to other losses, net, upon the sale of WisdomTree Asset Management Canada, Inc. (“WTAMC” or “Canadian ETF business”) (Note 22) |  |  | — |  |  |  | (167 | )
Foreign currency translation adjustment, net of income taxes |  |  | (117 | ) |  |  | (686 | )
Other comprehensive loss |  |  | (117 | ) |  |  | (853 | )
Comprehensive income/(loss) |  | $ | 15,030 |  |  | $ | (9,491 | )

The accompanying notes are an integral part of these consolidated financial statements
6

Table of Contents
WisdomTree Investments, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
(In Thousands)
(Unaudited)

|  | For the Three Months Ended March 31, 2021 |
|  | Common Stock |  |  | Additional Paid-In Capital |  |  | Accumulated Other |  |  | Accumulated Deficit |  |  | Total |
|  | Shares Issued |  |  | Par Value |  |  | Comprehensive Income |
Balance—January 1, 2021 |  |  | 148,716 |  |  | $ | 1,487 |  |  | $ | 317,075 |  |  | $ | 1,102 |  |  | $ | (53,399 | ) |  | $ | 266,265 |
Reclassification of equity component related to convertible notes, net of deferred taxes of $1,022, upon the implementation of ASU 2020-06 (Note 10) |  |  | — |  |  |  | — |  |  |  | (3,682 | ) |  |  | — |  |  |  | 616 |  |  |  | (3,066 | )
Balance—January 1, 2021 (as adjusted) |  |  | 148,716 |  |  | $ | 1,487 |  |  | $ | 313,393 |  |  | $ | 1,102 |  |  | $ | (52,783 | ) |  | $ | 263,199 |
Restricted stock issued and vesting of restricted stock units, net |  |  | 1,510 |  |  |  | 15 |  |  |  | (15 | ) |  |  | — |  |  |  | — |  |  |  | — |
Shares repurchased |  |  | (490 | ) |  |  | (5 | ) |  |  | (2,625 | ) |  |  | — |  |  |  | — |  |  |  | (2,630 | )
Exercise of stock options, net |  |  | 75 |  |  |  | 1 |  |  |  | 378 |  |  |  | — |  |  |  | — |  |  |  | 379 |
Stock-based compensation |  |  | — |  |  |  | — |  |  |  | 3,143 |  |  |  | — |  |  |  | — |  |  |  | 3,143 |
Other comprehensive loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (117 | ) |  |  | — |  |  |  | (117 | )
Dividends |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (4,937 | ) |  |  | (4,937 | )
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 15,147 |  |  |  | 15,147 |
Balance—March 31, 2021 |  |  | 149,811 |  |  | $ | 1,498 |  |  | $ | 314,274 |  |  | $ | 985 |  |  | $ | (42,573 | ) |  | $ | 274,184 |

|  | For the Three Months Ended March 31, 2020 |
|  | Common Stock |  |  | Additional Paid-In Capital |  |  | Accumulated Other |  |  | Accumulated Deficit |  |  | Total |
|  | Shares Issued |  |  | Par Value |  |  | Comprehensive Income |
Balance—January 1, 2020 |  |  | 155,264 |  |  | $ | 1,553 |  |  | $ | 352,658 |  |  | $ | 945 |  |  | $ | (17,744 | ) |  | $ | 337,412 |
Restricted stock issued and vesting of restricted stock units, net |  |  | 1,438 |  |  |  | 14 |  |  |  | (14 | ) |  |  | — |  |  |  | — |  |  |  | — |
Shares repurchased |  |  | (385 | ) |  |  | (3 | ) |  |  | (1,492 | ) |  |  | — |  |  |  | — |  |  |  | (1,495 | )
Exercise of stock options, net |  |  | 107 |  |  |  | — |  |  |  | 240 |  |  |  | — |  |  |  | — |  |  |  | 240 |
Stock-based compensation |  |  | — |  |  |  | — |  |  |  | 3,239 |  |  |  | — |  |  |  | — |  |  |  | 3,239 |
Other comprehensive loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (853 | ) |  |  | — |  |  |  | (853 | )
Dividends |  |  | — |  |  |  | — |  |  |  | (5,136 | ) |  |  | — |  |  |  | — |  |  |  | (5,136 | )
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (8,638 | ) |  |  | (8,638 | )
Balance—March 31, 2020 |  |  | 156,424 |  |  | $ | 1,564 |  |  | $ | 349,495 |  |  | $ | 92 |  |  | $ | (26,382 | ) |  | $ | 324,769 |

The accompanying notes are an integral part of these consolidated financial statements
7

Table of Contents
WisdomTree Investments, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)

|  | Three Months Ended March 31, |
|  | 2021 |  |  | 2020 |
Cash flows from operating activities: |  |  |  |  |  |  |  |
Net income/(loss) |  | $ | 15,147 |  |  | $ | (8,638 | )
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities: |  |  |  |  |  |  |  |
Advisory fees received in gold, other precious metals and bitcoin |  |  | (19,757 | ) |  |  | (13,860 | )
Contractual gold payments |  |  | 4,270 |  |  |  | 3,760 |
Stock-based compensation |  |  | 3,143 |  |  |  | 3,239 |
Deferred income taxes |  |  | 2,904 |  |  |  | 4,526 |
(Gain)/loss on revaluation of deferred consideration – gold payments |  |  | (2,832 | ) |  |  | 2,208 |
Amortization of right of use asset |  |  | 697 |  |  |  | 798 |
Amortization of issuance costs – convertible notes |  |  | 429 |  |  |  | — |
Impairments |  |  | 303 |  |  |  | 19,672 |
Depreciation and amortization |  |  | 252 |  |  |  | 256 |
Gain on sale – Canadian ETF business |  |  | — |  |  |  | (2,877 | )
Amortization of issuance costs - former credit facility |  |  | — |  |  |  | 723 |
Other |  |  | (235 | ) |  |  | (31 | )
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Securities owned, at fair value |  |  | 124 |  |  |  | (2,942 | )
Accounts receivable |  |  | 290 |  |  |  | 5,850 |
Prepaid expenses |  |  | (362 | ) |  |  | (616 | )
Gold, other precious metals and bitcoin |  |  | 14,166 |  |  |  | 9,838 |
Other assets |  |  | 5 |  |  |  | 139 |
Fund management and administration payable |  |  | (1,470 | ) |  |  | 537 |
Compensation and benefits payable |  |  | (14,245 | ) |  |  | (22,688 | )
Income taxes receivable/payable |  |  | (1,028 | ) |  |  | (2,032 | )
Securities sold, but not yet purchased, at fair value |  |  | — |  |  |  | (112 | )
Operating lease liabilities |  |  | (918 | ) |  |  | (926 | )
Accounts payable and other liabilities |  |  | 982 |  |  |  | 542 |
Net cash provided by/(used in) operating activities |  |  | 1,865 |  |  |  | (2,634 | )
Cash flows from investing activities: |  |  |  |  |  |  |  |
Purchase of investments |  |  | (5,500 | ) |  |  | — |
Purchase of fixed assets |  |  | (103 | ) |  |  | (50 | )
Proceeds from held-to-maturity securities maturing or called prior to maturity |  |  | 38 |  |  |  | 6,030 |
Proceeds from sale of Canadian ETF business, net |  |  | — |  |  |  | 2,774 |
Net cash (used in)/provided by investing activities |  |  | (5,565 | ) |  |  | 8,754 |
Cash flows from financing activities: |  |  |  |  |  |  |  |
Dividends paid |  |  | (4,937 | ) |  |  | (5,136 | )
Shares repurchased |  |  | (2,630 | ) |  |  | (1,495 | )
Repayment of debt |  |  | — |  |  |  | (5,000 | )
Proceeds from exercise of stock options |  |  | 379 |  |  |  | 240 |
Net cash used in financing activities |  |  | (7,188 | ) |  |  | (11,391 | )
Decrease in cash flow due to changes in foreign exchange rate |  |  | (235 | ) |  |  | (1,272 | )
Decrease in cash and cash equivalents |  |  | (11,123 | ) |  |  | (6,543 | )
Cash and cash equivalents—beginning of year |  |  | 73,425 |  |  |  | 74,972 |
Cash and cash equivalents—end of period |  | $ | 62,302 |  |  | $ | 68,429 |
Supplemental disclosure of cash flow information: |  |  |  |  |  |  |  |
Cash paid for taxes |  | $ | 1,278 |  |  | $ | 1,147 |
Cash paid for interest |  | $ | — |  |  | $ | 2,312 |

NON-CASH
ACTIVITIES
On January 1, 2021, the Company reclassified the equity component related to the convertible notes, net of deferred taxes, increasing retained earnings by $616, increasing the carrying value of the convertible notes by $4,088, reducing additional
paid-in capital by
$3,682 and reducing deferred tax liabilities by $1,022, upon the implementation of Accounting Standards Update (“ASU”)
2020-06,
Debt – Debt with Conversion and Other Options
(Note 10).
The accompanying notes are an integral part of these consolidated financial statements
8

Table of Contents
WisdomTree Investments, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(In Thousands, Except Share and Per Share Amounts)
1. Organization and Description of Business
WisdomTree Investments, Inc., through its global subsidiaries (collectively, “WisdomTree” or the “Company”), is an exchange traded product (“ETP”) sponsor and asset manager headquartered in New York. WisdomTree offers ETPs covering equity, commodity, fixed income,
leveraged-and-inverse,
currency, cryptocurrency and alternative strategies. The Company has the following wholly-owned operating subsidiaries:

| • |  | WisdomTree Asset Management, Inc. is a New York based investment adviser registered with the SEC, providing investment advisory and other management services to the WisdomTree Trust (“WTT”) and WisdomTree exchange-traded funds (“ETFs”). The WisdomTree ETFs are issued in the U.S. by WTT. WTT, a non-consolidated third party, is a Delaware statutory trust registered with the SEC as an open-end management investment company. The Company has licensed to WTT the use of certain of its own indexes on an exclusive basis for the WisdomTree ETFs in the U.S.

| • |  | WisdomTree Management Jersey Limited (“ManJer”) is a Jersey based management company providing management services to seven issuers (the “ManJer Issuers”) in respect of the ETPs issued and listed by the ManJer Issuers covering commodity, currency, cryptocurrency and leveraged-and-inverse strategies.

| • |  | WisdomTree Multi Asset Management Limited (“WTMAML”) is a Jersey based management company providing management services to WisdomTree Multi Asset Issuer PLC (“WMAI”) in respect of the ETPs issued by WMAI. WMAI, a non-consolidated third party, is a public limited company domiciled in Ireland.

| • |  | WisdomTree Management Limited (“WML”) is an Ireland based management company providing management services to WisdomTree Issuer ICAV (“WTI”) in respect of the WisdomTree UCITS ETFs issued by WTI. WTI, a non-consolidated third party, is a public limited company domiciled in Ireland.

| • |  | WisdomTree UK Limited (“WTUK”) is a U.K. based company registered with the Financial Conduct Authority currently providing distribution and support services to ManJer, WTMAML and WML.

| • |  | WisdomTree Europe Limited is a U.K. based company which is the legacy distributor of the WMAI ETPs and WisdomTree UCITS ETFs. These services are now provided directly by WTUK. WisdomTree Europe Limited is no longer r e gulated and does not provide any regulated services.

| • |  | WisdomTree Ireland Limited is an Ireland based company authorized by the Central Bank of Ireland providing distribution services to ManJer, WTMAML and WML.

| • |  | WisdomTree Commodity Services, LLC (“WTCS”) is a New York based company that served as the managing owner and commodity pool operator of the WisdomTree Continuous Commodity Index Fund (“GCC”) until December 2020 when GCC was reorganized into the WisdomTree Enhanced Commodity Strategy Fund under WTT.

2. Significant Accounting Policies
Basis of Presentation
These consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and in the opinion of management reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of financial condition, results of operations, and cash flows for the periods presented. The consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Consolidation
The Company consolidates entities in which it has a controlling financial interest. The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity (“VOE”) or a variable interest entity (“VIE”). The usual condition for a controlling financial interest in a VOE is ownership of a majority voting interest. If the Company has a majority voting interest in a VOE, the entity is consolidated. The Company has a controlling financial interest in a VIE when the Company has a variable interest that provides it with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.
The Company reassesses its evaluation of whether an entity is a VIE when certain reconsideration events occur.
9

Table of Contents
Segment and Geographic Information
The Company, through its subsidiaries in the U.S. and Europe, conducts business as a single operating segment as an ETP sponsor and asset manager which is based upon the Company’s current organizational and management structure, as well as information used by the chief operating decision maker to allocate resources and other factors.
Foreign Currency Translation
Assets and liabilities of subsidiaries whose functional currency is not the U.S. dollar are translated based on the end of period exchange rates from local currency to U.S. dollars. Results of operations are translated at the average exchange rates in effect during the period. The impact of the foreign currency translation adjustment is included in the Consolidated Statements of Comprehensive Income/(Loss) as a component of other comprehensive income/(loss).
Use of Estimates
The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet dates and the reported amounts of revenues and expenses for the periods presented. Actual results could differ materially from those estimates.
Revenue Recognition
The Company earns substantially all of its revenue in the form of advisory fees from its ETPs and recognizes 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 the Company has a right to invoice.
Contractual Gold Payments
Contractual gold payments are measured and paid monthly based upon the average daily spot price of gold (Note 9).
Marketing and Advertising
Marketing and advertising costs, including media advertising and production costs, are expensed when incurred.
Depreciation and Amortization
Depreciation is provided for using the straight-line method over the estimated useful lives of the related assets as follows:

Equipment |  | 5 years |  |
Furniture and fixtures |  | 15 years |  |

Leasehold improvements are amortized over the term of their respective leases or service lives of the improvements, whichever is shorter. Fixed assets are recorded at cost less accumulated depreciation and amortization.
Stock-Based Awards
Accounting for stock-based compensation requires the measurement and recognition of compensation expense for all equity awards based on estimated fair values. Stock-based compensation is measured based on the grant-date fair value of the award and is amortized over the relevant service period. Forfeitures are recognized when they occur.
Third-Party Distribution Fees
The Company pays a percentage of its advisory fee revenues based on incremental growth in assets under management (“AUM”), subject to caps or minimums, to marketing agents to sell WisdomTree ETFs and for including WisdomTree ETFs on third-party customer platforms and recognizes these expenses as incurred.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be classified as cash equivalents. The Company maintains deposits with financial institutions in an amount that is in excess of federally insured limits.
10

Table of Contents
Accounts Receivable
Accounts receivable are customer and other obligations due under normal trade terms. The Company measures credit losses, if any, by applying historical loss rates, adjusted for current conditions and reasonable and supportable forecasts to amounts outstanding using the aging method.
Impairment of Long-Lived Assets
The Company performs a review for the impairment of long-lived assets when events or changes in circumstances indicate that the estimated undiscounted future cash flows expected to be generated by the assets are less than their carrying amounts or when other events occur which may indicate that the carrying amount of an asset may not be recoverable.
Securities Owned and Securities Sold, but not yet Purchased (at fair value)
Securities owned and securities sold, but not yet purchased are securities classified as either trading or available-for-sale (“AFS”). These securities are recorded on their trade date and are measured at fair value. All equity securities are classified by the Company as trading. Debt securities are classified based primarily on the Company’s intent to hold or sell the security. Changes in the fair value of debt securities classified as trading and AFS are reported in other income and other comprehensive income, respectively, in the period the change occurs. Debt securities classified as AFS are assessed for impairment on a quarterly basis and an estimate for credit loss is provided when the fair value of the AFS debt security is below its amortized cost basis. Credit-related impairments are recognized in earnings with a corresponding adjustment to the security’s amortized cost basis if the Company intends to sell the impaired AFS debt security or it is more likely than not the Company will be required to sell the security before recovering its amortized cost basis. Other credit-related impairments are recognized as an allowance with a corresponding adjustment to earnings. Impairments resulting from noncredit-related factors are recognized in other comprehensive income. Amounts recorded in other comprehensive income are reclassified into earnings upon sale of the AFS debt security using the specific identification method.
Securities
Held-to-Maturity
The Company accounts for certain of its securities as
held-to-maturity
on a trade date basis, which are recorded at amortized cost. For
held-to-maturity
securities, the Company has the intent and ability to hold these securities to maturity and it is not
more-likely-than-not
that the Company will be required to sell these securities before recovery of their amortized cost bases, which may be maturity.
Held-to-maturity
securities are placed on
non-accrual
status when the Company is in receipt of information indicating collection of interest is doubtful. Cash received on
held-to-maturity
securities placed on
non-accrual
status is recognized on a cash basis as interest income if and when received.
The Company reviews its portfolio of
held-to-maturity
securities for impairment on a quarterly basis, recognizing an allowance, if any, by applying an estimated loss rate after consideration for the nature of collateral securing the financial asset as well as potential future changes in collateral values and historical loss information for financial assets secured with similar collateral.
Investments in pass-through government-sponsored enterprises (“GSEs”) are determined to have an estimated loss rate of zero due to an implicit U.S. government guarantee.
Investments
The Company accounts for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed within Accounting Standards Update (“ASU”)
2016-01,
Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities
, to the extent such investments are not subject to consolidation or the equity method. 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.
Goodwill
Goodwill is the excess of the purchase price over the fair values of the identifiable net assets at the acquisition date. The Company tests 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.
11

Table of Contents
Goodwill is allocated to the Company’s U.S. Business and European Business components. For impairment testing purposes, these components are aggregated as a single reporting unit as they fall under the same operating segment and have similar economic characteristics.
Goodwill is assessed for impairment annually on November 30
th
. When performing its goodwill impairment test, the Company considers a qualitative assessment, when appropriate, and a quantitative assessment using the market approach and its market capitalization when determining the fair value of the reporting unit.
Intangible Assets
Indefinite-lived intangible assets are tested for impairment at least annually and are also 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 values are less than their carrying values.
Finite-lived intangible assets, if any, are amortized over their estimated useful life, which is the period over which the assets are expected to contribute directly or indirectly to the future cash flows of the Company. These intangible assets are tested for impairment at the time of a triggering event, if one were to occur. Finite-lived intangible assets may be impaired when the estimated undiscounted future cash flows generated from the assets are less than their carrying amounts.
The Company may rely on a qualitative assessment when performing its 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 all of the Company’s intangible assets is November 30
th
.
Leases
The Company accounts for its lease obligations in accordance with Accounting Standards Codification (“ASC”) Topic 842,
Leases
(ASC 842), which requires the recognition of both (i) a lease liability equal to the present value of the remaining lease payments and (ii) an offsetting
right-of-use
asset. The remaining lease payments are discounted using the rate implicit in the lease, if known, or otherwise the Company’s incremental borrowing rate. After lease commencement,
right-of-use
assets are assessed for impairment and otherwise are amortized over the remaining lease term on a straight-line basis. These recognition requirements are not applied to short-term leases which are those with a lease term of 12 months or less. Instead, lease payments associated with short-term leases are recognized as an expense on a straight-line basis over the lease term.
ASC 842 also provides a practical expedient which allows for consideration in a contract to be accounted for as a single lease component rather than allocated between lease and
non-lease
components. The Company has elected to apply this practical expedient to all lease contracts, where applicable.
Deferred Consideration – Gold Payments
Deferred consideration represents the present value of an obligation to pay gold to a third party into perpetuity and is measured using forward-looking gold prices observed on the CMX exchange, a selected discount rate and perpetual growth rate (Note 9). Changes in the fair value of this obligation are reported as gain/(loss) on revaluation of deferred consideration – gold payments on the Company’s Consolidated Statements of Operations.
Convertible Notes
Convertible notes are carried at amortized cost, net of issuance costs. Effective January 1, 2021, the Company early adopted ASU
2020-06
Debt – Debt with Conversion and Other Options
under the modified retrospective approach. ASU
2020-06
provides for convertible instruments being reported as a single liability (applicable to the convertible notes) or equity with no separate accounting for embedded conversion features unless the conversion feature meets the criteria for accounting under the substantial premium model or does not qualify for a derivative scope exception. Previously, the convertible notes were required to be separated into their liability and equity components by allocating the issuance proceeds to each of those components. The liability component was allocated proceeds equal to the estimated fair value of similar debt instruments without the conversion option. The difference between the gross proceeds received from the issuance of the convertible notes and the proceeds allocated to the liability component represented the residual amount that was recorded in additional
paid-in
capital. Interest expense is recognized using the effective interest method and includes amortization of issuance costs over the life of the debt.
Contingencies
The Company may be subject to reviews, inspections and investigations by regulatory authorities as well as legal proceedings arising in the ordinary course of business. The Company evaluates the likelihood of an unfavorable outcome of all legal or regulatory proceedings to which it is a party and accrues a loss contingency when the loss is probable and reasonably estimable.
12

Table of Contents
Contingent Payments
The Company recognizes contingent payments when the contingency is resolved and the gain is realized.
Earnings per Share
Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period. Net income available to common stockholders represents net income of the Company reduced by an allocation of earnings to participating securities. The Series A
non-voting
convertible preferred stock (Note 18) and unvested share-based payment awards that contain
non-forfeitable
rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of EPS pursuant to the
two-class
method. Share-based payment awards that do not contain such rights are not deemed participating securities and are included in diluted shares outstanding (if dilutive).
Diluted EPS is calculated under the treasury stock method and the
two-class
method. The calculation that results in the lowest diluted EPS amount for the common stock is reported in the Company’s consolidated financial statements. The treasury stock method includes the dilutive effect of potential common shares including unvested stock-based awards, the Series A
non-voting
convertible preferred stock and the convertible notes, if any. Potential common shares associated with the Series A
non-voting
convertible preferred stock and the convertible notes are co
m
puted under the
if-converted
method. Potential common shares associated with the conversion option embedded in the convertible notes are dilutive when the Company’s average stock price exceeds the conversion price.
Income Taxes
The Company accounts for income taxes using the liability method, which requires the determination of deferred tax assets and liabilities based on the differences between the financial and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is
more-likely-than-not
that some portion or all the deferred tax assets will not be realized.
Tax positions are evaluated utilizing a
two-step
process. The Company first determines whether any of its tax positions are
more-likely-than-not
to be sustained upon examination, based solely on the technical merits of the position. Once it is determined that a position meets this recognition threshold, the position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company records interest expense and penalties related to tax expenses as income tax expense.
The Global Intangible
Low-Taxed
Income (“GILTI”) provisions of the Tax Reform Act requires the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. An accounting policy election is available to either account for the tax effects of GILTI in the period that is subject to such taxes or to provide deferred taxes for book and tax basis differences that upon reversal may be subject to such taxes. The Company accounts for the tax effects of these provisions in the period that is subject to such tax.
Non-income
based taxes are recorded as part of other liabilities and other expenses.
Recently Adopted Accounting Pronouncements
On January 1, 202
1
, the Company early adopted ASU
2020-06,
Debt – Debt with Conversion and Other Options
(ASU
2020-06)
under the modified retrospective approach. Under the ASU, the accounting for convertible instruments was simplified by removing major separation models required under current GAAP. Accordingly, more convertible instruments are reported as a single liability or equity with no separate accounting for embedded conversion features. Certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception are removed and, as a result, more equity contracts will qualify for the scope exception. The ASU also simplifies the diluted
earnings-per-share
calculation in certain areas. Upon the adoption of this
ASU,
the Company reclassified the equity component related to the convertible notes, net of deferred taxes, increasing retained earnings by $616, increasing the carrying value of the convertible notes by $4,088, reducing additional
paid-in capital
by $3,682 and reducing deferred tax liabilities by $1,022. These updates also reduced interest expense recognized on the Company’s convertible notes by approximately $420 per quarter (Note 10).
On January 1, 2021, the Company adopted ASU
2019-12,
Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes
(ASU
2019-12).
The main objective of the standard is to reduce complexity in the accounting for income taxes by removing the following exceptions: (1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income); (2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; (3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; and (4) exception to the general methodology for calculating income taxes in an interim period when a
year-to-date
loss exceeds the anticipated loss for the year. The standard also simplifies the accounting for income taxes by enacting the following: (a) requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and accoun
t
for any incremental amount as a
non-income-based
tax; (b) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered as a separate transaction; (c) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; and (d) requiring that an entity reflect the enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The Company has determined that the adoption of this standard did not have a material impact on its financial statements.
13

Table of Contents
3. Cash and Cash Equivalents
Of the total cash and cash equivalents of $62,302 and $73,425 at March 31, 2021 and December 31, 2020, respectively, $59,919 and $70,911 were held at two financial institutions. At March 31, 2021 and December 31, 2020, cash equivalents were approximately $502 and $660, respectively.
Certain of the Company’s international subsidiaries are required to maintain a minimum level of regulatory capital,
which was $12,222
and $10,745 at March 31, 2021 and December 31, 2020, respectively. These requirements are generally satisfied by cash on hand.
In addition, the Company collateralized its U.S. office lease through a standby letter of credit totaling $1,384 which is restricted from further use.
4. Fair Value Measurements
The fair value of financial instruments is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., “the exit price”) in an orderly transaction between market participants at the measurement date. ASC 820,
Fair Value Measurement
, establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs reflect assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the transparency of inputs as follows:

Level 1 – |  | Quoted prices for identical instruments in active markets.
Level 2 – |  | Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 – |  | Instruments whose significant drivers are unobservable.

The availability of observable inputs can vary from product to product and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The tables below summarize the categorization of the Company’s assets and liabilities measured at fair value. During the three months ended March 31, 2021 and 2020 there were no transfers between Levels 2 and 3.

|  | March 31, 2021 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 502 |  |  | $ | 502 |  |  | $ | — |  |  | $ | — |
Securities owned, at fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ETFs |  |  | 23,862 |  |  |  | 23,862 |  |  |  | — |  |  |  | — |
Pass-through GSEs |  |  | 8,832 |  |  |  | — |  |  |  | 8,832 |  |  |  | — |
Corporate bonds |  |  | 2,077 |  |  |  | — |  |  |  | 2,077 |  |  |  | — |
Total |  | $ | 35,273 |  |  | $ | 24,364 |  |  | $ | 10,909 |  |  | $ | — |
Non-recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securrency, Inc. – Series A convertible preferred stock (1) |  | $ | 8,349 |  |  | $ | — |  |  | $ | — |  |  | $ | 8,349 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred consideration (Note 9) |  | $ | 227,146 |  |  | $ | — |  |  | $ | — |  |  | $ | 227,146 |

(1) | Fair value determined on March 8, 2021 (Note 7).

14

Table of Contents

|  | December 31, 2020 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 660 |  |  | $ | 660 |  |  | $ | — |  |  | $ | — |
Securities owned, at fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ETFs |  |  | 24,165 |  |  |  | 24,165 |  |  |  | — |  |  |  | — |
Pass-through GSEs |  |  | 8,613 |  |  |  | — |  |  |  | 8,613 |  |  |  | — |
Corporate bonds |  |  | 2,117 |  |  |  | — |  |  |  | 2,117 |  |  |  | — |
Total |  | $ | 35,555 |  |  | $ | 24,825 |  |  | $ | 10,730 |  |  | $ | — |
Non-recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
AdvisorEngine Inc. (“AdvisorEngine”) – Financial interests (1) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Thesys Group, Inc. (“Thesys”) – Series Y Preferred Stock (1) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred consideration (Note 12) |  | $ | 230,137 |  |  | $ | — |  |  | $ | — |  |  | $ | 230,137 |
Non-recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Convertible notes (2) |  | $ | 170,191 |  |  | $ | — |  |  | $ | 170,191 |  |  | $ | — |

(1) | The fair value of the AdvisorEngine financial interests of $9,592 was determined on May 4, 2020, the date in which these financial interests were sold (Note 22). Thesys was written down to zero on September 30, 2020.

(2) | Fair value of $145,847 and $24,344 determined on June 16, 2020 and August 13, 2020, respectively (Note 10).

Recurring Fair Value Measurements - Methodology
Cash Equivalents (Note 3)
– These financial assets represent cash invested in highly liquid investments with ori
g
inal maturities of less than 90 days. These investments are valued at par, which approximates fair value, and are classified as Level 1 in the fair value hierarchy.
Securities Owned (Note 5)
– Securities owned are investments in ETFs, pass-through GSEs and corporate bonds. ETFs are generally traded in active, quoted and highly liquid markets and are therefore classified as Level 1 in the fair value hierarchy. Pricing of pass-through GSEs and corporate bonds include consideration given to collateral characteristics and market assumptions related to yields, credit risk and prepayments and are therefore classified as Level 2 in the fair value hierarchy.
Deferred Consideration (Note 9)
– Deferred consideration represents the present value of an obligation to pay gold into perpetuity.
The following table presents a reconciliation of beginning and ending balances of recurring fair value measurements classified as Level 3:

|  | Three Months Ended March 31, |
|  | 2021 |  |  | 2020 |
Deferred consideration (Note 9) |  |  |  |  |  |  |  |
Beginning balance |  | $ | 230,137 |  |  | $ | 173,024 |
Net realized losses (1) |  |  | 4,270 |  |  |  | 3,760 |
Net unrealized (gains)/losses (2) |  |  | (2,832 | ) |  |  | 2,208 |
Settlements |  |  | (4,429 | ) |  |  | (3,692 | )
Ending balanc e |  | $ | 227,146 |  |  | $ | 175,300 |

(1) | Recorded as contractual gold payments expense on the Company’s Consolidated Statements of Operations.

(2) | Recorded as gain/(loss) on revaluation of deferred consideration – gold payments on the Company’s Consolidated Statements of Operations.

15

Table of Contents
5. Securities Owned
These securities consist of the following:

|  | March 31, 2021 |  |  | December 31, 2020 |
Securities Owned |  |  |  |  |  |  |  |
Trading securities |  | $ | 34,771 |  |  | $ | 34,895 |

During the three months ended March 31, 2021 and 2020, the Company recognized trading losses of $561 and $196,
respectively on securities owned that were still held at the reporting dates.
The Company had no AFS debt securities at March 31, 2021 and December 31, 2020.
6. Securities
Held-to-Maturity
The following table is a summary of the Company’s securities
held-to-maturity:

|  | March 31, 2021 |  |  | December 31, 2020 |
Debt instruments: Pass-through GSEs (amortized cost) |  | $ | 411 |  |  | $ | 451 |

During the three months ended March 31, 2021 and 2020, the Company received proceeds of $38 and $6,030, respectively, from
held-to-maturity
securities maturing or being called prior to maturity.
The following table summarizes unrealized gains, losses, and fair value (classified as Level 2 within the fair value hierarchy) of securities
held-to-maturity:

|  | March 31, 2021 |  |  | December 31, 2020 |
Cost/amortized cost |  | $ | 411 |  |  | $ | 451 |
Gross unrealized gains |  |  | 20 |  |  |  | 30 |
Gross unrealized losses |  |  | (1 | ) |  |  | (12 | )
Fair value |  | $ | 430 |  |  | $ | 469 |

An allowance for credit losses was not provided on the Company’s
held-to-maturity
securities as all securities are investments in pass-through GSEs which are determined to have an estimated loss rate of zero due to an implicit U.S. government guarantee.
The following table sets forth the maturity profile of the securities
held-to-maturity;
however, these securities may be called prior to maturity date:

|  | March 31, 2021 |  |  | December 31, 2020 |
Due within one year |  | $ | — |  |  | $ | — |
Due one year through five years |  |  | — |  |  |  | — |
Due five years through ten years |  |  | — |  |  |  | — |
Due over ten years |  |  | 411 |  |  |  | 451 |
Total |  | $ | 411 |  |  | $ | 451 |

16

Table of Contents
7. Investments
The following table sets forth the Company’s investments:

|  | March 31, 2021 |  |  | December 31, 2020 |
|  | Carrying Value |  |  | Cost |  |  | Carrying Value |  |  | Cost |
Securrency, Inc. – Series A convertible preferred stock |  | $ | 8,349 |  |  | $ | 8,112 |  |  | $ | 8,112 |  |  | $ | 8,112 |
Securrency, Inc. – Series B convertible preferred stock |  |  | 5,500 |  |  |  | 5,500 |  |  |  | — |  |  |  | — |
Total |  | $ | 13,849 |  |  | $ | 13,612 |  |  | $ | 8,112 |  |  | $ | 8,112 |

Securrency, Inc. – Preferred Stock
The Company owns approximately 25% (or 20% on a fully-diluted basis) of the capital stock of Securrency, Inc. (“Securrency”), a leading developer of institutional-grade blockchain-based financial and regulatory technology, issued as a result of strategic investments totaling $13,612. In consideration of such investments, the Company received 5,178,488 shares of Series A convertible preferred stock (“Series A Shares”) and 2,004,665 shares of Series B convertible preferred stock (“Series B Shares”). The Series B Shares contain a liquidation preference that is pari passu with shares of Series
B-1
convertible preferred stock (which is substantially the same as the Series B Shares except that it has l
i
mited voting rights) and senior to that of the holders of the Series A Shares, which is senior to the holders of common stock. Otherwise, the Series A Shares and Series B Shares have substantially the same
terms
, are convertible into common stock at the option of the Company and contain various rights and protections including a
non-cumulative
6.0% dividend, payable if and when declared by the board of directors of Securrency. In addition, the Series A Shares and Series B Shares (together with the Series
B-1
convertible preferred stock) are separately redeemable, with respect to all of the shares outstanding of the applicable series of preferred stock (
subject to certain regulatory restrictions of certain investors), for the original issue price thereof, plus all declared and unpaid dividends, upon approval by holders of at least
60%
of the Series A Shares (at any time on or after December 31, 2029) and
90%
of the Series B Shares (at any time on or after March 31, 2031).
The investment is accounted for under the measurement alternative prescribed within ASU
2016-01,
as it does not have a readily determinable fair value and is not considered to be
in-substance
common stock. The investment is assessed for impairment and similar observable transactions on a quarterly basis. On March 8, 2021, the Company recognized a gain of $237
on its Series A Shares, which was re-measured to fair value upon the issuance of Securrency’s Series B Shares. Fair value was determined using the backsolve method, a valuation approach that determines the value of shares for companies with complex capital structures based upon the price paid for shares recently issued. Fair value is allocated across the capital structure using the Black-Scholes option pricing model.
The table below presents the inputs used in backsolve valuation approach (classified as Level 3 in the fair value hierarchy):

Inputs (Initial Recognition – March 8, 2021) |
Expected volatility |  |  | 55 | %
Time to exit (in years) |  |  | 5 |

There was no impairment recognized during the three months ended March 31, 2020 based upon a qualitative assessment.
8. Fixed Assets, net
The following table summarizes fixed assets:

|  | March 31, 2021 |  |  | December 31, 2020 |
Equipment |  | $ | 2,959 |  |  | $ | 2,836 |
Furniture and fixtures |  |  | 2,225 |  |  |  | 2,225 |
Leasehold improvements |  |  | 11,021 |  |  |  | 11,012 |
Less: accumulated depreciation and amortization |  |  | (8,773 | ) |  |  | (8,494 | )
Total |  | $ | 7,432 |  |  | $ | 7,579 |

17

Table of Contents
9. Deferred Consideration
Deferred consideration represents an obligation the Company assumed in connection with its acquisition of the European exchange-traded commodity, currency and
leveraged-and-inverse
business of ETFS Capital Limited (“ETFS Capital”) which occurred on April 11, 2018 (“ETFS Acquisition”). The obligation is for fixed payments to ETFS Capital of physical gold bullion equating to 9,500 ounces of gold per year through March 31, 2058 and then subsequently reduced to 6,333 ounces of gold continuing into perpetuity (“Contractual Gold Payments”).
The Contractual Gold Payments are paid from advisory fee income generated by any Company-sponsored financial product backed by physical gold and are subject to adjustment and reduction for declines in advisory fee income generated by such products, with any reduction remaining due and payable until paid in full. ETFS Capital’s recourse is limited to such advisory fee income and it has no recourse back to the Company for any unpaid amounts that exceed advisory fees earned. ETFS Capital ultimately has the right to claw back Gold Bullion Securities Ltd. (a physically backed gold ETP issuer) if the Company fails to remit any amounts due.
The Company determined the present value of the deferred consideration of $227,146 and $230,137 at March 31, 2021 and December 31, 2020 using the following assumptions:

|  | March 31, 2021 |  |  | December 31, 2020 |
Forward-looking gold price (low) – per ounce |  | $ | 1,717 |  |  | $ | 1,903 |
Forward-looking gold price (high) – per ounce |  | $ | 3,201 |  |  | $ | 2,662 |
Forward-looking gold price (weighted average) – per ounce |  | $ | 2,136 |  |  | $ | 2,117 |
Discount rate |  |  | 9.0 % |  |  |  | 9.0 % |
Perpetual growth rate |  |  | 1.7 % |  |  |  | 0.9 % |

The forward-looking gold prices at March 31, 2021 were extrapolated from the last observable CMX exchange price (beyond 2026) and the weighted-average price per ounce was derived from the relative present values of the annual payment obligations. The perpetual growth rate was determined based upon the increase in observable forward-looking gold prices through 2026. This obligation is classified as Level 3 as the discount rate and extrapolated forward-looking gold prices are significant unobservable inputs. An increase in spot gold prices, forward-looking gold prices and the perpetual growth rate would result in an increase in deferred consideration, whereas an increase in the discount rate would reduce the fair value.
Current amounts payable were $15,637 and $17,374 and long-term amounts payable were $211,509 and $212,763, respectively, at March 31, 2021 and December 31, 2020, respectively.
During the three months ended March 31, 2021 and 2020, the Company recognized the following in respect of deferred consideration:

|  | Three Months Ended March 31, |
|  | 2021 |  |  | 2020 |
Contractual Gold Payments |  | $ | 4,270 |  |  | $ | 3,760 |
Contractual Gold Payments – gold ounces paid |  |  | 2,375 |  |  |  | 2,375 |
Gain/(loss) on revaluation of deferred consideration – gold payments(1) |  | $ | 2,832 |  |  | $ | (2,208 | )

(1) | Gains on revaluation of deferred consideration – gold payments result from a decrease in spot gold prices, a decrease in the forward-looking price of gold, a decrease in the perpetual growth rate and an increase in the discount rate used to compute the present value of the annual payment obligations. Losses on revaluation of deferred consideration – gold payments result from an increase in spot gold prices, an increase in the forward-looking price of gold, an increase in the perpetual growth rate and a decrease in the discount rate used to compute the annual payment obligations.

10. Convertible Notes
On June 16, 2020, the
Company issued and sold $150,000 in aggregate principal amount of 4.25% Convertible Senior Notes due 2023
(the “Existing Notes”) pursuant to an Indenture (the “Indenture”), dated June 16, 2020, between the Company and U.S. Bank National Association, as trustee (the “Trustee”), in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. On August 13, 2020, the Company issued and sold $25,000 in aggregate principal amount of 4.25% Convertible Senior Notes due
2023 (the “Additional Notes”) at a price equal to 101% of the principal amount thereof, plus interest deemed to have accrued since June 16, 2020, and constitute a further issuance of, and form a single series with, the Company’s Existing Notes (the Additional Notes and together with the Existing Notes, the “Convertible Notes”). After the issuance of the Additional Notes, the Company had
$175,000
aggregate principal amount of Convertible Notes outstanding.
18

Table of Contents
Key terms of the Convertible Notes are as follows:

| • |  | Maturity date : June 15, 2023, unless earlier converted, repurchased or redeemed.

| • |  | Interest rate of 4.25% : Payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 15, 2020.

| • |  | Conversion price of $5.92 : Convertible at an initial conversion rate of 168.9189 shares of the Company’s common stock, per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $5.92 per share).

| • |  | Conversion : Holders may convert at their option at any time prior to the close of business on the business day immediately preceding March 15, 2023 only under the following circumstances: (i) if the last reported sale price of the Company’s 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 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 the Company’s common stock and the conversion rate on each such trading day; (iii) upon a notice of redemption delivered by the Company in accordance with the terms of the Indenture 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 March 15, 2023 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, the Company will pay cash up to the aggregate principal amount of the Convertible Notes to be converted. At its election, the Company will also settle its conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted in either cash, shares of its common stock or a combination of cash and shares of its common stock.

| • |  | Redemption price of $7 . 70 : The Company may redeem for cash all or any portion of the notes, at its option, on or after June 20, 2021 and on or prior to the 55 th scheduled trading day immediately preceding the maturity date, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days, including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides 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 the Company 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 Indenture) 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 270.2702 shares of the Company’s common stock per $1,000 principal amount of the Convertible Notes (the equivalent of 47,297,285 shares of the Company’s common stock), subject to adjustment.

| • |  | Seniority and Security : The Convertible Notes are the Company’s senior unsecured obligations, but are subordinated in right of payment to the Company’s obligations to make certain redemption payments (if and when due) in respect of its Series A Non-Voting Convertible Preferred Stock (Note 11).

The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Convertible Notes outstanding may declare the entire principal amount of all the Convertible Notes to be repurchased, plus any accrued special interest, if any, to be immediately due and payable.
The following table provides a summary of the carrying value of the Convertible Notes at March 31, 2021 and December 31, 2020:

|  | March 31, 2021 |  |  | December 31, 2020 |
Principal amount |  | $ | 175,000 |  |  | $ | 175,000 |
Plus: premium on Additional Notes |  |  | 250 |  |  |  | 250 |
Gross proceeds |  |  | 175,250 |  |  |  | 175,250 |
Less: Unamortized discount (1) |  |  | — |  |  |  | (4,207 | )
Less: Unamortized issuance costs (1) |  |  | (4,087 | ) |  |  | (4,397 | )
Carrying amount |  | $ | 171,163 |  |  | $ | 166,646 |
Effective interest rate (2) |  |  | 5.30 | % |  |  | 6.29 | %

(1) | Unamortized discount was reduced by $4,207 and unamortized issuance costs increased by $119 upon the early adoption of ASU 2020-06 on January 1, 2021. The discount previously arose from the bifurcation of the conversion option which occurred prior to the adoption of ASU 2020-06. The unamortized issuance costs are reported net of the unamortized premium on the Additional Notes.

19

Table of Contents

(2) | Includes amortization of the issuance costs allocated to the Convertible Notes and amortization of the premium associated with the Additional Notes. The effective interest rate prior to January 1, 2021 also included amortization of the discount arising from the bifurcation of the conversion option.

On January 1, 2021, the Company early adopted ASU
2020-06,
which simplified the accounting for convertible instruments by providing for such instruments being reported as a single liability (applicable to the convertible notes) or equity with no separate accounting for the embedded conversion features unless the conversion feature meets the criteria for accounting under the substantial premium model or does not qualify for a derivative scope exception. Previously, convertible instruments were required to be separated into their liability and equity components by allocating the issuance proceeds to each of those components. The discount arising from the recognition of the equity component was amortized as interest expense over the life of the Convertible Notes.
Interest expense on the convertible notes during the three months ended March 31, 2021 was $2,296. Interest expense during the three months ended March 31, 2020 of $2,419 was attributable to our former credit facility which was terminated on June 16, 2020. Interest payable of $2,209 and $342 at March 31, 2021 and December 31, 2020 is included in accounts payable and other liabilities on the Consolidated Balance Sheets.
The fair value of the Convertible Notes (classified as Level 2 in the fair value hierarchy) was $214,972 at March 31, 2021. The
if-converted
value of the Convertible Notes was $184,755 at March 31, 2021.
11. Preferred Shares
On April 10, 2018, the Company filed a Certificate of Designations of Series A
Non-Voting
Convertible Preferred Stock with the Secretary of State of the State of Delaware establishing the rights, preferences, privileges, qualifications, restrictions, and limitations relating to the Preferred Shares (defined below). The Preferred Shares are intended to provide ETFS Capital with economic rights equivalent to the Company’s common stock on an
as-converted
basis. The Preferred Shares have no voting rights, are not transferable and have the same priority with regard to dividends, distributions and payments as the common stock.
As described in the Certificate of Designations, the Company will not issue, and ETFS Capital does not have the right to require the Company to issue, any shares of common stock upon conversion of the Preferred Shares, if, as a result of such conversion, ETFS Capital (together with certain attribution parties) would beneficially own more than 9.99% of the Company’s outstanding common stock immediately after giving effect to such conversion.
In connection with the completion of the ETFS Acquisition, the Company issued 14,750 shares of Series A
Non-Voting
Convertible Preferred Stock (the “Preferred Shares”), which are convertible into an aggregate of 14,750,000 shares of common stock. The fair value of this consideration was $132,750, based on the closing price of the Company’s common stock on April 10, 2018 of $9.00 per share, the trading day prior to the closing of the acquisition.
The following is a summary of the Preferred Share balance:

|  | March 31, 2021 |  |  | December 31, 2020 |
Issuance of Preferred Shares |  | $ | 132,750 |  |  | $ | 132,750 |
Less: Issuance costs |  |  | (181 | ) |  |  | (181 | )
Preferred Shares – carrying value |  | $ | 132,569 |  |  | $ | 132,569 |

Temporary equity classification is required for redeemable instruments for which redemption triggers are outside of the issuer’s control. ETFS Capital has the right to redeem all the Preferred Shares specified to be converted during the period of time specified in the Certificate of Designations in the event that: (a) the number of shares of the Company’s common stock authorized by its certificate of incorporation is insufficient to permit the Company to convert all of the Preferred Shares requested by ETFS Capital to be converted; or (b) ETFS Capital does not, upon completion of a change of control of the Company, receive the same amount per Preferred Share as it would have received had each outstanding Preferred Share been converted into common stock immediately prior
to the change of control. However, the Company will not be obligated to make any such redemption payments to the extent such payments would be a breach of any covenant or obligation the Company owes to any of its secured creditors or is otherwise prohibited by applicable law.
20

Table of Contents
Any such redemption will be at a price per Preferred Share equal to the dollar volume-weighted average price for a share of common stock for the
30-trading
day period ending on the date of such attempted conversion or change of control, as applicable, multiplied by 1,000. Such redemption payment will be made in one payment no later than 10 business days following the last day of the Company’s first fiscal quarter that begins on a date following the date ETFS Capital exercises such redemption right. The redemption value of the Preferred Shares was $88,642 and $72,667 at March 31, 2021 and December 31, 2020, respectively.
The carrying amount of the Preferred Shares was not adjusted as it was not probable that the Preferred Shares would become redeemable.
12. Leases
The Company has entered into operating leases for its corporate headquarters and other office facilities, financial data terminals and equipment. The Company has no finance leases.
The following table provides additional information regarding the Company’s leases:

|  | Three Months Ended March 31, |
|  | 2021 |  |  | 2020 |
Lease cost: |  |  |  |  |  |  |  |
Operating lease cost |  | $ | 697 |  |  | $ | 798 |
Short-term lease cost |  |  | 295 |  |  |  | 342 |
Total lease cost |  | $ | 992 |  |  | $ | 1,140 |
Other information: |  |  |  |  |  |  |  |
Cash paid for amounts included in the measurement of operating liabilities (operating leases) |  | $ | 918 |  |  | $ | 926 |
Right-of-use assets obtained in exchange for new operating lease liabilities |  |  | n/a |  |  |  | n/a |
Weighted-average remaining lease term (in years) – operating leases |  |  | 8.9 |  |  |  | 9.2 |
Weighted-average discount rate – operating leases |  |  | 6.3 | % |  |  | 6.3 | %

None of the Company’s leases include variable payments, residual value guarantees or any restrictions or covenants relating to the Company’s ability to pay dividends or incur additional financing obligations.
The Company’s lease of its headquarters, which expires
in
August 2029, includes an option to extend for an additional five years. Rent payable under the option is equal to the fair market rent of the premises as determined by the landlord approximately six months prior to the commencement of the extension term. The lease also includes a cancellation option which is effective on August 21, 2024 and requires notice to be provided to the landlord at least 12 months prior. Triggering this option requires a cancellation payment of $4,236. The cancellation and extension options were not reasonably certain of being exercised and were therefore not recognized as part of the
right-of-use
asset and lease liability.
Other leases also include extension, automatic renewal and termination provisions. These provisions were also not reasonably certain of being exercised and were therefore not recognized as part of the
right-of-use
asset and lease liability.
During the three months ended March 31, 2021, the Company recognized an impairment charge of $303
resulting from the derecognition of a right-of-use asset upon exiting its London office in February 2021, as well as costs incurred to restore the office space to its original condition.
The following table discloses future minimum lease payments at March 31, 2021 with respect to the Company’s operating lease liabilities:

Remainder of 2021 |  | $ | 2,218 |
2022 |  |  | 2,958 |
2023 |  |  | 2,958 |
2024 |  |  | 3,037 |
2025 |  |  | 3,148 |
2026 and thereafter |  |  | 11,456 |
Total future minimum lease payments (undiscounted) |  | $ | 25,775 |

21

Table of Contents
The following table reconciles the future minimum lease payments at March 31, 2021 (disclosed above) to the operating lease liabilities recognized in the Company’s Consolidated Balance Sheet:

Amounts recognized in the Company’s Consolidated Balance Sheet |  |  |  |
Lease liability – short term |  | $ | 2,958 |
Lease liability – long term |  |  | 17,012 |
Subtotal |  |  | 19,970 |
Difference between undiscounted and discounted cash flows |  |  | 5,805 |
Total future minimum lease payments (undiscounted) |  | $ | 25,775 |

13. Contingencies
The Company may be subject to reviews, inspections and investigations by regulatory authorities as well as legal proceedings arising in the ordinary course of business.
Closure of the WisdomTree WTI Crude Oil 3x Daily Leveraged ETP
In December 2020, WMAI, WTMAML, WTUK and WisdomTree Ireland Limited were served with a writ of summons to appear before the Court of Milan, Italy, and in January 2021, WTUK was served with a writ of summons to appear before the Court of Udine, Italy. Investors had filed actions seeking approximately €9,000 ($10,565), in the aggregate, resulting from the closure of the WisdomTree WTI Crude Oil 3x Daily Leveraged ETP (“3OIL”) in March 2020. The product was dependent on the receipt of payments from a swap provider to satisfy payment obligations to the investors. Due to an extreme adverse move in oil futures relative to the oil futures’ closing price, the swap contract underlying 3OIL was terminated by the swap provider, which resulted in the compulsory redemption of 3OIL, all in accordance with the prospectus.
The Company is currently assessing these claims and an accrual has not been made with respect to these matters at March 31, 2021 and December 31, 2020.
14. Variable Interest Entities
VIEs are entities with any of the following characteristics: (i) the entity does not have enough equity to finance its activities without additional financial support; (ii) the equity holders, as a group, lack the characteristics of a controlling financial interest; or (iii) the entity is structured with
non-substantive
voting rights.
Consolidation of a VIE is required for the party deemed to be the primary beneficiary, if any. The primary beneficiary is the party who has both (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. The Company is not the primary beneficiary of the entity in which it has a variable interest as it does not have the power to direct the activities that most significantly impact the entity’s economic performance. Such power is conveyed through the entity’s board of directors and the Company does not have control over the board.
The following table presents information about the Company’s variable interests in
non-consolidated
VIEs:

|  | March 31, 2021 |  |  | December 31, 2020 |
Carrying Amount – Assets (Securrency) |  |  |  |  |  |  |  |
Preferred stock – Series A Shares |  | $ | 8,349 |  |  | $ | 8,112 |
Preferred stock – Series B Shares |  |  | 5,500 |  |  |  | — |
Total (Note 7) |  | $ | 13,849 |  |  | $ | 8,112 |
Maximum exposure to loss |  | $ | 13,849 |  |  | $ | 8,112 |

22

Table of Contents
15. Revenues from Contracts with Customers
The following table presents the Company’s total revenues from contracts with customers:

|  | Three Months Ended |
|  | March 31, 2021 |  |  | March 31, 2020 |
Revenues from contracts with customers: |  |  |  |  |  |  |  |
Advisory fees |  | $ | 71,616 |  |  | $ | 62,950 |
Other |  |  | 1,214 |  |  |  | 924 |
Total operating revenues |  | $ | 72,830 |  |  | $ | 63,874 |

The Company recognizes revenues from contracts with customers when the performance obligation is satisfied, which is when the promised goods or services are transferred to the customer. A good or service is considered to be transferred when the customer obtains control, which is represented by the transfer of rights with regard to the good or service. Transfer of control happens either over time or at a point in time. When a performance obligation is satisfied over time, an entity is required to select a single method of measuring progress for each performance obligation that depicts the entity’s performance in transferring control of goods or services to the customer.
Substantially all the Company’s revenues from contracts with customers are derived primarily from investment advisory agreements with related parties (Note 16). These advisory fees are recognized over time, are earned from the Company’s ETPs and are calculated based on a percentage of the ETPs’ average daily net assets. There is no significant judgment in calculating amounts due which are invoiced monthly 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 the Company has a right to invoice.
There are no contract assets or liabilities that arise in connection with the recognition of advisory fee revenue. In addition, there are no costs incurred to obtain or fulfill the contracts with customers, all of which are investment advisory agreements with related parties.
Geographic Distribution of Revenue
The following table presents the Company’s total revenues geographically as determined by where the respective management companies reside:

|  | Three Months Ended |
|  | March 31, 2021 |  |  | March 31, 2020 |
Revenues from contracts with customers: |  |  |  |  |  |  |  |
United States |  | $ | 40,699 |  |  | $ | 39,870 |
Jersey |  |  | 29,990 |  |  |  | 22,525 |
Ireland |  |  | 2,141 |  |  |  | 1,114 |
Canada (Note 22) |  |  | — |  |  |  | 365 |
Total operating revenues |  | $ | 72,830 |  |  | $ | 63,874 |

16. Related Party Transactions
The Company’s revenue
s
are derived primarily from investment advisory agreements with related parties. Under these agreements, the Company has licensed to related parties the use of certain of its own indexes for the U.S. WisdomTree ETFs and WisdomTree UCITS ETFs. The Board of Trustees and Board of Directors (including certain officers of the Company) of the related parties are primarily responsible for overseeing the management and affairs of the entities for the benefit of their stakeholders and have contracted with the Company to provide for general management and administration services. The Company is also responsible for certain expenses of the related parties, including the cost of transfer agency, custody, fund administration and accounting, legal, audit, and other
non-distribution
services, excluding extraordinary expenses, taxes and certain other expenses, which is included in fund management and administration on the Company’s Consolidated Statements of Operations. In exchange, the Company receives fees based on a percentage of the ETPs’ average daily net assets. A majority of the independent members of the Board of Trustees are required to annually approve the advisory agreements of the U.S. WisdomTree ETFs and these agreements may be terminated by the Board of Trustees upon notice.
The following table summarizes accounts receivable from related parties which are included as a component of accounts receivable on the Company’s Consolidated Balance Sheets:

|  | March 31, 2021 |  |  | December 31, 2020 |
Receivable from WTT |  | $ | 14,347 |  |  | $ | 13,030 |
Receivable from ManJer Issuers |  |  | 11,134 |  |  |  | 11,693 |
Receivable from WMAI and WTI |  |  | 1,777 |  |  |  | 2,125 |
Receivable from WTCS |  |  | — |  |  |  | 36 |
Total |  | $ | 27,258 |  |  | $ | 26,884 |

23

Table of Contents
The allowance for credit losses on accounts receivable from related parties is insignificant when applying historical loss rates, adjusted for current conditions and supportable forecasts, to the amounts outstanding in the table above. Amounts outstanding are all invoiced in arrears, are less than 30 days aged and are collected shortly after the applicable reporting period.
The following table summarizes revenues from advisory services provided to related parties:

|  | Three Months Ended |
|  | March 31, 2021 |  |  | March 31, 2020 |
Advisory services provided to WTT |  | $ | 40,536 |  |  | $ | 39,601 |
Advisory services provided to ManJer Issuers |  |  | 27,045 |  |  |  | 20,258 |
Advisory services provided to WMAI and WTI |  |  | 4,035 |  |  |  | 2,528 |
Advisory services provided to WTAMC |  |  | — |  |  |  | 365 |
Advisory services provided to WTCS |  |  | — |  |  |  | 198 |
Total |  | $ | 71,616 |  |  | $ | 62,950 |

The Company also has investments in certain WisdomTree ETFs of approximately $23,626 and $23,932 at March 31, 2021 and December 31, 2020, respectively. Losses related to trading WisdomTree ETFs during the three months ended March 31, 2021 and 2020 were $384 and $290, respectively, which are recorded in other losses, net on the Consolidated Statements of Operations.
17. Stock-Based Awards
On June 20, 2016, the Company’s stockholders approved a new equity award plan under which the Company can issue up to 10,000,000 shares of common stock (less one share for every share granted under prior plans since March 31, 2016 and inclusive of shares available under the prior plans as of March 31, 2016) in the form of stock options and other stock-based awards.
The Company grants equity awards to employees and directors which include restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”) and stock options. Certain awards described below are subject to acceleration under certain conditions.

Stock options: |  | Generally issued for terms of ten years and may vest after at least one year of service and have an exercise price equal to the Company’s stock price on the grant date. The Company estimates the fair value of stock options (when granted) using the Black- Scholes option pricing model.
RSAs/RSUs: |  | Awards are valued based on the Company’s stock price on grant date and generally vest ratably over three years.
PRSUs: |  | These awards cliff vest three years from the grant date and contain a market condition whereby the number of PRSUs ultimately vesting is tied to how the Company’s total shareholder return (“TSR”) compares to a peer group of other publicly traded asset managers over the three-year period. A Monte Carlo simulation is used to value these awards.
|  | The number of PRSUs vesting ranges from 0% to 200% of the target number of PRSUs granted, as follows:
|  | •   If the relative TSR is below the 25th percentile, then 0% of the target number of PRSUs granted will vest;
|  | •   If the relative TSR is at the 25th percentile, then 50% of the target number of PRSUs granted will vest; and
|  | •   If the relative TSR is above the 25th percentile, then linear scaling is applied such that the percent of the target number of PRSUs vesting is 100% at the 50th percentile and capped at 200% of the target number of PRSUs granted for performance at the 85th percentile (or 100th percentile for grants made during 2019 and 2020).

Stock-based compensation expense during
the three months ended March 31, 2021 and 2020 was $3,143 and $3,239, respectively.
A summary of unrecognized stock-based compensation expense and average remaining vesting period is as follows:

|  | March 31, 2021 |
|  | Unrecognized Stock- Based Compensation |  |  | Average Remaining Vesting Period (Years) |
Employees and directors |  | $ | 16,488 |  |  |  | 1.70 |

24

Table of Contents
A summary of stock-based compensation award activity during the three months ended March 31, 2021 is as follows:

|  | Stock Options |  |  | RSAs |  |  | RSUs |  |  | PRSUs |
Balance at January 1, 2021 |  |  | 305,000 |  |  |  | 3,580,743 |  |  |  | 39,408 |  |  |  | 341,312 |
Granted |  |  | — |  |  |  | 1,501,123 |  |  |  | 29,389 |  |  |  | 257,043 | (1)
Exercised/vested |  |  | (75,000 | ) |  |  | (1,243,763 | ) |  |  | (15,136 | ) |  |  | — |
Forfeitures |  |  | (115,000 | ) |  |  | (7,302 | ) |  |  | — |  |  |  | — |
Balance at March 31, 2021 |  |  | 115,000 |  |  |  | 3,830,801 |  |  |  | 53,661 |  |  |  | 598,355 |

(1) | Represents the target number of PRSUs granted and outstanding. The number of PRSUs that ultimately vest ranges from 0% to 200% of this amount. A Monte-Carlo simulation was used to value these awards using the following assumptions for the Company and the peer group: (i) beginning 90-day average stock prices; (ii) valuation date stock prices; (iii) historical stock price volatilities ranging from 34% to 57% (average 44%); (iv) correlation coefficients based upon the price data used to calculate the historical volatilities; (v) a risk free interest rate of 0.17%; and (vi) an expected dividend yield of 0%.

18. Earnings Per Share
The following tables set forth reconciliations of the basic and diluted earnings per share computations for the periods presented:

|  | Three Months Ended March 31, |
|  | 2021 |  |  | 2020 |
Basic Earnings/(Loss) per Share |  |  |  |  |  |  |  |
Net income/(loss) |  | $ | 15,147 |  |  | $ | (8,638 | )
Less: Income distributed to participating securities |  |  | (558 | ) |  |  | (555 | )
Less: Undistributed income allocable to participating securities |  |  | (1,152 | ) |  |  | — |
Net income/(loss) available to common stockholders – Basic EPS |  | $ | 13,437 |  |  | $ | (9,193 | )
Weighted average common shares (in thousands) |  |  | 145,649 |  |  |  | 152,519 |
Basic earnings/(loss) per share |  | $ | 0.09 |  |  | $ | (0.06 | )

|  | Three Months Ended March 31, |
|  | 2021 |  |  | 2020 |
Diluted Earnings/(Loss) per Share |  |  |  |  |  |  |  |
Net income/(loss) available to common stockholders |  | $ | 13,437 |  |  | $ | (9,193 | )
Add back: Undistributed income allocable to participating securities |  |  | 1,152 |  |  |  | — |
Less: Reallocation of undistributed income allocable to participating securities considered potentially dilutive |  |  | (1,152 | ) |  |  | (— | )
Net income/(loss) available to common stockholders – Diluted EPS |  | $ | 13,437 |  |  | $ | (9,193 | )
Weighted Average Diluted Shares (in thousands) : |  |  |  |  |  |  |  |
Weighted average common shares |  |  | 145,649 |  |  |  | 152,519 |
Dilutive effect of common stock equivalents, excluding participating securities |  |  | 121 |  |  |  | — |
Weighted average diluted shares, excluding participating securities (in thousands) |  |  | 145,770 |  |  |  | 152,519 |
Diluted earnings/(loss) per share |  | $ | 0.09 |  |  | $ | (0.06 | )

Diluted earnings/(loss) per share presented above is calculated using the
two-class
method as this method results in the lowest diluted earnings per share amount for common stock. During the three months ended March 31, 2020, there were no dilutive common stock equivalents as the Company reported a net loss for the period. Total antidilutive
non-participating
common stock equivalents were 149 and 430 during the three months ended March 31, 2021 and 2020, respectively (shares herein are reported in thousands).
Potential common shares associated with the conversion option embedded in the Convertible Notes were excluded from the computation for the three months ended March 31, 2021 as the Company’s average stock price during the period was lower than the conversion price of $5.92 per share.
25

Table of Contents
The following table reconciles weighted average diluted shares as reported on the Company’s Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020, which are determined pursuant to the treasury stock method, to the weighted average diluted shares used to calculate diluted earnings/(loss) per share as disclosed in the table above:

|  | Three Months Ended March 31, |
Reconciliation of Weighted Average Diluted Shares (in thousands) |  | 2021 |  |  | 2020 |
Weighted average diluted shares as disclosed on the consolidated statements of operations |  |  | 161,831 |  |  |  | 152,519 | (1)
Less: Participating securities: |  |  |  |  |  |  |  |
Weighted average shares of common stock issuable upon conversion of the Preferred Shares (Note 11) |  |  | (14,750 | ) |  |  | — |
Potentially dilutive restricted stock awards |  |  | (1,311 | ) |  |  | — |
Weighted average diluted shares used to calculate diluted earnings/(loss) per share as disclosed in the table abov e |  |  | 145,770 |  |  |  | 152,519 |

(1) | Excludes 15,025 participating securities and 16 potentially dilutive non-participating common stock equivalents for the three months ended March 31, 2020 as the Company reported a net loss for the period (shares herein are reported in thousands).

19. Income Taxes
Effective Income Tax Rate – Three Months Ended March 31, 2021 and March 31, 2020
The Company’s effective income tax rate for the three months ended March 31, 2021 of negative 14.9% resulted in an income tax benefit of $1,969. The Company’s effective income tax rate differs from the federal statutory tax rate of 21% primarily due to a $5,171 reduction in unrecognized tax benefits, a
non-taxable
gain on revaluation of deferred consideration and a lower tax rate on foreign earnings, partly offset by tax shortfalls associated with the vesting and exercise of stock-based compensation awards.
The Company’s effective income tax rate for the three months ended March 31, 2020 of 21.5% resulted in an income tax benefit of $2,371. The Company’s effective income tax rate differs from the federal statutory tax rate of 21% primarily due to a $5,981 reduction in unrecognized tax benefits, a $2,877
non-taxable
gain
recognized upon the
sale of the Company’s Canadian ETF business and a lower tax rate on foreign earnings, partly offset by a valuation allowance on capital losses, tax shortfalls associated with the vesting and exercise of stock-based compensation and a
non-deductible
loss on revaluation of deferred consideration.
Deferred Tax Assets
A summary of the components of the Company’s deferred tax assets at March 31, 2021 and December 31, 2020 are as follows:

|  | March 31, 2021 |  |  | December 31, 2020 |
Deferred tax assets: |  |  |  |  |
Capital losses |  | $ | 16,596 |  |  | $ | 16,596 |
Operating lease liabilities |  |  | 4,851 |  |  |  | 4,953 |
Interest carryforwards |  |  | 2,184 |  |  |  | 2,235 |
NOLs – Foreign |  |  | 2,084 |  |  |  | 2,167 |
Goodwill and intangible assets |  |  | 1,418 |  |  |  | 1,466 |
Accrued expenses |  |  | 1,363 |  |  |  | 3,507 |
Stock-based compensation |  |  | 1,195 |  |  |  | 1,922 |
NOLs – U.S. |  |  | 382 |  |  |  | 510 |
Outside basis differences |  |  | 122 |  |  |  | 122 |
Other |  |  | 263 |  |  |  | 111 |
Deferred tax assets |  |  | 30,458 |  |  |  | 33,589 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Right of use assets – operating leases |  |  | 3,848 |  |  |  | 3,927 |
Fixed assets and prepaid assets |  |  | 1,234 |  |  |  | 1,261 |
Foreign currency translation adjustment |  |  | 262 |  |  |  | 293 |
Unremitted earnings – International subsidiaries |  |  | 97 |  |  |  | 138 |
Allocated equity component of convertible notes |  |  | — |  |  |  | 1,022 |
Deferred tax liabilities |  |  | 5,441 |  |  |  | 6,641 |
Total deferred tax assets less deferred tax liabilities |  |  | 25,017 |  |  |  | 26,948 |
Less: valuation allowance |  |  | (18,802 | ) |  |  | (18,885 | )
Deferred tax assets, net |  | $ | 6,215 |  |  | $ | 8,063 |

26

Table of Contents
Net Operating and Capital Losses – U.S.
The Company’s tax effected net operating losses (“NOLs”) at March 31, 2021 were $382 which expire in 2024. The net operating loss carryforwards have been reduced by the impact of annual limitations described in the Internal Revenue Code Section 382 that arose as a result of an ownership change.
The Company’s tax effected capital losses were $16,596 at March 31, 2021 and December 31, 2020. These capital losses expire between the years 2023 and 2025.
Net Operating Losses – International
One of the Company’s European subsidiary’s generated NOLs outside the U.S. These tax effected NOLs, all of which are carried forward indefinitely, were
$
2,084
and $
2,167
at March
31
,
2021
and December
31
,
2020
, respectively.
Valuation Allowance
The Company’s valuation allowance has been established on its net capital losses, international net operating losses and outside basis differences as it is
more-likely-than-not
that these deferred tax assets will not be realized.
Uncertain Tax Positions
Tax positions are evaluated utilizing a
two-step
process. The Company first determines whether any of its tax positions are
more-likely-than-not
to be sustained upon examination, based solely on the technical merits of the position. Once it is determined that a position meets this recognition threshold, the position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.
In connection with the ETFS Acquisition, the Company accrued a liability for uncertain tax positions and interest and penalties at the acquisition date. The table below sets forth the aggregate changes in the balance of these gross unrecognized tax benefits during the three months ended March 31, 2021:

|  | Total |  |  | Unrecognized Tax Benefits |  |  | Interest and Penalties |
Balance on January 1, 2021 |  | $ | 27,016 |  |  | $ | 21,850 |  |  | $ | 5,166 |
Decrease - Lapse of statute of limitations (1) |  |  | (5,171 | ) |  |  | (3,559 | ) |  |  | (1,612 | )
Increases |  |  | 39 |  |  |  | — |  |  |  | 39 |
Foreign currency translation (2) |  |  | 338 |  |  |  | 273 |  |  |  | 65 |
Balance at March 31, 2021 |  | $ | 22,222 |  |  | $ | 18,564 |  |  | $ | 3,658 |

(1) | Recorded as an income tax benefit of $5,171 during the three months ended March 31, 2021, along with an equal and offsetting amount recorded in other losses, net, to recognize a reduction in the indemnification asset. During the three months ended March 31, 2020, an income tax benefit of $5,981 was recorded along with an equal and offsetting amount in other losses, net.

(2) | The gross unrecognized tax benefits were accrued in British pounds.

The Company also recorded an offsetting indemnification asset provided by ETFS Capital as part of its agreement to indemnify the Company for any potential claims, for which an amount is being held in escrow. ETFS Capital has also agreed to provide additional collateral by maintaining a minimum working capital balance up to a stipulated amount.
27

Table of Contents
The gross unrecognized tax benefits and interest and penalties totaling $22,222 at March 31, 2021 are included in other
non-current
liabilities on the Consolidated Balance Sheets. It is reasonably possible that the total amount of unrecognized tax benefits will decrease by $7,067 (including interest and penalties of $2,016) in the next 12 months upon lapsing of the statute of limitations.
At March 31, 2021, there were $22,222 of unrecognized tax benefits (including interest and penalties) that, if recognized, would impact the effective tax rate. The recognition of any unrecognized tax benefits would result in an equal and offsetting adjustment to the indemnification asset which would be recorded in income before taxes due to the indemnity for any potential claims.
Income Tax Examinations
The Company is subject to U.S. federal income tax as well as income tax of multiple state, local and certain foreign jurisdictions. The Company’s federal tax return for the year ended December 31, 2016 and ManJer’s tax returns (a Jersey-based subsidiary) for the years ended December 31, 2014 through 2016 are currently under review by the relevant tax authorities. The Company is indemnified by ETFS Capital for any potential exposure associated with ManJer’s tax return under audit.
The Company is not currently under audit in any other income tax jurisdictions. As of March 31, 2021, with few exceptions, the Company was no longer subject to income tax examinations by any taxing authority for years before 2016.
Undistributed Earnings of Foreign Subsidiaries
ASC 740-30
Income Taxes,
provides guidance that US companies do not need to recognize tax effects on foreign earnings that are indefinitely reinvested. The Company repatriates earnings of its foreign subsidiaries and therefore has recognized a deferred tax liability of
$97 and $138 at March 31, 2021 and December 31, 2020, respectively.
20. Shares Repurchased
On April 24, 2019, the Company’s Board of Directors extended the term of the Company’s share repurchase program for three years through April 27, 2022. Included under this program are purchases to offset future equity grants made under the Company’s equity plans and purchases made in open market or privately negotiated transactions. This authority may be exercised from time to time, subject to regulatory considerations. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The repurchase program may be suspended or terminated at any time without prior notice. Shares repurchased under this program are returned to the status of authorized and unissued on the Company’s books and records.
During the three months ended March 31, 2021 and March 31, 2020, the Company repurchased 489,763 shares and 385,399 shares of its common stock, respectively, under this program for an aggregate cost of $2,630 and $1,495, respectively. Shares repurchased under this program were returned to the status of authorized and unissued on the Company’s books and records.
As of March 31, 2021, $49,561 remained under this program for future purchases.
21. Goodwill and Intangible Assets
Goodwill
The table below sets forth goodwill which is tested annually for impairment on November 30
th
:

|  | Total |
Balance at January 1, 2021 |  | $ | 85,856 |
Changes |  |  | — |
Balance at March 31, 2021 |  | $ | 85,856 |

Goodwill arising from the ETFS Acquisition of $84,057 is not deductible for tax purposes as the acquisition was structured as a stock acquisition occurring in the UK. The remainder of the goodwill is deductible for U.S. tax purposes.
Intangible Assets (Indefinite-Lived)
The table below sets forth the Company’s intangible assets which are tested annually for impairment on November 30
th
:

|  | Total |
Balance at January 1, 2021 |  | $ | 601,247 |
Changes |  |  | — |
Balance at March 31, 2021 |  | $ | 601,247 |

28

Table of Contents
ETFS
In connection with the ETFS Acquisition, which was completed on April 11, 2018, the Company identified intangible assets valued at $601,247 related to the right to manage AUM through customary advisory agreements. The intangible assets were determined to have indefinite useful lives and are not deductible for tax purposes.
22. Contingent Payments
The Company recognizes contingent payments when the contingency is resolved and the gain is realized.
AdvisorEngine – Sale of Financial Interests
On May 4, 2020, the Company closed a transaction to exit its investment in AdvisorEngine. The fair value of upfront consideration paid to the Company was $9,592. Consideration also included contingent payments totaling up to $10,408 which will be payable only upon AdvisorEngine achieving certain revenue milestones during the first through fourth anniversaries of such exit. No value has been ascribed to these contingent payments at March 31, 2021 and December 31, 2020.
During the three months ended March 31, 2020, the Company recognized an impairment of $19,672 to adjust the carrying value of its previously held financial interests in AdvisorEngine to fair value. In the following quarter, the Company subsequently recognized a gain of $1,093 arising from an adjustment to the estimate fair value of consideration received. These fair value adjustments were based upon the final sale terms as disclosed above.
Sale of Canadian ETF Business
On February 19, 2020, the Company completed the sale of all the outstanding shares of WTAMC to CI Financial Corp. The Company received CDN $3,720 (USD $2,774) in cash at closing and will receive additional cash consideration of CDN $2,000 to $8,000, depending on the achievement of certain AUM growth targets over the next three years. The Company recorded CDN $2,000 in other receivables on the Consolidated Statements of Financial Condition at March 31, 2021 and December 31, 2020.
In connection with this sale, the Company recognized a gain of $2,877 during the three months ended March 31, 2020 which was recorded in other losses, net on the Consolidated Statements of Operations. This gain represents the difference between the minimum cash consideration payable to the Company and the carrying value of WTAMC’s net assets upon disposition.
23. Subsequent Events
The Company evaluated subsequent events through the date of issuance of the accompanying financial statements. There were no events requiring disclosure.
29

Table of Contents

ITEM 2. | 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” in our Annual Report on Form
10-K
for the fiscal year ended December 31, 2020. 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.
Executive Summary
Introduction
We are the only publicly-traded asset management company that focuses exclusively on exchange-traded products, or ETPs, and are a leading global ETP sponsor based on assets under management, or AUM, with AUM of $69.5 billion globally as of March 31, 2021. An ETP is a pooled investment vehicle that holds a basket of securities, financial instruments or other assets and generally seeks to track (index-based) or outperform (actively managed) the performance of a broad or specific equity, fixed income or alternatives market segment, commodity or currency (or an inverse or multiple thereof). ETPs are listed on an exchange with their shares traded in the secondary market at market prices, generally at approximately the same price as the net asset value of their underlying components. ETP is an umbrella term that includes exchange-traded funds, or ETFs, exchange-traded notes and exchange-traded commodities.
Our family of ETPs includes products that track our own indexes, third-party indexes and market prices of commodities. We also offer actively managed products. Most of our equity-based funds employ a fundamentally weighted investment methodology, which weights securities based on factors such as dividends, earnings or investment factors, whereas most other industry indexes use a capitalization weighted methodology. We distribute our products through all major channels within the asset management industry, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers primarily through our sales force. Our sales efforts are not primarily directed towards the retail segment but rather are directed towards financial advisers that act as intermediaries between the
end-client
and us or institutional investors.
We focus on creating products for investors that offer thoughtful innovation, smart engineering and redefined investing. We have launched many
first-to-market
products and pioneered alternative weighting we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective funds that are built to perform.
Through our operating subsidiaries, we provide investment advisory and other management services to our ETPs collectively offering products covering equity, commodity, fixed income,
leveraged-and-inverse,
currency, cryptocurrency and alternative strategies. In exchange for providing these services, we receive advisory fee revenues based on a percentage of the ETPs’ average daily AUM. Our expenses are predominantly related to selling, operating and marketing our products. We have contracted with third parties to provide certain operational services for the ETPs.
We strive to deliver a better investing experience through innovative solutions. Continued investments in technology-enabled and research-driven solutions and our Advisor Solutions program, which includes portfolio construction, asset allocation, practice management services and digital tools for financial advisors, are meant to differentiate us in the market, expand our distribution and further enhance our relationships with financial advisors.
We were incorporated under the laws of the state of Delaware on September 19, 1985 as Financial Data Systems, Inc. and ultimately renamed WisdomTree Investments, Inc. on September 6, 2005.
Recent Developments
We are executing on our digital assets initiative and have made meaningful advancements. We recently filed for the WisdomTree Bitcoin Trust and the WisdomTree Digital Short-Term Treasury Fund with the SEC. We cross-listed our European-domiciled WisdomTree Bitcoin ETP, or BTCW, in Germany, appointed Coinbase Custody as a custodian and received approval to passport BTCW in the European Union, or EU, allowing for a wider audience to access and invest in the product. We launched a physically backed Ethereum ETP in Europe, which is also passported across the EU. We also recently invested in Securrency, Inc.’s Series B funding round, as we believe their team is uniquely suited to lead in blockchain-based financial and regulatory technology going forward. These initiatives were undertaken in our pursuit to establish ourselves as a leader in this space.
30

Table of Contents
Assets Under Management
WisdomTree ETPs
We offer ETPs covering equity, commodity, fixed income,
leveraged-and-inverse,
currency, cryptocurrency and alternative strategies. The chart below sets forth the asset mix of our ETPs at March 31, 2020, December 31, 2020 and March 31, 2021:
Market Environment
During the first quarter of 2021, global equity markets performed favorably upon the rollout of
COVID-19
vaccines and further economic stimulus. These developments contributed to a sharp rise in government bond yields and a decline in gold prices during the quarter.
The S&P 500 rose 6.2%, MSCI EAFE (local currency) rose 7.7%, MSCI Emerging Markets Index (U.S. dollar) rose 2.3%, while gold prices declined 10.6% during the first quarter of 2021. In addition, the European and Japanese equities markets both appreciated with the MSCI EMU Index and MSCI Japan Index increasing 9.1% and 8.9%, respectively, in local currency terms for the quarter. Also, the U.S. dollar strengthened 7.3% and 1.3% versus the Japanese yen and British pound, while weakening 4.4% versus the euro during the quarter.
U.S. Listed ETF Industry Flows
U.S. listed ETF net flows for the three months ended March 31, 2021 were $248.6 billion. U.S. equity gathered the majority of those flows.
Source: Morningstar
31

Table of Contents
European ETP Industry Flows
European ETP net flows were $58.0 billion for the three months ended March 31, 2021. Equities gathered the majority of those flows.
Source: Morningstar

Our | Operating and Financial Results

We operate as an ETP sponsor and asset manager providing investment advisory services globally through our subsidiaries in the United States and Europe.
U.S. Listed ETFs
Our U.S. listed ETFs’ AUM increased from $38.5 billion at December 31, 2020 to $42.2 billion at March 31, 2021 due to market appreciation and net inflows.
32

Table of Contents
International Listed ETPs
Our international ETPs’ AUM decreased from $28.9 billion at December 31, 2020 to $27.4 billion at March 31, 2021 due to market depreciation, primarily in our gold products.
Consolidated Operating Results
The following table sets forth our revenues and net income/(loss) for the most recent five quarters:

| • |  | Revenues – We recorded operating revenues of $72.8 million during the three months ended March 31, 2021, up 14.0% from the three months ended March 31, 2020 due to higher average AUM arising from market appreciation and net inflows.

| • |  | Expenses – Total operating expenses increased 12.4% from the three months ended March 31, 2020 to $54.2 million due to higher incentive compensation, fund management and administration costs, professional fees, contractual gold payments and marketing expenses, partly offset by lower sales and business development and other expenses.

33

Table of Contents

| • |  | Other Income/(Expenses) – Other income/(expenses) includes interest income and interest expense, gains/(losses) on revaluation of deferred consideration – gold payments, impairments and other net losses. For the three months ended March 31, 2021 and 2020, the gains/(losses) on revaluation of deferred consideration – gold payments were $2.8 million and ($2.2) million, respectively. We recognized charges arising from a release of a tax-related indemnification asset upon the expiration of the statute of limitations of $5.2 million and $6.0 million during the three months ended March 31, 2021 and 2020, respectively. An equal and offsetting benefit has been recognized in income taxes. In addition, during the three months ended March 31, 2021, we recorded an unrealized gain on our investment in Securrency of $0.2 million and recognized an impairment charge of $0.3 million arising from exiting our London office. During the three months ended March 31, 2020, we recognized a non-cash impairment charge of $19.7 million on our investment in AdvisorEngine, Inc., or AdvisorEngine, and recorded a gain of $2.9 million associated with the sale of our Canadian ETF business.

| • |  | Net income/(loss) – We reported net income of $15.1 million during the three months ended March 31, 2021, compared to a net loss of ($8.6) million during the three months ended March 31, 2020. The change in net income/(loss) was impacted by the change in revenue and expenses described above, a favorable change related to the revaluation of deferred consideration – gold payments of $5.0 million, as well as the previously mentioned $19.7 million impairment charge and $2.9 million gain that were recorded in the prior year period.

34

Table of Contents
Key Operating Statistics
The following table presents key operating statistics that serve as indicators for the performance of our business:

|  | Three Months Ended |
|  | March 31, 2021 |  |  | December 31, 2020 |  |  | March 31, 2020 |
GLOBAL ETPs ($ in millions) |  |  |  |  |  |  |  |  |  |  |  |
Beginning of period assets |  | $ | 67,392 |  |  | $ | 60,710 |  |  | $ | 63,615 |
Assets sold |  |  | — |  |  |  | — |  |  |  | (778 | )
Inflows/(outflows) |  |  | 1,279 |  |  |  | 881 |  |  |  | (536 | )
Market appreciation/(depreciation) |  |  | 866 |  |  |  | 5,898 |  |  |  | (11,934 | )
Fund closures |  |  | — |  |  |  | (97 | ) |  |  | (20 | )
End of period assets |  | $ | 69,537 |  |  | $ | 67,392 |  |  | $ | 50,347 |
Average assets during the period |  | $ | 69,552 |  |  | $ | 64,125 |  |  | $ | 60,189 |
Average ETP advisory fee during the period |  |  | 0.42 | % |  |  | 0.41 | % |  |  | 0.42 | %
Number of ETPs – end of the period |  |  | 313 |  |  |  | 309 |  |  |  | 331 |
U.S. LISTED ETFs ($ in millions) |  |  |  |  |  |  |  |  |  |  |  |
Beginning of period assets |  | $ | 38,517 |  |  | $ | 33,310 |  |  | $ | 40,600 |
Inflows/(outflows) |  |  | 1,343 |  |  |  | 919 |  |  |  | (1,273 | )
Market appreciation/(depreciation) |  |  | 2,303 |  |  |  | 4,385 |  |  |  | (10,397 | )
Fund closures |  |  | — |  |  |  | (97 | ) |  |  | (10 | )
End of period assets |  | $ | 42,163 |  |  | $ | 38,517 |  |  | $ | 28,920 |
Average assets during the period |  | $ | 40,673 |  |  | $ | 36,002 |  |  | $ | 36,940 |
Average ETF advisory fee during the period |  |  | 0.40 | % |  |  | 0.40 | % |  |  | 0.43 | %
Number of ETFs – end of the period |  |  | 68 |  |  |  | 67 |  |  |  | 77 |
INTERNATIONAL LISTED ETPs ($ in millions) |  |  |  |  |  |  |  |  |  |  |  |
Beginning of period assets |  | $ | 28,875 |  |  | $ | 27,400 |  |  | $ | 23,015 |
Assets sold |  |  | — |  |  |  | — |  |  |  | (778 | )
Inflows/(outflows) |  |  | (64 | ) |  |  | (38 | ) |  |  | 737 |
Market appreciation/(depreciation) |  |  | (1,437 | ) |  |  | 1,513 |  |  |  | (1,537 | )
Fund closures |  |  | — |  |  |  | — |  |  |  | (10 | )
End of period assets |  | $ | 27,374 |  |  | $ | 28,875 |  |  | $ | 21,427 |
Average assets during the period |  | $ | 28,879 |  |  | $ | 28,123 |  |  | $ | 23,249 |
Average ETP advisory fee during the period |  |  | 0.44 | % |  |  | 0.42 | % |  |  | 0.40 | %
Number of ETPs—end of period |  |  | 245 |  |  |  | 242 |  |  |  | 254 |
PRODUCT CATEGORIES ($ in millions) |  |  |  |  |  |  |  |  |  |  |  |
Commodity & Currency |  |  |  |  |  |  |  |  |  |  |  |
Beginning of period assets |  | $ | 25,879 |  |  | $ | 25,089 |  |  | $ | 19,946 |
Inflows/(outflows) |  |  | (660 | ) |  |  | (302 | ) |  |  | 617 |
Market appreciation/(depreciation) |  |  | (1,562 | ) |  |  | 1,092 |  |  |  | (820 | )
End of period assets |  | $ | 23,657 |  |  | $ | 25,879 |  |  | $ | 19,743 |
Average assets during the period |  | $ | 25,291 |  |  | $ | 25,597 |  |  | $ | 20,300 |
U.S. Equity |  |  |  |  |  |  |  |  |  |  |  |
Beginning of period assets |  | $ | 18,367 |  |  | $ | 15,612 |  |  | $ | 17,732 |
Inflows/(outflows) |  |  | 218 |  |  |  | 395 |  |  |  | (285 | )
Market appreciation/(depreciation) |  |  | 1,434 |  |  |  | 2,360 |  |  |  | (5,296 | )
End of period assets |  | $ | 20,019 |  |  | $ | 18,367 |  |  | $ | 12,151 |
Average assets during the period |  | $ | 19,293 |  |  | $ | 17,050 |  |  | $ | 16,011 |
Emerging Market Equity |  |  |  |  |  |  |  |  |  |  |  |
Beginning of period assets |  | $ | 8,539 |  |  | $ | 5,979 |  |  | $ | 6,400 |
Inflows/(outflows) |  |  | 1,662 |  |  |  | 1,399 |  |  |  | 69 |
Market appreciation/(depreciation) |  |  | 276 |  |  |  | 1,161 |  |  |  | (1,869 | )
End of period assets |  | $ | 10,477 |  |  | $ | 8,539 |  |  | $ | 4,600 |
Average assets during the period |  | $ | 9,871 |  |  | $ | 7,249 |  |  | $ | 5,919 |

35

Table of Contents

|  | Three Months Ended |
|  | March 31, 2021 |  |  | December 31, 2020 |  |  | March 31, 2020 |
International Developed Market Equity |  |  |  |  |  |  |  |  |  |  |  |
Beginning of period assets |  | $ | 9,414 |  |  | $ | 8,621 |  |  | $ | 13,011 |
Inflows/(outflows) |  |  | 17 |  |  |  | (191 | ) |  |  | (1,097 | )
Market appreciation/(depreciation) |  |  | 560 |  |  |  | 984 |  |  |  | (3,255 | )
End of period assets |  | $ | 9,991 |  |  | $ | 9,414 |  |  | $ | 8,659 |
Average assets during the period |  | $ | 9,793 |  |  | $ | 8,930 |  |  | $ | 11,453 |
Fixed Income |  |  |  |  |  |  |  |  |  |  |  |
Beginning of period assets |  | $ | 3,324 |  |  | $ | 3,630 |  |  | $ | 3,585 |
Inflows/(outflows) |  |  | 10 |  |  |  | (330 | ) |  |  | 21 |
Market appreciation/(depreciation) |  |  | (73 | ) |  |  | 24 |  |  |  | (79 | )
End of period assets |  | $ | 3,261 |  |  | $ | 3,324 |  |  | $ | 3,527 |
Average assets during the period |  | $ | 3,253 |  |  | $ | 3,472 |  |  | $ | 3,653 |
Leveraged & Inverse |  |  |  |  |  |  |  |  |  |  |  |
Beginning of period assets |  | $ | 1,487 |  |  | $ | 1,430 |  |  | $ | 1,138 |
Inflows/(outflows) |  |  | (4 | ) |  |  | (118 | ) |  |  | 12 |
Market appreciation/(depreciation) |  |  | 45 |  |  |  | 175 |  |  |  | (254 | )
End of period assets |  | $ | 1,528 |  |  | $ | 1,487 |  |  | $ | 896 |
Average assets during the period |  | $ | 1,564 |  |  | $ | 1,436 |  |  | $ | 1,147 |
Cryptocurrency |  |  |  |  |  |  |  |  |  |  |  |
Beginning of period assets |  | $ | 168 |  |  | $ | 33 |  |  | $ | 1 |
Inflows/(outflows) |  |  | 36 |  |  |  | 48 |  |  |  | 5 |
Market appreciation/(depreciation) |  |  | 173 |  |  |  | 87 |  |  |  | (1 | )
End of period assets |  | $ | 377 |  |  | $ | 168 |  |  | $ | 5 |
Average assets during the period |  | $ | 264 |  |  | $ | 79 |  |  | $ | 2 |
Alternatives |  |  |  |  |  |  |  |  |  |  |  |
Beginning of period assets |  | $ | 214 |  |  | $ | 229 |  |  | $ | 358 |
Inflows/(outflows) |  |  | — |  |  |  | (26 | ) |  |  | (66 | )
Market appreciation/(depreciation) |  |  | 13 |  |  |  | 11 |  |  |  | (48 | )
End of period assets |  | $ | 227 |  |  | $ | 214 |  |  | $ | 244 |
Average assets during the period |  | $ | 223 |  |  | $ | 224 |  |  | $ | 328 |
Closed ETPs |  |  |  |  |  |  |  |  |  |  |  |
Beginning of period assets |  | $ | — |  |  | $ | 87 |  |  | $ | 1,444 |
Assets sold |  |  | — |  |  |  | — |  |  |  | (778 | )
Inflows/(outflows) |  |  | — |  |  |  | 6 |  |  |  | 188 |
Market appreciation/(depreciation) |  |  | — |  |  |  | 4 |  |  |  | (312 | )
Fund closures |  |  | — |  |  |  | (97 | ) |  |  | (20 | )
End of period assets |  | $ | — |  |  | $ | — |  |  | $ | 522 |
Average assets during the period |  | $ | — |  |  | $ | 88 |  |  | $ | 1,376 |
Headcount |  |  | 227 |  |  |  | 217 |  |  |  | 210 |

Note: Previously issued statistics may be restated due to fund closures and trade adjustments
Source: WisdomTree
36

Table of Contents
Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020
Selected Operating and Financial Information

|  | Three Months Ended March 31, |  |  | Change |  |  | Percent Change |
|  | 2021 |  |  | 2020 |
Global AUM (in millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Average global AUM |  | $ | 69,552 |  |  | $ | 60,189 |  |  | $ | 9,363 |  |  |  | 15.6 | %
Operating Revenues (in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Advisory fees |  | $ | 71,616 |  |  | $ | 62,950 |  |  | $ | 8,666 |  |  |  | 13.8 | %
Other income |  |  | 1,214 |  |  |  | 924 |  |  |  | 290 |  |  |  | 31.4 | %
Total revenues |  | $ | 72,830 |  |  | $ | 63,874 |  |  | $ | 8,956 |  |  |  | 14.0 | %

Average Global AUM
Our average global AUM increased 15.6% from $60.2 billion at March 31, 2020 to $69.6 billion at March 31, 2021 due to market appreciation and net inflows.
Operating Revenues
Advisory fees
Advisory fee revenues increased 13.8% from $63.0 million during the three months ended March 31, 2020 to $71.6 million in the comparable period in 2021 due to higher average global AUM. Our average global advisory fee was 0.42% during the three months ended March 31, 2020 and March 31, 2021.
Other income
Other income increased 31.4% from $0.9 million during the three months ended March 31, 2020 to $1.2 million in the comparable period in 2021 primarily due to higher fees associated with our international listed products.
Operating Expenses

|  | Three Months Ended March 31, |  |  | Change |  |  | Percent Change |
(in thousands) |  | 2021 |  |  | 2020 |
Compensation and benefits |  | $ | 22,627 |  |  | $ | 17,295 |  |  | $ | 5,332 |  |  |  | 30.8 | %
Fund management and administration |  |  | 15,521 |  |  |  | 14,485 |  |  |  | 1,036 |  |  |  | 7.2 | %
Marketing and advertising |  |  | 3,006 |  |  |  | 2,468 |  |  |  | 538 |  |  |  | 21.8 | %
Sales and business development |  |  | 2,145 |  |  |  | 3,417 |  |  |  | (1,272 | ) |  |  | (37.2 | %)
Contractual gold payments |  |  | 4,270 |  |  |  | 3,760 |  |  |  | 510 |  |  |  | 13.6 | %
Professional fees |  |  | 2,013 |  |  |  | 1,273 |  |  |  | 740 |  |  |  | 58.1 | %
Occupancy, communications and equipment |  |  | 1,475 |  |  |  | 1,551 |  |  |  | (76 | ) |  |  | (4.9 | %)
Depreciation and amortization |  |  | 252 |  |  |  | 256 |  |  |  | (4 | ) |  |  | (1.6 | %)
Third-party distribution fees |  |  | 1,343 |  |  |  | 1,355 |  |  |  | (12 | ) |  |  | (0.9 | %)
Acquisition and disposition-related costs |  |  | — |  |  |  | 383 |  |  |  | (383 | ) |  |  | n/a |
Other |  |  | 1,571 |  |  |  | 1,997 |  |  |  | (426 | ) |  |  | (21.3 | %)
Total operating expenses |  | $ | 54,223 |  |  | $ | 48,240 |  |  | $ | 5,983 |  |  |  | 12.4 | %

|  | Three Months Ended March 31, |
As a Percent of Revenues: |  | 2021 |  |  | 2020 |
Compensation and benefits |  |  | 31.1 | % |  |  | 27.1 | %
Fund management and administration |  |  | 21.3 | % |  |  | 22.7 | %
Marketing and advertising |  |  | 4.1 | % |  |  | 3.9 | %
Sales and business development |  |  | 3.0 | % |  |  | 5.3 | %
Contractual gold payments |  |  | 5.9 | % |  |  | 5.9 | %
Professional fees |  |  | 2.8 | % |  |  | 2.0 | %
Occupancy, communications and equipment |  |  | 2.0 | % |  |  | 2.4 | %

37

Table of Contents

|  | Three Months Ended March 31, |
As a Percent of Revenues: |  | 2021 |  |  | 2020 |
Depreciation and amortization |  |  | 0.3 | % |  |  | 0.4 | %
Third-party distribution fees |  |  | 1.8 | % |  |  | 2.1 | %
Acquisition and disposition-related costs |  |  | 0.0 | % |  |  | 0.6 | %
Other |  |  | 2.2 | % |  |  | 3.1 | %
Total operating expenses |  |  | 74.5 | % |  |  | 75.5 | %

Compensation and benefits
Compensation and benefits expense increased 30.8% from $17.3 million during the three months ended March 31, 2020 to $22.6 million in the comparable period in 2021 due to higher incentive compensation accruals. Headcount was 210 and 227 at March 31, 2020 and March 31, 2021, respectively.
Fund management and administration
Fund management and administration expense increased 7.2% from $14.5 million during the three months ended March 31, 2020 to $15.5 million in the comparable period in 2021 due to higher average global AUM.
Marketing and advertising
Marketing and advertising expense increased 21.8% from $2.5 million during the three months ended March 31, 2020 to $3.0 million in the comparable period in 2021 as our spending in the prior year period was reduced at the onset of the
COVID-19
pandemic.
Sales and business development
Sales and business development expense decreased 37.2% from $3.4 million during the three months ended March 31, 2020 to $2.1 million in the comparable period in 2021 primarily due to lower discretionary spending resulting from the
COVID-19
pandemic.
Contractual gold payments
Contractual gold payments expense increased 13.6% from $3.8 million during the three months ended March 31, 2020 to $4.3 million in the comparable period in 2021. This expense was associated with the payment of 2,375 ounces of gold and was calculated using the average daily spot price of $1,583 and $1,798 per ounce during the three months ended March 31, 2020 and 2021, respectively.
Professional fees
Professional fees increased 58.1% from $1.3 million during the three months ended March 31, 2020 to $2.0 million in the comparable period in 2021 due to spending related to our digital assets initiative.
Occupancy, communications and equipment
Occupancy, communications and equipment expense decreased 4.9% from $1.6 million during the three months ended March 31, 2020 to $1.5 million in the comparable period in 2021 as we exited our London office.
Depreciation and amortization
Depreciation and amortization expense was essentially unchanged from the three months ended March 31, 2020.
Third-party distribution fees
Third-party distribution fees were essentially unchanged from the three months ended March 31, 2020.
Acquisition and disposition-related costs
Acquisition and disposition-related costs of $0.4 million during the three months ended March 31, 2020 were recognized in connection with the sale of our Canadian ETF business.
38

Table of Contents
Other
Other expenses decreased 21.3% from $2.0 million during the three months ended March 31, 2020 to $1.6 million in the comparable period in 2021 primarily due to lower office-related and travel expenses as our employees are working remotely.
Other Income/(Expenses)

|  | Three Months Ended March 31, |  |  | Change |  |  | Percent Change |
(in thousands) |  | 2021 |  |  | 2020 |
Interest expense |  | $ | (2,296 | ) |  | $ | (2,419 | ) |  | $ | 123 |  |  |  | (5.1 | %)
Gain/(loss) on revaluation of deferred consideration |  |  | 2,832 |  |  |  | (2,208 | ) |  |  | 5,040 |  |  |  | n/a |
Interest income |  |  | 231 |  |  |  | 163 |  |  |  | 68 |  |  |  | 41.7 | %
Impairments |  |  | (303 | ) |  |  | (19,672 | ) |  |  | 19,369 |  |  |  | (98.5 | %)
Other losses, net |  |  | (5,893 | ) |  |  | (2,507 | ) |  |  | (3,386 | ) |  |  | 135.1 | %
Total other income/(expenses) |  | $ | (5,429 | ) |  | $ | (26,643 | ) |  | $ | 21,214 |  |  |  | (79.6 | %)

|  | Three Months Ended March 31, |
As a Percent of Revenues: |  | 2021 |  |  | 2020 |
Interest expense |  |  | (3.2 | %) |  |  | (3.8 | %)
Gain/(loss) on revaluation of deferred consideration |  |  | 3.9 | % |  |  | (3.5 | %)
Interest income |  |  | 0.3 | % |  |  | 0.2 | %
Impairments |  |  | (0.4 | %) |  |  | (30.7 | %)
Other losses, net |  |  | (8.1 | %) |  |  | (3.9 | %)
Total other income/(expenses) |  |  | (7.5 | %) |  |  | (41.7 | %)

Interest expense
Interest expense decreased 5.1% from $2.4 million during the three months ended March 31, 2020 to $2.3 million in the comparable period in 2020 due to a lower level of debt outstanding. In addition, we early adopted Accounting Standards Update
2020-06,
Debt – Debt with Conversion and Other Options, Cash Conversion
on January 1, 2021 that eliminated the requirement to bifurcate certain conversion options embedded in convertible instruments (applicable to our convertible notes). Previously, the discount arising from bifurcation was amortized as interest expense over the life of the instrument. Our effective interest rate during the three months ended March 31, 2020 and 2021 was 5.0% and 5.3%, respectively.
Gain/(loss) on revaluation of deferred consideration – Gold payments
We recognized a loss on revaluation of deferred consideration of ($2.2) million during the three months ended March 31, 2020 as compared to a gain of $2.8 million during the three months ended March 31, 2021. The gain in the current quarter arose due to a decline in spot gold prices, partly offset by a steepening of the forward-looking gold curve. The loss in the prior period arose due to an increase in forward-looking gold prices. The magnitude of any gain or loss is highly correlated to the magnitude of the change in the forward-looking price of gold.
Interest income
Interest income was essentially unchanged from the three months ended March 31, 2020.
Impairment
During the three months ended March 31, 2021, we recognized an impairment charge of $0.3 million upon exiting our London office. During the three months ended March 31, 2020, we recognized a
non-cash
impairment charge of $19.7 million on our investment in AdvisorEngine.
Other losses, net
Other losses, net were $2.5 million and $5.9 million during the three months ended March 31, 2020 and 2021, respectively. Included in the loss recognized during the three months ended March 31, 2020 and 2021 is a charge of $6.0 million and $5.2 million, respectively, arising from the release of a
tax-related
indemnification asset upon the expiration of the statute of limitations. An equal and offsetting benefit has been recognized in income tax expense. During the three months ended March 31, 2021, we also recognized an unrealized gain of $0.2 million on our investment in Securrency. In addition, we recognized a gain of $2.9 million associated with the sale of our Canadian ETF business during the three months ended March 31, 2020. Gains and losses also generally arise from the sale of gold earned from management fees paid by our physically-backed gold ETPs, foreign exchange fluctuations, securities owned and other miscellaneous items.
39

Table of Contents
Income taxes
Our effective income tax rate for the three months ended March 31, 2021 of negative 14.9% resulted in an income tax benefit of $2.0 million. Our effective income tax rate differs from the federal statutory rate of 21% primarily due to a $5.2 million reduction in unrecognized tax benefits, a
non-taxable
gain on revaluation of deferred consideration and a lower tax rate on foreign earnings, partly offset tax shortfalls associated with the vesting and exercise of stock-based compensation awards.
Our effective income tax rate for the three months ended March 31, 2020 of 21.5% resulted in an income tax benefit of $2.4 million. Our effective income tax rate differs from the federal statutory rate of 21% primarily due a $6.0 million reduction in unrecognized tax benefits, a $2.9 million
non-taxable
gain upon the sale of our Canadian ETF business and a lower tax rate on foreign earnings, partly offset by a valuation allowance on capital losses, tax shortfalls associated with the vesting and exercise of stock-based compensation awards and a
non-deductible
loss on revaluation of deferred consideration.
Non-GAAP
Financial Measures
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 adjusted diluted earnings per share. We disclose adjusted net income and adjusted 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 measures provides investors with a consistent way to analyze our performance. These non-GAAP financial measures exclude the following:

| • |  | Unrealized gains or losses on the revaluation of deferred consideration : Deferred consideration is an obligation we assumed in connection with the ETFS acquisition that is carried at fair value. This item represents the present value of an obligation to pay fixed ounces of gold into perpetuity and is measured using forward-looking gold prices. Changes in the forward-looking price of gold and changes in the discount rate used to compute the present value of the annual payment obligations may have a material impact on the carrying value of the deferred consideration and our reported financial results. We exclude this item when arriving at adjusted net income and adjusted diluted earnings per share as it is not core to our operating business. The item is not adjusted for income taxes as the obligation was assumed by a wholly-owned subsidiary of ours that is based in Jersey, a jurisdiction where we are subject to a zero percent tax rate.

| • |  | Tax shortfalls and windfalls upon vesting and exercise of stock-based compensation awards : GAAP requires the recognition of tax windfalls and shortfalls within income tax expense. These items arise upon the vesting and exercise of stock-based compensation awards and the magnitude is directly correlated to the number of awards vesting/exercised as well as the difference between the price of our stock on the date the award was granted and the date the award vested or was exercised. We exclude these items when determining adjusted net income and adjusted diluted earnings per share as they introduce volatility in earnings and are not core to our operating business.

| • |  | Other items : Impairment charges, an unrealized gain recognized on our investment in Securrency, a gain recognized upon the sale of our Canadian ETF business and acquisition and disposition-related costs are excluded when determining adjusted net income and adjusted earnings per share.

|  | Three Months Ended March 31, |
Adjusted Net Income and Diluted Earnings per Share: |  | 2021 |  |  | 2020 |
Net income/(loss), as reported |  | $ | 15,147 |  |  | $ | (8,638 | )
Deduct/Add back: (Gain)/loss on revaluation of deferred consideration |  |  | (2,832 | ) |  |  | 2,208 |
Deduct: Unrealized gain recognized on our investment in Securrency, net of income taxes |  |  | (179 | ) |  |  | — |
Add back: Impairments, net of income taxes (where applicable) |  |  | 245 |  |  |  | 19,672 |
Add back: Tax shortfalls upon vesting and exercise of stock-based compensation awards |  |  | 123 |  |  |  | 501 |
Add back: Acquisition and disposition-related costs, net of income taxes |  |  | — |  |  |  | 358 |
Deduct: Gain recognized upon the sale of our Canadian ETF business |  |  | — |  |  |  | (2,877 | )
Adjusted net income |  | $ | 12,504 |  |  | $ | 11,224 |
Deduct: Income distributed to participating securities |  |  | (558 | ) |  |  | (555 | )
Deduct: Undistributed income allocable to participating securities |  |  | (853 | ) |  |  | (654 | )
Adjusted net income available to common stockholders |  | $ | 11,093 |  |  | $ | 10,015 |
Weighted average diluted shares, excluding participating securities (See Note 18 to our Consolidated Financial Statements) |  |  | 145,770 |  |  |  | 152,535 |
Adjusted earnings per share - diluted |  | $ | 0.08 |  |  | $ | 0.07 |

40

Table of Contents
Liquidity and Capital Resources
The following table summarizes key data regarding our liquidity, capital resources and uses of capital to fund our operations:

|  | March 31, 2021 |  |  | December 31, 2020 |
Balance Sheet Data (in thousands): |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 62,302 |  |  | $ | 73,425 |
Securities owned, at fair value |  |  | 34,771 |  |  |  | 34,895 |
Accounts receivable |  |  | 30,341 |  |  |  | 29,455 |
Securities held-to-maturity |  |  | 411 |  |  |  | 451 |
Total: Liquid assets |  |  | 127,825 |  |  |  | 138,226 |
Less: Total current liabilities |  |  | (56,558 | ) |  |  | (73,999 | )
Less: Regulatory capital requirement – certain international subsidiaries |  |  | (12,222 | ) |  |  | (10,745 | )
Total: Available liquidity |  | $ | 59,045 |  |  | $ | 53,482 |

|  | Three Months Ended March 31, |
|  | 2021 |  |  | 2020 |
Cash Flow Data (in thousands): |  |  |  |  |  |  |  |
Operating cash flows |  | $ | 1,865 |  |  | $ | (2,634 | )
Investing cash flows |  |  | (5,565 | ) |  |  | 8,754 |
Financing cash flows |  |  | (7,188 | ) |  |  | (11,391 | )
Foreign exchange rate effect |  |  | (235 | ) |  |  | (1,272 | )
Decrease in cash and cash equivalents |  | $ | (11,123 | ) |  | $ | (6,543 | )

Liquidity
We consider our available liquidity to be our liquid assets, less our current liabilities and regulatory capital requirements of certain international subsidiaries. Liquid assets consist of cash and cash equivalents, securities owned, at fair value, accounts receivable and securities
held-to-maturity.
Our securities owned, at fair value are highly liquid investments. Certain securities are accounted for as
held-to-maturity
securities and we have the intention and ability to hold them to maturity. However, these securities are also readily traded and, if needed, could be sold for liquidity. 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, deferred consideration and accrued incentive compensation for employees.
Cash and cash equivalents decreased $11.1 million during the three months ended March 31, 2021 due to $5.5 million used to purchase investments, $4.9 million used to pay dividends on our common stock and $2.6 million used to repurchase our common stock. These decreases were partly offset by $1.9 million provided by operating activities.
Cash and cash equivalents decreased $6.5 million during the three months ended March 31, 2020 due to $5.1 million used to pay dividends on our common stock, $5.0 million used to repay our debt, $2.6 million used in operating activities, $1.5 million used to repurchase our common stock and $1.1 million used in other activities. These decreases were partly offset by $6.0 million of proceeds from
held-to-maturity
securities maturing or called prior to maturity and $2.8 million of net proceeds from the sale of our Canadian ETF business.
41

Table of Contents
Issuance of Convertible Notes
On June 16, 2020, we issued and sold $150,000 in aggregate principal amount of 4.25% Convertible Senior Notes due 2023 (the “Existing Notes”) pursuant to an Indenture (the “Indenture”), dated June 16, 2020, between us and U.S. Bank National Association, as trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. On August 13, 2020, we issued and sold $25,000 in aggregate principal amount of 4.25% Convertible Senior Notes due 2023 (the “Additional Notes”) at a price equal to 101% of the principal amount thereof, plus interest deemed to have accrued since June 16, 2020, and constitute a further issuance of, and form a single series with, our Existing Notes (the Additional Notes and together with the Existing Notes, the “Convertible Notes”). After the issuance of the Additional Notes, we had $175,000 aggregate principal amount of Convertible Notes outstanding.
Key terms of the Convertible Notes are as follows:

| • |  | Maturity date : June 15, 2023, unless earlier converted, repurchased or redeemed.

| • |  | Interest rate of 4.25% : Payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 15, 2020.

| • |  | Conversion price of $5.92 : Convertible at an initial conversion rate of 168.9189 shares of our common stock, per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $5.92 per share.

| • |  | Conversion : Holders may convert at their option at any time prior to the close of business on the business day immediately preceding March 15, 2023 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 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 that we deliver in accordance with the terms of the Indenture 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 March 15, 2023 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 our conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted in either cash, shares of our common stock or a combination of cash and shares of its common stock.

| • |  | Redemption price of $7 . 70 : We may redeem for cash all or any portion of the notes, at our option, on or after June 20, 2021 and on or prior to the 55 th scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price 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 provides 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 Indenture) 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 270.2702 shares of our common stock per $1,000 principal amount of the Convertible Notes (the equivalent of 47,297,285 shares of our common stock), subject to adjustment.

| • |  | Seniority and Security : The Convertible Notes are our senior unsecured obligations, but are subordinated in right of payment to our obligations to make certain redemption payments (if and when due) in respect of its Series A Non-Voting Convertible Preferred Stock (See Note 11 to our Consolidated Financial Statements).

The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the trustee or the holders of not less than 25% in aggregate principal amount of the Convertible Notes outstanding may declare the entire principal amount of all the Convertible Notes to be repurchased, plus any accrued special interest, if any, to be immediately due and payable.
42

Table of Contents
Capital Resources
Our principal source of financing is our operating cash flow. We believe that 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 international subsidiaries are required to maintain a minimum level of regulatory capital, which at March 31, 2021 was approximately $12.2 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, 2022, including purchases to offset future equity grants made under our equity plans.
During the three months ended March 31, 2021, we repurchased 489,763 shares of our common stock under the repurchase program for an aggregate cost of $2.6 million. At March 31, 2021, $49.6 million remained under this program for future purchases.
Contractual Obligations
Convertible Notes
At March 31, 2021, we had $175.0 million aggregate principal amount of Convertible Notes outstanding that are scheduled to mature on June 15, 2023, 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 the principal amount, while settlement of the conversion obligation in excess of the aggregate principal amount may be satisfied in either cash, shares of our common stock or a combination of cash and shares of its common stock. We currently anticipate refinancing this obligation when due.
See “Issuance of Convertible Notes” above for additional information.
Deferred Consideration – Gold Payments
Deferred consideration represents an obligation we assumed in April 2018 in connection with our acquisition of the European exchange-traded commodity, currency and
leveraged-and-inverse
business of ETFS Capital Limited. The obligation is for fixed payments to ETFS Capital Limited of physical gold bullion equating to 9,500 ounces of gold per year through March 31, 2058 and then subsequently reduced to 6,333 ounces of gold continuing into perpetuity (“Contractual Gold Payments”). The present value of the deferred consideration was $227.1 million at March 31, 2021.
The Contractual Gold Payments are paid from advisory fee income generated by any of our sponsored financial products backed by physical gold with no recourse back to us for any unpaid amounts that exceed advisory fees earned.
See Note 9 to our Consolidated Financial Statements for additional information.
Operating Leases
Our principal executive office is currently located at 245 Park Avenue, New York, New York 10167. We lease approximately 38,000 square feet of office space under a lease that expires in August 2029, which includes a cancellation option that is effective on August 21, 2024. Total future minimum lease payments with respect to this office space was $25.8 million at March 31, 2021.
Cash flows generated by our operating activities and existing cash balances should be sufficient to satisfy the future minimum lease payments.
See Note 12 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.
43

Table of Contents
Critical Accounting Policies and Estimates
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.
Goodwill is allocated to our U.S. Business and European Business components. For impairment testing purposes, these components are aggregated as a single reporting unit as they fall under the same operating segment and have similar economic characteristics.
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.
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
.
Investments
We account for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed within ASU
2016-01,
Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities
, to the extent such investments are not subject to consolidation or the equity method. 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 regarding a gain of $0.2 million recognized on our investment in Securrency.
Deferred Consideration – Gold Payments
Deferred consideration represents the present value of an obligation to pay gold to a third party into perpetuity and is measured using forward-looking gold prices, a selected discount rate and perpetual growth rate. The weighted average forward-looking gold price per ounce, discount rate and perpetual growth rate were $2,136, 9.0% and 1.7%, respectively, at March 31, 2021. Changes in the fair value of this obligation are reported as gain/(loss) on revaluation of deferred consideration – gold payments on our Consolidated Statements of Operations.
During the three months ended March 31, 2021, we reported a gain on deferred consideration – gold payments of $2.8 million. A 1.0% increase in the weighted average forward-looking gold price per ounce would have reduced this reported gain by $1.6 million, a 1 percentage point increase in the discount rate would have increased this reported gain by $24.8 million and a 1 percentage point increase in the perpetual growth rate would have reduced this reported gain by $23.1 million. See Note 9 to our Consolidated Financial Statements for additional information.
Revenue Recognition
We earn substantially all of our revenue in the form of advisory fees from our ETPs and recognize this revenue over time, as the performance obligation is satisfied. 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.
Recently Adopted Accounting Pronouncements
On January 1, 2021, we early adopted ASU
2020-06,
Debt – Debt with Conversion and Other Options
(ASU
2020-06)
under the modified retrospective approach. Under the ASU, the accounting for convertible instruments was simplified by removing major separation models required under current GAAP. Accordingly, more convertible instruments are reported as a single liability or equity with no separate accounting for embedded conversion features. Certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception are removed and, as a result, more equity contracts will qualify for the scope exception. The ASU also simplifies the diluted
earnings-per-share
calculation in certain areas. Upon the adoption of this ASU, we reclassified the equity component related to the convertible notes, net of deferred taxes, increasing retained earnings by $0.6 million, increasing the carrying value of the convertible notes by $4.1 million, reducing additional
paid-in
capital by $3.7 million and reducing deferred tax liabilities by $1.0 million. These updates also reduced interest expense recognized on our convertible notes by approximately $0.4 million per quarter. See Note 10 to our Consolidated Financial Statements for additional information.
44

Table of Contents
On January 1, 2021, we adopted ASU
2019-12,
Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes
(ASU
2019-12).
The main objective of the standard is to reduce complexity in the accounting for income taxes by removing the following exceptions: (1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income); (2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; (3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; and (4) exception to the general methodology for calculating income taxes in an interim period when a
year-to-date
loss exceeds the anticipated loss for the year. The standard also simplifies the accounting for income taxes by enacting the following: (a) requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount as a
non-income-based
tax; (b) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered as a separate transaction; (c) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; and (d) requiring that an entity reflect the enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. We have determined that the adoption of this standard did not have a material impact on our financial statements.

ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following information, together with information included in other parts of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, describes key aspects of our market risk.
Market Risk
Market risk to us generally represents the risk of changes in the value of our ETPs that results from fluctuations in securities or commodity prices, foreign currency exchange rates against the U.S. dollar, and interest rates. Nearly all our revenues are derived from advisory agreements for the WisdomTree ETPs. Under these agreements, the advisory fee we receive is based on the average market value of the assets in the WisdomTree ETP portfolios we manage.
Fluctuations in the value of the ETPs are common and are generated by numerous factors such as market volatility, the global economy, inflation, changes in investor strategies and sentiment, availability of alternative investment vehicles, domestic and foreign government regulations, emerging markets developments and others. Accordingly, changes in any one or a combination of these factors may reduce the value of investment securities and, in turn, the underlying AUM on which our revenues are earned. These declines may cause investors to withdraw funds from our ETPs in favor of investments that they perceive as offering greater opportunity or lower risk, thereby compounding the impact on our revenues. We believe challenging and volatile market conditions will continue to be present in the foreseeable future.
Interest Rate Risk
We invest our corporate cash in short-term interest earning assets, primarily in our WisdomTree ETFs, federal agency debt instruments, money market instruments at a commercial bank and other securities which totaled $36.0 million and $35.7 million as of December 31, 2020 and March 31, 2021, respectively. We do not anticipate that changes in interest rates will have a material impact on our financial condition, operating results or cash flows.
In addition, our Convertible Notes bear interest at a fixed rate of 4.25%. Therefore, we have no direct financial statement risk associated with changes in interest rates. However, the fair value of the Convertible Notes changes primarily when the market price of our common stock fluctuates or interest rates change.
Exchange Rate Risk
We are subject to currency translation exposure on the results of our
non-U.S.
operations, primarily in the U.K. and Europe. Foreign currency translation risk is the risk that exchange rate gains or losses arise from translating foreign entities’ statements of earnings and balance sheets from functional currency to our reporting currency (the U.S. dollar) for consolidation purposes. The advisory fees earned on our international listed ETPs are predominantly in U.S. dollars (and also paid in gold ounces, as described below); however, expenses for corporate overhead are generally incurred in British pounds. Currently, we do not enter into derivative financial instruments aimed at offsetting certain exposures in the statement of operations or the balance sheet but may seek to do so in the future.
45

Table of Contents
Exchange rate risk associated with the euro is not considered to be significant.
Commodity Price Risk
Fluctuations in the prices of commodities that are linked to certain of our ETPs could have a material adverse effect on our AUM and revenues. In addition, a portion of the advisory fee revenues we receive on our ETPs backed by gold are paid in gold ounces. In addition, we pay gold ounces to satisfy our deferred consideration obligation (See Note 9 to our Consolidated Financial Statements). 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.

ITEM 4. | CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures
As of March 31, 2021, our management, with the participation of our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule
13a-15(b)
promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based upon that evaluation, our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer concluded that, as of March 31, 2021, our disclosure controls and procedures were effective at a reasonable assurance level in ensuring that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules, regulations and forms of the SEC, including ensuring that such material information is accumulated by and communicated to our management, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
During the quarter ended March 31, 2021, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II: OTHER INFORMATION

ITEM 1. | LEGAL PROCEEDINGS

None.

ITEM 1A. | RISK FACTORS

You should carefully consider the information set forth in this Report, as well as the information in Part 1, Item 1A. “Risk Factors” in our Annual Report on Form
10-K
for the fiscal year ended December 31, 2020.

ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent sales of Unregistered Securities
None.
Use of Proceeds
Not applicable.
46

Table of Contents
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table provides information with respect to purchases made by or on behalf of us or any “affiliated purchaser” of shares of our common stock.

|  | Total Number of Shares Purchased |  |  | Average Price Paid Per Share |  |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) |  |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
Period |  |  |  |  |  |  |  |  |  |  | (in thousands) |
January 1, 2021 to January 31, 2021 |  |  | 489,763 |  |  | $ | 5.37 |  |  |  | 489,763 |  |  |  |  |
February 1, 2021 to February 28, 2021 |  |  | — |  |  | $ | — |  |  |  | — |  |  |  |  |
March 1, 2021 to March 31, 2021 |  |  | — |  |  | $ | — |  |  |  | — |  |  |  |  |
Total |  |  | 489,763 |  |  | $ | 5.37 |  |  |  | 489,763 |  |  | $ | 49,561 |

(1) | On April 24, 2019, our Board of Directors extended the term of our share repurchase program for three years through April 27, 2022. During the three months ended March 31, 2021, we repurchased 489,763 shares of our common stock under this program for an aggregate cost of approximately $2.6 million. As of March 31, 2021, $49.6 million remained under this program for future repurchases.

ITEM 3. | DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. | MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. | OTHER INFORMATION

None.
47

Table of Contents

ITEM 6. | EXHIBITS

Exhibit No. |  | Description
3.1 |  | Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Registration Statement on Form 10, filed with the SEC on March 31, 2011)
3.2 |  | Certificate of Designations of Series A Non-Voting Convertible Preferred Stock of the Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on April 13, 2018)
3.3 |  | Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K, filed with the SEC on February 26, 2019)
4.1 |  | Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statement on Form 10, filed with the SEC on March 31, 2011)
4.2 |  | Amended and Restated Stockholders Agreement among the Registrant and certain investors dated December 21, 2006 (incorporated by reference to Exhibit 4.2 of the Registrant’s Registration Statement on Form 10, filed with the SEC on March 31, 2011)
4.3 |  | Securities Purchase Agreement among the Registrant and certain investors dated December 21, 2006 (incorporated by reference to Exhibit 4.3 of the Registrant’s Registration Statement on Form 10, filed with the SEC on March 31, 2011)
4.4 |  | Securities Purchase Agreement among the Registrant and certain investors dated October 15, 2009 (incorporated by reference to Exhibit 4.4 of the Registrant’s Registration Statement on Form 10, filed with the SEC on March 31, 2011)
4.5 |  | Third Amended and Restated Registration Rights Agreement dated October 15, 2009 (incorporated by reference to Exhibit 4.5 of the Registrant’s Registration Statement on Form 10, filed with the SEC on March 31, 2011)
4.6 |  | Investor Rights Agreement, dated April 11, 2018, between the Registrant and ETF Securities Limited (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on April 13, 2018)
4.7 |  | Indenture, dated as of June 16, 2020, by and between the Registrant and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2020).
4.8 |  | Form of Global Note, representing the Registrant’s 4.25% Convertible Senior Notes due 2023 (included as Exhibit A to the Indenture filed as Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2020)
31.1 (1) |  | Certification of Chief Executive Officer and Principal Executive Officer pursuant to Rule 13a-14 of the Exchange Act
31.2 (1) |  | Certification of Chief Financial Officer and Principal Financial Officer pursuant to Rule 13a-14 of the Exchange Act
31.3 (1) |  | Certification of Chief Accounting Officer and Principal Accounting Officer pursuant to Rule 13a-14 of the Exchange Act
32 (1) |  | Section 1350 Certification

48

Table of Contents

Exhibit No. |  | Description
101 (1) |  | Financial Statements from the Quarterly Report on Form 10-Q of the Company for the three months ended March 31, 2021, formatted in XBRL: (i) Consolidated Balance Sheets at March 31, 2021 (Unaudited) and December 31, 2020; (ii) Consolidated Statements of Operations and Comprehensive Income/(Loss) for the three months ended March 31, 2021 and March 31, 2020 (Unaudited); (iii) Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2021 and March 31, 2020 (Unaudited); (iv) Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and March 31, 2020 (Unaudited); and (v) Notes to Consolidated Financial Statements, as blocks of text and in detail.
101.SCH (1) |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL (1) |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF (1) |  | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB (1) |  | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE (1) |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 (1) |  | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)

(1) | Filed herewith.

49

Table of Contents
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized on this 6
th
day of May 2021.

WISDOMTREE INVESTMENTS, INC.
By: |  | /s/ Jonathan Steinberg
|  | Jonathan Steinberg
|  | Chief Executive Officer (Principal Executive Officer)
WISDOMTREE INVESTMENTS, INC.
By: |  | /s/ Amit Muni
|  | Amit Muni
|  | Chief Financial Officer (Principal Financial Officer)
WISDOMTREE INVESTMENTS, INC.
By: |  | /s/ Bryan Edmiston
|  | Bryan Edmiston
|  | Chief Accounting Officer (Principal Accounting Officer)

50