GlobeNewswire Inc | Oct 30, 2020 07:00AM EDT

October 30, 2020

NEW YORK, Oct. 30, 2020 (GLOBE NEWSWIRE) -- WisdomTree Investments, Inc. (NASDAQ: WETF) today reported financial results for the third quarter of 2020.

$12.0 million of non-cash charges, including (i) a loss on revaluation of deferred consideration of $8.9 million and (ii) a $3.1 million impairment charge related to our investment in Thesys Group, Inc.

($0.3) million net loss ($11.01 million net income, as adjusted), see Non-GAAP Financial Measurements for additional information.

$60.7 billion of ending AUM, an increase of 5.3% arising primarily from market appreciation, partly offset by net outflows.

$468 million of net outflows, driven by outflows from our commodity and international developed market equity products, partly offset by inflows into our U.S. equity and emerging market equity products.

0.42% average global advisory fee, an increase of 1 basis point due to AUM mix shift.

$64.6 million of operating revenues, an increase of 11.2% primarily due to higher average AUM and a higher average global advisory fee.

76.5% gross margin1, a 1.4 point increase primarily due to higher revenues.

22.8% operating income margin, a 2.5 point increase primarily due to higher revenues, partly offset by higher operating expenses.

$25.0 million issuance of convertible senior notes due 2023, which were issued on the same terms as the notes previously issued.

$4.5 million repurchase of 1.1 million shares of our common stock, principally in connection with the issuance of the convertible notes.

$0.03 quarterly dividenddeclared, payable on November 25, 2020 to stockholders of record as of the close of business on November 11, 2020.

Update from Jonathan Steinberg, WisdomTree CEO

?We have restored the momentum built prior to the pandemic through steadfastfocus on what we can control and strong execution amid a highly volatile andunusual year. Important elements across our global franchise are starting toalign and I?m excited about our growth outlook for the remainder of the yearand into 2021.?

?Given the strength and sustainability of our execution over the past eightmonths, we have decided to pursue a ?remote first? philosophy and plan toreduce our office space globally. Technology has brought our team closertogether and driven productivity gains while our funds continue to operateflawlessly with coordination from our third-party service providers. We aretaking this action because we believe it is the right strategy to drivesustained momentum and future growth of the business and the cost savings couldbe meaningful.?

OPERATING AND FINANCIAL HIGHLIGHTS

Three Months Ended Sept. 30, June 30, Mar.31, Dec. 31, Sept. 30, 2020 2020 2020 2019 2019ConsolidatedOperating Highlights ($, in billions):AUM $ 60.7 $ 57.6 $ 50.3 $ 63.6 $ 60.0 Net inflows/ $ (0.5 ) $ 0.1 $ (0.5 ) $ 0.4 $ (0.7 )(outflows)Average AUM $ 61.2 $ 55.7 $ 59.8 $ 61.9 $ 60.3 Average advisory fee 0.42 % 0.41 % 0.42 % 0.44 % 0.44 % ConsolidatedFinancial Highlights($, in millions, except per shareamounts):Operating revenues $ 64.6 $ 58.1 $ 63.9 $ 68.9 $ 67.7 Net (loss)/income $ (0.3 ) $ (13.3 ) $ (8.6 ) $ (25.9 ) $ 4.2 Diluted (loss)/ $ (0.01 ) $ (0.09 ) $ (0.06 ) $ (0.17 ) $ 0.02 earnings per shareOperating income 22.8 % 20.3 % 24.5 % 21.5 % 23.8 %marginAs Adjusted (Non-GAAP^1):Gross margin 76.5 % 75.1 % 77.3 % 77.3 % 77.7 %Net income, as $ 11.0 $ 8.5 $ 11.2 $ 10.1 $ 10.6 adjustedDiluted earnings per $ 0.07 $ 0.05 $ 0.07 $ 0.06 $ 0.06 share, as adjustedOperating income 22.8 % 20.4 % 25.1 % 22.0 % 24.1 %margin, as adjusted

RECENT BUSINESS DEVELOPMENTS

Company News

* In August 2020, we issued and sold an additional $25.0 million in aggregate principal amount of convertible senior notes due 2023 following our issuance in June 2020 of $150.0 million in aggregate principal amount of such notes. * In September 2020, we won two awards at the AJ Bell Fund & Investment Trust Awards 2020 for WisdomTree Physical Gold (PHAU) and WisdomTree Cloud Computing UCITS ETF (WCLD). * In October 2020, we were named ?Best International Equity ETF Issuer ($1BN+)? by the ETF Express U.S. Awards 2020, which recognizes excellence among ETF issuers and service providers across a wide range of categories.

Product News

* In August 2020, we announced an index change for WTI Crude Oil ETC (CRUD) following a vote by security holders; we announced that enhancements were made to the WisdomTree Growth Leaders Fund (PLAT) ? previously the WisdomTree Modern Tech Platforms Fund ? focusing on growth exposure of platform businesses with the addition of growth screen criteria and a fee reduction; and we cross-listed five funds in Mexico ? four European products: SGBS, WCLD1, VOLT, WTAI and one U.S. ETF: WCLD. * In October 2020, we implemented a number of volatility proofing measures for three currency-hedged and six short-and-leveraged ETPs in Europe; we announced a forward share split of 2:1 on the WisdomTree China ex-State-Owned Enterprises Fund (CXSE); we applied an ESG screen and introduced the WisdomTree Composite Risk Score to the WisdomTree Global Quality Dividend Growth UCITS ETF (GGRA), the WisdomTree SmallCap Dividend UCITS ETF (DGSE) and the WisdomTree Emerging Markets Equity Income UCITS ETF (DEM); and we announced a collaboration with 55ip, a financial technology company, to deliver WisdomTree model portfolios utilizing 55ip?s automated tax-smart technology.

WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited)

Three Months Ended Nine Months Ended Sept.30, June 30, Mar.31, Dec.31, Sept.30, Sept.30, Sept.30, 2020 2020 2020 2019 2019 2020 2019Operating Revenues:Advisory fees $ 63,919 $ 57,208 $ 62,950 $ 68,179 $ 67,006 $ 184,077 $ 197,473 Other income 721 918 924 728 712 2,563 2,023 Total revenues 64,640 58,126 63,874 68,907 67,718 186,640 199,496 Operating Expenses:Compensation and 19,098 17,455 17,295 19,280 18,880 53,848 61,481 benefitsFund managementand 15,219 14,461 14,485 15,650 15,110 44,165 45,852 administrationMarketing and 2,996 1,949 2,468 3,551 3,022 7,413 8,612 advertisingSales andbusiness 2,386 2,181 3,417 5,329 4,354 7,984 12,947 developmentContractual gold 4,539 4,063 3,760 3,516 3,502 12,362 9,710 paymentsProfessional and 950 1,357 1,273 1,604 1,259 3,580 4,037 consulting feesOccupancy,communications 1,611 1,643 1,551 1,587 1,549 4,805 4,715 and equipmentDepreciation and 253 251 256 253 259 760 792 amortizationThird-partydistribution 1,233 1,340 1,355 1,146 1,503 3,928 5,822 feesAcquisition anddisposition- ? 33 383 366 190 416 536 related costsOther 1,611 1,596 1,997 1,816 1,959 5,204 6,267 Total operating 49,896 46,329 48,240 54,098 51,587 144,465 160,771 expensesOperating income 14,744 11,797 15,634 14,809 16,131 42,175 38,725 Other Income/ (Expenses):Interest expense (2,511 ) (2,044 ) (2,419 ) (2,606 ) (2,832 ) (6,974 ) (8,634 )Loss onrevaluation ofdeferred (8,870 ) (23,358 ) (2,208 ) (5,354 ) (6,306 ) (34,436 ) (5,939 )consideration ?gold paymentsInterest income 111 119 163 936 799 393 2,396 Impairments (3,080 ) ? (19,672 ) (30,138 ) ? (22,752 ) (572 )Loss onextinguishment ? (2,387 ) ? ? ? (2,387 ) ? of debtOther gains and 744 1,819 (2,507 ) (2 ) 843 56 (3,500 )losses, netIncome/(loss)before income 1,138 (14,054 ) (11,009 ) (22,355 ) 8,635 (23,925 ) 22,476 taxesIncome taxexpense/ 1,408 (804 ) (2,371 ) 3,525 4,483 (1,767 ) 7,021 (benefit)Net (loss)/ $ (270 ) $ (13,250 ) $ (8,638 ) $ (25,880 ) $ 4,152 $ (22,158 ) $ 15,455 income(Loss)/earnings ) )per share ? ($0.01 ^ ($0.09 ) ($0.06 ) ($0.17 ) $0.02^2 ($0.16 ^ $0.09 basic 2 2(Loss)/earnings ) )per share ? ($0.01 ^ ($0.09 ) ($0.06 ) ($0.17 ) $0.02 ($0.16 ^ $0.09 diluted 2 2Weighted averagecommon shares ? 145,564 151,623 152,519 151,948 151,897 149,886 151,782 basicWeighted averagecommon shares ? 145,564 151,623 152,519 151,948 167,163 149,886 166,944 diluted As Adjusted (Non-GAAP^1) Total operating $ 49,896 $ 46,296 $ 47,857 $ 53,732 $ 51,397 expensesOperating income $ 14,744 $ 11,830 $ 16,017 $ 15,175 $ 16,321 Income before $ 13,242 $ 10,911 $ 14,358 $ 13,503 $ 15,131 income taxesIncome tax $ 2,205 $ 2,417 $ 3,134 $ 3,396 $ 4,489 expenseNet income $ 11,037 $ 8,494 $ 11,224 $ 10,107 $ 10,642 Earnings per $ 0.07 $ 0.05 $ 0.07 $ 0.06 $ 0.06 share ? diluted

QUARTERLY HIGHLIGHTS

Operating Revenues

-- Operating revenues increased 11.2% from the second quarter of 2020 due to higher average global AUM arising from market appreciation, partly offset by net outflows. Also, our average global advisory fee increased 1 basis point due to AUM mix shift. -- Operating revenues decreased 4.5% from the third quarter of 2019 due to a 2 basis point decline in our average global advisory fee arising from AUM mix shift, notwithstanding the increase in our average AUM. -- Our average global advisory fee was 0.42%, 0.41% and 0.44% during the third quarter of 2020, the second quarter of 2020 and the third quarter of 2019, respectively.

Operating Expenses

-- Operating expenses increased 7.7% from the second quarter of 2020 due to higher incentive compensation accruals, marketing expenses, and higher fund management and administration costs due to higher average AUM and an increase in contractual gold payments due to higher average gold prices. -- Operating expenses decreased 3.3% from the third quarter of 2019 due to lower sales and business development costs, partly offset by higher contractual gold payments due to higher average gold prices.

Other Income/(Expenses)

-- We recognized a non-cash loss on revaluation of deferred consideration of ($8.9) million, ($23.4) million and ($6.3) million during the third quarter of 2020, second quarter of 2020 and third quarter of 2019, respectively. These losses arose due to an increase in forward-looking gold prices when compared to the previous periods forward-looking gold curves. The magnitude of any gain or loss recognized is highly correlated to the magnitude of the change in the forward-looking price of gold. -- Interest expense increased 22.8% from the second quarter of 2020 to $2.5 million primarily due to higher effective interest rates. This expense decreased 11.3% from the third quarter of 2019 primarily due to a lower level of debt outstanding. -- During the third quarter of 2020, we recognized a non-cash impairment charge of $3.1 million related to our investment in Thesys. -- Other gains, net, were $0.7 million, $1.8 million and $0.8 million for the third quarter of 2020, second quarter of 2020 and third quarter of 2019, respectively. The third quarter of 2020 and second quarter of 2020 includes a gain of $0.2 million and $0.9 million, respectively, arising from an adjustment to the estimated fair value of consideration received from the exit of our investment in AdvisorEngine Inc. 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.

Income Taxes

-- Our effective income tax rate for the third quarter of 2020 of 123.7% resulted in income tax expense of $1.4 million. Our tax rate differs from the federal statutory tax rate of 21% primarily due to a non-deductible loss on revaluation of deferred consideration. This loss was partly offset by a lower tax rate on foreign earnings. -- Our adjusted effective income tax rate was 16.7%1.

NINE MONTH HIGHLIGHTS

-- Operating revenues decreased 6.4% as compared to 2019 due to a 3 basis point decline in our average global advisory fee arising from AUM mix shift. -- Operating expenses decreased 10.1% as compared to 2019 due to lower incentive compensation accruals as well as $3.5 million of severance expense included in the prior period, lower sales and business development costs, third party distribution costs, marketing expenses and other expenses, as well as lower fund management and administration costs primarily due to the sale of our Canadian ETF business. These declines were partly offset by higher contractual gold payments due to higher average gold prices. -- Significant changes in items reported in other income/(expenses) include a decrease in interest expense of 19.2% due to a lower level of debt outstanding; non-cash loss on revaluation of deferred consideration of ($34.4) million and ($5.9) million in 2020 and 2019, respectively; non-cash impairment charges of $22.8 million recorded in 2020; a loss on extinguishment of debt of $2.4 million in 2020; non-cash charges of $6.0 million and $4.3 million in 2020 and 2019, respectively, arising from the release of tax-related indemnification assets upon the expiration of the statute of limitations (an equal and offsetting benefit was recognized in income tax expense); and a gain of $1.1 million in 2020 arising from an adjustment to the estimated fair value of consideration received from the exit of our investment in AdvisorEngine. -- Our effective income tax rate for 2020 of 7.4% resulted in an income tax benefit of $1.8 million. Our tax rate differs from the federal statutory rate of 21% primarily due to a valuation allowance on capital losses, a non-deductible loss on revaluation of deferred consideration and tax shortfalls associated with the vesting and exercise of stock-based compensation awards. These items were partly offset by a tax benefit of $6.0 million recognized in connection with the release of the tax-related indemnification asset described above, a $2.9 million non-taxable gain recognized upon sale of our Canadian ETF business in the first quarter, a tax benefit of $2.8 million recognized in connection with the release of a deferred tax asset valuation allowance on interest carryforwards arising from our debt previously held in the United Kingdom and a lower tax rate on foreign earnings.

CONFERENCE CALL

WisdomTree will discuss its results and operational highlights during a conference call on Friday, October 30, 2020 at 9:00 a.m. ET. The call-in number will be (877)303-7209.Anyone outside the U.S. or Canada should call (970)315-0420.The slides used during the presentation will be available at http://ir.wisdomtree.com. For those unable to join the conference call at the scheduled time, an audio replay will be available on http://ir.wisdomtree.com.

ABOUT WISDOMTREE

WisdomTree Investments, Inc., through its subsidiaries in the U.S. and Europe (collectively, WisdomTree), is an ETF and ETP sponsor and asset manager headquartered in New York.WisdomTree offers products covering equity, commodity, fixed income, leveraged and inverse, currency and alternative strategies. WisdomTree currently has approximately $62.5 billion in assets under management globally.

WisdomTree is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.

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1See Non-GAAP Financial Measurements. 2Earnings/(loss) per share (EPS) is calculated pursuant to the two-class method as it results in a lower EPS amount as compared to the treasury stock method.

Contact Information:

Investor Relations Media RelationsJason Weyeneth, CFA Jessica Zaloom+1.917.267.3858 +1.917.267.3735jweyeneth@wisdomtree.com jzaloom@wisdomtree.com

WisdomTreeInvestments, Inc.Key OperatingStatistics (Unaudited) Three Months Ended Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, 2020 2020 2020 2019 2019GLOBAL ETPs ($ in millions)Beginning of $ 57,647 $ 50,323 $ 63,615 $ 59,981 $ 60,389 period assetsAssets sold ? ? (778 ) ? ? Inflows/ (468 ) 126 (536 ) 390 (698 )(outflows)Marketappreciation/ 3,560 7,494 (11,958 ) 3,247 471 (depreciation)Fund closures (46 ) (296 ) (20 ) (3 ) (181 )End of period $ 60,693 $ 57,647 $ 50,323 $ 63,615 $ 59,981 assetsAverage assetsduring the $ 61,194 $ 55,689 $ 59,819 $ 61,858 $ 60,306 periodAverageadvisory fee 0.42 % 0.41 % 0.42 % 0.44 % 0.44 %during theperiodRevenue days 92 91 91 92 92 Number of ETFs? end of the 305 311 331 349 348 period U.S. LISTEDETFs ($ in millions)Beginning of $ 31,344 $ 28,893 $ 40,600 $ 37,592 $ 39,220 period assetsInflows/ 575 (1,474 ) (1,273 ) 563 (1,198 )(outflows)Marketappreciation/ 1,373 4,039 (10,424 ) 2,448 (430 )(depreciation)Fund closures ? (114 ) (10 ) (3 ) ? End of period $ 33,292 $ 31,344 $ 28,893 $ 40,600 $ 37,592 assetsAverage assetsduring the $ 32,962 $ 30,607 $ 36,936 $ 39,094 $ 37,857 periodAverageadvisory fee 0.41 % 0.41 % 0.43 % 0.44 % 0.44 %during theperiodNumber of ETFs? end of the 67 67 77 80 80 period INTERNATIONALLISTED ETPs ($ in millions)Beginning of $ 26,303 $ 21,430 $ 23,015 $ 22,389 $ 21,169 period assetsAssets sold ? ? (778 ) ? ? Inflows/ (1,043 ) 1,600 737 (173 ) 500 (outflows)Marketappreciation/ 2,187 3,455 (1,534 ) 799 901 (depreciation)Fund closures (46 ) (182 ) (10 ) ? (181 )End of period $ 27,401 $ 26,303 $ 21,430 $ 23,015 $ 22,389 assetsAverage assetsduring the $ 28,232 $ 25,082 $ 22,883 $ 22,764 $ 22,449 periodAverageadvisory fee 0.42 % 0.41 % 0.41 % 0.44 % 0.44 %during theperiodNumber of ETPs? end of the 238 244 254 269 268 period PRODUCTCATEGORIES ($ in millions) Commodity & CurrencyBeginning of $ 24,260 $ 19,823 $ 20,074 $ 19,713 $ 18,204 period assetsInflows/ (1,087 ) 1,316 592 (244 ) 511 (outflows)Marketappreciation/ 2,036 3,121 (843 ) 605 998 (depreciation)End of period $ 25,209 $ 24,260 $ 19,823 $ 20,074 $ 19,713 assetsAverage assetsduring the $ 25,959 $ 23,037 $ 20,407 $ 19,892 $ 19,558 period U.S. Equity Beginning of $ 13,997 $ 12,151 $ 17,732 $ 16,281 $ 15,889 period assetsInflows/ 897 (241 ) (285 ) 460 239 (outflows)Marketappreciation/ 718 2,087 (5,296 ) 991 153 (depreciation)End of period $ 15,612 $ 13,997 $ 12,151 $ 17,732 $ 16,281 assetsAverage assetsduring the $ 15,139 $ 13,302 $ 16,011 $ 16,969 $ 15,872 period InternationalDeveloped Market EquityBeginning of $ 8,821 $ 8,632 $ 13,011 $ 12,169 $ 13,313 period assetsInflows/ (587 ) (965 ) (1,097 ) (135 ) (1,009 )(outflows)Marketappreciation/ 369 1,154 (3,282 ) 977 (135 )(depreciation)End of period $ 8,603 $ 8,821 $ 8,632 $ 13,011 $ 12,169 assetsAverage assetsduring the $ 8,819 $ 8,760 $ 11,447 $ 12,607 $ 12,379 period

Three Months Ended Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, 2020 2020 2020 2019 2019 Emerging Market Equity Beginning of period assets $ 5,413 $ 4,600 $ 6,400 $ 5,699 $ 5,966 Inflows/(outflows) 257 (25 ) 69 195 176 Market appreciation/ 309 838 (1,869 ) 506 (443 )(depreciation)End of period assets $ 5,979 $ 5,413 $ 4,600 $ 6,400 $ 5,699 Average assets during the $ 5,913 $ 5,129 $ 5,918 $ 5,991 $ 5,729 period Fixed Income Beginning of period assets $ 3,530 $ 3,527 $ 3,585 $ 3,337 $ 3,946 Inflows/(outflows) 76 (53 ) 21 218 (594 )Market appreciation/ 24 56 (79 ) 30 (15 )(depreciation)End of period assets $ 3,630 $ 3,530 $ 3,527 $ 3,585 $ 3,337 Average assets during the $ 3,605 $ 3,523 $ 3,653 $ 3,540 $ 3,731 period Leveraged & Inverse Beginning of period assets $ 1,349 $ 882 $ 995 $ 1,002 $ 989 Inflows/(outflows) (10 ) 312 12 (22 ) 12 Market appreciation/ 92 155 (125 ) 15 1 (depreciation)End of period assets $ 1,431 $ 1,349 $ 882 $ 995 $ 1,002 Average assets during the $ 1,481 $ 1,163 $ 1,008 $ 1,033 $ 1,019 period Alternatives Beginning of period assets $ 225 $ 244 $ 358 $ 418 $ 434 Inflows/(outflows) (4 ) (29 ) (66 ) (61 ) (17 )Market appreciation/ 8 10 (48 ) 1 1 (depreciation)End of period assets $ 229 $ 225 $ 244 $ 358 $ 418 Average assets during the $ 226 $ 226 $ 328 $ 398 $ 428 period Closed ETPs Beginning of period assets $ 52 $ 464 $ 1,460 $ 1,362 $ 1,648 Assets sold ? ? (778 ) ? ? Inflows/(outflows) (10 ) (189 ) 218 (21 ) (16 )Market appreciation/ 4 73 (416 ) 122 (89 )(depreciation)Fund closures (46 ) (296 ) (20 ) (3 ) (181 )End of period assets $ ? $ 52 $ 464 $ 1,460 $ 1,362 Average assets during the $ 52 $ 549 $ 1,047 $ 1,428 $ 1,590 period Headcount 211 214 210 208 212

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

WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts)

Sept.30, Dec.31, 2020 2019 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 63,561 $ 74,972 Securities owned, at fair value 32,574 17,319 Accounts receivable 26,163 26,838 Income taxes receivable 38 ? Prepaid expenses 4,971 3,724 Other current assets 704 207 Total current assets 128,011 123,060 Fixed assets, net 7,654 8,127 Notes receivable ? 28,172 Securities held-to-maturity 501 16,863 Deferred tax assets, net 7,115 7,398 Investments 8,112 11,192 Right of use assets ? operating leases 16,788 18,161 Goodwill 85,856 85,856 Intangible assets 601,247 603,294 Other noncurrent assets 185 983 Total assets $ 855,469 $ 903,106 LIABILITIES AND STOCKHOLDERS? EQUITY LIABILITIES Current liabilities: Fund management and administration payable $ 22,427 $ 22,021 Compensation and benefits payable 13,881 26,501 Deferred consideration ? gold payments 17,202 13,953 Securities sold, but not yet purchased, at fair value ? 582 Operating lease liabilities 3,124 3,682 Income taxes payable ? 3,372 Accounts payable and other liabilities 10,383 8,930 Total current liabilities 67,017 79,041 Convertible notes 165,819 ? Debt ? 175,956 Deferred consideration ? gold payments 190,546 159,071 Operating lease liabilities 17,849 19,057 Total liabilities 441,231 433,125 Preferred stock ? Series A Non-Voting Convertible,par value $0.01; 14.750 shares authorized, issued and 132,569 132,569 outstanding STOCKHOLDERS? EQUITY Common stock, par value $0.01; 250,000 shares authorized:Issued and outstanding: 148,782 and 155,264 atSeptember 30, 2020 and December31, 2019, 1,488 1,553 respectivelyAdditional paid-in capital 319,443 352,658 Accumulated other comprehensive income 640 945 Accumulated deficit (39,902 ) (17,744 )Total stockholders? equity 281,669 337,412 Total liabilities and stockholders? equity $ 855,469 $ 903,106

WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)

Nine Months Ended Sept. 30, Sept. 30, 2020 2019Cash flows from operating activities: Net (loss)/income $ (22,158 ) $ 15,455 Adjustments to reconcile net (loss)/income to net cash provided by operating activities:Advisory fees received in gold and other precious (46,077 ) (36,306 )metalsLoss on revaluation of deferred consideration ? gold 34,436 5,939 paymentsImpairments 22,752 572 Contractual gold payments 12,362 9,710 Stock-based compensation 9,003 8,581 Gain on sale ?Canadian ETF business (2,877 ) ? Loss on extinguishment of debt 2,387 ? Amortization of right of use asset 2,384 2,379 Amortization of issuance costs - former credit 1,328 2,159 facilityDeferred income taxes (961 ) 1,383 Amortization of issuance costs - convertible notes 882 ? Depreciation and amortization 760 792 Paid-in-kind interest income ? (1,856 )Other (1,173 ) (330 )Changes in operating assets and liabilities: Securities owned, at fair value (15,255 ) 5,497 Accounts receivable 3,166 2,358 Income taxes receivable/payable (3,399 ) 4,350 Prepaid expenses (1,325 ) (888 )Gold and other precious metals 32,969 25,751 Other assets (341 ) (571 )Fund management and administration payable 735 (366 )Compensation and benefits payable (12,349 ) 1,476 Securities sold, but not yet purchased, at fair (582 ) (1,130 )valueOperating lease liabilities (2,778 ) (2,662 )Accounts payable and other liabilities 1,679 788 Net cash provided by operating activities 15,568 43,081 Cash flows from investing activities: Purchase of fixed assets (292 ) (25 )Funding of notes receivable ? (1,790 )Proceeds from held-to-maturity securities maturing 16,441 2,313 or called prior to maturityProceeds from the sale of our financial interests in 9,592 ? AdvisorEngineProceeds from sale of Canadian ETF business, net 2,774 ? Net cash provided by investing activities 28,515 498 Cash flows from financing activities: Repayment of debt (179,000 ) (15,000 )Shares repurchased (30,979 ) (2,187 )Dividends paid (15,207 ) (15,286 )Convertible notes issuance costs (5,411 ) ? Proceeds from the issuance of convertible notes 175,250 ? Proceeds from exercise of stock options 240 70 Net cash used in financing activities (55,107 ) (32,403 )Decrease in cash flows due to changes in foreign (387 ) (385 )exchange rate(Decrease)/increase in cash and cash equivalents (11,411 ) 10,791 Cash and cash equivalents ? beginning of year 74,972 77,784 Cash and cash equivalents ? end of period $ 63,561 $ 88,575 Supplemental disclosure of cash flow information: Cash paid for taxes $ 7,650 $ 5,439 Cash paid for interest $ 3,390 $ 6,997

Non-GAAP Financial Measurements

In an effort to provide additional information regarding our results as determined by GAAP, we also disclose certain non-GAAP information which we believe provides useful and meaningful information. Our management reviews these non-GAAP financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-GAAP measurements so as to share this perspective of management. Non-GAAP measurements do not have any standardized meaning, do not replace nor are superior to GAAP financial measurements and are unlikely to be comparable to similar measures presented by other companies. These non-GAAP financial measurements should be considered in the context with our GAAP results. The non-GAAP financial measurements contained in this press release include:

-- Adjusted operating income, operating expenses, income before income taxes, income tax expense, net income and diluted earnings per share. We disclose adjusted operating income, operating expenses, income before income taxes, income tax expense, net income and diluted earnings per share as non-GAAP financial measurements in order to report our results exclusive of items that are non-recurring or not core to our operating business. We believe presenting these non-GAAP financial 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 may have a material impact on the carrying value of the deferred consideration and our reported financial results. We exclude this item when calculating our non-GAAP financial measurements 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 calculating our non-GAAP financial measurements as they introduce volatility in earnings and are not core to our operating business.Interest expense from the amortization of discount arising from the bifurcation of the conversion option embedded in the convertible notes: GAAP requires convertible instruments to be separated into their liability and equity components by allocating the issuance proceeds to each of these components. The liability component for convertible instruments that qualify for a derivative scope exception (applicable to our convertible notes) is allocated proceeds equal to the estimated fair value of similar debt without the conversion option. The difference between the gross proceeds received from the issuance of the convertible instrument and the proceeds allocated to the liability component represents the residual amount that is classified in equity. The discount arising from the recognition of the residual amount classified in equity is amortized as interest expense over the life of the instrument. We exclude this item when calculating our non-GAAP financial measurements as it is non-cash and distorts our actual cost of borrowing. In addition, in August 2020, the FASB issued Accounting Standards Update 2020-06, Debt Debt with Conversion and Other Options, Cash Conversion which includes the elimination of the requirement to bifurcate conversion options qualifying for a derivative scope exception. Once effective, this interest expense will no longer be recognized.Other items: Loss on extinguishment of debt, the release of a deferred tax asset valuation allowance recognized on interest carryforwards arising from our debt previously outstanding in the United Kingdom, a gain arising from an adjustment to the estimated fair value of consideration received from the exit of our investment in AdvisorEngine, impairment charges, a gain recognized upon sale of our Canadian ETF business and acquisition and disposition-related costs are excluded when calculating our non-GAAP financial measurements.

-- Adjusted effective income tax rate. We disclose our adjusted effective income tax rate as a non-GAAP financial measurement in order to report our effective income tax rate exclusive of items that are non-recurring or not core to our operating business. We believe reporting our adjusted effective income tax rate provides investors with a consistent way to analyze our income taxes. Our adjusted effective income tax rate is calculated by dividing adjusted income tax expense by adjusted income before income taxes. See above for information regarding the items that are excluded. -- Gross margin and gross margin percentage. We disclose our gross margin and gross margin percentage as non-GAAP financial measurements because we believe they provide investors with a consistent way to analyze the amount we retain after paying third-party service providers to operate our ETPs. These measures also assist us in analyzing the profitability of our products. We define gross margin as total operating revenues less fund management and administration expenses. Gross margin percentage is calculated as gross margin divided by total operating revenues. -- Adjusted operating income margin. We disclose adjusted operating income margin as a non-GAAP financial measurement in order to report our operating income margin exclusive of items that are non-recurring or not core to our operating business.

WISDOMTREE INVESTMENTS, INC. AND SUBSIDIARIESGAAP to NON-GAAP RECONCILIATION (CONSOLIDATED)(in thousands)(Unaudited)

Three Months EndedAdjusted Net Income Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,and Diluted 2020 2020 2020 2019 2019Earnings per Share:Net (loss)/income, $ (270 ) $ (13,250 ) $ (8,638 ) $ (25,880 ) $ 4,152 as reportedAdd back: Loss onrevaluation of 8,870 23,358 2,208 5,354 6,306 deferredconsiderationAdd back:Impairments, net of 2,326 ? 19,672 30,138 ? income taxesAdd back: Interestexpense from theamortization ofdiscount arisingfrom the 286 42 ? ? ? bifurcation of theconversion optionembedded in theconvertible notes,net of income taxesDeduct: Gainarising from anadjustment to theestimated fairvalue of (225 ) (868 ) ? ? ? considerationreceived from theexit of investmentin AdvisorEngineAdd back: Taxshortfalls uponvesting and 50 119 501 142 30 exercise ofstock-basedcompensation awardsAdd back: Loss onextinguishment of ? 1,910 ? ? ? debt, net of incometaxesDeduct: Release ofa deferred taxasset valuationallowancerecognized oninterest ? (2,842 ) ? ? ? carryforwardsarising from debtpreviouslyoutstanding in theUnited KingdomDeduct: Gainrecognized upon ? ? (2,877 ) ? ? sale of CanadianETF businessAdd back:Acquisition anddisposition-related ? 25 358 353 154 costs, net ofincome taxesAdjusted net income $ 11,037 $ 8,494 $ 11,224 $ 10,107 $ 10,642 Weighted averagecommon shares - 160,876 166,634 167,561 167,203 167,163 dilutedAdjusted earnings $ 0.07 $ 0.05 $ 0.07 $ 0.06 $ 0.06 per share - diluted Three Months EndedGross Margin and Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,Gross Margin 2020 2020 2020 2019 2019Percentage:Operating revenues $ 64,640 $ 58,126 $ 63,874 $ 68,907 $ 67,718 Less: Fundmanagement and (15,219 ) (14,461 ) (14,485 ) (15,650 ) (15,110 )administrationGross margin $ 49,421 $ 43,665 $ 49,389 $ 53,257 $ 52,608 Gross margin 76.5 % 75.1 % 77.3 % 77.3 % 77.7 %percentage

Three Months EndedAdjusted OperatingIncome and Adjusted Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,OperatingIncome 2020 2020 2020 2019 2019Margin: $ 64,640 $ 58,126 $ 63,874 $ 68,907 $ 67,718 Operating revenues Operating income $ 14,744 $ 11,797 $ 15,634 $ 14,809 $ 16,131 Add back:Acquisition anddisposition-related ? 33 383 366 190 costs, beforeincome taxesAdjusted operating $ 14,744 $ 11,830 $ 16,017 $ 15,175 $ 16,321 incomeAdjusted operating 22.8 % 20.4 % 25.1 % 22.0 % 24.1 %income margin

Three Months EndedAdjusted Total Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,Operating Expenses: 2020 2020 2020 2019 2019Total operating $ 49,896 $ 46,329 $ 48,240 $ 54,098 $ 51,587 expensesDeduct: Acquisitionanddisposition-related ? (33 ) (383 ) (366 ) (190 )costs, beforeincome taxesAdjusted total $ 49,896 $ 46,296 $ 47,857 $ 53,732 $ 51,397 operating expenses

Three Months EndedAdjusted Income Sept. 30, June 30, Mar. 31, Dec. 31, Sept.Before Income 2020 2020 2020 2019 30,Taxes: 2019

Income/(loss) $ 1,138 $ (14,054 ) $ (11,009 ) $ (22,355 ) $ 8,635before income taxesAdd back: Loss onrevaluation of 8,870 23,358 2,208 5,354 6,306deferredconsiderationAdd back:Impairments, before 3,080 ? 19,672 30,138 ?income taxesAdd back: Interestexpense from theamortization ofdiscount arisingfrom the 379 55 ? ? ?bifurcation of theconversion optionembedded in theconvertible notes,before income taxesDeduct: Gainarising from anadjustment to theestimated fairvalue of (225 ) (868 ) ? ? ?considerationreceived from theexit of investmentin AdvisorEngineAdd back: Loss onextinguishment of ? 2,387 ? ? ?debtAdd back: Lossrecognized uponreduction of a ? ? 5,981 ? ?tax-relatedindemnificationassetDeduct: Gainrecognized upon ? ? (2,877 ) ? ?sale of CanadianETF businessAdd back:Acquisition anddisposition-related ? 33 383 366 190costs, beforeincome taxesAdjusted income $ 13,242 $ 10,911 $ 14,358 $ 13,503 $ 15,131before income taxes

Three Months EndedAdjusted Income TaxExpense and Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,Adjusted Effective 2020 2020 2020 2019 2019Income Tax Rate:

Adjusted income $ 13,242 $ 10,911 $ 14,358 $ 13,503 $ 15,131 before income taxes(above) Income tax expense/ $ 1,408 $ (804 ) $ (2,371 ) $ 3,525 $ 4,483 (benefit)Add back: Taxbenefit arising 754 ? ? ? ? from impairmentsAdd back: Taxbenefit arisingfrom theamortization ofdiscount associated 93 13 ? ? ? with thebifurcation of theconversion optionembedded in theconvertible notesDeduct: Taxshortfalls uponvesting and (50 ) (119 ) (501 ) (142 ) (30 )exercise ofstock-basedcompensation awardsAdd back: Taxbenefit arisingfrom loss on ? 477 ? ? ? extinguishment ofdebtAdd back: Releaseof a deferred taxasset valuationallowancerecognized oninterest ? 2,842 ? ? ? carryforwardsarising from debtpreviouslyoutstanding in theUnited KingdomAdd back: Taxbenefit arisingfrom reduction of a ? ? 5,981 ? ? tax-relatedindemnificationassetAdd back: Taxbenefit arisingfrom acquisition ? 8 25 13 36 anddisposition-relatedcostsAdjusted income tax $ 2,205 $ 2,417 $ 3,134 $ 3,396 $ 4,489 expenseAdjusted effective 16.7 % 22.2 % 21.8 % 25.1 % 29.7 %income tax rate

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements that are based on our managements 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 results. Factors that may cause actual results to differ materially from current expectations include, among other things, the risks described below.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 press release 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 press release 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 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.

Our business is subject to many risks and uncertainties, including without limitation:

-- declining prices of securities, gold and other precious metals and other commodities can adversely affect our business by reducing the market value of the assets we manage or causing WisdomTree ETP investors to sell their fund shares and trigger redemptions; -- fluctuations in the amount and mix of our AUM, whether caused by disruptions in the financial markets or otherwise, including but not limited to a pandemic event such as COVID-19, may negatively impact revenues and operating margins, and may impede our ability to refinance our debt upon maturity, increase the cost of borrowing or result in our debt being called prior to maturity; -- competitive pressures could reduce revenues and profit margins; -- we derive a substantial portion of our revenues from a limited number of products, and as a result, our operating results are particularly exposed to investor sentiment toward investing in the products strategies and our ability to maintain the AUM of these products, as well as the performance of these products and market-specific and political and economic risk; -- a significant portion of our AUM is held in products with exposure to U.S. and international developed markets and we therefore have exposure to domestic and foreign market conditions and are subject to currency exchange rate risks; -- withdrawals or broad changes in investments in our ETPs by investors with significant positions may negatively impact revenues and operating margins; -- over the last few years, we have expanded our business globally. This expansion subjects us to increased operational, regulatory, financial and other risks; -- many of our ETPs have a limited track record, and poor investment performance could cause our revenues to decline; and -- we depend on third parties to provide many critical services to operate our business and our ETPs. The failure of key vendors to adequately provide such services could materially affect our operating business and harm WisdomTree ETP investors.

Other factors, such as general economic conditions, including currency exchange rate fluctuations, also may have an effect on the results of our operations. For a more complete description of the risks noted above and other risks that could cause our actual results to differ from our current expectations, see Risk Factors in our Annual Report on Form 10-K for the year ended December31, 2019 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.

The forward-looking statements in this press release represent our views as of the date of this press release.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 press release.