GlobeNewswire Inc | Jul 31, 2020 07:00AM EDT

July 31, 2020

NEW YORK, July 31, 2020 (GLOBE NEWSWIRE) -- WisdomTree Investments, Inc. (NASDAQ: WETF) today reported financial results for the second quarter of 2020.

During the second quarter of 2020, we experienced a partial recovery of our AUM which was adversely impacted by severe market declines arising from the COVID-19 pandemic toward the end of the prior quarter. This recovery was driven principally by market appreciation, resulting in a 14.6% increase of our ending AUM. Our business continues to operate remotely without disruption.

$23.0 million of non-cash charges, including (i) a loss on revaluation of deferred consideration of ($23.4) million (ii) a loss on extinguishment of debt of ($2.4) million and (iii) a release of a deferred tax valuation allowance of $2.8 million.

($13.3) million net loss ($8.51 million net income, as adjusted), see Non-GAAP Financial Measurements for additional information.

$57.6 billion of ending AUM, an increase of 14.6% resulting primarily from market appreciation.

$126 million of net inflows ($928 million of net inflows excluding HEDJ/DXJ), driven by inflows into our commodity and leveraged and inverse products, partly offset by outflows from our international developed market equity and U.S. equity products.

0.41% average global advisory fee, a decrease of 0.1 basis point due to AUM mix shift.

$58.1 million of operating revenues, a decrease of 9.0% primarily due to lower average AUM and a lower average global advisory fee.

75.1% gross margin1, a 2.2 point decrease primarily due to lower revenues.

20.3% operating income margin (20.4%1 as adjusted), a 4.2 point decrease (4.7 point decrease, as adjusted1) primarily due to lower revenues, partly offset by reduced discretionary spending as a result of the COVID-19 pandemic.

$150.0 million issuance of convertible senior notes due 2023, coupled with the repayment of $174.0 million of debt previously outstanding and termination of our revolver, collectively referred to in this press release as the former Credit Facility.

$24.9 million repurchase of 6.7 million shares of our common stock, principally in connection with the issuance of the convertible notes.

$0.03 quarterly dividenddeclared, payable on August 26, 2020 to stockholders of record as of the close of business on August 12, 2020.

Update from Jonathan Steinberg, WisdomTree CEO

?During the second quarter, assets under management rebounded, resulting inrevenue tailwinds as we entered the second half of the year. The globalWisdomTree team has remained focused on what we can control, and demonstratedstrong execution in the quarter, including navigating unprecedented volatilityin energy markets, generating record client engagement and producing strongU.S.-listed product gross sales and record Europe-listed product net flows.

?We?ve realized significant cost efficiencies in the current environment, someof which should prove sustainable in the future. We also successfullyrefinanced our debt, repurchased 6.7 million shares and improved our financialflexibility. Despite the uncertain environment, we are seeing momentum inimportant lead indicators, and we are well positioned for growth with the rightteam and strategy in place.?

OPERATING AND FINANCIAL HIGHLIGHTS

Three Months Ended June 30, Mar. 31, Dec.31, Sept. 30, June 30, 2020 2020 2019 2019 2019ConsolidatedOperating Highlights ($, in billions):AUM $ 57.6 $ 50.3 $ 63.6 $ 60.0 $ 60.4 Net inflows/ $ 0.1 $ (0.5 ) $ 0.4 $ (0.7 ) $ 0.3 (outflows)Average AUM $ 55.7 $ 59.8 $ 61.9 $ 60.3 $ 58.6 Average advisory fee 0.41 % 0.42 % 0.44 % 0.44 % 0.45 % ConsolidatedFinancial Highlights ($, in millions, except per shareamounts):Operating revenues $ 58.1 $ 63.9 $ 68.9 $ 67.7 $ 66.3 Net (loss)/income $ (13.3 ) $ (8.6 ) $ (25.9 ) $ 4.2 $ 2.5 Diluted (loss)/ $ (0.09 ) $ (0.06 ) $ (0.17 ) $ 0.02 $ 0.01 earnings per shareOperating income 20.3 % 24.5 % 21.5 % 23.8 % 18.0 %marginAs Adjusted (Non-GAAP ^1):Gross Margin 75.1 % 77.3 % 77.3 % 77.7 % 76.5 %Net income, as $ 8.5 $ 11.2 $ 10.1 $ 10.6 $ 7.8 adjustedDiluted earnings per $ 0.05 $ 0.07 $ 0.06 $ 0.06 $ 0.05 share, as adjustedOperating income 20.4 % 25.1 % 22.0 % 24.1 % 20.2 %margin, as adjusted

RECENT BUSINESS DEVELOPMENTS

Company News

* In June 2020, we issued $150.0 million in aggregate principal amount of 4.25% Convertible Senior Notes due 2023, repaid our debt previously outstanding and terminated our former Credit Facility; and * In June 2020, we entered into a new distribution agreement in Italy for our model portfolios with The Intermonte Eye ? a digital service providing investment products to its network of private banks.

Product News

* In May 2020, we listed sterling trading lines for the WisdomTree Brent Crude Oil (BRNG), the WisdomTree Brent Crude Oil Pre-roll (BRNB) and the WisdomTree WTI Crude Oil Pre-roll (WTIB) on the London Stock Exchange. * In June 2020, we announced the results of a WisdomTree study revealing various investor behavior data as it relates to model portfolio usage and allocation. * In July 2020, we securedadditional third-party relationships for our model portfolios, including: Carson Group, Riskalzye, Kwanti, ETF Logic and Orion; we listed WisdomTree Battery Solutions UCITS ETF (VOLT) and WisdomTree Cloud Computing UCITS ETF (WCLD) on SIX, the Swiss Exchange; and the WisdomTree WTI Crude Oil ETC (CRUD) security holders voted in favour of changing the underlying index tracked by the ETC. The new index is the result of extensive work between WisdomTree and Bloomberg to create an index which would be more resilient to extreme conditions in the WTI Crude Oil market.

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

Three Months Ended Six Months Ended June30, Mar. 31, Dec.31, Sept.30, June30, June30, June30, 2020 2020 2019 2019 2019 2020 2019Operating Revenues:Advisory fees $ 57,208 $ 62,950 $ 68,179 $ 67,006 $ 65,627 $ 120,158 $ 130,467 Other income 918 924 728 712 666 1,842 1,311 Total revenues 58,126 63,874 68,907 67,718 66,293 122,000 131,778 Operating Expenses:Compensation and 17,455 17,295 19,280 18,880 21,300 34,750 42,601 benefitsFund managementand 14,461 14,485 15,650 15,110 15,576 28,946 30,742 administrationMarketing and 1,949 2,468 3,551 3,022 2,910 4,417 5,590 advertisingSales andbusiness 2,181 3,417 5,329 4,354 4,171 5,598 8,593 developmentContractual gold 4,063 3,760 3,516 3,502 3,110 7,823 6,208 paymentsProfessional and 1,357 1,273 1,604 1,259 1,296 2,630 2,778 consulting feesOccupancy,communications 1,643 1,551 1,587 1,549 1,548 3,194 3,166 and equipmentDepreciation and 251 256 253 259 264 507 533 amortizationThird-partydistribution 1,340 1,355 1,146 1,503 1,919 2,695 4,319 feesAcquisition anddisposition- 33 383 366 190 33 416 346 related costsOther 1,596 1,997 1,816 1,959 2,255 3,593 4,308 Total operating 46,329 48,240 54,098 51,587 54,382 94,569 109,184 expensesOperating income 11,797 15,634 14,809 16,131 11,911 27,431 22,594 Other Income/ (Expenses):Interest expense (2,044 ) (2,419 ) (2,606 ) (2,832 ) (2,910 ) (4,463 ) (5,802 )(Loss)/gain onrevaluation ofdeferred (23,358 ) (2,208 ) (5,354 ) (6,306 ) (4,037 ) (25,566 ) 367 consideration ?gold paymentsInterest income 119 163 936 799 818 282 1,597 Impairments ? (19,672 ) (30,138 ) ? ? (19,672 ) (572 )Loss onextinguishment (2,387 ) ? ? ? ? (2,387 ) ? of debtOther gains and 1,819 (2,507 ) (2 ) 843 284 (688 ) (4,343 )losses, net(Loss)/incomebefore income (14,054 ) (11,009 ) (22,355 ) 8,635 6,066 (25,063 ) 13,841 taxesIncome tax(benefit)/ (804 ) (2,371 ) 3,525 4,483 3,587 (3,175 ) 2,538 expenseNet (loss)/ $ (13,250 ) $ (8,638 ) $ (25,880 ) $ 4,152 $ 2,479 $ (21,888 ) $ 11,303 income (Loss)/earnings ^ ^ )per share ? $ (0.09 ) $ (0.06 ) $ (0.17 ) $ 0.02 2 $ 0.01 2 $ (0.15 ^ $ 0.07 basic 2(Loss)/earnings )per share ? $ (0.09 ) $ (0.06 ) $ (0.17 ) $ 0.02 $ 0.01 $ (0.15 ^ $ 0.07 diluted 2Weighted averagecommon shares ? 151,623 152,519 151,948 151,897 151,818 152,071 151,722 basicWeighted averagecommon shares ? 151,623 152,519 151,948 167,163 167,249 152,071 166,855 diluted As Adjusted (Non-GAAP^1)Compensation and $ $ $ $ $ benefits 17,455 17,295 19,280 18,880 19,825Total expenses $ $ $ $ $ 46,296 47,857 53,732 51,397 52,874Operating income $ $ $ $ $ 11,830 16,017 15,175 16,321 13,419Income before $ $ $ $ $ income taxes 10,911 14,358 13,503 15,131 11,611Income tax $ 2,417 $ 3,134 $ 3,396 $ 4,489 $ 3,798 expenseNet income $ $ $ $ $ 7,813 8,494 11,224 10,107 10,642Earnings per $ 0.05 $ 0.07 $ 0.06 $ 0.06 $ 0.05 share ? diluted

QUARTERLY HIGHLIGHTS

Operating Revenues

-- Operating revenues decreased 9.0% from the first quarter of 2020 due to lower average AUM of our U.S. listed products due to market depreciation arising from the COVID-19 pandemic toward the end of the prior quarter and net outflows. Also, our average global advisory fee declined 1 basis point due to AUM mix shift. These declines were partly offset by net inflows into our international listed products and market appreciation. -- Operating revenues decreased 12.3% from the second quarter of 2019 due to lower average AUM of our U.S. listed products arising from market depreciation and net outflows, as well as a 4 basis point decline in our average global advisory fee due to AUM mix shift. These declines were partly offset by higher average AUM of our international listed products arising from net inflows and market appreciation. -- Our average global advisory fee was 0.41%, 0.42% and 0.45% during the second quarter of 2020, the first quarter of 2020 and the second quarter of 2019, respectively.

Operating Expenses

-- Operating expenses decreased 4.0% from the first quarter of 2020 due to lower discretionary spending as a result of the COVID-19 pandemic, including lower sales and business development costs and marketing expenses. -- Operating expenses decreased 14.8% from the second quarter of 2019 largely due to lower incentive compensation accruals as well as $1.5 million of severance expense included in the prior period, lower fund management and administration costs due to lower average AUM and lower sales and business development costs, marketing expenses and third-party distribution costs. These declines were 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 ($23.4) million, ($2.2) million and ($4.0) million during the second quarter of 2020, first quarter of 2020 and second 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 decreased 15.5% and 29.8% from the first quarter of 2020 and second quarter of 2019, respectively, due to lower levels of debt outstanding and lower interest rates. -- During the second quarter of 2020, we recognized a non-cash loss on extinguishment of debt of $2.4 million arising from the acceleration of debt issuance cost amortization in connection with the termination of our former Credit Facility. -- Other gains and losses, net, for the second quarter of 2020 includes a gain of $0.9 million arising from an adjustment to the estimated fair value of consideration received from the exit of our investment in AdvisorEngine. 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 2020 of 5.7% resulted in an income tax benefit of $0.8 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 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. -- Our adjusted effective income tax rate was 22.2%1.

SIX MONTH HIGHLIGHTS

-- Operating revenues decreased 7.4% as compared to 2019 due to lower average AUM of our U.S. listed products and a 3 basis point decline in our average global advisory fee due to AUM mix shift. These declines were partly offset by higher average AUM of our international listed products. -- Operating expenses decreased 13.4% as compared to 2019 largely due to lower incentive compensation accruals as well as $3.5 million of severance expense included in the prior period, lower fund management and administration costs due to lower average AUM and lower sales and business development costs, marketing expenses and third-party distribution costs. 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 non-cash loss on revaluation of deferred consideration of ($25.6) million in 2020 as compared to a gain of $0.4 million in 2019; a non-cash impairment charge of $19.7 million recorded in the first quarter of 2020 in connection with the exit from our investment in AdvisorEngine; 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 $0.9 million in the second quarter of 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 12.7% resulted in an income tax benefit of $3.2 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, July 31, 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 $61.5 billion in assets under management globally.

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

^1 See ?Non-GAAP Financial Measurements.?^ (Loss)/earnings per share (?EPS?) is calculated pursuant to the two-class2 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

WisdomTree Investments, Inc.Key Operating Statistics (Unaudited)

Three Months Ended June 30, Mar. 31, Dec. 31, Sept. 30, June 30, 2020 2020 2019 2019 2019GLOBAL ETPs ($ in millions)Beginning of $ 50,323 $ 63,615 $ 59,981 $ 60,389 $ 59,112 period assetsAssets sold ? (778 ) ? ? ? Inflows/ 126 (536 ) 390 (698 ) 343 (outflows)Marketappreciation/ 7,494 (11,958 ) 3,247 471 934 (depreciation)Fund closures (296 ) (20 ) (3 ) (181 ) ? End of period $ 57,647 $ 50,323 $ 63,615 $ 59,981 $ 60,389 assetsAverage assetsduring the $ 55,689 $ 59,819 $ 61,858 $ 60,306 $ 58,575 periodAverage advisoryfee during the 0.41 % 0.42 % 0.44 % 0.44 % 0.45 %periodRevenue days 91 91 92 92 91 Number of ETFs ?end of the 311 331 349 348 536 period U.S. LISTED ETFs ($ in millions)Beginning of $ 28,893 $ 40,600 $ 37,592 $ 39,220 $ 39,366 period assetsInflows/ (1,474 ) (1,273 ) 563 (1,198 ) (166 )(outflows)Marketappreciation/ 4,039 (10,424 ) 2,448 (430 ) 20 (depreciation)Fund closures (114 ) (10 ) (3 ) ? ? End of period $ 31,344 $ 28,893 $ 40,600 $ 37,592 $ 39,220 assetsAverage assetsduring the $ 30,607 $ 36,936 $ 39,094 $ 37,857 $ 38,945 periodAverage advisoryfee during the 0.41 % 0.43 % 0.44 % 0.44 % 0.44 %periodNumber of ETFs ?end of the 67 77 80 80 79 period INTERNATIONALLISTED ETPs ($ in millions)Beginning of $ 21,430 $ 23,015 $ 22,389 $ 21,169 $ 19,746 period assetsAssets sold ? (778 ) ? ? ? Inflows/ 1,600 737 (173 ) 500 509 (outflows)Marketappreciation/ 3,455 (1,534 ) 799 901 914 (depreciation)Fund closures (182 ) (10 ) ? (181 ) ? End of period $ 26,303 $ 21,430 $ 23,015 $ 22,389 $ 21,169 assetsAverage assetsduring the $ 25,082 $ 22,883 $ 22,764 $ 22,449 $ 19,630 periodAverage advisoryfee during the 0.41 % 0.41 % 0.44 % 0.44 % 0.46 %periodNumber of ETPs ?end of the 244 254 269 268 457 period PRODUCTCATEGORIES ($ in millions) Commodity & CurrencyBeginning of $ 19,823 $ 20,074 $ 19,713 $ 18,204 $ 16,689 period assetsInflows/ 1,316 592 (244 ) 511 611 (outflows)Marketappreciation/ 3,121 (843 ) 605 998 904 (depreciation)End of period $ 24,260 $ 19,823 $ 20,074 $ 19,713 $ 18,204 assetsAverage assetsduring the $ 23,037 $ 20,407 $ 19,892 $ 19,558 $ 16,643 period U.S. Equity Beginning of $ 12,159 $ 17,746 $ 16,296 $ 15,903 $ 15,759 period assetsInflows/ (242 ) (285 ) 458 241 108 (outflows)Marketappreciation/ 2,090 (5,302 ) 992 152 36 (depreciation)End of period $ 14,007 $ 12,159 $ 17,746 $ 16,296 $ 15,903 assetsAverage assetsduring the $ 13,312 $ 16,022 $ 16,983 $ 15,885 $ 15,690 period InternationalDeveloped Market EquityBeginning of $ 8,653 $ 13,043 $ 12,200 $ 13,346 $ 14,092 period assetsInflows/ (964 ) (1,100 ) (139 ) (1,011 ) (736 )(outflows)Marketappreciation/ 1,158 (3,290 ) 982 (135 ) (10 )(depreciation)End of period $ 8,847 $ 8,653 $ 13,043 $ 12,200 $ 13,346 assetsAverage assetsduring the $ 8,783 $ 11,474 $ 12,640 $ 12,409 $ 13,628 period

Three Months Ended June 30, Mar. 31, Dec. 31, Sept. 30, June 30, 2020 2020 2019 2019 2019Emerging Market Equity Beginning of period $ 4,610 $ 6,417 $ 5,713 $ 5,981 $ 5,644 assetsInflows/(outflows) (21 ) 65 198 176 344 Market appreciation/ 840 (1,872 ) 506 (444 ) (7 )(depreciation)End of period assets $ 5,429 $ 4,610 $ 6,417 $ 5,713 $ 5,981 Average assets during $ 5,143 $ 5,933 $ 6,008 $ 5,743 $ 5,691 the period Fixed Income Beginning of period $ 3,527 $ 3,585 $ 3,337 $ 3,946 $ 3,692 assetsInflows/(outflows) (53 ) 21 218 (594 ) 235 Market appreciation/ 56 (79 ) 30 (15 ) 19 (depreciation)End of period assets $ 3,530 $ 3,527 $ 3,585 $ 3,337 $ 3,946 Average assets during $ $ $ $ $ the period 3,523 3,653 3,540 3,731 3,796 Leveraged & Inverse Beginning of period $ 883 $ 995 $ $ 989 $ assets 1,002 1,060Inflows/(outflows) 312 12 (22 ) 11 (55 )Market appreciation/ 153 (124 ) 15 2 )(depreciation) (16End of period assets $ $ 883 $ 995 $ $ 989 1,348 1,002Average assets during $ $ $ $ $ the period 1,162 1,009 1,033 1,020 1,042 Alternatives Beginning of period $ 244 $ 359 $ 419 $ 434 $ 515 assetsInflows/(outflows) (29 ) (66 ) (61 ) (17 ) ) (80Market appreciation/ 11 (49 ) 1 2 (1 )(depreciation)End of period assets $ 226 $ 244 $ 359 $ 419 $ 434 Average assets during $ 227 $ 328 $ 399 $ 429 $ 476 the period Closed ETPs Beginning of period $ 424 $ $ $ $ assets 1,396 1,301 1,586 1,661Assets sold ? (778 ) ? ? ? Inflows/(outflows) (193 ) 225 (18 ) (15 ) ) (84Market appreciation/ 65 (399 ) 116 (89 ) 9 (depreciation)Fund closures (296 ) (20 ) (3 ) ) ? (181End of period assets $ ? $ 424 $ $ $ 1,396 1,301 1,586Average assets during $ 502 $ 993 $ $ $ the period 1,363 1,531 1,609 Headcount 214 210 208 212 214

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)

June30, Dec.31, 2020 2019 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 50,255 $ 74,972 Securities owned, at fair value 13,110 17,319 Accounts receivable 24,372 26,838 Prepaid expenses 5,621 3,724 Other current assets 1,414 207 Total current assets 94,772 123,060 Fixed assets, net 7,835 8,127 Notes receivable ? 28,172 Securities held-to-maturity 581 16,863 Deferred tax assets, net 5,540 7,398 Investments 11,192 11,192 Right of use assets ? operating leases 17,230 18,161 Goodwill 85,856 85,856 Intangible assets 601,247 603,294 Other noncurrent assets 184 983 Total assets $ $ 824,437 903,106 LIABILITIES AND STOCKHOLDERS? EQUITY LIABILITIES Current liabilities: Fund management and administration payable $ $ 23,240 22,021Compensation and benefits payable 7,629 26,501Deferred consideration ? gold payments 16,364 13,953Securities sold, but not yet purchased, at fair value ? 582 Operating lease liabilities 3,293 3,682 Income taxes payable 2,277 3,372 Accounts payable and other liabilities 9,376 8,930 Total current liabilities 62,179 79,041Convertible notes ? 141,479Debt ? 175,956Deferred consideration ? gold payments 182,420 159,071Operating lease liabilities 18,258 19,057Total liabilities 404,336 433,125Preferred stock ? Series A Non-Voting Convertible, par value $0.01; 132,569 132,569 14.750 shares authorized, issued and outstanding STOCKHOLDERS? EQUITY Common stock, par value $0.01; 250,000 shares authorized:Issued and outstanding: 149,796 and 155,264 at June30, 2020 1,498 1,553 and December31, 2019, respectivelyAdditional paid-in capital 325,406 352,658Accumulated other comprehensive income 260 945 Accumulated deficit ) ) (39,632 (17,744Total stockholders? equity 287,532 337,412Total liabilities and stockholders? equity $ $ 824,437 903,106

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

Six Months Ended June 30, June 30, 2020 2019Cash flows from operating activities: Net (loss)/income $ ) $ (21,888 11,303Adjustments to reconcile net (loss)/income to net cash provided by operating activities:Advisory fees received in gold and other precious ) )metals (29,135 (22,872Loss/(gain) on revaluation of deferred consideration ? 25,566 (367 )gold paymentsImpairments 19,672 572 Contractual gold payments 7,823 6,208 Stock-based compensation 6,159 6,207 Gain on sale ?Canadian ETF business (2,877 ) ? Loss on extinguishment of debt 2,387 ? Amortization of right of use asset 1,588 1,590 Amortization of issuance costs - former Credit 1,328 1,430 FacilityDeferred income taxes 832 2,443 Depreciation and amortization 507 533 Amortization of issuance costs - convertible notes 115 ? Paid-in-kind interest income ? ) (1,223Other (83 ) 5 Changes in operating assets and liabilities: Securities owned, at fair value 4,209 (222 )Accounts receivable 4,461 1,833 Income taxes payable (1,046 ) (44 )Prepaid expenses (2,016 ) ) (1,746Gold and other precious metals 20,882 16,318Other assets (702 ) (552 )Fund management and administration payable 1,677 1,231 Compensation and benefits payable (18,431 ) ) (3,938Securities sold, but not yet purchased, at fair value (582 ) ) (1,155Operating lease liabilities (1,845 ) ) (1,760Accounts payable and other liabilities 781 (435 )Net cash provided by operating activities 19,382 15,359Cash flows from investing activities: Purchase of fixed assets (224 ) (15 )Funding of notes receivable ? ) (1,540Proceeds from held-to-maturity securities maturing or 16,365 39 called prior to maturityProceeds from the sale of our financial interests in 8,155 ? AdvisorEngineProceeds from sale of Canadian ETF business, net 2,774 ? Net cash provided by/(used in) investing activities 27,070 ) (1,516Cash flows from financing activities: Repayment of debt ) ? (179,000Shares repurchased ) ) (26,444 (2,107Dividends paid ) ) (10,270 (10,191Convertible notes issuance costs (4,611 ) ? Proceeds from the issuance of convertible notes ? 150,000Proceeds from exercise of stock options 240 14 Net cash used in financing activities ) ) (70,085 (12,284(Decrease)/increase in cash flows due to changes in (1,084 ) 268 foreign exchange rate(Decrease)/increase in cash and cash equivalents ) 1,827 (24,717Cash and cash equivalents ? beginning of year 74,972 77,784Cash and cash equivalents ? year $ 50,255 $ 79,611Supplemental disclosure of cash flow information: Cash paid for taxes $ 2,200 $ 4,403 Cash paid for interest $ 3,390 $ 4,559

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 release include:

-- Adjusted compensation, operating income, operating expenses, income before income taxes, income tax expense, net income and diluted earnings per share. We disclose adjusted compensation, 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 June 2020, the FASB approved amendments to ASC 470-20, Debt Debt with Conversion and Other Options, Cash Conversion and once issued, will include 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, severance expense 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 Ended Adjusted Net Income June 30, Mar. 31, Dec. 31, Sept. 30, June 30,and Diluted 2020 2020 2019 2019 2019Earnings per Share:

Net (loss)/income, $ (13,250 ) $ (8,638 ) $ (25,880 ) $ 4,152 $ 2,479 as reportedAdd back: Loss onrevaluation of 23,358 2,208 5,354 6,306 4,037 deferredconsiderationAdd back: Loss onextinguishment of 1,910 ? ? ? ? debt, net of incometaxesDeduct: Release ofa deferred taxasset valuationallowancerecognized oninterest (2,842 ) ? ? ? ? carryforwardsarising from debtpreviouslyoutstanding in theUnited KingdomAdd back: Interestexpense from theamortization ofdiscount arisingfrom the 42 ? ? ? ? bifurcation of theconversion optionembedded in theconvertible notes,net of income taxesDeduct: Gainarising from anadjustment to theestimated fairvalue of (868 ) ? ? ? ? considerationreceived from theexit of investmentin AdvisorEngine.Add back:Impairments, net of ? 19,672 30,138 ? ? income taxesDeduct: Gainrecognized upon ? (2,877 ) ? ? ? sale of CanadianETF businessAdd back: Severanceexpense, net of ? ? ? ? 1,194 income taxesAdd back: Taxshortfalls uponvesting and 119 501 142 30 76 exercise ofstock-basedcompensation awardsAdd back:Acquisition anddisposition-related 25 358 353 154 27 costs, net ofincome taxesAdjusted net income $ 8,494 $ 11,224 $ 10,107 $ 10,642 $ 7,813 Weighted averagecommon shares - 166,634 167,561 167,203 167,163 167,249 dilutedAdjusted earnings $ 0.05 $ 0.07 $ 0.06 $ 0.06 $ 0.05 per share - diluted Three Months Ended Gross Margin and June 30, Mar. 31, Dec. 31, Sept. 30, June 30,Gross Margin 2020 2020 2019 2019 2019 Percentage: $ 58,126 $ 63,874 $ 68,907 $ 67,718 $ 66,293 Operating revenuesLess: Fundmanagement and (14,461 ) (14,485 ) (15,650 ) (15,110 ) (15,576 )administrationGross margin $ 43,665 $ 49,389 $ 53,257 $ 52,608 $ 50,717 Gross margin 75.1 % 77.3 % 77.3 % 77.7 % 76.5 %percentage

Three Months Ended Adjusted OperatingIncome and Adjusted June 30, Mar. 31, Dec. 31, Sept. 30, June 30,Operating 2020 2020 2019 2019 2019Income Margin: $ 58,126 $ 63,874 $ 68,907 $ 67,718 $ 66,293 Operating revenues Operating income $ 11,797 $ 15,634 $ 14,809 $ 16,131 $ 11,911 Add back: Severanceexpense, before ? ? ? ? 1,475 income taxesAdd back:Acquisition anddisposition-related 33 383 366 190 33 costs, beforeincome taxesAdjusted operating $ 11,830 $ 16,017 $ 15,175 $ 16,321 $ 13,419 incomeAdjusted operating 20.4 % 25.1 % 22.0 % 24.1 % 20.2 %income margin

Three Months EndedAdjusted Compensation June 30, Mar. 31, Dec. 31, Sept. 30, June 30,Expense: 2020 2020 2019 2019 2019 $ 17,455 $ 17,295 $ 19,280 $ 18,880 $ 21,300 Compensation expenseDeduct: Severanceexpense, before income ? ? ? ? (1,475 )taxesAdjusted compensation $ 17,455 $ 17,295 $ 19,280 $ 18,880 $ 19,825 expense

Three Months EndedAdjusted Total June 30, Mar. 31, Dec. 31, Sept. 30, June 30,Operating Expenses: 2020 2020 2019 2019 2019

Total operating $ 46,329 $ 48,240 $ 54,098 $ 51,587 $ 54,382 expensesDeduct: Severanceexpense, before ? ? ? ? (1,475 )income taxesDeduct: Acquisitionanddisposition-related (33 ) (383 ) (366 ) (190 ) (33 )costs, beforeincome taxesAdjusted total $ 46,296 $ 47,857 $ 53,732 $ 51,397 $ 52,874 operating expenses

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

(Loss)/income $ (14,054 ) $ (11,009 ) $ (22,355 ) $ 8,635 $ 6,066before income taxesAdd back: Loss onrevaluation of 6,306 4,037deferred 23,358 2,208 5,354considerationAdd back: Loss on extinguishment of 2,387 ? ? ? ?debtAdd back: Interestexpense from theamortization ofdiscountarising from the 55 ? ? ? ?bifurcation of theconversion optionembedded in theconvertible notes,before income taxesDeduct: Gainarising from anadjustment to theestimated fairvalue of (868 ) ? ? ? ?considerationreceived from theexit of investmentinAdvisorEngineAdd back: Impairments, before ? 19,672 30,138 ? ?income taxesAdd back: Lossrecognized uponreduction of a ? ? ? ?tax-related 5,981indemnificationassetDeduct: Gainrecognized upon ? ) ? ? ?sale of Canadian (2,877ETF businessAdd back:Acquisition anddisposition-related 33 383 366 190 33costs,before incometaxesAdd back: Severanceexpense, before ? ? ? ? 1,475income taxesAdjusted income $ $ $ $ $ 11,611before income taxes 10,911 14,358 13,503 15,131

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

Adjusted income $ 10,911 $ 14,358 $ 13,503 $ 15,131 $ 11,611 before income taxes(above) Income tax (benefit) $ (804 ) $ (2,371 ) $ 3,525 $ 4,483 $ 3,587 /expenseAdd back: Taxbenefit arising fromloss on 477 ? ? ? ? extinguishment ofdebtAdd back: Release ofa deferred tax assetvaluation allowancerecognized oninterest 2,842 ? ? ? ? carryforwardsarising from debtpreviouslyoutstanding in theUnited KingdomAdd back: Taxbenefit arising fromthe amortization ofdiscount associatedwith the bifurcation 13 ? ? ? ? of the conversionoption embedded inthe convertiblenotesAdd back: Taxbenefit arising fromreduction of a ? 5,981 ? ? ? tax-relatedindemnificationassetDeduct: Taxshortfalls uponvesting and exercise (119 ) (501 ) (142 ) (30 ) (76 )of stock-based compensationawardsAdd back: Taxbenefit arising fromacquisition and 8 25 13 36 6 disposition-relatedcostsAdd back: Taxbenefit arising from ? ? ? ? 281 severance expenseAdjusted income tax $ 2,417 $ 3,134 $ 3,396 $ 4,489 $ 3,798 expenseAdjusted effective 22.2 % 21.8 % 25.1 % 29.7 % 32.7 %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 Report on Form 10-Q for the quarter ended March 31, 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.