WisdomTree, Inc. (WT)

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, 2025. 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

We are a global financial innovator, offering a diverse suite of ETPs, models and solutions, private market investments and digital asset-related products. Our offerings empower investors to shape their financial future and equip financial professionals to grow their businesses. Leveraging the latest financial infrastructure, we create products that emphasize access and transparency and provide an enhanced user experience. Building on our heritage of innovation, we continue to broaden our capabilities beyond our core ETP business. We offer next-generation digital products and services related to tokenized real-world assets and stablecoins, including digital funds, as well as our institutional platform, WisdomTree Connect, and blockchain-native digital wallet, WisdomTree Prime.

As of June 30, 2026, we managed approximately $162.9 billion in AUM. Our products span a broad range of strategies, including equities, commodities and currency, fixed income, alternatives, leveraged-and-inverse and cryptocurrency. Our offerings also include private assets, with a primary focus on farmland investments, as well as active investment strategies focused on defined outcome and derivatives-driven solutions. We have launched many first-to-market products and pioneered a unique alternative-weighting approach called “Modern Alpha” that combines the outperformance potential of active management with the cost-effective benefits of passive management.

Our products are distributed across all major asset management industry channels, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers, primarily through our dedicated sales team. We believe technology is transforming how financial advisors conduct business, and through our Advisor and Portfolio Solutions programs we offer technology-enabled and research-driven solutions. These include portfolio construction, asset allocation, practice management services and digital tools to help advisors address technology challenges and scale their businesses.

As pioneers in tokenization and blockchain technology, we view this as the next phase in the evolution of financial services. Through our digital assets strategy, we are committed to “responsible DeFi,” aligning with regulatory standards to foster growth in this rapidly evolving space. We believe that expanding into digital assets and blockchain-enabled financial services not only complements our core competencies but will diversify our revenue streams and further contribute to our growth.

We were incorporated under the laws of the state of Delaware on September 19, 1985 as Financial Data Systems, Inc. and were ultimately renamed WisdomTree, Inc. on November 7, 2022.

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Assets Under Management

WisdomTree ETPs

We offer ETPs covering equities, commodities and currency, fixed income, alternatives, leveraged-and-inverse, private assets and cryptocurrency. The chart below sets forth the asset mix of our ETPs at June 30, 2026, March 31, 2026 and June 30, 2025:

Market Environment

Global financial markets recovered strongly during the second quarter of 2026 as geopolitical tensions moderated and investor risk appetite improved. Equity markets were led higher by technology-related companies, supported by continued investment in artificial intelligence and resilient corporate earnings. Fixed income markets remained focused on inflation and the outlook for monetary policy, with government bond yields remaining elevated amid ongoing uncertainty around future interest rate movements. Commodities retreated from first-quarter highs as energy prices declined, although geopolitical developments continued to present uncertainty for global markets.

During the quarter, the S&P 500, MSCI EAFE Index (local currency), MSCI EMU Index (local currency), MSCI Japan Index (local currency) and MSCI Emerging Markets Index (U.S. dollar) increased by 15.2%, 11.8%, 15.8%, 16.7% and 24.1%, respectively, while gold prices decreased by 12.6%. The U.S. dollar strengthened 0.7% and 1.4% versus the euro and Japanese yen, respectively, and weakened 0.1% versus the British pound during the quarter.

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U.S. Listed ETF Industry Flows

U.S. listed ETF industry net flows were $545.9 billion for the three months ended June 30, 2026. U.S. equity, fixed income and international equity gathered the majority of those flows.

Source: Morningstar

European Listed ETP Industry Flows

European listed ETP industry net flows were $99.6 billion for the three months ended June 30, 2026. Equity and fixed income gathered the majority of those flows.

Source: Morningstar

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Our Operating and Financial Results

We operate as an ETP sponsor and asset manager, providing investment advisory services globally through our subsidiaries in the U.S. and Europe.

U.S. Listed ETFs

The AUM of our U.S. listed exchange traded funds, or U.S. listed ETFs, increased from $90.9 billion at March 31, 2026 to $99.0 billion at June 30, 2026 due to market appreciation and net inflows.

European Listed ETPs

The AUM of our European listed (including internationally cross-listed) ETPs, or European listed ETPs, increased from $58.8 billion at March 31, 2026 to $61.1 billion at June 30, 2026 due to $4.1 billion of AUM arising from the acquisition of Atlantic House Holdings Limited (“Atlantic House”) and net inflows, partly offset by market depreciation.

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Digital Assets

The AUM of our digital assets products decreased from $867 million at March 31, 2026 to $761 million at June 30, 2026 due to net outflows. Substantially all Q2 2026 outflows were from the WisdomTree Treasury Money Market Digital Fund.

Private Assets

The AUM of our private assets products was essentially unchanged from March 31, 2026.

Consolidated Operating Results

The following table sets forth our revenues and net (loss)/income for the most recent five quarters.

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Guidance Update for the Year Ending December 31, 2026

Compensation to Revenue Ratio

Our compensation to revenue ratio for the year ending December 31, 2026 is currently estimated to range from 26% to 28% (unchanged from our guidance provided last quarter) and takes into consideration the Atlantic House acquisition, planned hires as well as year-end compensation adjustments and the annualization of hires made during 2025. The range also considers variability in incentive compensation with drivers including the magnitude of our flows, revenues and operating income growth, margin expansion and our stock price performance in relation to our peers. A range is provided in consideration of uncertain market conditions.

Discretionary Spending

Discretionary spending includes marketing, sales, professional fees, occupancy and equipment, depreciation and amortization and other expenses. During the six months ended June 30, 2026, our discretionary spending was $40.8 million. We currently estimate our discretionary spending for the year ending December 31, 2026 to range from $83.0 million to $89.0 million (unchanged from our guidance provided last quarter).

Not included in the guidance above is intangible amortization arising from the Ceres and Atlantic House acquisitions, of which $4.0 million was recognized during the six months ended June 30, 2026.

Gross Margin

We define gross margin as total operating revenues less fund management and administration expenses. Gross margin percentage is calculated as gross margin divided by total operating revenues. Our gross margin was 83.6% during the six months ended June 30, 2026. For the year ending December 31, 2026, we currently estimate that our gross margin percentage will be 83.0% to 84.0% (unchanged from our guidance provided last quarter).

Third-Party Distribution Fees

We currently estimate third-party distribution expense to be approximately $20.0 million to $24.0 million for the year ending December 31, 2026 (unchanged from our guidance provided last quarter).

Interest Expense

We currently estimate our interest expense for the year ending December 31, 2026 to be $54.0 million (unchanged from our guidance provided last quarter) taking into consideration our current capital structure. See Note 9 to our consolidated financial statements for additional information. This guidance is inclusive of approximately $0.9 million of interest cost we are required to impute under U.S. GAAP related to our interest-free financing of the shares of Series C Non-Voting Convertible Preferred Stock (the “Series C Preferred Stock”) we repurchased from Gold Bullion Holdings (Jersey) Limited (“GBH”), a subsidiary of the World Gold Council, in November 2023.

Interest Income

We currently estimate our interest income for the year ending December 31, 2026 to be $8.0 million (previously $10.0 million), reflecting the allocation of a portion of our interest-earning assets to stock repurchases.

Income Tax Expense

We currently estimate that our consolidated normalized effective tax rate will be approximately 24.0% to 25.0% for the year ending December 31, 2026 (unchanged from our guidance provided last quarter).

This estimat

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of
our financial condition and results of operations should be read together with our consolidated financial statements and the related notes
and the other financial information included elsewhere in this Report. In addition to historical consolidated financial information, the
following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include
those discussed below. For a more complete description of the risks noted above and other risks that could cause our actual results to
materially differ from our current expectations, please see Item 1A. “Risk Factors” of this Report. We assume no obligation
to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless
required by law.

Introduction

We are a global financial innovator, offering a diverse suite of ETPs,
models and solutions, private market investments and digital asset-related products. Our offerings empower investors to shape their financial
future and equip financial professionals to grow their businesses. Leveraging the latest financial infrastructure, we create products
that emphasize access and transparency and provide an enhanced user experience.

Building on our heritage of innovation, we continue to broaden our capabilities
beyond our core ETP business. We offer next-generation digital products and services related to tokenized real world assets and stablecoins,
including Digital Funds, as well as our institutional platform, WisdomTree Connect, and blockchain-native digital wallet, WisdomTree Prime.
We also have expanded into private assets through our acquisition of Ceres, a leading U.S.-based alternative asset manager specializing
in farmland investments.

As of December 31, 2025, we managed approximately
$144.5 billion in AUM. Our products span a broad range of strategies including equities, fixed income, commodities, leveraged-and-inverse,
currency, alternatives and cryptocurrency exposures. We have launched many first-to-market products and pioneered a unique alternative-weighting
approach called “Modern Alpha” that combines the outperformance potential of active management with the cost effective benefits
of passive management.

Our products are distributed across all major
asset management industry channels, including banks, brokerage firms, registered investment advisers, institutional investors, private
wealth managers and online brokers, primarily through our dedicated sales team. We believe technology is transforming how financial advisors
conduct business, and through our Advisor and Portfolio Solutions programs we offer technology-enabled and research-driven solutions.
These include portfolio construction, asset allocation, practice management services and digital tools to help advisors address technology
challenges and scale their businesses.

As pioneers in tokenization and blockchain technology, we view this as
the next phase in the evolution in financial services. Through our digital assets strategy, we are committed to “responsible DeFi,”
aligning with regulatory standards to foster growth in this rapidly evolving space. We believe that expanding into digital assets and
blockchain-enabled financial services not only complements our core competencies, but will diversify our revenue streams and further contribute
to our growth.

Executive Summary

Our business delivered strong progress in 2025 as we advanced our long-term
strategic initiatives and further strengthened the foundation for durable growth. We ended the year with AUM of $144.5 billion at December
31, 2025, up 31.6% as compared to the prior year, driven by favorable market conditions and net inflows of $8.5 billion, representing
annualized organic growth of approximately 8%. Revenues and operating income increased 15.4% and 26.9%, respectively, year over year,
driving approximately 300 basis points of operating margin expansion, supported by higher average AUM, improved revenue capture and continued
operating discipline. These results underscore the resilience of our business model and the benefits of our strategy to diversify revenue
streams and enhance earnings quality.

A significant strategic milestone in 2025 was the Ceres Acquisition, which
marked our entry into private assets and added exposure to U.S. farmland, which we believe to be one of the largest and most underpenetrated
real asset classes. At December 31, 2025, we managed $1.9 billion in farmland-based strategies, an asset class with low correlation to
traditional financial markets that enhances the diversification of our overall platform. This acquisition also increased our revenue capture
and resulted in operating margin expansion of more than 200 basis points.

Our Portfolio Solutions business continued to gain traction. Assets under
advisement in our models offering reached $6.1 billion, an increase of approximately 60% from the prior year, supported by deeper engagement
across major wealth platforms and registered investment advisers. The program provides advisors with customized evaluations, a suite of
model portfolios and Shared CIO services designed to support scalable, repeatable investment processes. In addition, our strategic minority
investment in, and multi-year collaboration with, Quorus enables certain of our investment strategies to be implemented in SMAs via the
Quorus platform, and our model portfolios to be made available there, with integrated trading and rebalancing, providing advisors with
additional customization options and implementation flexibility, and expanding our reach within the wealth management ecosystem. Together,
these initiatives contribute to more consistent and higher-quality revenue streams.

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We also achieved notable growth in digital assets. Digital assets AUM increased
to $0.8 billion as of December 31, 2025, driven primarily by the expansion of our tokenized money market offering, the WisdomTree Treasury
Money Market Digital Fund. Early adoption of this product highlights the broader potential for tokenization across real world assets,
including future applications in fixed income and equities. Institutional clients access our Digital Funds through WisdomTree Connect,
while WisdomTree Prime provides direct-to-consumer access to digital assets, such as bitcoin, ether, tokenized gold, U.S. dollar tokens
and 15 Digital Funds. Our continued focus on “responsible DeFi” ensures these offerings remain aligned with regulatory standards
while positioning us at the forefront of blockchain-enabled financial innovation.

Our initiatives across ETPs, private assets,
digital assets, models and SMAs are integral to our long-term growth strategy and are intended to drive sustained AUM growth, revenue
diversification, improved revenue capture and stronger operating margins. We believe this strategic alignment positions us to continue
delivering stockholder value and driving future performance.

Additional 2025 business highlights include the following:

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Market Environment

The following chart reflects the annual returns
of the broad-based equity indexes and gold prices over the last three years.

Source: FactSet

U.S. Listed ETF Industry Flows

U.S. listed ETF net flows for the year ended
December 31, 2025 were $1,419.5 billion. U.S. equity and fixed income gathered the majority of those flows.

Source: Morningstar

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European Listed ETP Industry Flows

European listed ETP net flows were $246.6 billion
for the year ended December 31, 2025. Equities and fixed income gathered the majority of those flows.

Source: Morningstar

Industry Developments

Asset Management – Consolidation

In the recent past, a number of acquisitions in the asset management industry
have either been announced or completed. These trends have accelerated as fee compression, cost pressures and increased regulations have
weighed on the industry, highlighting the importance of scale and operating efficiency to compete in to

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