WisdomTree, Inc. Fair Value Disclosure
5. Fair Value Measurements
The fair value of financial instruments is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., “the exit price”) in an orderly transaction between market participants at the measurement date. ASC 820, Fair Value Measurement, establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs reflect assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the transparency of inputs as follows:
Level 1 – Quoted prices for identical instruments in active markets.
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 – Instruments whose significant drivers are unobservable.
The availability of observable inputs can vary from product to product and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The tables below summarize the categorization of the Company’s assets and liabilities measured at fair value. During the years ended December 31, 2025 and 2024, there were no transfers between Levels 2 and 3.
| December 31, 2025 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Recurring fair value measurements: | ||||||||||||||||
| Cash equivalents | $ | 161,063 | $ | 161,063 | $ | $ | ||||||||||
| Financial instruments owned, at fair value: | ||||||||||||||||
| ETFs | 81,737 | 81,737 | ||||||||||||||
| Pass-through GSEs | 6,053 | 6,053 | ||||||||||||||
| Other assets—seed capital (WisdomTree Digital Funds): | ||||||||||||||||
| U.S. treasuries | 5,402 | 5,402 | ||||||||||||||
| Equities | 11,824 | 11,824 | ||||||||||||||
| Fixed income | 2,101 | 1,138 | 963 | |||||||||||||
| Total | $ | 268,180 | $ | 255,762 | $ | 12,418 | $ | |||||||||
| Non-recurring fair value measurements: | ||||||||||||||||
| Fnality International Limited—Series B-1 Preference Shares(1) | $ | 8,035 | $ | $ | $ | 8,035 | ||||||||||
| Liabilities: | ||||||||||||||||
| Recurring fair value measurements: | ||||||||||||||||
| Contingent consideration | $ | 11,844 | $ | $ | $ | 11,844 | ||||||||||
_____________________________
| (1) | Fair value determined on September 10, 2025. Not included in the table above are prospective changes in value due to fluctuations in the British pound to U.S. dollar exchange rate. |
| December 31, 2024 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Recurring fair value measurements: | ||||||||||||||||
| Cash equivalents | $ | 48,336 | $ | 48,336 | $ | $ | ||||||||||
| Financial instruments owned, at fair value: | ||||||||||||||||
| ETFs | 62,907 | 62,907 | ||||||||||||||
| Pass-through GSEs | 6,898 | 6,898 | ||||||||||||||
| Other assets—seed capital (WisdomTree Digital Funds): | ||||||||||||||||
| U.S. treasuries | 5,251 | 5,251 | ||||||||||||||
| Equities | 8,478 | 8,478 | ||||||||||||||
| Fixed income | 1,905 | 1,019 | 886 | |||||||||||||
| Other investments | 687 | 687 | ||||||||||||||
| Total | $ | 134,462 | $ | 120,740 | $ | 13,035 | $ | 687 | ||||||||
| Non-recurring fair value measurements: | ||||||||||||||||
| Fnality International Limited—Series B-1 Preference Shares(1) | $ | 8,288 | $ | $ | $ | 8,288 | ||||||||||
_____________________________
| (1) | Fair value determined on June 17, 2024. Not included above are prospective changes in value due to fluctuations in the British pound to U.S. dollar exchange rate. |
Recurring Fair Value Measurements - Methodology
Cash equivalents (Note 4) – These financial assets represent cash invested in highly liquid investments with original maturities of less than 90 days, as well as institutional money market funds that invest in short-term, high-quality U.S. Treasury and government agency securities and aim to maintain a stable $1.00 net asset value per share. These investments are valued at par, which approximates fair value, and are classified as Level 1 in the fair value hierarchy.
Financial instruments owned (Note 6) – Financial instruments owned are investments in ETFs, pass-through GSEs, equities and fixed income. ETFs and equities are generally traded in active, quoted and highly liquid markets and are therefore classified as Level 1 in the fair value hierarchy. Pricing of pass-through GSEs and fixed income includes consideration given to date of issuance, collateral characteristics and market assumptions related to yields, credit risk and timing of prepayments and may be classified as either Level 1 or Level 2.
Contingent consideration (Note 9) – This liability represents contingent consideration arising from the Ceres Acquisition which is measured at fair value on a recurring basis and classified within Level 3 of the fair value hierarchy as the valuation incorporates significant unobservable inputs. Fair value is estimated using a Monte Carlo simulation model, which incorporates a range of potential revenue outcomes over the earnout measurement period and estimates the probability-weighted present value of expected future payments. Significant assumptions used in the valuation include revenue volatility, revenue discount rate and payment discount rate.
Fair Value Measurements classified as Level 3 – The following table presents a reconciliation of beginning and ending balances of recurring fair value measurements classified as Level 3:
These instruments consist of the following:
| Years Ended | ||||||||
December 31, | December 31, | |||||||
| Other Investments: | ||||||||
| Beginning balance | $ | 687 | $ | |||||
| Net unrealized gains(1) | 284 | 13 | ||||||
| Conversion | (971 | ) | 674 | |||||
| Ending balance | $ | $ | 687 | |||||
| Contingent Consideration: | ||||||||
| Beginning balance | $ | $ | ||||||
| Additions | 11,134 | |||||||
| Remeasurement(2) | 710 | |||||||
| Ending balance | $ | 11,844 | ||||||
_____________________________
| (1) | Recorded in impairments and other gains/(losses), net in the Consolidated Statements of Operations. |
| (2) | Recorded in remeasurement of contingent consideration in the Consolidated Statements of Operations. |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 29, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.