What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-04 compared with 2022-08-05 · 198 added, 222 removed, 349 unchanged (55% of the section changed)

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Factors that could cause or contribute to these differences include those discussed below.

for the fiscal year ended December 31, 2021, as amended.

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, 2021, as amended, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.

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 an asset management company in the business of offering transparent financial exposures to our clients and are a leading global ETP sponsor based on assets under management, or AUM, with AUM of $74.3 billion as of June 30, 2022.

More recently, we have been positioning ourselves to expand beyond our existing ETP business by leveraging blockchain technology, digital assets and principles of decentralized finance, or DeFi, to deliver transparency, choice and inclusivity to customers and consumers around the world.

Our family of ETPs includes providing exposure to equities, commodities, fixed income, leveraged and inverse, currency, cryptocurrency and alternative strategies.

We have launched many first-to-market

products and pioneered alternative weighting we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective funds that are built to perform.

We have launched many first-to-market products and pioneered alternative weighting we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective funds that are built to perform.

Most of our equity-based funds employ a fundamentally weighted investment methodology, which weights securities based on factors such as dividends, earnings or investment factors, whereas most other industry indexes use a capitalization weighted methodology.

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We are at the forefront of innovation and have differentiated ourselves through continued investments in technology-enabled and research-driven solutions such as our Advisor Solutions program, which includes portfolio construction, asset allocation, practice management services and digital tools for financial advisors.

, a digital wallet that is native to the blockchain and being developed for saving, spending and investing in both native crypto assets and tokenized versions of mainstream financial assets (e.g., blockchain enabled investment funds).

We seek to usher in the next chapter of financial services by introducing new revenue streams and expanding our offerings to include a new financial services mobile application, branded WisdomTree Prime ™ , a digital wallet that is native to the blockchain and being developed for saving, spending and investing in both native crypto assets and tokenized versions of mainstream financial assets (e.g., blockchain enabled investment funds).

We also are planning to launch asset- and fund-tokenization products beginning with a dollar token, gold token and digital short term treasury fund which will be available on multiple public and permissioned blockchains, leveraging federal and state regulated entities.

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We offer ETPs covering equity, commodity, fixed income, leveraged and inverse, currency, cryptocurrency and alternative strategies.

The chart below sets forth the asset mix of our ETPs at June 30, 2021, March 31, 2022 and June 30, 2022:

The chart below sets forth the asset mix of our ETPs at September 30, 2021, June 30, 2022 and September 30, 2022:

Market Environment

During the second quarter of 2022, the U.S.

and Eurozone markets were under pressure as investors reacted to further interest rate rises and an increased risk of recession.

and European equities fell as focus was on inflation and the continued war in Ukraine.

Gold’s steady performance stood in contrast to equities as it gained support due to the high-risk environment brought on by multi-decade highs for inflation.

The third quarter of 2022 saw a continuation of the significant market volatility that has dominated much of 2022.

Investors remained worried about high inflation, slowing growth and the rising probability of recession and as a result, broad-based equity markets dropped into bear market territory.

Gold prices decreased as the dollar and Treasury yields increased amid expectations for aggressive monetary policy tightening by major central banks.

The S&P 500, MSCI EAFE (local currency), MSCI Emerging Markets Index (U.S.

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Listed ETF Industry Flows

listed ETF industry net flows for the three months ended June 30, 2022 were $93.5 billion.

Fixed income gathered the majority of those flows.

listed ETF industry net flows for the three months ended September 30, 2022 were $110.1 billion.

Fixed income and U.S.

Equity gathered the majority of those flows.

European Listed ETP Industry Flows

European listed ETP industry net flows were $16.7 billion for the three months ended June 30, 2022.

Equities gathered the majority of those flows.

European listed ETP industry net flows were ($8.0) billion for the three months ended September 30, 2022.

Equities and commodities contributed to most of the outflows, partially offset by inflows into fixed income.

Our Operating and Financial Results

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

listed ETFs’ AUM decreased from $48.6 billion at March 31, 2022 to $47.3 billion at June 30, 2022 due to market depreciation, partly offset by net inflows.

listed ETFs’ AUM increased from $47.3 billion at June 30, 2022 to $48.0 billion at September 30, 2022 due to net inflows, partly offset by market depreciation.

European Listed ETPs

Our European listed ETPs’ AUM decreased from $30.8 billion at March 31, 2022 to $27.0 billion at June 30, 2022 due to market depreciation and net outflows.

Our European listed ETPs’ AUM decreased from $27.0 billion at June 30, 2022 to $22.8 billion at September 30, 2022 due to market depreciation and net outflows.

Consolidated Operating Results

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

Prior period amounts previously disclosed for the three months ended June 30, 2021 have been revised due to an immaterial error correction to conform with our current presentation.

These revisions had no effect on previously reported net income.

See Note 2 to our Consolidated Financial Statements for additional information.

– We recorded operating revenues of $77.3 million during the three months ended June 30, 2022, up 2.0% from the three months ended June 30, 2021 due to higher average AUM, partly offset by a lower average advisory fee.

Operating Expenses

– Total operating expenses increased 18.0% from the three months ended June 30, 2021 to $61.4 million primarily due to higher incentive compensation and headcount, higher professional fees including $2.0 million incurred in responding to an activist campaign, higher fund management and administration costs and higher sales and business development expenses.

These increases were partly offset by lower occupancy expenses, lower depreciation and amortization expenses and lower third-party distribution fees.

Other Income/(Expenses)

– Other income/(expenses) includes interest income and interest expense, gains on revaluation of deferred consideration–gold payments, impairments and other net losses.

For the three months ended June 30, 2022 and 2021, the gains on revaluation of deferred consideration–gold payments were $2.3 million and $0.5 million, respectively.

In addition, during the three months ended June 30, 2022 we recognized losses on our securities owned of $4.2 million.

– We reported net income of $8.0 million during the three months ended June 30, 2022, compared to net income of $17.6 million during the three months ended June 30, 2021.

Revenues – We recorded operating revenues of $72.4 million during the three months ended September 30, 2022, down 7.3% from the three months ended September 30, 2021 due to a lower average advisory fee.

Operating Expenses – Total operating expenses increased 6.7% from the three months ended September 30, 2021 to $57.5 million primarily due to higher incentive compensation and headcount, fund management and administration costs, professional fees incurred in connection with our digital assets initiative and other expenses, partly offset by lower sales and business development expenses, occupancy expenses, contractual gold payments and depreciation and amortization expenses.

Other Income/(Expenses) – Other income/(expenses) includes interest income and interest expense, gains on revaluation of deferred consideration—gold payments, impairments and other net losses.

For the three months ended September 30, 2022 and 2021, the gains on revaluation of deferred consideration—gold payments were $77.9 million and $1.7 million, respectively.

In addition, during the three months ended September 30, 2022 we recognized losses on our securities owned and investments of $6.3 million.

Net income – We reported net income of $81.2 million during the three months ended September 30, 2022, compared to net income of $5.8 million during the three months ended September 30, 2021.

The change in net income was primarily due to the gain on revaluation of deferred consideration—gold payments.

Expense Guidance Update for the Year Ending December 31, 2022

Compensation Expense

Our compensation expense for the year ending December 31, 2022 is currently estimated to range from $96.0 million to $99.0 million (previously $92.0 million to $102.0 million).

of our guidance range has been reduced as we temper our hiring plans in the wake of uncertain market conditions.

Our compensation expense for the year ending December 31, 2022 is currently estimated to range from $96.0 million to $99.0 million (unchanged from the three months ended June 30, 2022).

Discretionary Spending

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We currently estimate our discretionary spending for the year ending December 31, 2022 to range from $50.0 million to $51.0 million (previously $51.0 million to $53.0 million).

Not included in the guidance above are non-recurring

expenses of $4.5 million incurred during the six months ended June 30, 2022, in response to an activist campaign.

We do not anticipate any significant activist campaign expenses during the remainder of this year.

Not included in the guidance above are non-recurring expenses of $4.5 million incurred during the six months ended June 30, 2022 in response to an activist campaign.

We do not anticipate any significant activist campaign expenses during the remainder of 2022.

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.

At current AUM and flow levels, we estimate our gross margin percentage will be 79% (previously 80% to 81%) for the year ending December 31, 2022.

At current AUM and flow levels, we estimate our gross margin percentage will be 78% to 79% for the year ending December 31, 2022 (previously 79%).

Contractual Gold Payments

We currently estimate our contractual gold payments expense for the year ending December 31, 2022 to be approximately $17.0 million (previously $18.0 million to $19.0 million) taking into consideration current lower gold prices.

We currently estimate our contractual gold payments expense for the year ending December 31, 2022 to be approximately $17.0 million (unchanged from the three months ended June 30, 2022) taking into consideration current gold prices.

Third-Party Distribution Expense

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Income Tax Expense

We currently estimate that our consolidated normalized effective tax rate will range from 21% to 22% for the year ending December 31, 2022 (unchanged from prior guidance).

We currently estimate that our consolidated normalized effective tax rate will be 22% for the year ending December 31, 2022 (previously 21% to 22%).

This estimated rate may change and is dependent upon our actual taxable income earned in relation to our forecasts as well as any other items that may arise that are not currently forecasted.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

GLOBAL ETPs (in millions )

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Inflows/(outflows)

Market appreciation/(depreciation)

Market (depreciation)/appreciation

Fund closures

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Inflows/(outflows)

Market appreciation/(depreciation)

Fund closures

Market (depreciation)/appreciation

End of period assets

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Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

(Outflows)/inflows

Market (depreciation)/appreciation

Fund closures

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Number of ETPs—end of period

Three Months Ended

Six Months Ended

PRODUCT CATEGORIES (in millions )

Commodity & Currency

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

Market (depreciation)/appreciation

End of period assets

Average assets during the period

Commodity & Currency

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

(Outflows)/inflows

Market (depreciation)/appreciation

End of period assets

Average assets during the period

International Developed Market Equity

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

Market (depreciation)/appreciation

End of period assets

Average assets during the period

Emerging Market Equity

Three Months Ended

Nine Months Ended

September 30,

International Developed Market Equity

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

(Outflows)/inflows

Market (depreciation)/appreciation

End of period assets

Average assets during the period

Emerging Market Equity

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

Market (depreciation)/appreciation

End of period assets

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Inflows/(outflows)

Market appreciation/(depreciation)

Market (depreciation)/appreciation

End of period assets

Average assets during the period

Cryptocurrency

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

Market (depreciation)/appreciation

End of period assets

Average assets during the period

Cryptocurrency

Beginning of period assets

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Inflows/(outflows)

Market appreciation/(depreciation)

Fund closures

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Previously issued statistics may be restated due to fund closures and trade adjustments

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Selected Operating and Financial Information

Three Months Ended

September 30,

AUM (in millions)

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Total revenues

Advisory fees previously reported have been revised due to an immaterial error correction.

These revisions had no effect on previously reported net income.

See Note 2 to our Consolidated Financial Statements for additional information.

Our average AUM increased 5.6% from $73.6 billion at June 30, 2021 to $77.7 billion at June 30, 2022 due to net inflows, partly offset by market depreciation.

Our average AUM was essentially unchanged from the three months ended September 30, 2021.

Operating Revenues

Advisory fees

Advisory fee revenues increased 1.9% from $74.2 million during the three months ended June 30, 2021 to $75.6 million in the comparable period in 2022 due to higher average AUM, partly offset by a lower average advisory fee.

Our average advisory fee was 0.39% during the three months ended June 30, 2022 and 0.40% during the same period in 2021.

Other income increased 3.8% from $1.6 million during the three months ended June 30, 2021 to $1.7 million in the comparable period in 2022 primarily due to higher fees associated with our European listed products.

Advisory fee revenues decreased 7.6% from $76.4 million during the three months ended September 30, 2021 to $70.6 million in the comparable period in 2022 due to a lower average advisory fee.

Our average advisory fee was 0.38% during the three months ended September 30, 2022 and 0.41% during the same period in 2021.

Other income increased 5.0% from $1.7 million during the three months ended September 30, 2021 to $1.8 million in the comparable period in 2022 primarily due to higher fees associated with our European listed products.

Operating Expenses

Three Months Ended

September 30,

(in thousands)

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Three Months Ended

September 30,

As a Percent of Revenues:

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Total operating expenses

Fund management and administration expenses previously reported have been revised due to an immaterial error correction.

These revisions had no effect on previously reported net income.

See Note 2 to our Consolidated Financial Statements for additional information.

Compensation and benefits

Compensation and benefits expense increased 20.8% from $20.3 million during the three months ended June 30, 2021 to $24.6 million in the comparable period in 2022 due to higher incentive compensation and headcount.

Headcount was 227 and 264 at June 30, 2021 and 2022, respectively.

Compensation and benefits expense increased 7.7% from $22.0 million during the three months ended September 30, 2021 to $23.7 million in the comparable period in 2022 due to higher incentive compensation and headcount.

Headcount was 235 and 274 at September 30, 2021 and 2022, respectively.

Fund management and administration

Fund management and administration expense increased 11.9% from $14.4 million during the three months ended June 30, 2021 to $16.1 million in the comparable period in 2022 due to higher average AUM.

Fund management and administration expense increased 7.3% from $15.2 million during the three months ended September 30, 2021 to $16.3 million in the comparable period in 2022 due to higher AUM and transaction fees associated with our U.S.

listed products, partly offset by lower European-listed AUM.

Marketing and advertising

Marketing and advertising expense increased 8.3% from $3.6 million during the three months ended June 30, 2021 to $3.9 million in the comparable period in 2022 primarily due to higher spending on online marketing campaigns.

Marketing and advertising expense increased 7.5% from $2.9 million during the three months ended September 30, 2021 to $3.1 million in the comparable period in 2022 primarily due to higher spending on online and television marketing campaigns.

Sales and business development

Sales and business development expense increased 45.0% from $2.2 million during the three months ended June 30, 2021 to $3.1 million in the comparable period in 2022 primarily due to higher spending on conferences and market data.

Sales and business development expense decreased 7.2% from $2.9 million during the three months ended September 30, 2021 to $2.7 million in the comparable period in 2022 primarily due to lower spending on sales tools.

Contractual gold payments

Contractual gold payments expense increased 3.1% from $4.3 million during the three months ended June 30, 2021 to $4.4 million in the comparable period in 2022.

This expense was associated with the payment of 2,375 ounces of gold and was calculated using the average daily spot price of $1,816 and $1,872 per ounce during the three months ended June 30, 2021 and 2022, respectively.

Contractual gold payments expense decreased 3.4% from $4.3 million during the three months ended September 30, 2021 to $4.1 million in the comparable period in 2022.

This expense was associated with the payment of 2,375 ounces of gold and was calculated using the average daily spot price of $1,789 and $1,728 per ounce during the three months ended September 30, 2021 and 2022, respectively.

Professional fees

Professional fees increased 124.3% from $1.9 million during the three months ended June 30, 2021 to $4.3 million in the comparable period in 2022 due to expenses incurred in response to an activist campaign.

Professional fees increased 49.5% from $1.6 million during the three months ended September 30, 2021 to $2.4 million in the comparable period in 2022 due to spending related to our digital assets initiative.

Occupancy, communications and equipment

Occupancy, communications and equipment expense decreased 17.1% from $1.3 million during the three months ended June 30, 2021 to $1.0 million in the comparable period in 2022 due to the termination of our New York office lease in September 2021.

Occupancy, communications and equipment expense decreased 15.2% from $1.2 million during the three months ended September 30, 2021 to $1.0 million in the comparable period in 2022 due to our reduced office footprint.

Depreciation and amortization

Depreciation and amortization expense decreased 79.3% from $0.3 million during the three months ended June 30, 2021 to $0.1 million in the comparable period in 2022 due to the write-off

of fixed assets related to exiting our New York office in September 2021.

Depreciation and amortization expense decreased 68.6% from $0.2 million during the three months ended September 30, 2021 to $0.1 million in the comparable period in 2022 due to lower spending on fixed assets.

Third-party distribution fees

Third-party distribution fees decreased 14.6% from $2.1 million during the three months ended June 30, 2021 to $1.8 million in the comparable period in 2022 primarily due to lower fees paid to our third-party marketing agent in Latin America, partly offset by new platform relationships in Europe.

Other expenses increased 20.4% from $1.8 million during the three months ended June 30, 2021 to $2.1 million in the comparable period in 2022 due to higher insurance costs and other miscellaneous items.

Third-party distribution fees decreased 2.1% from $1.9 million during the three months ended September 30, 2021 to $1.8 million in the comparable period in 2022 primarily due to lower fees paid to our third-party marketing agent in Latin America, partly offset by new platform relationships in Europe.

Other expenses increased 30.1% from $1.8 million during the three months ended September 30, 2021 to $2.3 million in the comparable period in 2022 due to higher insurance costs and other miscellaneous items.

Other Income/(Expenses)

Three Months Ended

September 30,

(in thousands)

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Interest income

Other losses and gains, net

Total other expenses, net

Other losses, net

Total other income/(expenses), net

Three Months Ended

September 30,

As a Percent of Revenues:

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Interest income

Other losses and gains, net

Total other expenses, net

Other losses, net

Total other income/(expenses), net

Interest expense

Interest expense increased 45.4% from $2.6 million during the three months ended June 30, 2021 to $3.7 million in the comparable period in 2022 due to a higher level of debt outstanding, partly offset by a lower effective interest rate.

Our effective interest rate during the three months ended June 30, 2021 and 2022 was 5.2% and 4.6%, respectively.

Interest expense was essentially unchanged from the three months ended September 30, 2021.

Our effective interest rate was 4.6% during the three months ended September 30, 2021 and 2022.

Gain on revaluation of deferred consideration

We recognized a gain on revaluation of deferred consideration of $0.5 million and $2.3 million during the three months ended June 30, 2021 and 2022, respectively.

The gain in the current quarter was due to lower spot gold prices, partly offset by a steepening of the forward-looking gold curve.

The magnitude of any gain or loss is highly correlated to the magnitude of the change in the forward-looking price of gold.

We recognized a non-cash gain on revaluation of deferred consideration of $1.7 million and $77.9 million during the three months ended September 30, 2021 and 2022, respectively.

The gain in the current quarter arose primarily from an increase in the discount rate (from 9.0% to 12.3%) used to compute the present value of the annual payment obligations as well as lower spot gold prices.

The magnitude of any gain or loss is highly correlated to changes in the discount rate and the magnitude of the change in the forward-looking price of gold.

Interest income

Interest income increased 242.2% from $0.2 million during the three months ended June 30, 2021 to $0.8 million in the comparable period in 2022 due to an increase in securities owned.

Other losses and gains, net

Other losses and gains, net were $0.0 million and ($4.5) million during the three months ended June 30, 2021 and 2022, respectively.

During the three months ended June 30, 2022, we recognized losses on our securities owned of $4.2 million.

Interest income increased 17.7% from $0.7 million during the three months ended September 30, 2021 to $0.8 million in the comparable period in 2022 due to an increase in securities owned.

During the three months ended September 30, 2021, we recognized a loss of approximately $15.8 million upon exiting our New York office, which is included in impairments in our Consolidated Statements of Operations.

There were no impairment charges during the three months ended September 30, 2022.

Other losses, net

Other losses, net were ($0.7) million and ($5.3) million during the three months ended September 30, 2021 and 2022, respectively.

During the three months ended September 30, 2022, we recognized losses on our securities owned and investments of $6.3 million.

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 and other miscellaneous items.

Our effective income tax rate for the three months ended June 30, 2022 of 25.0% resulted in an income tax expense of $2.7 million.

Our tax rate differs from the federal statutory rate of 21% primarily due to a valuation allowance on losses recognized on securities owned and non-deductible

compensation.

These items were partly offset by a non-taxable

gain on revaluation of deferred consideration and a lower tax rate on foreign earnings.

Our effective income tax rate for the three months ended June 30, 2021 of 19.5% resulted in income tax expense of $4.3 million.

Our effective income tax rate differs from the federal statutory tax rate of 21% primarily due to a lower tax rate on foreign earnings.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Our effective income tax rate for the three months ended September 30, 2022 of 3.9% resulted in an income tax expense of $3.3 million.

Our tax rate differs from the federal statutory rate of 21% primarily due to a non-taxable gain on revaluation of deferred consideration.

This was partly offset by an increase in the deferred tax asset valuation allowance on losses recognized on securities owned.

Our effective income tax rate for the three months ended September 30, 2021 of 7.9% resulted in income tax expense of $0.5 million.

Our effective income tax rate differs from the federal statutory tax rate of 21% primarily due to a lower tax rate on foreign earnings and a non-taxable gain on revaluation of deferred consideration, partly offset by higher non-deductible compensation.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Selected Operating and Financial Information

Six Months Ended

Nine Months Ended

September 30,

Global AUM (in millions)

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Total revenues

Advisory fees previously reported have been revised due to an immaterial error correction.

These revisions had no effect on previously reported net income.

See Note 2 to our Consolidated Financial Statements for additional information.

Average Global AUM

Our average global AUM increased 8.6% from $71.6 billion at June 30, 2021 to $77.8 billion at June 30, 2022 due to net inflows, partly offset by market depreciation.

Our average global AUM increased 5.8% from $72.6 billion at September 30, 2021 to $76.7 billion at September 30, 2022 due to net inflows, partly offset by market depreciation.

Operating Revenues

Advisory fees

Advisory fee revenues increased 5.5% from $144.2 million during the six months ended June 30, 2021 to $152.1 million in the comparable period in 2022 due to higher average global AUM, partly offset by a lower average advisory fee.

Our average global advisory fee was 0.42% and 0.39% during the six months ended June 30, 2021 and June 30, 2022, respectively.

Other income increased 24.8% from $2.8 million during the six months ended June 30, 2021 to $3.5 million in the comparable period in 2022 primarily due to higher fees associated with our European listed products.

Advisory fee revenues were essentially unchanged from the nine months ended September 30, 2021.

Our average global advisory fee was 0.41% and 0.39% during the nine months ended September 30, 2021 and September 30, 2022, respectively.

Other income increased 17.3% from $4.5 million during the nine months ended September 30, 2021 to $5.3 million in the comparable period in 2022 primarily due to higher fees associated with our European listed products.

Operating Expenses

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Total operating expenses

Six Months Ended

Nine Months Ended

September 30,

As a Percent of Revenues:

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Compensation and benefits

Compensation and benefits expense increased 14.9% from $43.0 million during the six months ended June 30, 2021 to $49.4 million in the comparable period in 2022 due to higher incentive compensation and headcount.

Compensation and benefits expense increased 12.4% from $65.0 million during the nine months ended September 30, 2021 to $73.1 million in the comparable period in 2022 due to higher incentive compensation and headcount.

Fund management and administration

Fund management and administration expense increased 11.5% from $28.3 million during the six months ended June 30, 2021 to $31.6 million in the comparable period in 2022 primarily due to higher average global AUM.

Fund management and administration expense increased 10.0% from $43.5 million during the nine months ended September 30, 2021 to $47.9 million in the comparable period in 2022 primarily due to higher average global AUM.

Marketing and advertising

Marketing and advertising expense increased 20.0% from $6.6 million during the six months ended June 30, 2021 to $7.9 million in the comparable period in 2022 due to higher spending on online marketing campaigns.

Marketing and advertising expense increased 16.1% from $9.5 million during the nine months ended September 30, 2021 to $11.1 million in the comparable period in 2022 due to higher spending on online and television marketing campaigns.

Sales and business development

Sales and business development expense increased 33.4% from $4.3 million during the six months ended June 30, 2021 to $5.7 million in the comparable period in 2022 primarily due to higher spending on conferences and market data.

Sales and business development expense increased 16.9% from $7.2 million during the nine months ended September 30, 2021 to $8.5 million in the comparable period in 2022 primarily due to higher spending on conferences and market data.

Contractual gold payments

Contractual gold payments expense increased 3.6% from $8.6 million during the six months ended June 30, 2021 to $8.9 million in the comparable period in 2022.

This expense was associated with the payment of 4,750 ounces of gold and was calculated using the average daily spot price of $1,807 and $1,873 per ounce during the six months ended June 30, 2021 and 2022, respectively.

Contractual gold payments expense increased 1.3% from $12.8 million during the nine months ended September 30, 2021 to $13.0 million in the comparable period in 2022.

This expense was associated with the payment of 7,125 ounces of gold and was calculated using the average daily spot price of $1,801 and $1,825 per ounce during the nine months ended September 30, 2021 and 2022, respectively.

Professional fees

Professional fees increased 122.9% from $3.9 million during the six months ended June 30, 2021 to $8.8 million in the comparable period in 2022 due to expenses incurred in response to an activist campaign.

Professional fees increased 101.8% from $5.5 million during the nine months ended September 30, 2021 to $11.1 million in the comparable period in 2022 due to $4.5 million of expenses incurred in response to an activist campaign and spending related to our digital assets initiative.

Occupancy, communications and equipment

Occupancy, communications and equipment expense decreased 34.3% from $2.7 million during the six months ended June 30, 2021 to $1.8 million in the comparable period in 2022 due to the termination of our New York office lease in September 2021.

Occupancy, communications and equipment expense decreased 28.6% from $3.9 million during the nine months ended September 30, 2021 to $2.8 million in the comparable period in 2022 due to our reduced office footprint.

Depreciation and amortization

Occupancy, communications and equipment expense decreased 80.3% from $0.5 million during the six months ended June 30, 2021 to $0.1 million in the comparable period in 2022 due to the write-off

of fixed assets related to exiting our New York office in September 2021.

Occupancy, communications and equipment expense decreased 77.2% from $0.7 million during the nine months ended September 30, 2021 to $0.2 million in the comparable period in 2022 due to lower spending on fixed assets.

Third-party distribution fees

Third-party distribution fees increased 16.0% from $3.5 million during the six months ended June 30, 2021 to $4.0 million in the comparable period in 2022 due to new platform relationships in Europe.

Other expenses increased 19.0% from $3.3 million during the six months ended June 30, 2021 to $4.0 million in the comparable period in 2022 due to miscellaneous expenses incurred in response to an activist campaign, higher insurance costs and other miscellaneous matters.

Third-party distribution fees increased 9.7% from $5.3 million during the nine months ended September 30, 2021 to $5.9 million in the comparable period in 2022 due to new platform relationships in Europe, higher U.S.

listed AUM on third-party platforms, partly offset by lower fees paid to our third-party marketing agent in Latin America.

Other expenses increased 22.9% from $5.1 million during the nine months ended September 30, 2021 to $6.3 million in the comparable period in 2022 due to miscellaneous expenses incurred in response to an activist campaign, higher insurance costs and other miscellaneous matters.

Other Income/(Expenses)

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

Interest expense

(Loss)/gain on revaluation of deferred consideration – gold payments

Gain on revaluation of deferred consideration—gold payments

Interest income

Other losses, net

Total other expenses, net

Six Months Ended

Total other income/(expenses), net

Nine Months Ended

September 30,

As a Percent of Revenues:

Interest expense

(Loss)/gain on revaluation of deferred consideration – gold payments

Gain on revaluation of deferred consideration—gold payments

Interest income

Other losses, net

Total other expenses, net

Total other income/(expenses), net

Interest expense

Interest expense increased 53.5% from $4.9 million during the six months ended June 30, 2021 to $7.5 million in the comparable period in 2022 due to a higher level of debt outstanding, partly offset by a lower effective interest rate.

Our effective interest rate during the six months ended June 30, 2021 and 2022 was 5.2% and 4.6%, respectively.

(Loss)/gain on revaluation of deferred consideration

We recognized a gain on revaluation of deferred consideration of $3.3 million during the six months ended June 30, 2021 as compared to a loss of ($14.7) million during the six months ended June 30, 2022.

The loss in the current period was due to an increase in forward-looking gold prices.

The gain in the prior period was due to a decline in spot gold prices, partly offset by a steepening of the forward-looking gold curve.

The magnitude of any gain or loss is highly correlated to the magnitude of the change in the forward-looking price of gold.

Interest expense increased 30.3% from $8.6 million during the nine months ended September 30, 2021 to $11.2 million in the comparable period in 2022 due to a higher level of debt outstanding and a higher effective interest rate.

Our effective interest rate during the nine months ended September 30, 2021 and 2022 was 5.0% and 4.6%, respectively.

Gain on revaluation of deferred consideration

We recognized a gain on revaluation of deferred consideration of $5.1 million and $63.2 million, respectively, during the nine months ended September 30, 2021 and 2022.

The gain in the current period arose primarily from an increase in the discount rate (from 9.0% to 12.3%) used to compute the present value of the annual payment obligations as well as lower spot gold prices.

The magnitude of any gain or loss is highly correlated to changes in the discount rate and the magnitude of the change in the forward-looking price of gold.

Interest income

Interest income increased 243.0% from $0.5 million during the six months ended June 30, 2021 to $1.6 million in the comparable period in 2022 due to an increase in our securities owned.

During the six months ended June 30, 2021, we recognized an impairment charge of $0.3 million upon exiting our London office.

There were no impairment charges during the six months ended June 20, 2022.

Interest income increased 107.4% from $1.1 million during the nine months ended September 30, 2021 to $2.4 million in the comparable period in 2022 due to an increase in our securities owned.

During the nine months ended September 30, 2021, we recognized a loss of approximately $16.2 million upon exiting our London and New York offices, which is included in impairments in our Consolidated Statements of Operations.

There were no impairment charges during the nine months ended September 30, 2022.

Other losses, net

Other losses, net were $5.9 million and $29.2 million during the six months ended June 30, 2021 and 2022, respectively.

The six months ended June 30, 2022 includes a non-cash

charge of $19.9 million arising from the release of a tax-related

indemnification asset due to the favorable resolution of certain tax audits as well as the expiration of the statute of limitations (an equal and offsetting benefit has been recognized in income tax expense).

Other losses, net were ($6.6) million and ($34.5) million during the nine months ended September 30, 2021 and 2022, respectively.

The nine months ended September 30, 2022 includes a non-cash charge of $19.9 million arising from the release of a tax-related indemnification asset due to the favorable resolution of certain tax audits as well as the expiration of the statute of limitations (an equal and offsetting benefit has been recognized in income tax expense).

We also recognized $15.6 million of losses on our securities owned.

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.

Our effective income tax rate benefit for the six months ended June 30, 2022 was 86.2% resulting in an income tax benefit of $14.0 million.

Our tax rate differs from the federal statutory rate of 21% primarily due to a reduction in unrecognized tax benefits associated with the release of the tax-related

indemnification asset described above and a lower tax rate on foreign earnings.

These items were partly offset by a non-taxable

loss on revaluation of deferred consideration and an increase in the deferred tax asset valuation allowance on losses recognized on securities owned.

Our effective income tax rate for the six months ended June 30, 2021 of 6.5% resulted in income tax expense of $2.3 million.

Our effective income tax rate differs from the federal statutory rate of 21% primarily due to a $5.2 million reduction in unrecognized tax benefits, a lower tax rate on foreign earnings and a non-taxable

gain on revaluation of deferred consideration.

These items were partly offset by tax shortfalls associated with the vesting and exercise of stock-based compensation and state and local taxes.

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.

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.

financial measurements contained in this Report include:

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 and other miscellaneous items.

Our effective income tax rate for the nine months ended September 30, 2022 was negative 15.7%, resulting in an income tax benefit of $10.7 million.

Our tax rate differs from the federal statutory rate of 21% primarily due to the reduction in unrecognized tax benefits associated with the release of the tax-related indemnification asset described above, a non-taxable gain on revaluation of deferred consideration and a lower tax rate on foreign earnings.

These items were partly offset by an increase in the deferred tax asset valuation allowance on losses recognized on securities owned.

Our effective income tax rate for the nine months ended September 30, 2021 of 6.7% resulted in income tax expense of $2.8 million.

These items were partly offset by tax shortfalls associated with the vesting and exercise of stock-based compensation and non-deductible executive compensation.

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 Report include:

Adjusted Net Income and Diluted Earnings per Share

We disclose adjusted net income and adjusted diluted earnings per share as non-GAAP

financial measurements in order to report our results exclusive of items that are non-recurring

or not core to our operating business.

We believe presenting these non-GAAP

financial measurements provides investors with a consistent way to analyze our performance.

These non-GAAP

financial measurements exclude the following:

Unrealized gains or losses on the revaluation of deferred consideration:

We disclose adjusted net income and adjusted diluted earnings per share as non-GAAP financial measurements in order to report our results exclusive of items that are non-recurring or not core to our operating business.

We believe presenting these non-GAAP financial measurements provides investors with a consistent way to analyze our performance.

These non-GAAP financial measurements exclude the following:

Unrealized gains 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.

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Changes in the forward-looking price of gold and changes in the discount rate used to compute the present value of the annual payment obligations may have a material impact on the carrying value of the deferred consideration and our reported financial results.

We exclude this item when calculating our non-GAAP

financial measurements as it is not core to our operating business.

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.

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We account for securities owned as trading securities which requires these instruments to be measured at fair value with gains and losses reported in net income.

In the third quarter of 2021, we began excluding these items when calculating our non-GAAP

financial measurements as these securities have become a more meaningful percentage of total assets and the gains and losses introduce volatility in earnings and are not core to our operating business.

In the third quarter of 2021, we began excluding these items when calculating our non-GAAP financial measurements as these securities have become a more meaningful percentage of total assets and the gains and losses introduce volatility in earnings and are not core to our operating business.

Tax shortfalls and windfalls upon vesting and exercise of stock-based compensation awards:

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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.

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.

Unrealized gains and losses recognized on our investments, changes in the deferred tax asset valuation allowance on securities owned, expenses incurred in response to an activist campaign and impairment charges.

Three Months Ended

Six Months Ended

Nine Months Ended

Adjusted Net Income and Diluted Earnings per Share:

Net income/(loss), as reported

Deduct/add back:

(Gain)/loss on revaluation of deferred consideration

Increase in deferred tax asset valuation allowance on securities owned

September 30,

Net income, as reported

Gain on revaluation of deferred consideration

Losses on securities owned, net of income taxes

Expenses incurred in response to an activist campaign, net of income taxes

Increase in deferred tax asset valuation allowance on securities owned

Deduct/add back:

Unrealized gain recognized on our investments, net of income taxes

Add back/deduct:

Tax shortfalls/(windfalls) upon vesting and exercise of stock-based compensation awards

Deduct/add back:

Unrealized (gain)/loss recognized on our investments, net of income taxes

Expenses incurred in response to an activist campaign, net of income taxes

Impairments, net of income taxes (where applicable)

Gain recognized upon sale of Canadian ETF business

Adjusted net income

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The following table summarizes key data regarding our liquidity, capital resources and use of capital to fund our operations:

September 30,

Balance Sheet Data (in thousands):

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Available liquidity

Excludes convertible notes in the amount of $173,325 scheduled to mature on June 15, 2023, as we are actively exploring refinancing and extension alternatives.

Six Months Ended June 30,

Excludes convertible notes in the amount of $173,760 at September 30, 2022, net of premiums and unamortized issuance costs, scheduled to mature on June 15, 2023, as we are actively exploring refinancing and extension alternatives.

Nine Months Ended September 30,

Cash Flow Data (in thousands):

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Foreign exchange rate effect

(Decrease)/increase in cash and cash equivalents

Cash flows from purchasing securities owned, at fair value of $29,819 and selling securities owned, at fair value of $5,212 during the six months ended June 30, 2021 that were not acquired specifically for resale or associated with the Company’s business activities have been reclassified from operating activities to investing activities to conform to the current year’s presentation in the Consolidated Statements of Cash Flows.

See Note 2 for additional information.

Net (decrease)/increase in cash and cash equivalents

We consider our available liquidity to be our liquid assets, less our current liabilities and regulatory capital requirements of certain international subsidiaries.

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Accounts receivable are current assets and primarily represent receivables from advisory fees we earn from our ETPs.

Our current liabilities consist primarily of payments owed to vendors and third parties in the normal course of business, deferred consideration and accrued incentive compensation for employees.

Cash and cash equivalents decreased $31.0 million during the six months ended June 30, 2022 due to $32.5 million used to purchase securities owned, $11.9 million used to purchase investments, $9.7 million used to pay dividends on our common stock, $3.4 million used to repurchase our common stock, $3.4 million of foreign exchange rate losses and $0.1 million used in other activities.

Our current liabilities, excluding convertible notes in the amount of $173,760 scheduled to mature on June 15, 2023, consist primarily of payments owed to vendors and third parties in the normal course of business, deferred consideration and accrued incentive compensation for employees.

Cash and cash equivalents decreased $8.0 million during the nine months ended September 30, 2022 due to $41.2 million used to purchase securities owned, $11.9 million used to purchase investments, $14.5 million used to pay dividends on our common stock, $3.4 million used to repurchase our common stock, $7.6 million of foreign exchange rate losses and $0.2 million used in other activities.

These decreases were partly offset by $27.7 million of proceeds from the sale of securities owned and $43.1 million of net cash provided by operating activities.

Cash and cash equivalents increased $94.2 million during the six months ended June 30, 2021 due to $150.0 million of proceeds received from the issuance of the 2021 Notes, $22.4 million of net cash provided by operating activities, $5.2 million of proceeds from the sale of securities owned, at fair value and $0.9 million provided by other activities.

These increases were partly offset by $34.5 million used to repurchase our common stock, $29.8 million used to purchase securities owned, at fair value, $9.9 million used to pay dividends on our common stock, $5.8 million used to purchase investments and $4.3 million used to pay the 2021 Note issuance costs.

Cash and cash equivalents increased $54.5 million during the nine months ended September 30, 2021 due to $150.0 million of proceeds received from the issuance of the 2021 Notes, $50.1 million of net cash provided by operating activities, $11.0 million of proceeds from the sale of securities owned and $0.3 million provided by other activities.

These increases were partly offset by $97.6 million used to purchase securities owned, $34.5 million used to repurchase our common stock, $14.7 million used to pay dividends on our common stock, $5.8 million used to purchase investments and $4.3 million used to pay the 2021 Note issuance costs.

Issuance of Convertible Notes

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Redemption price :

scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days, including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding the redemption date.

We may redeem for cash all or any portion of the notes, at our option, on or after June 20, 2023 and June 20, 2021 in respect of the 2021 Notes and 2020 Notes, respectively, and on or prior to the 55 th scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days, including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding the redemption date.

No sinking fund is provided for the Convertible Notes.

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Seniority and Security :

The 2021 Notes and 2020 Notes rank equal in right of payment, and are our senior unsecured obligations, but are subordinated in right of payment to our obligations to make certain redemption payments (if and when due) in respect of our Series A Non-Voting

Convertible Preferred Stock (See Note 10 to our Consolidated Financial Statements).

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

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Our business does not require us to maintain a significant cash position.

However, certain of our international subsidiaries are required to maintain a minimum level of regulatory capital, which at June 30, 2022 was approximately $25.5 million in the aggregate.

However, certain of our international subsidiaries are required to maintain a minimum level of regulatory capital, which at September 30, 2022 was approximately $23.1 million in the aggregate.

Notwithstanding these regulatory capital requirements, we expect that our main uses of cash will be to fund the ongoing operations of our business.

We also maintain a capital return program which includes a $0.03 per share quarterly cash dividend and authority to purchase our common stock through April 27, 2025, including purchases to offset future equity grants made under our equity plans.

There were no shares repurchased during the three months ended June 30, 2022.

As of June 30, 2022, $100 million remains under this program for future purchases.

During the three months ended September 30, 2022, we repurchased 4,567 shares of our common stock under the repurchase program for an aggregate cost of $0.02 million.

As of September 30, 2022, $100 million remains under this program for future purchases.

Contractual Obligations

Convertible Notes

At June 30, 2022, we had $325.0 million aggregate principal amount of Convertible Notes outstanding, of which $175.0 million are scheduled to mature on June 15, 2023 and $150.0 million are scheduled to mature on June 15, 2026, unless earlier converted, repurchased or redeemed.

At September 30, 2022, we had $325.0 million aggregate principal amount of Convertible Notes outstanding, of which $175.0 million are scheduled to mature on June 15, 2023 and $150.0 million are scheduled to mature on June 15, 2026, unless earlier converted, repurchased or redeemed.

Conditional conversions or a requirement to repurchase the Convertible Notes upon the occurrence of a fundamental change may accelerate payment.

The Convertible Notes require cash settlement of the principal amount, while settlement of the conversion obligation in excess of the aggregate principal amount may be satisfied in either cash, shares of our common stock or a combination of cash and shares of our common stock.

We currently anticipate refinancing these obligations when due.

We anticipate refinancing or extending these obligations when due and are currently actively exploring refinancing and extension alternatives with respect to the 2020 Notes.

See the section titled “Issuance of Convertible Notes” above for additional information.

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The obligation is for fixed payments to ETFS Capital Limited of physical gold bullion equating to 9,500 ounces of gold per year through March 31, 2058 and then subsequently reduced to 6,333 ounces of gold continuing into perpetuity (“Contractual Gold Payments”).

The present value of the deferred consideration was $242.8 million at June 30, 2022.

The present value of the deferred consideration was $164.8 million at September 30, 2022.

The Contractual Gold Payments are paid from advisory fee income generated by any of our sponsored financial products backed by physical gold with no recourse back to us for any unpaid amounts that exceed advisory fees earned.

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However, we maintain office space in New York and London, as well as other regional locations, to align with employees choosing to collaborate in person.

Total future minimum lease payments with respect to our office space was $2.4 million at June 30, 2022.

Total future minimum lease payments with respect to our office space was $1.8 million at September 30, 2022.

Cash flows generated by our operating activities and existing cash balances should be sufficient to satisfy the future minimum lease payments.

See Note 12 to our Consolidated Financial Statements for additional information.

Sheet Arrangements

We do not have any off-balance

sheet financing or other arrangements and have neither created nor are party to any special-purpose or off-balance

sheet entities for the purpose of raising capital, incurring debt or operating our business.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet financing or other arrangements and have neither created nor are party to any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business.

Critical Accounting Policies

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Goodwill is the excess of the purchase price over the fair values of the identifiable net assets at the acquisition date.

We test goodwill for impairment at least annually and at the time of a triggering event requiring re-evaluation,

if one were to occur.

We test goodwill for impairment at least annually and at the time of a triggering event requiring re-evaluation, if one were to occur.

Goodwill is considered impaired when the estimated fair value of the reporting unit that was allocated the goodwill is less than its carrying value.

12 unchanged sentences

The annual impairment testing date for our intangible assets is November 30 th .

We account for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed in ASU 2016-01,

Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities

, to the extent such investments are not subject to consolidation or the equity method.

We account for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed in ASU 2016-01, Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities , to the extent such investments are not subject to consolidation or the equity method.

Under the measurement alternative, these financial instruments are carried at cost, less any impairment (assessed quarterly), plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.

3 unchanged sentences

Deferred consideration represents the present value of an obligation to pay gold to a third party into perpetuity and is measured using forward-looking gold prices observed on the CMX exchange, a selected discount rate and perpetual growth rate.

The weighted average forward-looking gold price per ounce, discount rate and perpetual growth rate were $2,265, 9.0% and 1.4%, respectively, at June 30, 2022.

Changes in the fair value of this obligation are reported as gain/(loss) on revaluation of deferred consideration–gold payments in our Consolidated Statements of Operations.

During the three months ended June 30, 2022, we reported a gain on deferred consideration–gold payments of $2.3 million.

The weighted average forward-looking gold price per ounce, discount rate and perpetual growth rate were $2,037, 12.3% and 1.5%, respectively, at September 30, 2022.

Changes in the fair value of this obligation are reported as gain on revaluation of deferred consideration—gold payments in our Consolidated Statements of Operations.

During the three months ended September 30, 2022, we reported a gain on deferred consideration—gold payments of $77.9 million.

A 1.0% increase in the weighted average forward-looking gold price per ounce would have reduced this reported gain by $1.1 million, a 1 percentage point increase in the discount rate would have increased this reported gain by $12.9 million and a 1 percentage point increase in the perpetual growth rate would have reduced this reported gain by $9.3 million.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis